Annual report 2023
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AMBER GRID AB CONSOLIDATED ANNUAL REPORT 2023
Vilnius
2024
CONTENT
1. OVERVIEW.............................................................................................................................. 5
2. BUSINESS ENVIRONMENT.................................................................................................... 12
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3. STRATEGY ............................................................................................................................. 16
4. OPERATIONS ........................................................................................................................ 23
5. FINANCIAL RESULTS ............................................................................................................. 34
6. RISKS AND RISK MANAGEMENT .......................................................................................... 44
7. MANAGEMENT REPORT ....................................................................................................... 49
8. SUSTAINABILITY REPORT ...................................................................................................... 63
9. SIGNIFICANT EVENTS DURING THE REPORTING PERIOD................................................... 111
10. ANNEXES ........................................................................................................................... 111
FOREWORD BY THE CHAIRMAN OF THE BOARD
2023 was a successful year for Amber Grid. The Company maintained stable revenue and profit performance, and
achieved significant results in network modernisation projects. Employee and customer satisfaction with the Company
and its services improved during the year. The Company continues to present itself as a reliable and responsible
company that plays an important role in ensuring the energy security of Lithuania and the entire Baltic region.
Last year, despite the complicated geopolitical situation and high gas prices at the start of this year, Amber Grid
successfully ensured uninterrupted gas supply to all its customers. The Company made further investments in the
modernisation and development of the gas transmission system: during the year, upgraded five gas distribution stations
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and other gas transmission system facilities, as well as implemented the reconstruction of sections in the Vilnius-Kaunas
gas pipeline.
The environment and climate change reduction remains the area of particular attention in the Company. In 2023, the
Company’s solar power plants generated even more electricity from renewable sources, and its car fleet was upgraded
by replacing polluting cars with electric or hybrid vehicles. In addition, the Company approved future plans to switch
the existing gas compressor from gas to electric.
Although a gas pipeline incident in Pasvalys district marked the beginning of the year, the Company and its customers
did not suffer significant losses. On the contrary, internal diagnostics of gas pipelines were improved, and around 600
km of gas pipelines across Lithuania were tested. The Company also held the campaign to raise public awareness for
safety at gas pipelines.
Amber Grid will continue to pursue its goals outlined in the Strategy: to ensure reliable and secure gas supply, to increase
the diversification of gas supply and to actively contribute to the development of green energy by participating in the
implementation of green hydrogen and other renewable gas projects. I am grateful to my colleagues for a successful
past year and wish Amber Grid sustainable growth, strengthening the Baltic energy sector and creating benefits for
Lithuania in the dynamically changing energy sector.
Yours faithfully
Dalius Svetulevičius
Chairman of the Board of Amber Grid
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CEO’S FOREWORD
2023 was a year of events, achievements and changes. We successfully implemented numerous projects, strengthened
our presence in the region and took significant steps towards energy transformation.
Last year, we transported more than 61 TWh of gas through our well-developed gas transmission infrastructure to meet
national and regional needs. This period was accompanied by exceptionally large gas flows towards Latvia. During the
year, we transported as much as 19 TWh of gas to the underground gas storage facility and to the Baltic States and
Finland. The strategic ELLI project implemented on the territory of Lithuania in 2022 served for this, boosting gas
transmission flows to Latvia by a third. Since the interconnection capacities were also enhanced on the territory of Latvia
at the end of 2023, the ELLI project is considered complete.
This was one of the last projects increasing the integration of the gas market in the Baltic region. After implementing it,
we achieved that gas flows in large quantities between the Baltic countries and Finland. The Klaipėda LNG terminal, and
the recently implemented GIPL and ELLI projects have substantially increased the gas infrastructure possibilities of
Lithuania and the Baltic States, created economic and geopolitical benefits.
One of the key projects implemented by the Company last year was the reconstruction of sections in the Vilnius-Kaunas
gas pipeline. The project, which cost more than EUR 13 million, was implemented on schedule and improved reliability
and security of the gas supply. As part of our investments in network modernisation, last year we completed the
reconstruction of five gas distribution stations in Šiauliai, Telšiai, Grigiškės, Vievis and Kėdainiai, as well as the installation
of the pressure relief valve in the main gas pipeline branch to the Marijampolė GDS.
The gas pipeline incident on 13 January last year has motivated us to reinforce action on the security of infrastructure.
We carry out a complete diagnostics of gas pipelines, held national training exercise and launched a public awareness
campaign “Protect yourself and the pipeline”.
We also successfully completed an international transaction by selling a majority of shares in our subsidiary, gas
exchange GET Baltic, to the German gas exchange EEX. The transaction strengthens the region’s energy market and
brings benefits to all its participants.
2023 was also notable for concrete steps towards hydrogen energy. We launched hydrogen transport activities,
established an Energy Transformation Centre and, together with the Ministry of Energy of the Republic of Lithuania,
drafted guidelines for the development of the hydrogen sector in Lithuania. We have also entered the preparatory
phase of the Hydrogen Corridor, one of the biggest future projects: together with Scandinavian, Baltic and European
partners we are developing a feasibility study enabling to plan the Nordic-Baltic Hydrogen Corridor project.
Last year was also a breakthrough year for biomethane: we connected a link dedicated for biomethane supply to the
gas transmission system. In July, biomethane production was put into pilot mode, and in September the first
biomethane plant connected to the Lithuanian network started operating. The plant is expected to feed around 100
GWh of biomethane into the transmission system each year. The biomethane will be granted green gas guarantees of
origin.
Taken together, these achievements prove that Amber Grid is a reliable and responsible company committed to care
for energy security and sustainability. We will continue working towards a reliable and secure gas supply, and we will
invest in infrastructure modernisation and contribute to the development of national green energy.
As we have increased our focus on sustainability, we have expanded the list of sustainability indicators being assessed.
We disclose them in the Sustainability Report that accompanies the Annual Report. Diligent work in the field of
sustainability will allow us to be seen as a responsible and valuable part of a sustainable society.
I am thankful to all Amber Grid’s employees and colleagues for their dedication and cooperation. Your professionalism
and efforts have enabled us to achieve a very satisfactory outcome. I am also thankful to our clients, partners and
shareholders for their trust and support. I do believe 2024 is going toe an even more successful year. We will continue
to strengthen our presence in the region, invest in the security and renewal of infrastructure, and play an active role in
the energy transformation.
Yours faithfully
Nemunas Biknius
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Chief Executive Officer
Amber Grid
1. OVERVIEW
The Consolidated Annual Report covers the reporting period for the year 2023.
1.1. BASIC DETAILS
Name
Amber Grid AB (hereinafter “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
Issued capital
EUR 51,730,929.06
LEI code
097900BGMP0000061061
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Registered office address
Laisvės ave. 10, LT-04215 Vilnius, Lithuania
Phone
+370 5 236 0855
Email address
info@ambergrid.lt
Website
www.ambergrid.lt
Amber Grid is the gas transmission system operator in Lithuania, which ensures reliable and safe transporting 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 transporting large volumes of energy to Poland, the Baltic States and Finland.
The Company has implemented two strategic energy projects, i.e. GIPL and ELLI, which interconnected the gas
transmission systems of Poland and Lithuania, and fostered integration of the Baltic and Finnish gas markets into the
pan-European gas trading market.
As part of its decarbonisation goals, Amber Gird takes active measures to look into innovative technological and market
solutions and to facilitate adaptation of the Lithuanian gas transmission system to transporting 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 “EPSO-G” or the “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
the 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 the EPSO-G Group, see www.epsog.lt.
Amber Grid holds 34% of shares in the GET Baltic UAB gas exchange. GET Baltic, a part of the EEX gas exchange,
undertakes and develops gas exchange trade in Lithuania, Latvia, Estonia and Finland. For more information about GET
Baltic, see www.getbaltic.com.
The Company has no branches and representative offices.
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1.2. PERFORMANCE INDICATORS
Table 1. The Company’s performance indicators in 2021–2023
2023
2022
2021
Quantity of gas transported to domestic exit point and used for own needs, GWh
14913
15576
24136
Quantity of gas transported to adjacent transmission systems
1
, GWh
46326
48213
28595
Number of systems users at the end of the period
127
122
110
Length of main gas pipelines, km
2285
2285
2115
Gas distribution stations and gas metering stations (number of units)
68
68
67
Number of employees at the end of the period
340
332
324
1.3. SIGNIFICANT EVENTS
13 January. An incident in the Pasvalys district in the northern part of Lithuania on the gas pipeline of
Amber Grid occurred, during which the fire broke out. There were no human injuries during the incident.
The gas ignited during the incident and the fire ceased after 4 hours. The gas transmission system at the
site of the incident consists of two parallel gas pipelines running towards the direction of Latvia. The
incident occurred in one of them, while the other pipeline was not damaged. The gas transmission to the
damaged pipeline was immediately cut off. The gas transmission to the Pasvalys district and other
consumers in Northern Lithuania is ensured through a parallel pipeline. The gas transmission to Latvia was
also restored on the same evening. The damaged gas pipeline was repaired in few days, and the gas
transmission to Latvia was fully restored on 16 January. The causes of the incident are being investigated.
8 January. Amber Grid started the reconstruction of one of the most important gas transmission arteries
in Lithuania – Vilnius-Kaunas gas pipeline: almost 17 km of gas pipeline sections in Kaunas and Kaišiadorys
districts. The reline of the section is planned to be completed in 2023.
1
The transmission systems in Latvia, Poland and the Karaliaučius Region
01
January
February
02
VISION
An environmentally friendly, innovative energy
company in the integrated European gas
network.
MISSION
To develop the system that enables competition
and the use of climate-friendly energy.
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16 March. European Energy Exchange AG (EEX) was awarded the contract following the conclusion of
the international public tender to select a strategic partner for GET Baltic gas exchange. The Board of
Amber Grid made a decision to approve the sale of 66% shares of GET Baltic to EEX for EUR 6.5 million.
This price reflects GET Baltic’ strong performance in 2022, with revenues of EUR 1.61 million and EBITDA
of EUR 0.93 million, as well as future business prospects.
11 April. the ordinary General Meeting of Shareholders, elected Paulius Butkus, nominated by the parent
company EPSO-G to the Board of Amber Grid for the remainder of its term of office.
11 April. The ordinary General Meeting of Shareholders of Amber Grid resolved to distribute the
Company's profit for 2022 and to grant a dividend of EUR 0.0676 per share. In total, more than EUR 12
million in dividends was paid.
14 April. Amber Grid participating in the international Nordic-Baltic Hydrogen Corridor project, launched
the international public procurement for developing the feasibility study. This is another important step
in the development of Europe’s hydrogen infrastructure, following the signing the cooperation agreement
in December 2022 between the transmission system operators of six European Union countries for the
implementation of a cross-border project – the Nordic-Baltic Hydrogen Corridor.
16 May. Amber Grid and the European Energy Exchange AG (EEX) have officially signed an agreement
under which EEX will acquire a 66% stake in regional gas exchange GET Baltic. The gas exchange, which
operates in the three Baltic countries and Finland, thus became part of the EEX Group. Amber Grid
continues to hold the remaining 34% of shares.
23 May. Amber Grid set gas transmission service prices for 2024. The prices are based on the regulatory
revenue cap approved by the Council. Compared to the average price of transmission services for
Lithuanian consumers in 2023 (EUR 1.39/MWh), the price will increase by 7% to EUR 1.49/MWh in 2024.
The gas transmission service price makes up only a few percent of the final price paid by consumers for
gas.
2 June. As part of its internal investigation and assessment of available information, Amber Grid contacted
the Prosecutor's Office regarding the GIPL pipeline connection fittings. The ongoing process does not have
any impact on the normal operation of the GIPL pipeline. Previous and new additional tests and
investigations carried out on the pipeline and its components confirm that the pipeline is technically safe
and reliable.
In June 2023, the internal diagnostics of the GIPL pipeline was carried out as previously planned.
25 June. Amber Grid has initiated a public awareness campaign “Saugok save ir dujotiekį” (Protect yourself
and the pipeline) to encourage residents to pay attention to the main gas pipelines and surrounding
infrastructure. It highlights important aspects of living or working near a main gas pipeline, as well as
applicable rules, permits and restrictions.
1 August. Special land use conditions become applicable for areas within the location classes of trunk gas
pipelines. This change will raise public awareness of the standards for property development near gas
transmission system facilities, and will encourage people to plan their activities near gas pipelines more
carefully, to check the applicable activity restrictions and to comply with the rules. From now on, the
registered main gas pipelines’ class location will be recorded in the extract of the land plot’s legal
05
06
June
03
March
April
04
May
July
07
August
08
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registration from the real property register. This change is being made by Amber Grid to implement the
provisions of the Law on Special Land Use Conditions of the Republic of Lithuania.
September 18. The first biomethane plant started operating in Pasvalys district. The plant feeds green gas
into the transmission system, Tube green biomethane plant facilities were connected to the gas
transmission system in the middle of the year as part of a joint project between Amber Grid and Tube
green. Around 100,000 megawatt hours (MWh) of biomethane is expected to be injected into the
transmission system from this plant each year. This will account for up to 0.6% of Lithuania’s total gas
demand. In the future, biomethane production is expected to increase to as much as 250,000 MWh.
October 9. As part of its contribution to a sustainable Lithuania, Amber Grid has launched hydrogen
transport activities, develops hydrogen-related projects and aims to become the Lithuania’s hydrogen
infrastructure operator. This will allow timely integration into the European green hydrogen transport
network currently under development. Amber Grid established the Energy Transformation Centre to
accelerate the development of hydrogen transport activities. Its specialists are responsible for the
development of the hydrogen gas transport network and market, and the adaptation of the existing gas
transmission system to the transport of the gas-hydrogen mixture. They will also ensure the development
of the Green Gas Guarantee Register and the creation of the necessary partnerships to enable energy
transformation.
November 13. Amber Grid and Conexus Baltic Grid, Lithuanian and Latvian transmission system
operators, respectively, has started to offer increased technical capacity at the Kiemėnai interconnection
point. As a result of the accelerated implementation of ELLI project, the technical capacity was increased
to 82 GWh/d from Latvia to Lithuania with a possible dynamic increase to around 100 GWh/d. Last year,
the technical capacity was increased to 90 GWh/d from Lithuania to Latvia with a possible dynamic
increase to around 100 GWh/d.
December 1. Amber Grid completed the reconstruction of sections of the Vilnius-Kaunas gas pipeline,
one of the most important gas transmission arteries in Lithuania. The project cost more than EUR 13
million and involved the relining of almost 17 km of gas pipeline sections in Kaunas and Kaišiadorys
districts.
December 8. Amber Grid modernised five gas distribution stations in Šiauliai, Telšiai, Grigiškės, Vievis and
Kėdainiai, and installed a gas pressure limiting unit at the branch of the gas pipeline to the Marijampolė
gas distribution station. The renewal works took one and a half years and the total investment in these
projects amounts to EUR 14 million.
December 14. Amber Grid announced a public tender for the purchase of an electric compressor for gas
transmission. The 5 MW electric compressor will be built on the territory of the Jauniūnai gas compressor
station and will be used as required together with, or separately from, the three existing 11.5 MW gas
compressors. This project will reduce compressor maintenance costs. Moreover, electric compressor will
operate using only green energy, which will reduce air pollution.
Events after the reporting period
3 January. The European Gas Transmission System Operators Gasgrid Finland (Finland), Elering (Estonia),
Conexus Baltic Grid (Latvia), Amber Grid (Lithuania), GAZ-SYSTEM (Poland) and ONTRAS (Germany)
participating in the international project for the creation of the Nordic-Baltic Hydrogen Corridor signed a
contract on the pre-feasibility study on the green hydrogen corridor. AFRY Management Consulting, the
winner of the tender, will analyse the conditions for the development of cross-border hydrogen
09
September
October
10
November
11
12
December
01
Januar
y
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infrastructure from Finland, through the Baltic countries and Poland to Germany, as well as green
hydrogen trends in the region. It is planned that the study, which will provide a comprehensive, fact-based
framework to allow the optimal decisions to be made, will be prepared in six months, by the middle of
2024.
26 January. The ELLI project, a joint partnership between Amber Grid and Latvian gas transmission and
storage system operator Conexus Baltic Grid, has been officially completed. The project increases the
interconnection capacity in both directions, strengthening the security of natural gas supply in the region.
The ELLI project was included in the BEMIP gas priority corridor in the list of projects of common interest
adopted by the European Commission, and co-financed by the European Union.
1.4. 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 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 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 transporting of gas 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.
LNG
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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 help achieve the goals of the EU Hydrogen Strategy to create a
full-fledged and affordable renewable hydrogen value chain. 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, innovations, etc.
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 is the member of the European hydrogen development initiative European
Hydrogen Backbone. Members participating in the initiative create a shared vision for
hydrogen transportation infrastructure across Europe.
Amber Grid is the member of AIB, the organization uniting bodies issuing guarantees of origin
in Europe. AIB creates and develops a standardized system for the exchange of guarantees of
origin of energy among the bodies issuing guarantees of origin of the European Union and the
member states of the European Economic Area to ensure a reliable, transparent and
economical cross-border exchange of guarantees of origin of energy.
In 2023, Amber Grid joined Oil & Gas Methane Partnership 2.0 (OGMP 2.0). This is the United
Nations Environment Programme’s (UNEP) flagship programme for oil and gas reporting and
environmental impact reduction. OGMP 2.0 is the only comprehensive, measurement-based
reporting framework for industry that improves the accuracy and transparency of methane
emissions reporting. OGMP 2.0 directly engages oil and gas companies that have the power to
address methane emissions. It helps them to better understand their emission profiles and,
most importantly, to use this knowledge to reduce emissions in a cost-effective way, focusing
their efforts on the largest emission sources.
ECH2
A
LHP
AIB
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2. BUSINESS ENVIRONMENT
2.1 BUSINESS ENVIRONMENT AND FORECAST
In pursuit of full energy independence from the Russian gas, in response to Russia’s blackmailing of Europe over energy
and the outbreak of war in Ukraine, Lithuania has completely discontinued imports of Russian gas: the Lithuanian gas
transmission system has been operating without imported Russian gas since 1 April 2022. Lithuania’s entire gas demand
is met through Klaipėda Liquefied Natural Gas (LNG) terminal, and Santaka entry point for gas from Poland, and
Kiemėnai entry point for gas from Latvia.
Gas is continued to be transported to the Karaliaučius Region by transit through Lithuania, however, in an unusual
technical mode, which ensures transmission of gas only to the extent necessary for the transit.
During 2023, 37.3 terawatt hours (TWh) of gas was supplied to Lithuania, excluding gas transported to the Karaliaučius
Region. This was by 7.7% less than 40.4 TWh of gas transported to Lithuania in 2022. The pipeline connection to Latvia
transported 19.1 TWh of gas for the needs of other Baltic States and Finland, which is by 3.9% more than 18.4 TWh
transported towards the Baltic States in 2022. The pipeline connection to Poland transported 3.2 TWh of gas, which is
by 49.3% less than 6.4 TWh transported towards Poland in 2022.
Decrease in gas consumption in Lithuania in 2023 was marginal. In total 14.9 TWh of gas was consumed in Lithuania
during 2023, which was 4.3% less compared to 2022, when the demand was 15.6 TWh of gas. The lower gas
consumption is due to the warm winter, high gas prices in the first months of the year and the resulting significant
reduction in gas use for fertiliser production and urban heating.
Klaipėda LNG terminal continues to be the most important source of gas supply for Lithuania and the Baltic States.
During 2023, the terminal supplied 31.9 TWh of gas, or 84.6% of the total, 2.5 TWh, or 6.6%, from Latvia and 3.3 TWh,
or 8.7%, from Poland. Klaipėda LNG terminal capacity is fully booked until 2033, i.e. 33 TWh of capacity will be allocated
to the terminal’s customers each year.
From end-2022, biomethane produced in EU countries meeting sustainability criteria has been imported to Lithuania.
Guarantees of origin recognised in Lithuania were issued for this biomethane. In 2023, a total of 40 GWh of biomethane
was imported to Lithuania.
The guarantees of origin were also issued for the biomethane which been produced in Lithuania since the summer of
2023. By the end of 2023, 47 GWh of biomethane was produced in Lithuania.
In the context of fight against climate change, adoption of more stringent requirements of the EU 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 sector 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 source of energy in pursuance of pan-European and national goals to reduce
greenhouse gas emissions. At the same time, gas transported via the 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.
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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. They aim to
increase the share of renewable energy sources (including biomethane and other RES-produced gases) in the country’s
total final energy consumption: The Law on Energy from Renewable Sources of
the Republic of Lithuania sets a target of at least 55% of renewable energy
sources in the country’s total final energy consumption by 2030, with a further
increase in this share.
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 annual demand for natural gas will reach around 20 TWh by
2030, of which more than 50% will represent demand for gas as a raw material
in the fertilizer production industry.
There is an urgency to transform Europe's energy system:
In order to end the EU’s dependence on Russian fossil fuels, which are used as an economic and political weapon to
fight climate change, the European Commission (EC) has launched the RePowerEU plan in 2022 as a response to the
difficulties and disruptions in the global energy market caused by Russia’s invasion of Ukraine.
As foreseen in the REPowerEU Plan, the objectives will be pursued by:
• energy savings,
• diversification of energy supplies,
• accelerated roll-out of renewable energy
The gas sector and networks can effectively contribute to the creation and development of the European hydrogen
economy as envisaged in the EU Hydrogen Strategy. The European Commission envisages two phases – the transition
period until 2030 and the period until the hydrogen market is established in 2050.
On 8 December 2023, the European Parliament and the Council of the European Union reached an agreement on the
Hydrogen and Decarbonised Gas Package (hereafter the “Decarbonised Gas Package”). The package comprises a
Regulation and a Directive. 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.
One of the main objectives of the Gas Package is to create the hydrogen market, develop a proper environment for
investments and facilitate the development of the related infrastructure and trade with the third parties. Firstly, the
access to the hydrogen infrastructure, segregation of the hydrogen production and transport activities and setting the
tariffs will be governed by the market rules.
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Geopolitical circumstances and rise in energy prices caused a stronger
focus on the importance of energy security, particularly at the time of
volatile global markets. The European Commission has offered to
improve 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 through new pre-agreed measures
and revisions regarding control and compensations in the internal
energy market. The Gas Package 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. At the end of December
2023, the agreement was reached regarding provisions of the Methane
Regulation. In 2020, the Methane Strategy was published. The Strategy
provides for that hydrogen generated from renewable energy sources
will become of critical importance by the year 2050, thereby seeking to
achieve climate-neutral economy in the EU. The above document, as
well as the Gas Package, are expected to have a considerable impact on
the gas transmission activities in the future.
2.2. REGULATORY ENVIRONMENT
The application of the network code on harmonised transmission tariff structures for gas (TAR NC) established by
Commission Regulation (EU) 2017/460 of 16 March 2017 was started in 2020 for pricing of transmission services.
The changes in the existing regulation of the Council had an impact on the Company’s operations and results. The
regulatory period that started in 2019 resulted in a necessity for the Company to apply new Council-approved
methodology for determining the rate of return on investments, and the rate of return on investment was significantly
reduced (from 7.09% to 3.33-3.96%) as from the beginning of 2019. According to provisions of the said methodology,
the rate of return on investments shall vary annually during the course of the regulatory period from the beginning of
the current regulatory period. For 2023, it has so far been used by the Council for the determination of the Company's
allowed revenue at 3.94 %, but will be adjusted to 3.96 %.
The new regulatory period of 2024-2028 is approaching and the related actions carried out 2023 were as follows:
• The public consultation on Amber Grid’s pricing for the period from 2024 onwards was published by the Council
from 1 December 2022 to 1 February 2023 (https://www.vert.lt/Puslapiai/bendra/viesosios-
konsultacijos/vykstancios-viesosios-konsultacijos.aspx) and did not receive any comments from market
participants.
• Following the public consultation on 31 March 2023, the Agency for the Cooperation of Energy Regulators (ACER)
published its opinion with recommendations on gas transmission pricing in Lithuania
(acer.europa.eu/Publications/Agency_report-analysis_of_the_consultation_document_for_Lithuania.pdf).
• In H1 2023, the methodology for determining the revenues and prices of state-regulated natural gas transmission
activities was amended.
• In May 2023, the Council set the Company’s revenue cap (RC) for 2024, the first year of the new regulatory period.
• In May 2023, the transmission service prices for 2024 were set. The average transmission price for Lithuanian
consumers will increase by 7% from EUR 1.39 to EUR 1.49 per MWh.
• As of July 2023, the updated methodology for determining the rate of return on investments apply.
The position that the next public consultation on the applicable pricing principles would be published in end-2024 in
respect of the pricing methodology to be applied from the 2026 tariff period has also been discussed with the Council.
Annual report 2023
15
2.3. INFORMATION ON ACTIVITIES OF GET BALTIC IN 2023, IN WHICH AMBER GRID HOLDS
SHARES
Name
GET Baltic UAB (hereinafter “GET Baltic” or the “Company”)
Legal form
Private limited company
Date of registration and name of register
13 September 2012, Register of Legal Entities
Legal entity code
302861178
Manager of the Register of Legal Entities
State Enterprise Centre of Registers
Issued capital
EUR 580,450.00
Registered office address
Geležinio Vilko st. 18A, LT-08104 Vilnius, Lithuania
Phone
+370 5 36 0000
Email address
info@getbaltic.com
Website
www.getbaltic.com
GET Baltic, the gas exchange owned by the European Energy Exchange (EEX) and the Lithuanian gas transmission system
operator Amber Grid, is a licensed natural gas market operator with Registered Reporting Market Operator (RRM) status
granted by the ACER. The company operates the electronic trading system for short-term and long-term (one-month)
natural gas products with physical delivery on virtual trading venues in Lithuania, Latvia, Estonia and Finland. By
developing tailor-made solutions for natural gas trading, GET Baltic aims to increase the liquidity, competitiveness and
transparency of the wholesale natural gas market in the Baltic States and Finland.
In 2023, the results of GET Baltic reflect an upward trend. These successful results can be attributed to a consistent
effort in the developing of the exchange, a growing community of exchange participants, and infrastructure projects
that were developed in the region. One of the region's major infrastructure projects is the Inkoo LNG terminal in Finland,
which received its first shipment in April 2023. In addition, the underground gas storage facility in Inčukalns, Latvia,
played a significant role in 2023. The storage reached its almost full capacity in October, thus optimising region’s
preparation for the coming winter. Finally, tin 2023, the GIPL pipeline, connecting the gas transmission systems of
Poland and Lithuania, in addition integrating Baltic countries and Finland into a unified European Union gas network,
remained a crucial element of this growth. Noticeable increase in the attractiveness of the region led to the registration
of new participants of neighbouring markets on the exchange, and a notable increase in their activity on the exchange
trading system. All of these significant developments in the region reflected in GET Baltic’s trading results through
increased liquidity and competition.
The most significant change in 2023 was the sale of shares in GET Baltic. To ensure optimal use of the potential of the
opening of the European gas market and to provide the opportunity to offer customers of the regional gas exchange
GET Baltic the cutting-edge gas trading solutions, the Company’s sole shareholder announced the selection of the
strategic partner for the GET Baltic exchange early in 2022. On 16 March 2023, the EEX exchange was selected as GET
Baltic’s strategic partner following the conclusion of the international public tender. On 16 May 2023, Amber Grid and
EEX have officially signed an agreement under which EEX will acquire a 66% stake in GET Baltic. GET Baltic, the gas
exchange operating in three Baltic countries and Finland, thus became part of the EEX Group. Amber Grid continues to
hold the remaining 34% of shares.
On 4 December 2023, EEX successfully launched REMIT inside information disclosure services for Baltic-Finnish natural
gas markets, offered by GET Baltic until 27 December 2023. 23 customers have signed up to use EEX’s inside information
disclosure services for the Baltic-Finnish gas markets. It is the first joint accomplishment in the framework of the
integration of the Baltic-Finnish gas markets into EEX.
Aiming to implement the client-focused strategy of the organisation, fulfil client expectations as well as improve the
quality of products and service, the client satisfaction survey was conducted by the Company in September 2023. In the
Annual report 2023
16
course of this survey, GET Baltic customers expressed their views on their experience of working with GET Baltic and
provided their 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 high standard of the market services.
In the upcoming year, GET Baltic will continue to drive the work forward, will strive to take advantage of the open
opportunities in the European gas market, will continue to improve the quality of its services, and will meet market
participants’ and shareholders’ expectations regarding the ambition to strengthen the Baltic and Finnish gas markets
and foster integration into the pan-European gas trading markets. The partnership with the EEX Group will be aimed at
harmonising GET Baltic’s short- and long-term products with other trading zones by 2025, which will be offered under
EEX’s German exchange licence, and making use of the EEX trading infrastructure as well as state-of-the-art clearing
services provided by European Commodity Clearing AG.
Gas Exchange GET Baltic performance in 2023:
• Trade turnover amounted to 9.1 TWh or 31% more compared to 2022 (6.9 TWh);
• Gas quantities traded through cross-border transactions amounted to 2.1 TWh or 15% less than last year (2023: 2.5
GWh);
• 49% of the total traded volume was purchased in Lithuania (4,481 GWh), 21% in the common Latvian-Estonian
market area (1,949 GWh) and 29% in Finland (2,670 GWh);
• A total of 32,213 transactions were made on the exchange, i.e. 28% more compared to 2022 (25,101 transactions);
• Orders were submitted by 70 participants of the exchange, all of them concluded transactions successfully (in 2022,
orders were successfully submitted by 66 participants of the exchange);
• At the end of 2023, there 118 registered participants on the exchange: 86 on the Lithuanian trading floor, 42 on the
joint Latvian-Estonian trading floor and 38 in Finland.
• The cheapest transaction was recorded in November for EUR 10 per MWh, and the most expensive transaction was
registered in February – for EUR 139 per MWh.
• In 2023, 9 new participants were registered on the Exchange.
Fig. 1. GET Baltic performance in 2023
118
Exchange participants
70
Active exchange participants
9,100 GWh
Trade turnover
32,213
Concluded transactions
3. STRATEGY
3.1 VISION, MISSION, OBLIGATIONS AND PRIORITIES
Trade floor
Number of
Exchange
participants
Purchase
turnover, GWh
Sale turnover,
GWh
Finland
38
2.670
2.124
Latvia-Estonia
42
1.949
2.031
Lithuania
86
4.481
4.944
Annual report 2023
17
The Company continued implementing the updated long-term Amber Grid strategy by 2030, which was approved by
the Board at the beginning of 2023.
A key goal se in the Company’s strategy is to work together on Lithuania’s energy transformation towards a climate
neutral economy. The natural gas transportation system, including main gas pipelines, gas distribution, metering and
compressor stations, is an integral part of the Lithuanian energy system. It plays an important role in the creation of an
environment-neutral economy and, more importantly, a cleaner and safer future. Amber Grid is ready to transform the
natural gas system by adapting it to the safe transportation of renewable energy sources, that is biogas, a mix of
methane and hydrogen and pure hydrogen, as well as to create a new system for hydrogen transportation. We aim to
integrate into the single European market by creating a unified system that will help the country to follow the European
Green Deal confidently, and consumers to benefit from clean energy at the best price.
Value for stakeholders is the axis of the 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.
Fig. 2. Amber Grid’s commitments to stakeholders
Fig. 3. Amber Grid’s strategic priorities for the period until 2030
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18
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).
Implementation of the mission, pursuit of the vision and all activities of the Company are based on the fundamental
human and professional values: professionalism, cooperation, and progress.
Table 2. Long-term strategic objectives and main performance indicators of the Company
Consumers
Producers /
Suppliers
Founder
The public
For each other
Objectives
• Adapt the transmission
system for green gas
supply to the market
• Create the customer-
centric organisation
• Implement strategic
projects provided for in the
NEIS in a timely manner
and to the envisaged
extent
• Ensure sustainable returns
to shareholders
• Ensure efficient
management of the system
to accommodate RES
integration
• Reduce the environmental
impact of operations
• Enable gas sector
transformation through
RES integration
• Create inclusive and
advanced organisation
• Create an advanced
organisation - Centre of
Excellence for Future
Energy
Key
performance
indicators
• Implementation of the
action plan for adapting
the transmission system
for the supply of green
gas to the market on
time and to the
envisaged extent
• Customer satisfaction
index, %
• Implementation of
strategic projects covered
by the NEIS in a timely
manner and to the
envisaged extent
• ROE
• Allowable return to be
earned by the regulator
(EUR m)
• Quantity of RES gas in the
system (TWh)
• Reduction of the
environmental impact of
operations (CO2, CH4
emissions, etc.)
• Quantity of RES gas in the
system (TWh)
• Employee engagement (%)
• Recognised new gas
experts are invited to
deliver reports on this topic
in at least two Lithuanian
and international
conferences each year
Result in 2030
• Created possibilities for
transporting hydrogen
and gas mixtures
according to new
national and
transnational standards
• Quantity of RES gas
entering the gas system
(with guarantees of
origin) – 1.6 TWh
• •Customer satisfaction
index in 2030 ≥80%
• •Implemented NEIS
projects on time and with
100% of the expected
scope
• ROE not less than
established by the RL
Government
• 100% of allowable return
to be earned by the
regulator
• Quantity of RES gas
entering the gas system
(with guarantees of origin)
– 1.6 TWh
• Environmental impact of
operations (CO2, CH4
emissions, etc.) reduced by
2/3 compared with the
established base year
• Quantity of RES gas
entering the gas system
(with guarantees of origin)
– 1.6 TWh
• Employee engagement by
70 %
• Centre of Excellence for
New Gas – shaping future
energy trends, lawmaking,
business model
To achieve the objectives set, Amber Grid continuously evaluates changes in the operating environment, the
implementation and progress of the strategy, and updates the strategy document as necessary. More detailed
information on the Company's strategy can be found at https://ambergrid.lt/strategy
Table 3 below shows the status of implementation of the strategy.
Table 3. Implementation of the Company’s strategy
Annual report 2023
19
CONSUMERS
Goal
To adapt the transmission network to
placing of green gas on the market
We are actively examining and creating options for transporting a methane-
hydrogen mixture. With this objective, we are looking into the possibility of
integrating a hydrogen production unit into the gas system. In 2023, preparations
were made to implement a project for the blending of hydrogen into the natural
gas system.
In addition, favourable conditions for the connection of biomethane producers to
the gas transmission system in 2023 have been created to ensure market access for
green gas.
Indicator achieved in 2023
The amount of RES gas entering the gas system (with guarantees of origin) was 0.09 TWh (planned 0.05 TWh).
PRODUCERS/SUPPLIERS
Objectives
To create a customer-oriented
organisation
The customer satisfaction survey, which was conducted for the third year in a row,
showed very positive results (the GCSI index reached 83%). In 2023, we focused on
active engagement with our customers to meet their expectations as expressed in
the 2022 survey.
The implementation of an automated 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 one of the objectives of this goal, an analysis was carried out
together with Klaipėdos Nafta on the expansion of the LNG terminal capacity.
Opinion polls revealed that the extension project is not yet relevant for market
participants.
Indicator achieved in 2023
Customer satisfaction indicator (GCSI) achieved – 83% (planned ≥80)
To implement the strategic projects
provided for in the National Energy
Independence Strategy in a timely
manner and within the planned scope
As part of the ELLI project, all scheduled work was completed, the capacity of the
gas interconnection in the direction of Lithuania and Latvia was increased.
Indicator achieved in 2023
Strategic projects under the NEIS/NECP were implemented in a timely manner and within the planned scope, i.e. 100%
achievement (as planned)
FOUNDER
Objectives
Ensure a sustainable return for 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 management by
adapting it to integration of renewable
energy sources
A number of measures are foreseen to achieve this goal. The Estonian, Finnish,
Latvian and Lithuanian natural gas transmission systems were assessed for their
technical capabilities to supply and transport hydrogen; a study on the
identification of the necessary modernisation measures and investments was
carried out. Additionally, a study on the transformation of the Lithuanian energy
system has been prepared together with the EPSO-G Group companies. The
contract was signed with a study developer for the development of the Nordic-
Baltic Cross-Border Hydrogen Corridor. A feasibility study was carried out on the
optimisation of the gas compressor station capacities and ensuring continuity of
their operation through the decarbonisation of the gas transport system, and
preparatory work has been initiated for their reconstruction. Favourable conditions
for the connection of biomethane producers have been created: easier connection
to the transmission system, and the possibility to independently install both own
and Amber Grid’s part of the system. In September 2023, the first biomethane
producer was connected to the natural gas transmission system. All sections of the
main pipelines subject to diagnostics have been adapted for diagnostics.
Continuous improvement of selected performance indicators through participation
in a benchmarking initiative with transmission system operators from 12 countries
in Europe The planned maturity to apply digital solutions/tools in the construction
and operation of the transmission system has been achieved. The implementation
of the actions laid down in the Company’s information security management plan
Annual report 2023
20
for 2023 was continued. The introduction of common IT systems in the companies
of the group has been postponed upon the performance of a detailed analysis, a
new concept is being developed. The implementation of the Law on Special Land
Use Conditions of the Republic of Lithuania is carried out according to the timetable
set by the legislation. Planned IT measures were implemented.
Indicator achieved in 2023
The amount of RES gas entering the gas system (with guarantees of origin) was 0.09 TWh (planned 0.05 TWh).
THE PUBLIC
Objectives
To enable the transformation of the gas
sector by integrating renewable energy
sources
Preparations are made for the integration of the national system of guarantees of
origin for gas produced from RES (including hydrogen) into the European system by
launching a self-service portal, testing in an operating environment.
Indicator achieved in 2023
The amount of RES gas entering the gas system (with guarantees of origin) was 0.09 TWh (planned 0.05 TWh).
To significantly mitigate the impact of
operations on the environment
One of the top priorities for the Company is to significantly mitigate the impact of
operations on the environment. An investment plan for the planned measures to
reduce GHG emissions has been drawn up, and the measures set out in the GHG
emission education plan are being implemented. In 2023, the reduction target was
exceeded by 18,999 thousand t of CO
2
. The Scope 3 emissions inventory took place
in the Company.
Indicator achieved in 2023
Reduction of GHG emissions: reduced by 18,999 t CO
2
(planned by 14,1 thousand t CO
2
)
EMPLOYEES
Objectives
To create an engaged organisation
The Company builds an engaged organisation through a number of measures and
developments. The Company develops e-learning system, implements a motivating
remuneration system in line with market trends, and has a plan for the
improvement of the employer’s image in place.
Indicator achieved in 2023
The Company’s employee engagement is 72% (planned ≥70)
To create a progressive organisation – a
centre for future energy competencies
There is a slight delay in the deployment of the interactive learning and training
platform. It has been decided to acquire this platform at EPSO-G group level. Both
top managers and middle managers and professionals take an active part in
conferences. Efforts to create a culture of efficiency resulted in the implementation
of some planned initiatives, estimation of savings. The measures taken are not
combined into a single systematic and continuous programme.
Indicator achieved in 2023
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 >2 (planned <2)
3.2. OPERATING AND FINANCIAL OBJECTIVES
The Board of the Company formulated and approved the annual operating objectives of the Company for the year 2023.
Both financial and non-financial objectives set for the Company and the objectives of the Company’s manager are
identical. The Company’s manager 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 2023.
Table 4. Status of the implementation of the Company’s objectives for 2023
Annual goal
Target indicator
Weight of the
goal
Assessment of
goal
achievement
Annual report 2023
21
Investment program
implementation
(1) To implement the investments under the
Company’s budget (weight – 50%); (2) To implement
EU co-financed projects (weight – 50%).
15%
15%
Financial sustainability
Annual target indicators until 31/12/2023:
(a) adjusted ROE – 6.3% (weight – 30%);
(b) adjusted EBITDA – EUR 27.5 million (weight – 30%);
(c) regulated costs included in the tariffs (at least 96%)
(weight – 40%).
20%
13.4%
Optimisation of gas
compressor station
capacities and costs
An analysis of the optimisation of gas compressor
stations has been carried out, investment
requirements have been identified and tenders for the
reconstruction and expansion of compressor stations
have been launched. The change has significant impact
on the Company’s business continuity.
10%
10%
Implementation of the
strategic asset
management plan
(1) Long-list assessment of technological assets to be
repaired/reconstructed in 2024-2028 using PIMS and
IMS risk assessment modules (weight – 30%);
(2) Compressor reliability (GTBI reliability – intrinsic
availability) (weight – 20%);
(3) SAIDI/SAIFI – 0 (weight – 30%);
(4) Diagnostics comprised 94% of pipelines subject to
diagnostic (weight – 20%).
15%
14.9%
Implementation of
environmental impact
mitigation measures to
the extent agreed with
EPSO-G
(1) An investment plan for the planned measures to
reduce GHG emissions has been drawn up (weight –
25%);
(2) The measures set out in the GHG emission
education plan are being implemented (emission
reduction by 14.0 thousand t CO
2
in 2023 – 100%, the
target of 9.8–14.0 thousand t CO
2
has been achieved
by 70-100%, respectively) (weight – 50%);
(3) The Scope 3 emissions inventory took place in the
Company (weight – 25%).
15%
15%
Hydrogen programme
implemented as planned
(1) Carrying out a study programme to assess the
feasibility and conditions for transporting H
2
through
the gas transmission systems of Estonia, Finland, Latvia
and Lithuania: the maximum allowable concentration
for blending hydrogen into the gas transmission system
and related investments were identified (weight–
50%);
(2) The contract was signed with the developer for the
development of the feasibility study for the Nordic-
Baltic Cross-Border Hydrogen Corridor, a cross-border
H
2
infrastructure corridor (weight – 50%).
15%
15%
Preparation of the
Lithuanian energy system
transformation study
(1) The transformation study was carried out by
30/06/2023, the findings were approved by the
representatives of the shareholder.
(2) Amber Grid’s and the Group’s strategic role in the
transformation of the energy sector, including in the
development of the concept of energy island, was
made more clear (H2).
10%
10%
The Board of the Company annually assesses the progress achieved in respect of the implementation of the objectives.
The result is used as one of the components when awarding annual financial incentive to both the Company’s
management and employees.
The Company’s objectives are identical to those set for the CEO. They are available Amber Grid’s website
https://ambergrid.lt/tikslai
Based on the Board’s assessment, the objectives set for the Company for 2023 were achieved at 93.3%.
3.3. STRATEGIC INFRASTRUCTURE PROJECTS
Annual report 2023
22
In 2023, the project for the Enhancement of Latvia-Lithuania Interconnection (ELLI), a strategic gas transmission
infrastructure project, was completed. This project was included in the European Network of Transmission System
Operators for Gas (ENTSOG), the Ten-Year Network Development Plan (TYNDP), 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 Network Development Plan (2022-2031), the Gas transmission Infrastructure Projects approved by
the Government and the list of the EU Projects of Common Interest published on 19 November 2021.
The purpose of the project was 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.
It also provided better conditions for the utilisation of the Latvian Inčukalns underground gas storage facility. The project
promoters were Amber Grid and the Latvian transmission system operator Conexus Baltic Grid AS.
Fig 4. Project for the Enhancement of Latvia-Lithuania Interconnection (ELLI)
In 2022, Amber
Grid expanded
the Kiemėnai gas metering station in the Pasvalys district and enhanced its capacity. It also carried out the
reconstruction of the pipelines at the Panevėžys gas compressor station that allowed transporting a larger volume of
gas from the Klaipėda LNG terminal to Latvia. From November 2022, the pipeline allows transporting 90 gigawatt-hours
(GWh) of gas per day in the Latvian direction, and 82 GWh per day in the Lithuanian direction, after the Latvian
transmission system operator completed works on the Latvian side in 2023. The ELLI project was financed from own
funds of Amber Grid and AS Conexus Baltic Grid, as well as in a form of the EU financial support under the European
infrastructure network facility (Common European Framework).
In 2022, KN Energies, an international energy terminal operator, and Amber Grid launched a project actions to assess
the possibility of expanding current Klaipėda LNG terminal regasification capacity and expansion of gas transmission
system capacity in relevant entry and exit points, and thereby creating opportunities to reserve additional LNG import
capacity in the future The implementation of the project should create additional LNG import capacity up to 1.25
bcm/year (by increasing current capacity from 3.75 bcm/year to 5 bcm/year) preliminary from the beginning of 2029.
In September 2023, KN Energies completed the capacity allocation procedure, which revealed that Klaipėda LNG
terminal capacity is fully booked until 2033, i.e. 33 TWh of capacity will be allocated to the terminal’s customers each
year. During the capacity allocation procedure, KN Energies also offered to reserve the terminal’s capacity for the period
2033-2044. However, this offer received less market interest. Given the little interest in long-term capacities beyond
2033, as well as the potential growth of LNG supply in the region and other risks, the decision was made to suspend the
Annual report 2023
23
terminal capacity expansion project. In the future, if there is a market demand for additional Klaipėda LNG terminal
capacity without increasing Amber Grid’s transmission cost, KN Energies and Amber Grid may resume the project.
3.4. REGIONAL MARKET
Already 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.
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 aligned.
In 2020-2021, the studies regarding alternative option of the
integration of the Lithuanian, Latvian, Estonian and Finnish natural
gas markets were carried out and an alternative analysis was
prepared in relation to potential Inter-TSO Compensation (ITC)
mechanism. However, upon the occurrence of new geopolitical
circumstances, such as the war in Ukraine, suspension of gas flows
from Russia for the needs of the EU, development of infrastructure
in the EU countries for alternative supply sources (for example, a
new LNG terminal in Finland), lower transmission tariffs due to
higher prices of gas, the countries decided to postpone the creation
of the common tariff zone, which will also include Lithuania. On 26
October 2022, the national regulatory authorities of the Baltic States
and Finland issued a public statement informing about the
postponement of the creation of the common gas transmission tariff
zone (https://www.vert.lt/Puslapiai/naujienos/2022-metai/2022-10-
26/atidetas-baltijos-suomijos-gamtiniu-duju-rinkos-
sujungimas.aspx).
It is not excluded that when the geopolitical situation becomes stable and additional infrastructure is created (the LNG
terminal in Finland-Estonia, enhancement of Lithuania-Latvia interconnection, enhancement of the capacity of the
Latvian Inčukalns underground gas storage facility as well as development of the LNG terminals and cross-border
interconnection in Europe), and when the gas market will operate normally under new conditions, the Baltic States and
Finland will renew the coordination of their positions regarding a further market integration in order to create the
cooperation model for the operators that would be acceptable to all parties. At present, Amber Grid is focused on
capacity expansion, strengthening of cross-border interconnections, increasing access to the system (for connection of
green gas producers), and servicing a customer base that has expanded to foreign markets.
4. OPERATIONS
4.1. TRANSMISSION SYSTEM
The natural gas transmission system consists of the 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
Annual report 2023
24
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 2,288 km, and the diameter ranges between 100 and 1220mm. The design
pressure in the larger part of the transmission system is 54 bar.
5. Fig. The gas transmission system in Lithuania.
4.2. MAINTENANCE, RECONSTRUCTION AND MODERNISATION
Maintenance of the main gas 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 H1 2023, 451 km of the main gas pipelines were inspected through internal diagnostics: Ryga-
Panevėžys-Vilnius, Klaipėda-Kuršėnai, GIPL, and Minskas-Vilnius-Vievis.
During 2023, the Company carried out the following reconstruction and modernisation works:
• installation of pig launchers of the control device in Ivacevičiai-Vilnius-Riga interconnector with the main gas pipeline
of Vilnius-Kaunas;
• deep trenching of separate sections of the main gas pipeline in the branch to the Alytus GDS, Karaliaučius, the
Marijampolė GDS, the Panevėžys GDS, in the main gas pipelines Vilnius-Kaunas, Ivacevičiai-Vilnius-Ryga, Šiauliai-
Klaipėda, and the looping to the Jonava GDS;
• replacement of inserts in the main gas pipeline in view of the technical condition and diagnostics results of the gas
pipelines;
• installation of the pressure relief valve in the main gas pipeline branch to the Marijampolė GDS;
• reconstruction works in individual sections of the main gas pipeline Vilnius-Kaunas (about 16.9 km);
• replacement of shut-off devices and connection to the remote control system in the branches to: the Alytus GDS,
the Prienai GDS, the Birštonas GDS, the Vilkaviškis GDS, the Batniava GDS, the Miežiškiai GDS, the Šiauliai GDS, the
Pajiešmeniai GDS, the Panevėžys GDS, the A. Paneriai GDS I, the A. Paneriai GDS II; in the main gas pipelines:
Ivacevičiai-Vilnius-Riga, Vilnius-Panevėžys-Riga, Panevėžys-Šiauliai line II, Vilnius-Kaunas; and in the technological
connector to Klaipėda;
• renovation of buildings and other structures at the Panevėžys gas compressor station;
• design works for the reconstruction of the control-room building;
• modernising the control of gas compressor stations and installing a data centre;
• works of reconstruction and extension of 5 gas distribution stations.
Annual report 2023
25
4.3 MARKET FOR THE SERVICES PROVIDED
Amber Grid provides natural gas transmission services to the system users,
other operators, biogas producers and gas market participants in the
territory of Lithuania: it transmits gas to the domestic consumers, also
transports natural gas to Latvia, Poland and the Kaliningrad Region of the
Russian Federation. Gas is supplied to the system via the LNG terminal in
Klaipėda and gas entry points from Latvia, Poland and Belarus. As of the
summer 2023, the biomethane produced in Lithuania has also been injected
into the transmission system. With effect from 1 April 2022, gas supply for
domestic consumption was discontinued from Russia.
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 biomethane produced, while the end-users of
such fuel can be assured that the gas they use is produced from renewable energy sources.
4.4. CUSTOMERS
The customers 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.
At the end of 2022 and H1 2023, the Company received a number of requests
from biomethane producers for the issuance of preliminary connection
conditions, following the adoption of amendments to Article 32 of the Law
of the Republic of Lithuania on Renewable Energy Resources in 2022, which
entered into force on 1 November 2022, which provide that a biogas
producer, after coordinating with the gas system operator, shall have the
right to design and/or construct / install and perform works in the gas system
on behalf of the gas system operator, according to the procedure, terms and
conditions set out in the gas system service agreement for connection of the biogas production facilities to the gas
system.
Annual report 2023
26
4.5. SERVICES PROVIDED
The Company provides the following services to system users, other operators and gas market participants:
• gas transmission in the territory of Lithuania;
• balancing gas flows in the transmission system;
• administering the funds allocated for the costs of installation and fixed operating costs of Klaipėda LNG terminal, its
infrastructure, the interconnection well as for the compensation of reasonable costs of supplying the required
quantity of liquefied natural gas by the designated supplier;
• administering the register of guarantees of origin for gas produced from renewable energy sources.
• connecting new consumers, including biomethane producers, to the transmission system.
4.5.1. GAS TRANSMISSION
GAS TRANSMISSION QUANTITIES
In 2023, 31,891 GWh of natural gas was injected into Amber Grid’s gas transmission system from Klaipėda LNG terminal
for consumers of Lithuania and EU Member States; 2,491 GWh was transported from Latvia to Lithuania and 3,258 GWh
– from Poland to Lithuania. Klaipėda LNG terminal supplied 84.6% of the total required quantity of gas for consumers
of Lithuania and EU Member States.
In 2023, 14,913 GWh of gas was transported up to the domestic exit point for the gas consumers in Lithuania. Compared
to 15,576 GWh of gas transported during 2022, gas transmission quantities decreased by 4.3%.
In 2023, 19,140 GWh of gas was transported from the Lithuanian transmission system to Latvia through the Kiemėnai
gas metering station, i.e. 3.9% more than in 2022 (18,428 GWh).
In 2023, 3,240 GWh of gas was transported from the Lithuanian transmission system to Poland via Santaka gas metering
station, i.e. 49.3% more than in 2022 (6,386 GWh).
During the reporting period, 23,946 GWh of gas was transported to the Kaliningrad Region of the Russian Federation
(2022: 23,399 GWh).
As at 31 December 2023, the Company had 127 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 63 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.
Transmitted gas quantities at the domestic exit point by type of transmission system users is illustrated below in Fig. 6.
Fig. 6. Transmitted gas quantities by type of transmission system users in Lithuania 2020–2023, GWh
Annual report 2023
27
REGULATION OF PRICES FOR THE GAS TRANSMISSION SYSTEM OPERATOR’S SERVICES
Regulation of gas transmission prices is conducted by the Council 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 Council in accordance with the procedure established in the Methodology
for determining revenue from and prices for regulated natural gas transmission activities.
In May 2022, the Council set the cap on Amber Grid’s natural gas transmission revenue (NTR) effective from 1 January
2023. The NTR for the regulated activities for 2023, the last year of the current regulatory period, was set by the Council
at EUR 64.17 million, which exceeds the revenue cap approved for 2022 by 58.7%. The increase in the revenue cap
compared to 2022 is mainly due to the increase in technological costs (due to the significant increase in natural gas
prices), the lower correction returned to the market for the excess revenue collected in 2021 and the partial inclusion
of the higher compensation paid to the Polish operator GAZ System for the implementation of the GIPL project of
common interest. The NTR for regulated activities for 2024 set by the Council in May 2023 is EUR 67.01 million, which
is by 4.4% higher than the NTR of EUR 64.17 million approved for 2023. The increase in the NTR is a result of the increase
in total costs. Detailed information on the prices of gas transmission services is available on Amber Grid’s website.
In 2024, 66.2 TWh of natural gas is planned to be transported via Lithuania’s gas transmission system, which is by 0.6 %
less than estimated for 2023. The projected level for ordered capacity, consumption capacity and transported gas
volume was determined with reference to the historical data and the needs of the existing and potential system users,
as well as in view of Russia‘s military actions in Ukraine, the resulting sanctions imposed by the Western countries, and
gradual withdrawal from Russian gas in Europe. Lithuania discontinued imports of Russian gas with effect from April
2022. The pricing of gas transmission services in 2024 was influenced by results of the public consultation on Amber
Grid’s transmission service reference price methodology and the survey on multipliers, seasonal factors and discounts
to be applied in the transmission price structure for the remainder of the regulatory period, held in early 2023.
In 2024, transmission prices at all entry points (including the entry point of Klaipėda) are expected to remain aligned
with entry prices in the adjacent tariff zone of Latvia, Estonia and Finland.
In 2023, the average price of gas transmission services for Lithuanian consumers (taking into account both long- and
short-term services) amounts to EUR 1.39/MWh, which is an increase of about 39% compared to the average price for
2022 (EUR 1/MWh). It should be noted that the average price of transmission services for Lithuanian consumers in 2022
was particularly low and was due to a one-off adjustment, returning to consumers the additional revenues earned and
cost savings for 2019 and 2020. In 2024, the average gas transmission price to meet the domestic consumption needs
in Lithuania was set at 1.49 EUR/MWh, Compared to the average price for 2023 (1.39 Eur/MWh), the price for 2024 will
increase by 7%. Debates regarding Lithuania‘s entry into the adjacent tariff zone of Latvia, Estonia and Finland (the
FINESTLAT tariff zone) and the applicable gas market integration measures of the Baltic States and Finland were
postponed on mutual agreement, given the actual geopolitical climate and situation in the gas market.
4 201
4 161
1 957
1 917
13 136
11 572
7 090
7 018
7 809
8 403
6 529
5 978
25 146
24 136
15 576
14 913
0
5 000
10 000
15 000
20 000
25 000
30 000
2020 m. 2021 m. 2022 m. 2023 m.
Energy companies
Fertilizer companies
Other companies
In all
Annual report 2023
28
Close cooperation with the Polish transmission system operator Gaz-System allows creating favourable conditions for
cross-border flows between Lithuania and Poland with effect from 2022, i.e. upon launching the new GIPL
interconnection. As a result of changes in geopolitical and commercial situation and in view of higher importance of
supply security across the EU, in May 2022 the GIPL interconnection was launched, which is actively used by the market
participants without any commercial incentive measures.
4.5.2. 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 Natural
Gas Transmission System Balancing, 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.
The Rules for Balancing the Natural Gas Transmission System enforced on 1 March 2022 stipulate that the virtual
trading point cannot trade in day-ahead products, which has increased the number of market participants causing
imbalances. The Transmission system operator calculates a neutrality fee for each market participant to ensure
financial neutrality for the reporting period. The amendments have been drafted in accordance with the provisions of
Commission Regulation (EU) No 312/2014 of 26 March 2014 establishing a Network Code on Gas Balancing of
Transmission Networks.
During 2023, due to the imbalance caused by the system users, the Company bought 333.8 GWh and sold 246.1 GWh
of gas.
Following the amendments to Amber Grid’s Rules for Balancing the Natural Gas Transmission System rules enforced
on 1 March 2022, Amber Grid calculates a neutrality fee for market participants to ensure financial neutrality. During
March-December 2023, the amount refunded to system users totalled EUR 854.6 thousand and the amount collected
– EUR 68.8 thousand.
Transmission of gas by transit 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 2023, transmission of gas to the Karaliaučius Region resulted in a 264.9 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.
4.5.3. 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 Liquefied Natural Gas Terminal and
the supplementing legal acts), the Company collects, administers and pays out the LNG terminal funds to the terminal
operator (KN Energies 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 25 November 2022, the Council approved the extra charge for gas security of EUR 0 per MWh/(MWh/day/year) for
the period from 1 January to 30 June 2023 (the last surcharge in force until then was EUR 102.98 per MWh/day/year in
the period from May to December 2022). By Resolution of the Council of 29 May 2023, the extra charge for gas security
was set at EUR 152.45 per MWh/day/year. It applies from 1 July 2023 to 31 December 2023.
For 2024, the extra charge for gas security is set at EUR 205.93 per MWh/day/year (pursuant to Resolution of the Council
No O3E-1694 of 22 November 2023, replacing Resolution No O3E-713 of 29 May 2023). It applies from 1 January 2024.
The proportions of the allocation of funds of the LNG terminal to the beneficiaries of the SGD terminal’s funds
(applicable in 2023 and from 1 January 2024, respectively), as agreed with the Council, are presented in Table 3.
Annual report 2023
29
Table 5. Information on the allocation of funds collected by the LNG terminal in 2023-2024 among their beneficiaries
Components
Proportion applicable
between 01/01/2023 and
30/06/2023
Proportion applicable
between 01/07/2023 and
31/12/2023
Proportion applicable from
01/01/2024
Liquefied natural gas regasification component
0%
0%
0.000%
Administrative cost component
0%*
0%
0.401%
Reasonable costs’ component for supplying the
necessary quantity to the LNG terminal
0%
100%
99.599%
Total
-
100%
100%
*In line with the Council’s decision, the costs of administering the funds for 2023 were reimbursed by the designated supplier
Due to funds unpaid to the LNG terminal, the Company currently has one civil case pending regarding the award of LNG
terminal’s funds and default interest from AB Achema.
By the decision of Kaunas Regional Court of 20 January 2022, the proceedings were suspended in respect of the claimed
LNG extra charges of EUR 4,678 thousand and late interest of EUR 55 thousand arising from the natural gas transmission
service contract of 22 December 2014, as it was pending the decision of the European Commission regarding the
compatibility of the LNG extra charges, collected during the period from 1 January 2016 to 31 December 2018, with the
state aid rules under the EU law. By decision of 17 March 2022, the Lithuanian Court of Appeal left the decision of
Kaunas Regional Court of 20 January 2022 unchanged.
By the decision of Kaunas Regional Court of 20 September 2022, the proceedings were also suspended in respect of late
interest of EUR 763 thousand arising from the natural gas transmission service contract of 21 December 2012 and a
counterclaim, whereby Achema AB requested to declare as unlawful the Company’s actions when calculating late
interest under the natural gas transmission service contract of 21 December 2012 and when allocating the payments
collected from Achema AB under the contract for offsetting against late interest, as it was pending the decision of the
European Commission regarding the compatibility of the LNG terminal funds, charged during the period from 1 January
2016 to 31 December 2018, with the state aid rules under the EU law. As the Company disagreed with the decision of
Kaunas Regional Court of 20 June 2022, it filed a separate appeal regarding the annulment of the aforementioned part
of the decision. As the Lithuanian Court of Appeal investigated the Company’s separate appeal, it made a decision on 8
September 2022, by which the decision of Kaunas Regional Court of 20 June 2022 was left unchanged.
On 12 September 2023, the Company submitted a statement to the Kaunas District Court regarding the increase of the
claim (hereinafter the “Statement”), asking the court to award EUR 763,119.55 of late interest from Achema AB in favour
of the Company based on the natural gas transmission service contract dated 21 December 2012, EUR 6,024,286.30 of
LNG extra charges and EUR 211,023.02 of late interest under the natural gas transmission service contract dated 22
December 2014. The issue of acceptance of the Company’s Statement will be decided by the Kaunas District Court after
resuming the proceedings.
4.6. 10-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 2022, Amber Grid prepared the Ten-Year Network
Development Plan (2022-2031) and submitted it for the Council approval. The total amount of investments in the gas
transmission system development projects over the next ten years is expected to reach EUR 264 million. The gas
consumption in Lithuania is expected to remain stable over the next ten years, besides, there will be a possibility to
transport gas towards new directions – through Poland-Lithuania interconnection. Given the geopolitical situation, the
gas flows through the Klaipėda LNG terminal and cross-border interconnection points with Latvia and Poland are
expected to grow. The Network Development Plan also sets out the main directions for the development of the
transmission system, including a focus on innovation and the development of green energy
On 6 September 2022, the Council gave its consent for publishing the Ten-Year Network Development Plan (2022-2031)
prepared by Amber Grid. The Plan is available on the Company’s website.
In 2024, the ten-year network development plan is scheduled to be updated by preparing the plan for the period of
2024-2033.
Annual report 2023
30
4.7. GREEN GAS ACTIVITIES
Amber Grid is active in these green gas areas:
• Green gas development,
• Administration of guarantees of origin.
4.7.1 GREEN GAS DEVELOPMENT
The intensive development of renewable energy sources (RES) and the significant increase in the share of RES in the
total energy balance, as well as the current and future challenges of balancing the electricity grid and integrating it into
the electricity transport system, create opportunities for the development of one of the most potential technologies –
Power-to-Gas (P2G) green hydrogen produced from renewable electricity. It will enable high-capacity storage of the
energy generated by RES and will help to meet these challenges. This technology can transform electricity generated
from RES into a gaseous form of energy (hydrogen or synthetic methane) and transport it through gas transmission and
distribution networks to energy storage and consumption sites thus contributing to the decarbonisation of energy and
transport sectors. Therefore, in order to assess the relevance and applicability of hydrogen gas and Power-to-Gas
technologies in Lithuania, the Company, together with its regional partners (the Baltic and Finnish gas transmission
system operators), in 2023 completed the technical feasibility study in order to adapt gas transmission networks for
transporting methane and hydrogen mixtures, which also provided the investment requirements for the system based
on different hydrogen concentrations.
In H3 2023, the Lithuania energy system transformation to 2050 study has been developed by EPSO-G together with the
consultancy company DNV. The study is aimed at modelling the potential Lithuanian energy system development
scenarios taking into account development projects, opportunities, changes in energy consumption, and responsible
parties. The Study recommendations play significant role in further development of Amber Grid’s operations, and
planning the 2050 long-term strategy. The decarbonisation of industry will lead to a steep increase in demand for
hydrogen and decrease in demand for natural gas. Biomethane is projected to account for all methane used in Lithuania
by 2050. The forecasts in the Transformation Study suggest that the demand for methane will remain stable up to 2030,
and, from 2030 to 2050, it will be gradually substituted by the demand for hydrogen or its derivatives. In response to
these trends, Amber Grid launched hydrogen transport activities in 2023: to become the Lithuanian hydrogen grid
operator. This will allow for the timely development of new infrastructure, the adaptation of existing gas infrastructure
for hydrogen transport and the integration into the European green hydrogen transport network.
Fig 7. Methane and hydrogen demand forecast by 2050
Source: Lithuania Energy System Transformation to 2050, DNV, 2023
In order to contribute more significantly to the promotion of hydrogen and Power-to-Gas technologies at local and
regional level, the Company further participates in the Lithuanian Hydrogen Platform established by the Ministry of
22
24
14
4
0
4
14
24
0
5
10
15
20
25
30
2022 2030 2040 2050
TWh
Methane demand
Hydrogen demand
Annual report 2023
31
Energy, and is a member of the European Clean Hydrogen Alliance and the Lithuanian Hydrogen Energy Association.
Since 2022, the Company has continued to participate in the European Hydrogen Backbone initiative, which brings
together 33 transmission system operators from across Europe to develop a vision, analyse alternatives, and draw up
implementation plans for a nationwide interconnected hydrogen transport/storage infrastructure.
Nordic-Baltic Hydrogen Corridor project.
In January 2024, the Baltic Sea Region gas transmission system
operators: Gasgrid Finland Oy (Finland), Elering AS (Estonia), AS Conexus
Baltic Grid (Latvia), Amber Grid AB, GAZ-SYSTEM S.A. (Poland) and Ontras
Gastransport GmbH (Germany) signed the agreement with the
consultancy company whereby they decided to draw up the feasibility
study for a Finnish-Baltic green hydrogen transport corridor (Nordic-
Baltic Hydrogen Corridor) linking the hydrogen production and
consumption centres of the Member States between Finland and
Germany. The objective of the feasibility study is to assess the main
business opportunities for a crossborder hydrogen corridor and the main
infrastructure parameters and implementation conditions. The study is
scheduled to be completed by mid-2024.
The goal of the Nordic-Baltic Hydrogen Corridor project is to create the
connection between green energy production regions in Northern
Europe with the main consumption centres in Central Europe. This
project is scheduled to be implemented by 2030. The hydrogen corridor
is expected to boost the development of energy and related ecosysems.
It will promote the development of renewable electricity production,
utilisation of renewable energy sources, accelerate the hydrogen
economy development and contribute to the implementation of
European climate goals. Furthermore, it will create conditions for
investment in industrial and technological innovation along the entire pipeline route, reduce energy transportation
costs, create jobs, and generate additional income for the states.
The Nordic-Baltic Hydrogen Corridor project aims to strongly support the regional and EU climate targets. Based on the
recommendations of the pre-feasibility study on the hydrogen corridor, the project partners will make decisions on the
further development of the project.
• In December 2022, six gas transmission system operators, the project partners, signed a cooperation agreement on
promoting the project together.
• In November 2023, the Nordic-Baltic Hydrogen Corridor was granted the status of the project of common interest
(PCI) by the European Commission.
In Lithuania, investments in biomethane production is also growing rapidly. Large industrial companies and new
entrants are actively exploring the possibility of installing biomethane plants, connecting them to the gas transmission
system, and supplying the biomethane produced to the domestic and foreign markets through the Green Gas Guarantee
of Origin (GO). The integration of biomethane into the common energy system is now a key energy objective for
European countries, and is therefore a major future opportunity for the Company’s customers.
The development potential of the Lithuanian biomethane sector is reinforced by the adoption of the Alternative Fuels
Law in 2021. It sets a target of 15% renewable energy use in the transport sector by 2030, by increasing the
electrification of transport, promoting the use of gaseous fuels and hydrogen gas produced from biomass, and
increasing the blending requirements for biofuels. This will encourage investors to build biomethane plants, connect
them to the gas grid and produce green energy.
Fig. 8. Potential of biomethane producers willing to connect to the transmission network based on the issued preliminary conditions
for connection
Annual report 2023
32
In December 2023, 14 preliminary conditions for connection were effective, of which several customers applied for a
connection contract. 3-4 connection contracts are expected to be signed in 2024.
The first biomethane plant in the Baltics started operating in Pasvalys district in September 2023. The plant feeds green
gas into the transmission system, which is expected to feed around 100,000 megawatt hours (MWh) of biomethane
each year. In addition, during 2023, four connection agreements were signed with potential biomethane suppliers with
a total biomethane injection capacity of around 500,000 MWh/year.
.
4.7.2 ADMINISTRATION OF GUARANTEES OF ORIGIN
The Company administers the National Register of Guarantees of Origin for gas produced from RES established in 2019,
which performs the functions of issuing, transferring and cancelling guarantees of origin, supervising and controlling the
use of guarantees of origin and recognizing in Lithuania of the guarantees of origin issued in other countries. This system
is useful for energy consumers who want to use green energy produced in Lithuania or in another EU Member State.
The Company cooperates with designated bodies in other countries and with organizations in the RES gas sector. In
2023, more than 40 GWh of green gas with guarantees of origin were imported into Lithuania through the Guarantee
of Origin system. This biomethane is used in transport as fuel and the guarantees of origin are used in the Renewable
Energy Fuel Units (REFU) system to cover the obligations of fuel suppliers regarding the share of renewable fuels in the
final fuel blend.
Feeding of green gas produced in Lithuania from RES into the country’s gas transmission network started in 2023. The
newly opened Tube green biomethane plant in Pasvalys district feeds biomethane to the transmission network. In 2023,
guarantees of origin were issued for 47 GWh of biomethane produced and fed into the transmission network.
Annual report 2023
33
Fig 9. Biomethane with guarantees of origin produced in Lithuania in 2023, GWh
Fig. 10. Fed, imported and exported with guarantees of origin in 2023, GWh
In order to ensure that the guarantees of origin market participants receive user-friendly, transparent services that meet
the European best practice, the Company upgrades the IT system of the Register of Guarantees of Origin. The upgrading
will also allow integration of the Company’s existing system with the systems in other countries or with pan-European
solutions for the exchange of guarantees of origin, thereby facilitating and automating the exchange of guarantees of
origin with other European countries.
4.8 RESEARCH & DEVELOPMENT ACTIVITIES
To assess prospects for hydrogen transport potential, the Company completed the technical feasibility study on
adapting gas transmission networks in the Baltic States and Finland for transporting methane and hydrogen mixture in
2023, as well as study on modernisation measures and the investment requirements. Following in-depth examination
of the situation, independent foreign experts have provided estimates of the required investments in the natural gas
transmission network to ensure technical capacity for the transport of the methane-hydrogen mixture. The investment
requirement has been estimated by examining different scenarios based on the percentage of hydrogen/methane in
the mixture that has a direct impact on the characteristics of the components of the existing technological equipment.
The P2G (Power-to-Gas) project for hydrogen blending in the gas network is expected to be implemented by 2027 in
cooperation with the gas distribution system and electricity transmission system operators as part of a research
programme to assess the technical parameters for adapting the natural gas infrastructure for transporting the
hydrogen/methane mixtures, the economic feasibility, the need for legislative changes, and the potential for adapting
the P2G technology to ensure energy system flexibility. The specific potential amount of hydrogen to be blended and
the investment in the natural gas network will be determined after taking into account the results of the planned studies,
3,47
8,53
8,68
9,1
8,76
8,49
0
1
2
3
4
5
6
7
8
9
10
July
August
September
October
November
December
47
40,2
0,057
0 5 10 15 20 25 30 35 40 45 50
Export
Import
Issued
Annual report 2023
34
the infrastructure capacities of the neighbouring countries, the EU requirements and the results of the economic
analysis. In the period up to 2030, gas transmission and distribution systems is expected to be adapted to transport
methane/hydrogen mixtures of a set level.
4.9 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. At
the beginning of 2022, in the wake of the Russian-led war in Ukraine, the Baltic countries focused their attention and
efforts on gas supply and its security. This has led to the opening of another LNG terminal in Finland from the end of
2022, the GIPL interconnection, which became operational in 2022, and the expansion of gas transmission capacity
between Lithuania and Latvia. Later, as the situation stabilizes under new circumstances (gas prices stabilizing,
consumption reaching a new stable level, flow trends in the region becoming clearer), discussions with regional partners
could be reopened with a view to ensuring that all countries participate in the single gas market on mutually beneficial
terms.
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 membership in the ERGaR (European Renewable Gas Registry) association and in
the Association of Issuing Bodies (AIB), besides the aforementioned goals, enables to develop new competencies that
will contribute in future to the promotion of green gas production and market development in Lithuania, safeguarding
the business continuity of the Company, and implementation of the National Energy Strategy.
Looking at the outlook for gas transmission, in 2024, the Company is expected to transport about 17.7 TWh to domestic
gas exit points, 8.6 TWh to Poland, around 26 TWh to Kaliningrad Region. The Company is expected to transport 2.4
times less gas to Latvia than forecasted for 2023, i.e. 7.9 TWh. As estimated for 2023, the bigger part of the natural gas
quantity for consumers of Lithuania and other Baltic States is forecast to come from Klaipėda LNG terminal.
5. FINANCIAL RESULTS
The figures presented in the financial results section reflect the financial performance of the Amber Grid Group, which
as at 31 December 2023 consisted of Amber Grid AB and the associated company GET Baltic UAB (Amber Grid owns a
34% stake in the gas exchange GET Baltic).
5.1. FINANCIAL INDICATORS
2
Table 4. Financial indicators
Financial results (EUR thousand)
2023
2022
2021
Financial results (EUR thousand)
Revenue
82229
98206
68595
EBITDA
26307
31894
35372
Profit (loss) before tax
13720
18130
22777
Net profit (loss)
13013
15665
23211
Net cash flows from operating activities
40434
19768
29068
Investments
35703
42852
45774
2
The financial indicators are presented after elimination of assets or liabilities arising from the LNG terminal funds.
Annual report 2023
35
Financial debt
92046
100962
104849
Profitability indicators (%)
EBITDA margin
32.0
32.5
51.6
Net profit (loss) margin
15.8
16.0
33.8
Average return on assets (ROA)
3.0
3.5
6.9
Average return on equity (ROE)
7.0
8.7
13.9
Liquidity indicators
Total liquidity ratio
0.36
0.89
1.04
Fixed assets turnover
0.29
0.35
0.26
Capital structure indicators
Equity-to-assets ratio
0.58
0.34
0.49
Financial debt-to-equity ratio
0.49
0.55
0.59
Financial debt-to-EBITDA ratio, times
3.5
3.2
3.0
Market value indicators
Share price/earnings per share ratio (P/E), times
15.08
14.29
9.38
Net earnings (loss) per share, EUR
0.07
0.09
0.13
Formulas for calculating indicators:
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
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)
5.2. REVENUE
In 2023, the Group’s revenue totalled EUR 82.2 thousand, i.e. increased by 16% compared to 2022. The decrease in
revenue was due lower gas prices and the application of the agent principle for the accounting of system users’
balancing activities as from 1 March 2022 (net result in the financial statements, balancing revenue netted against
costs). Revenue from gas transmission amounted to EUR 67.4 million and increased by 3% compared to 2022, as a result
of higher gas transmission prices set in 2023.
Fig 11. Revenue structure, %; EUR million
Annual report 2023
36
Balancing products generate revenue:
• By balancing gas flows between system users and other gas market participants involved in balancing the
transmission system (until 1 March 2022);
• As a result of technological balancing of the transmission system due to technological features of the transmission
system and gas flow deviations (imbalances) caused by technical reasons.
5.3. EXPENSES
In 2023, costs (except for PP&E depreciation, revaluation, other non-cash items) amounted to EUR 55.9 million and
were by 16% lower than in 2022. The decrease was caused by drop in gas prices leading to lower gas costs.
Payroll and related costs amounted to EUR 14.1 million (25% of the total costs), an increase of 13% compared to 2022
due to increasing salary in the market. Repair and maintenance costs amounted to EUR 3.1 million (5% of the total
costs).
Natural gas costs amounted to EUR 25.4 million and represented 45% of the total costs. Natural gas costs decreased by
36% compared to 2022 due to lower gas prices.
Fig. 12. Cost Structure, %; EUR million
Annual report 2023
37
5.4. PERFORMANCE
In 2023, net profit totalled EUR 13.0 million, i.e. decreased by 17% compared to 2022 (EUR 15.7 million). The Company’s
earnings before taxes, interest, depreciation and amortisation (EBITDA) amounted to EUR 26.3 million (2022: EUR 31.9
million).
The lower earnings are explained by weaker revenue in 2023 due to drop in gas prices in the market and negative PP&E
revaluation result (EUR -7.9 million).
Fig. 13. Financial performance, EUR million
Fig 14. Profitability, %
Annual report 2023
38
5.5. INVESTMENTS
The completion of the GIPL pipeline resulted in a decrease in investments to EUR 35.7 million in 2023 (2022: EUR 42.9
million). However, reconstruction volumes increased in 2023: EUR 13.2 million for the reconstruction of separate
sections of the main gas pipeline Vilnius-Kaunas, EUR 3.2 million for the replacement of overground passes with the
underground passes and deepening of not deepened sections, EUR 6.7 million for the reconstruction of the Grigiškės,
Kėdainiai, Vievis, Šiauliai, Telšiai GDSs.
Fig. 15. Investments, EUR million
5.6. ASSETS
As at 31 December 2023, the value of assets amounted to EUR 333.4 million: non-current assets accounted for 90% and
current assets 10% of the total assets.
Annual report 2023
39
Non-current assets increased by 2% to EUR 299.0 million in 2023 due to investments above depreciation. The value of
current assets as at 31 December 2023 was EUR 34.4 million, i.e. decreased by 7.4 times over the year due to disposals
(66%). Shares in GET Baltic UAB, which were accounted for under current assets held for sale in 2022, amounted to EUR
203.8 million.
5.7. EQUITY AND LIABILITIES
During 2023, equity increased by 2% due to revaluation reserve recognised, and, at the end of the reporting period,
amounted to EUR 187.5 million. At the end of the reporting period, equity represented 56% of the total assets.
As at 31 December 2023, payables and liabilities amounted to EUR 145.9 million, i.e. decreased by 2.5 fold during the
year. The change was caused by the sale of shares in GET Baltic UAB, which were accounted for under current assets
held for sale in 2022 (EUR 202.6 million).
As at 31 December 2023, the financial debt (loans) amounted to EUR 92.0 million, a decrease of EUR 8.9 million over
the reporting period. The financial debt-to-equity ratio was 49%.
5.8. CASH FLOWS
In 2023, net cash flows from operating activities amounted to EUR 40.4 million (2022: EUR 19.8 million). The increase
in cash flow from operating activities is due to a decrease in inventories and trade receivables. Capital investments
amounted to EUR 37.6 million (2022: EUR 14.5 million). In 2023, the EU financial support obtained to finance the
investment projects amounted to EUR 14.3 million (2022: EUR 9.4 million).
5.9. ADJUSTED INDICATORS
Adjusted performance indicators are presented to reflect the Company’s performance more accurately in a given period
and to provide a more objective comparison with prior periods. The adjustments to the regulated revenue, cost and
profitability indicators are due to temporary regulatory deviations from the regulatory profitability approved by the
Council. Non-ordinary/one-off transactions are also eliminated.
The adjustments to the indicators take into account:
• The profitability adjustment (temporary regulatory differences for previous periods) approved by the Council’s
decision for the reporting period;
• A projected Council’s adjustment for the next period due to deviations in the current period’s regulated
profitability (temporary regulatory differences for reporting period);
• Other non-ordinary transactions, income tax adjustments.
Table 6. Company’s adjusted indicators, Eur million
2023
2022
EBITDA
25.7
31.0
Temporary regulatory differences for previous periods
-2.9
8.8
Temporary regulatory differences for reporting period
1.9
-4.8
Adjusted EBITDA
24.7
35.0
Net profit
13.4
15.7
Temporary regulatory differences for previous periods
-2.9
8.8
Annual report 2023
40
Temporary regulatory differences for reporting period
1.7
-4.3
Other (non-ordinary transactions, income tax adjustments)
-3.0
-0.7
Adjusted net profit
9.2
19.5
Adjusted return on equity (ROE)
5.0%
10.8%
5.10. 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 2023.
5.11. 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 2023.
5.12. INFORMATION ON ANY FINANCIAL ASSISTENCE
On 11 April 2023, the Company’s General Meeting of Shareholders allocated EUR 471 thousand of distributable profit
to support. However, in 2023, the Company did not grant any support to any natural or legal person or to any
organization having the status of a beneficiary (charity). The Company’s support policy is publicly available at:
https://www.epsog.lt/uploads/documents/files/Politikos/20220527_Paramos%20politika.pdf.
5.13. 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 the year 2023.
The Company is 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:
• Loan agreement of 19 August 2015 with the Nordic Investment Bank;
• 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 on market terms, and whether the transaction is
fair from the standpoint of all the shareholders.
Table 7. Amber Grid related-party transactions, 2023
Agreement
No
Type of
relationshi
p
Name of related
party
Details of
related party
Agreement
effective date
Type
Subject of agreement
Estimated
value, excl. VAT
VPP-3245
SOE
Transporto
Valdymas UAB
Company code
303383884,
Laisvės ave. 10,
LT-04215 Vilnius
03/03/2023
Purchase of
services
Periodic replacement services for vehicle
tyres and fire extinguishers
4,999.00
Annual report 2023
41
23-05962
SOE
Energijos
Skirstymo
Operatorius AB
(ESO)
Company code
304151376,
Aguonų st. 24,
LT-03212 Vilnius
17/03/2023
Other than
public
procurement
contracts
Service of connecting the LČ-4M/5M line
of the MGP Panevėžys-Šiauliai II (Galeliai
vlg., Rozalimas Eld., Pakruojis D.) to ESO
AB electricity network
9,763.06
23-06179
SOE
Energijos
Skirstymo
Operatorius AB
(ESO)
Company code
304151376,
Aguonų st. 24,
LT-03212 Vilnius
17/03/2023
Other than
public
procurement
contracts
Service of connecting the LČ-6M line of
the MGP Panevėžys-Šiauliai II (Beniuliai
vlg, Lygumai Eld., Pakruojis D. Municip.)
to ESO AB electricity network
15,718.69
23-06199
SOE
Energijos
Skirstymo
Operatorius AB
(ESO)
Company code
304151376,
Aguonų st. 24,
LT-03212 Vilnius
17/03/2023
Other than
public
procurement
contracts
Service of connecting the main line to
Kužiai GDS LČ-1-II (Kužiai vlg., Kurkliai
Eld., Anykščiai D.) to ESO AB electricity
network
6,615.40
23-06208
SOE
Energijos
Skirstymo
Operatorius AB
(ESO)
Company code
304151376,
Aguonų st. 24,
LT-03212 Vilnius
17/03/2023
Other than
public
procurement
contracts
Service of connecting the main line to
Daugėliai GDS LČ-1-II (Liepkalnis vlg.,
Kuršėnai Eld., Šiauliai D.) to ESO AB
electricity network
18,843.70
23-06247
SOE
Energijos
Skirstymo
Operatorius AB
(ESO)
Company code
304151376,
Aguonų st. 24,
LT-03212 Vilnius
17/03/2023
Other than
public
procurement
contracts
Service of connecting the main line to
Pajiešmeniai and Biržai GDS LČ-1-I/1-II
(Tetirvinai vlg., Vaškai Eld., Pasvalys D.)
to ESO AB electricity network
7,928.81
23-06337
SOE
Energijos
Skirstymo
Operatorius AB
(ESO)
Company code
304151376,
Aguonų st. 24,
LT-03212 Vilnius
17/03/2023
Other than
public
procurement
contracts
Service of connecting the main line
Klaipėda-Kuršėnai ČA-20M (Saulažoliai
vlg., Klaipėda D.) to ESO AB electricity
network
12,820.13
PS-1959
(10.46 E)/23
SOE
State Enterprise
Centre of
Registers
Company code
124110246,
Lvovo st. 25-
101, LT-09320
Vilnius
23/03/2023
Other than
public
procurement
contracts
Provision of data for the Beneficiary
Subsystem of the Legal Entity
Participants Information System
Value not
established
22-24879
SOE
Energijos
Skirstymo
Operatorius AB
(ESO)
Company code
304151376,
Aguonų st. 24,
LT-03212 Vilnius
16/01/2023
Other than
public
procurement
contracts
Service of connecting ČA-11D
(Grabučiškiai vlg., Rumšiškės Eld.,
Kaišiadorys D.) to ESO AB electricity
network
7,796.35
21-96868
SOE
Energijos
Skirstymo
Operatorius AB
(ESO)
Company code
304151376,
Aguonų st. 24,
LT-03212 Vilnius
30/01/2023
Other than
public
procurement
contracts
Service of relocating electrical
equipment in Neveronys village,
Neveronys Eld., Kaunas D. Municip.)
402.14
21-96863
SOE
Energijos
Skirstymo
Operatorius AB
(ESO)
Company code
304151376,
Aguonų st. 24,
LT-03212 Vilnius
30/01/2023
Other than
public
procurement
contracts
Service of relocating electrical
equipment in Romaškiai village,
Domeikava Eld., Kaunas D. Municip.
748.60
639306
EPSO-G
Group
TETAS UAB
Company code
300513148,
Senamiesčio st.
102B, LT-35116
Panevėžys
16/01/2023
Purchase of
services
(PPP-2583) Verification services for
electrical protection measures
12,000.00
SOE
Ignitis UAB
Company code
303383884,
Laisvės ave. 10,
LT-04215 Vilnius
09/02/2023
Other than
public
procurement
contracts
Guarantee of origin service contract
Value not
established
EPSO-G
Group
GET BALTIC UAB
Company code
302861178,
Geležinio vilko
st. 18A, LT-
08104 Vilnius
27/06/2023
Purchase
agreements
On the reimbursement of costs
3,660.00
22/EPST-
3420/S-2
SOE
State Enterprise
Centre of
Registers
Company code
124110246,
Lvovo st. 25-
101, LT-09320
Vilnius
19/04/2023
Purchase
agreements
Special conditions for a contract for the
provision of electronic delivery services
by means of the national information
system for the delivery of electronic
items by means of the postal network,
where payment is made after the
provision of these services
0.00
AF2023-16
SOE
Energijos
Skirstymo
Operatorius AB
(ESO)
Company code
304151376,
Aguonų st. 24,
LT-03212 Vilnius
01/10/2023
Natural gas
transmission
services
Agreement for access to the electronic
system for ordering and managing gas
transmission services
0.00
23-67864
SOE
Energijos
Skirstymo
Operatorius AB
(ESO)
Company code
304151376,
Aguonų st. 24,
LT-03212 Vilnius
18/09/2023
Other than
public
procurement
contracts
Service of connecting Šiauliai GDS
electrical equipment to ESO AB
electricity network
646.76
23-68044
SOE
Energijos
Skirstymo
Operatorius AB
(ESO)
Company code
304151376,
Aguonų st. 24,
LT-03212 Vilnius
12/09/2023
Other than
public
procurement
contracts
Service of connecting Kėdainiai GDS
electrical equipment to ESO AB
electricity network
161.92
23-68055
SOE
Energijos
Skirstymo
Operatorius AB
(ESO)
Company code
304151376,
Aguonų st. 24,
LT-03212 Vilnius
12/09/2023
Other than
public
procurement
contracts
Service of connecting Vievis GDS
electrical equipment to ESO AB
electricity network
80.96
Annual report 2023
42
528808
EPSO-G
Group
EPSO-G UAB
Company code
302826889, A.
Juozapavičiaus
st. 13, LT-09311
Vilnius
19/07/2023
Purchase of
services
Supplement to the holding management
services agreement No 528808 of 25
February 2021
0.00
676194
EPSO-G
Group
EPSO-G UAB
Company code
302826889, A.
Juozapavičiaus
st. 13, LT-09311
Vilnius
21/07/2023
Purchase of
services
(VPP-3328) Management (holding)
services
676194
2023-302431
EPSO-G
Group
EPSO-G UAB
Company code
302826889, A.
Juozapavičiaus
st. 13, LT-09311
Vilnius
12/07/2023
Financial
agreements
Lending and borrowing
2023-302431
AF2023-41
SOE
Ignitis UAB
Company code
303383884,
Laisvės ave. 10,
LT-04215 Vilnius
01/10/2023
Natural gas
transmission
services
Agreement for access to the electronic
system for ordering and managing gas
transmission services
AF2023-41
AF2023-62
SOE
Ignitis Gamyba
UAB
Company code
302648707,
Elektrinės st.21,
LT-26108
Elektrėnai
21/09/2023
Natural gas
transmission
services
Agreement for access to the electronic
system for ordering and managing gas
transmission services
AF2023-62
AF2023-107
SOE
Ignitis Polska sp. z
o.o.
C.C.681577,
Puławska st, 2B,
02-566 Warsaw,
Poland
01/10/2023
Natural gas
transmission
services
Agreement on the right to use the
Electronic Transmission Service Booking
and Administration system
AF2023-107
3396
SOE
PROJEKTŲ
EKSPERTIZĖ UAB
Company code
120091161, A.
Vienuolio st. 6-
11, Vilnius
28/09/2023
Design/works/c
ontracting
services
purchase
agreements
General expert services for main pipeline
projects
3396
597339/4
SOE
State Enterprise
Centre of
Registers
Company code
124110246,
Lvovo st. 25-
101, LT-09320
Vilnius
04/09/2023
Purchase of
services
Additional agreement No 1 (MD VK Part
IV)
597339/4
597339/3
SOE
State Enterprise
Centre of
Registers
Company code
124110246,
Lvovo st. 25-
101, LT-09320
Vilnius
04/09/2023
Purchase of
services
Additional agreement No 1 (MD VK Part
III)
597339/3
597339/2
SOE
State Enterprise
Centre of
Registers
Company code
124110246,
Lvovo st. 25-
101, LT-09320
Vilnius
04/09/2023
Purchase of
services
Additional agreement No 1 (MD VK Part
II)
597339/2
597339/1
SOE
State Enterprise
Centre of
Registers
Company code
124110246,
Lvovo st. 25-
101, LT-09320
Vilnius
04/09/2023
Purchase of
services
Additional agreement No 1 (MD VK Part
I)
597339/1
23-06309
SOE
Energijos
Skirstymo
Operatorius AB
(ESO)
Company code
304151376,
Aguonų st. 24,
LT-03212 Vilnius
19/10/2023
Other than
public
procurement
contracts
Service of connecting the main line
Klaipėda - Kuršėnai ČA-18M (Stalgas vlg.,
Stalgėnai Eld., Plungė D.) to ESO AB
electricity network
23-06309
CPO271503
SOE
Ignitis UAB
Company code
303383884,
Laisvės ave. 10,
LT-04215 Vilnius
06/11/2023
Purchase of
goods
Electricity 2024
CPO271503
CPO274751
SOE
Lietuvos Paštas
AB
Company code
121215587,
J.Balčikonio st.3,
LT-03500,
Vilnius
07/11/2023
Purchase of
services
Courier services
CPO274751
12
SOE
Ignitis UAB
Company code
303383884,
Laisvės ave. 10,
LT-04215 Vilnius
01/11/2023
Natural gas
transmission
services
Additional agreement No 12 (on an
uninterrupted gas supply)
12
AF2023-36
EPSO-G
Group
GET Baltic UAB
Company code
302861178,
Geležinio vilko
st. 18A, LT-
08104 Vilnius
01/10/2023
Natural gas
transmission
services
Agreement for access to the electronic
system for ordering and managing gas
transmission services
AF2023-36
23-01253
SOE
Energijos
Skirstymo
Operatorius AB
(ESO)
Company code
304151376,
Aguonų st. 24,
LT-03212 Vilnius
20/11/2023
Other than
public
procurement
contracts
Relocation of electricity meter in
Anykščiai GDS
23-01253
2023-SUT-
126
EPSO-G
Group
EPSO-G UAB
Company code
302826889,
Laisvės ave. 10,
LT-04215 Vilnius
22/12/2023
Other than
public
procurement
contracts
Assessment of the payment for the
search and selection of candidate(s) for
independent member(s) of the Board of
2023-SUT-126
Annual report 2023
43
Litgrid AB, Amber Grid AB and Baltpool
AB
23-94945
SOE
Energijos
Skirstymo
Operatorius AB
(ESO)
Company code
304151376,
Aguonų st. 24,
LT-03212 Vilnius
21/12/2023
Other than
public
procurement
contracts
Service of connecting the main line
Jurbarkas-Tauragė LČ-7 (Mikutaičiai II
vlg. 2, Jurbarkai Eld., Jurbarkas D.
Municip.) to ESO electricity network
23-94945
23-94948
SOE
Energijos
Skirstymo
Operatorius AB
(ESO)
Company code
304151376,
Aguonų st. 24,
LT-03212 Vilnius
21/12/2023
Other than
public
procurement
contracts
Service of connecting Tauragė-Klaipėda
LČ-12 (Spiečiai vlg, Žemaičių Naumiestis
Eld., Šilutė D. Municip.) to the electricity
grid of ESO
23-94948
23-94953
SOE
Energijos
Skirstymo
Operatorius AB
(ESO)
Company code
304151376,
Aguonų st. 24,
LT-03212 Vilnius
22/12/2023
Other than
public
procurement
contracts
Service of connecting the main line to
Šakiai GDS LČ 1-II ir 1-I (Galeliai vlg.,
Rozalimas Eld., Pakruojis D.) to the
electricity grid of ESO
23-94953
23-94956
SOE
Energijos
Skirstymo
Operatorius AB
(ESO)
Company code
304151376,
Aguonų st. 24,
LT-03212 Vilnius
22/12/2023
Other than
public
procurement
contracts
Service of connecting the main line
Pabradė-Visaginas LČ-5 (Bajorai k.,
Švenčionys Eld., Švenčionys D.) to ESO
AB electricity network
23-94956
23-94957
SOE
Energijos
Skirstymo
Operatorius AB
(ESO)
Company code
304151376,
Aguonų st. 24,
LT-03212 Vilnius
22/12/2023
Other than
public
procurement
contracts
Service of connecting the main line
Pabradė - Visaginas LČ-6 (Naujasalis vlg.,
Ignalina Eld., Ignalina D.) to ESO AB
electricity network
23-94957
23-94959
SOE
Energijos
Skirstymo
Operatorius AB
(ESO)
Company code
304151376,
Aguonų st. 24,
LT-03212 Vilnius
22/12/2023
Other than
public
procurement
contracts
Service of connecting the main line
Pabradė - Visaginas LČ-7 (Ožionys vlg.,
Ignalina Eld., Ignalina D.) to ESO AB
electricity network
23-94959
23-94972
SOE
Energijos
Skirstymo
Operatorius AB
(ESO)
Company code
304151376,
Aguonų st. 24,
LT-03212 Vilnius
22/12/2023
Other than
public
procurement
contracts
Service of connecting the main line
Pabradė-Visaginas LČ-8 (Pečiūniškės vlg.,
Ignalina Eld., Ignalina D.) to ESO AB
electricity network
23-94972
23-94976
SOE
Energijos
Skirstymo
Operatorius AB
(ESO)
Company code
304151376,
Aguonų st. 24,
LT-03212 Vilnius
02/01/2024
Other than
public
procurement
contracts
Service of connecting the main line
Vilnius – Karaliaučius LČ-18/19B
(Smiltynai I vlg., Domeikava Eld., Kaunas
D.) to ESO AB electricity network
23-94976
676194
EPSO-G
Group
EPSO-G UAB
Company code
302826889, A.
Juozapavičiaus
st. 13, LT-09311
Vilnius
21/07/2023
Purchase of
services
(VPP-3328) Management (holding)
services
676194
2023-302431
EPSO-G
Group
EPSO-G UAB
Company code
302826889, A.
Juozapavičiaus
st. 13, LT-09311
Vilnius
12/07/2023
Financial
agreements
Lending and borrowing
2023-302431
AF2023-41
SOE
Ignitis UAB
Company code
303383884,
Laisvės ave. 10,
LT-04215 Vilnius
01/10/2023
Natural gas
transmission
services
Agreement for access to the electronic
system for ordering and managing gas
transmission services
AF2023-41
AF2023-62
SOE
Ignitis Gamyba
UAB
Company code
302648707,
Elektrinės st.21,
LT-26108
Elektrėnai
21/09/2023
Natural gas
transmission
services
Agreement for access to the electronic
system for ordering and managing gas
transmission services
AF2023-62
AF2023-107
SOE
Ignitis Polska sp. z
o.o.
C.C.681577,
Puławska st, 2B,
02-566 Warsaw,
Poland
01/10/2023
Natural gas
transmission
services
Agreement on the right to use the
Electronic Transmission Service Booking
and Administration system
AF2023-107
3396
SOE
PROJEKTŲ
EKSPERTIZĖ UAB
Company code
120091161, A.
Vienuolio st. 6-
11, Vilnius
28/09/2023
Design/works/c
ontracting
services
purchase
agreements
General expert services for main pipeline
projects
3396
597339/4
SOE
State Enterprise
Centre of
Registers
Company code
124110246,
Lvovo st. 25-
101, LT-09320
Vilnius
04/09/2023
Purchase of
services
Additional agreement No 1 (MD VK Part
IV)
597339/4
597339/3
SOE
State Enterprise
Centre of
Registers
Company code
124110246,
Lvovo st. 25-
101, LT-09320
Vilnius
04/09/2023
Purchase of
services
Additional agreement No 1 (MD VK Part
III)
597339/3
597339/2
SOE
State Enterprise
Centre of
Registers
Company code
124110246,
Lvovo st. 25-
101, LT-09320
Vilnius
04/09/2023
Purchase of
services
Additional agreement No 1 (MD VK Part
II)
597339/2
597339/1
SOE
State Enterprise
Centre of
Registers
Company code
124110246,
Lvovo st. 25-
101, LT-09320
Vilnius
04/09/2023
Purchase of
services
Additional agreement No 1 (MD VK Part
I)
597339/1
Annual report 2023
44
23-06309
SOE
Energijos
Skirstymo
Operatorius AB
(ESO)
Company code
304151376,
Aguonų st. 24,
LT-03212 Vilnius
19/10/2023
Other than
public
procurement
contracts
Service of connecting the main line
Klaipėda - Kuršėnai ČA-18M (Stalgas vlg.,
Stalgėnai Eld., Plungė D.) to ESO AB
electricity network
23-06309
CPO271503
SOE
Ignitis UAB
Company code
303383884,
Laisvės ave. 10,
LT-04215 Vilnius
06/11/2023
Purchase of
goods
Electricity 2024
CPO271503
CPO274751
SOE
Lietuvos Paštas
AB
Company code
121215587,
J.Balčikonio st.3,
LT-03500,
Vilnius
07/11/2023
Purchase of
services
Courier services
CPO274751
12
SOE
Ignitis UAB
Company code
303383884,
Laisvės ave. 10,
LT-04215 Vilnius
01/11/2023
Natural gas
transmission
services
Additional agreement No 12 (on an
uninterrupted gas supply)
12
AF2023-36
EPSO-G
Group
GET Baltic UAB
Company code
302861178,
Geležinio vilko
st. 18A, LT-
08104 Vilnius
01/10/2023
Natural gas
transmission
services
Agreement for access to the electronic
system for ordering and managing gas
transmission services
AF2023-36
23-01253
SOE
Energijos
Skirstymo
Operatorius AB
(ESO)
Company code
304151376,
Aguonų st. 24,
LT-03212 Vilnius
20/11/2023
Other than
public
procurement
contracts
Relocation of electricity meter in
Anykščiai GDS
23-01253
2023-SUT-
126
EPSO-G
Group
EPSO-G UAB
Company code
302826889,
Laisvės ave. 10,
LT-04215 Vilnius
22/12/2023
Other than
public
procurement
contracts
Assessment of the payment for the
search and selection of candidate(s) for
independent member(s) of the Board of
Litgrid AB, Amber Grid AB and Baltpool
AB
2023-SUT-126
23-94945
SOE
Energijos
Skirstymo
Operatorius AB
(ESO)
Company code
304151376,
Aguonų st. 24,
LT-03212 Vilnius
21/12/2023
Other than
public
procurement
contracts
Service of connecting the main line
Jurbarkas-Tauragė LČ-7 (Mikutaičiai II
vlg. 2, Jurbarkai Eld., Jurbarkas D.
Municip.) to ESO electricity network
23-94945
23-94948
SOE
Energijos
Skirstymo
Operatorius AB
(ESO)
Company code
304151376,
Aguonų st. 24,
LT-03212 Vilnius
21/12/2023
Other than
public
procurement
contracts
Service of connecting Tauragė-Klaipėda
LČ-12 (Spiečiai vlg, Žemaičių Naumiestis
Eld., Šilutė D. Municip.) to the electricity
grid of ESO
23-94948
23-94953
SOE
Energijos
Skirstymo
Operatorius AB
(ESO)
Company code
304151376,
Aguonų st. 24,
LT-03212 Vilnius
22/12/2023
Other than
public
procurement
contracts
Service of connecting the main line to
Šakiai GDS LČ 1-II ir 1-I (Galeliai vlg.,
Rozalimas Eld., Pakruojis D.) to the
electricity grid of ESO
23-94953
23-94956
SOE
Energijos
Skirstymo
Operatorius AB
(ESO)
Company code
304151376,
Aguonų st. 24,
LT-03212 Vilnius
22/12/2023
Other than
public
procurement
contracts
Service of connecting the main line
Pabradė-Visaginas LČ-5 (Bajorai k.,
Švenčionys Eld., Švenčionys D.) to ESO
AB electricity network
23-94956
23-94957
SOE
Energijos
Skirstymo
Operatorius AB
(ESO)
Company code
304151376,
Aguonų st. 24,
LT-03212 Vilnius
22/12/2023
Other than
public
procurement
contracts
Service of connecting the main line
Pabradė - Visaginas LČ-6 (Naujasalis vlg.,
Ignalina Eld., Ignalina D.) to ESO AB
electricity network
23-94957
23-94959
SOE
Energijos
Skirstymo
Operatorius AB
(ESO)
Company code
304151376,
Aguonų st. 24,
LT-03212 Vilnius
22/12/2023
Other than
public
procurement
contracts
Service of connecting the main line
Pabradė - Visaginas LČ-7 (Ožionys vlg.,
Ignalina Eld., Ignalina D.) to ESO AB
electricity network
23-94959
23-94972
SOE
Energijos
Skirstymo
Operatorius AB
(ESO)
Company code
304151376,
Aguonų st. 24,
LT-03212 Vilnius
22/12/2023
Other than
public
procurement
contracts
Service of connecting the main line
Pabradė-Visaginas LČ-8 (Pečiūniškės vlg.,
Ignalina Eld., Ignalina D.) to ESO AB
electricity network
23-94972
23-94976
SOE
Energijos
Skirstymo
Operatorius AB
(ESO)
Company code
304151376,
Aguonų st. 24,
LT-03212 Vilnius
02/01/2024
Other than
public
procurement
contracts
Service of connecting the main line
Vilnius – Karaliaučius LČ-18/19B
(Smiltynai I vlg., Domeikava Eld., Kaunas
D.) to ESO AB electricity network
23-94976
5.14. INFORMATION ON SIGNIFICANT DIRECT AND INDIRECT HOLDINGS
As at 31 December 2023, the Company held 34% of shares in the associate GET Baltic UAB. More details on the associate
are provided in Amber Grid’s financial statements.
6. RISKS AND RISK MANAGEMENT
6.1 RISK MANAGEMENT FRAMEWORK
The Company views risk management as a structured approach to managing uncertainties by methodically assessing
the impact and likelihood of risks and applying appropriate risk management tools.
Annual report 2023
45
In 2023, the Company followed the Risk Management Policy and Risk Management Methodology of the EPSO-G Group
approved by the Board. These documents provide the Company with a best practice risk management framework based
on the internationally accepted COSO ERM (Committee of Sponsoring Organisations of the Treadway Commission
Enterprise Risk Management) methodology. The Risk Management Policy defines the key risk management principles
and responsibilities for the EPSO-G Group companies to ensure a unified corporate risk management process based on
common principles. The EPSO-G Group companies define risk management principles and responsibilities in the Risk
Management Policy. The Policy is publicly available on EPSO-G website.
The Company’s risk appetite, as defined in the Risk
Management Policy, is the level of risk that is below the highest
level of risk that is equal to or greater than a score of 15 (the
product of the probability and the impact of the risk on the
Company), or the level of risk the Company’s governing bodies
willing to accept to achieve the strategy and performance
objectives set. Risks exceeding the score set for the risk
appetite are subject to additional management measures.
The Company has in place the following risk management
process (stages):
I. Identification of environment. The Company identifies
aspects that may have an impact on the Company’s failure to
achieve its goals based on the Company’s internal and external
environment, planning documents, the Risk Assessment
history and the monitoring of the implementation of the risk
management measures. Regular environmental assessments
are carried out to adapt to changes and to prepare in advance
for unexpected threats.
II. Assessment of risks. The Company identifies, analyses and assesses risks on regular basis, identifies Key Risk
Indicators, and prepares the List of Risks. The Company also identifies the risk appetite, and categorizes risks according
to their priority and the appetite identified.
III. Developing a Plan on risk Management Measures. The Company develops a Plan on Risk Management Measures for
risks exceeding risk appetite.
IV. Monitoring of risks and the implementation of the Plan on Risk Management Measures. This process involves
continuous monitoring of the Company’s List of Risks and the Plan on Risk Management Measures, as well as monitoring
of the Group-level risks and the list of the Group-level risks management measures. The monitoring results are
communicated to the Company’s manager, the Board, the Audit Committee, in accordance with the remit of each of
them.
V. Communication and information. Regular and effective sharing of information among the participants in the Risk
Management process that has impact on the assessment of the Company’s risks and their management. Relevant
information on risks and their management is communicated to the Company’s employees during staff meetings.
The Company identified operational risks for 2023, assessed them, set risk monitoring indicators and provided risk
management measures.
After assessing the risks identified and managed in the Company and their level (impact on the Company’s activities),
the Board of Amber Grid approved the EPSO-G group-level risk list.
In each quarter of 2023, the Audit Committee of EPSO-G assessed the changes in the key risk indicators of the Company,
the effectiveness of risk management, and presented its conclusions and recommendations to the Boards of Amber
Grid.
During 2023, to improve risk management and integrity within the Group, the Risk Management Information System,
was installed.
6.2 KEY RISKS AND THEIR MANAGEMENT
I. Identification
of environment
II. Assessment of
risks
III. Developing a
Plan on risk
Management
Measures
IV. Monitoring of
risks and the
implementation
of the Plan on
Risk
Management
Measures:
V.
Communication
and information
Annual report 2023
46
The Company is exposed to the following key risks:
1. Risk of delays in strategic projects
There are risks related to non-compliance with the project portfolio execution plan, delays in asset renewal and
development are possible. The Company minimises these risks by confirming the next year’s project portfolio as early
as possible, so that resources can be planned in advance. Investment projects are approved by the committee after a
prior analysis of the Company’s available resources.
Management measures:
• The Company, together with the Group’s Project Management Officer (PMO), monitors and controls projects.
• Ongoing (passive and active) controls are in place, such as monitoring of project reports and KPIs, and active
involvement in risk management and problem solving.
• The Company, together with the Group’s PMO, participates in meetings between the programme, the project team
and the project developer and contractors, joint problem solving and risk assessment.
• Project process audits are carried out to review in detail risks, issues, benefits, timeliness and compliance with
approved processes.
2. Long-term funding risk
There is a risk that Amber Grid will face difficulties in attracting new funding and/or will be forced to pay significantly
higher than normal prices for new funding, which would jeopardise the implementation of its strategic plans. Risks may
arise from unsustainable financial conditions (e.g., overleveraging, underperformance), adverse changes in the business
environment (e.g., downgrading of a country’s credit rating, unfavourable regulatory developments), or inability to
achieve the intended strategic objectives.
Management measures:
• The Treasury and financial risk management policy guides day-to-day operations and decision-making, aiming at
ensuring a sustainable financial position, maintaining a rating of at least investment grade (BBB-/Baa3 or above),
and ensuring compliance with non-financial commitments and financial indicator commitments.
Probability
5
4
7.4
3
6
1,3,8
2
2
5.9
1
1
2
3
4
5
Impact
Annual report 2023
47
• Regular monitoring of budgets and long-term financial forecasts to ensure that the long-term financial targets (e.g.,
debt/EBITDA, ROE) set in the operational strategy are met
• When drawing up short-term and/or long-term business plans, decisions on dividends must take into account the
potential impact of the decisions on the long-term financial sustainability of Amber Grid, the fulfilment of financial
targets and liquidity.
3. Regulatory risk
The prices of natural gas transmission and related services are regulated, the price caps are set by the Council. Those
decisions directly affect Amber Grid’s performance, 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.
Management measures:
• To achieve clear and consistent regulation that does not adversely affect performance, the Company actively
communicates with the Council, participates in the discussions on amendments to legislation, and submits its
comments on the improvement of the legislation, arguing the impact of future decisions and the importance of the
Company' long-term strategic objectives. Proactive engagement with the Council will also be crucial in coordinating
decisions on the costs of climate neutrality activities.
4. Technological risks
One of the most important functions and responsibilities of Amber Grid is to ensure secure, reliable and efficient
operation of the natural gas transmission systems. Technological risk management aims to avoid disruptions to
operations and the disconnection of gas to consumers.
Management measures:
• To ensure reliable operation of transmission systems, the Company implement specialized information systems,
modern business management systems, update accident and technological disruption and emergency
management, business continuity plans on a continuous basis, and set high standards for the contractors.
• To avoid disruptions to the transmission systems, the systems are continuously monitored, maintenance plans are
drawn up accordingly, and the necessary new investments in transmission system upgrades are planned in time.
5. Risks of non-compliance with occupational safety requirements
The Company places great emphasis on occupational safety. Given the applicable and most relevant occupational safety
and health requirements and the current implementation situation, there is a risk of non-compliance with these
requirements.
Management measures:
• Proper installation of workstations, timely maintenance and control of systems, equipment, work tools.
• Internal documents on health and safety have been approved.
• Staff training, certification and briefings on safety and health issues.
• Continuous monitoring and supervision of employees' and contractors' compliance with OHS requirements.
6. Risk of lack of relevant qualification employees, employee turnover and motivation
The Company is facing challenges on the labour market and competition for highly skilled professionals is intensifying.
Management measures:
• The Company is improving shift plans for critical positions. Over the next few years, the focus will be on updating
the competency model, improving employer branding and developing talent.
7. Risk of too little competition in procurement procedures carried out
Amber Grid implements large-scale projects as part of NEIS. There is a risk that insufficient competition from suppliers
will lead to economically unfavourable tenders exceeding the planned budget/not meeting the company's needs or to
the procurement having to be cancelled and re-tendered.
Annual report 2023
48
Management measures:
• There is a requirement to publish all purchases on the CPP IS
• Requirement for promoters to identify at least 3 Suppliers in their application or justify a smaller number
• Requirement to carry out a market consultation in all simplified and international procurement. The principle of
"4-eye" control is set as a minimum.
8. Cybersecurity risk
The information and data managed by Amber Grid are of strategic importance for the security of Lithuania, therefore,
loss of such information or data, illegal change or disclosure, damage thereof, or termination of the data flow which is
necessary for a secure operation of transmission systems may cause disturbances of the activities of Amber Grid, cause
damage to other natural persons and legal entities.
Management measures:
• In order to prevent cyber incidents, threats to the information systems, physical protection and security
management systems of Amber Grid are regularly assessed, existing security measures, systems and/or tools are
constantly updated and new ones are introduced to comply with the strict requirements of the EU and the Republic
of Lithuania’s legislation on information security.
• Amber Grid’s staff actively participate in cybersecurity exercises to train how to manage and respond to cyber
incidents targeting critical information systems and networks, and to ensure the functioning of their services.
9. Risk of failing to meet the budget
There is a risk that Amber Grid will fail to meet its budget and financial plans, which will adversely affect their ability to
meet the commitments of the Company, as well as ability to meet financial covenants and other obligations, and to pay
dividends.
Management measures:
• Performance control (monitoring by EPSO-G, the Boards) as part of the Integrated Planning and Monitoring Policy.
• For the purpose of regulated activities, comments and recommendations, as appropriate, on decisions related to
recognition of expenses, changes in a methodology, and development of a common Group position.
• For the purpose of non-regulated activities, review of, amendments to the action plan, where appropriate.
10. Environmental impact mitigation risk
Untimely or inaccurate recording and reporting of sustainability-related indicators, inaccurate calculation of GHG
emissions from the Company’s operations, or delays in reporting compliance with requirements to institutional
investors may result in sanctions from the exchange authorities, and fines for defaulting on commitments to investors.
There is also a risk of non-achievement of Amber Grid’s long-term strategic objectives and its commitments
(sustainability indicators), when the regulatory approval for the necessary investments to reduce environmental impacts
(GHG emissions) is not obtained due to regulatory restrictions or lack of cost-effectiveness.
Management measures:
• In line with EPSO-G’s Sustainability Policy, the Company is required to collect and, at least annually, publish
sustainability-related data in accordance with the global GRI and/or other disclosure standards.
• The Company is provided with the list of ESG indicators to be selected
• The Company is required to develop and implement cost-effective mitigation plans and related measures.
6.3 SUSTAINABILITY RISK MANAGEMENT
Amber Grid AB aims to integrate sustainability principles into all its activities and processes.
Annual report 2023
49
The Company aims to transform the energy sector by striking a sustainable balance between environmental, social
and economic objectives.
Sustainability risks are treated as an integral part of the Company’s day-to-day operations and are integrated into the
risk management process. The Company assess all the risks against the criteria set for the sustainability risks. Risks
that meet these criteria are assigned to the relevant sustainability risk type.
In 2023, the following risks were assigned to sustainability (environmental, social and governance) risks:
Risks that meet environmental criteria:
• Risks of reducing the environmental impacts.
Risks that meet social criteria:
• Risks of non-compliance with occupational safety requirements.
• Risk of lack of relevant qualification employees, employee turnover and motivation.
Risks that meet governance criteria:
• Risk of regulatory change.
• Risk of too little competition in procurement procedures carried out.
• Cybersecurity risks.
Descriptions of the Company’s sustainability risks listed above and their management measures are provided in section
6.1 (see “Key risks and their management”).
In 2023, corruption, compliance, going concern risks are included in the Company’s key risk register. All of these risks
are medium or low level because of applied effective risk management measures. Being aware of the importance of
these risks for the achievement of the sustainability objectives, the Company pays particular attention to the
management and disclosure of these risks.
6.4 CLIMATE CHANGE RISKS
Given the importance of climate-change challenges in the energy sector, the EU regulations (the EU Taxonomy
Regulation, the European Sustainability Reporting Standards (ESRS), etc.), climate-related risk disclosures and to
improve related risk management, in 2023, Amber Grid AB together with other EPSO-G Group companies and in
partnership with consulting firm Deloitte conducted a comprehensive analysis of the Group’s climate-related risks
(physical and transition), opportunities and climate scenarios (based on IPCC climate change scenarios) in the short-
term (2026), medium-term (2030) and long-term (2050).
The evaluation was carried out in the Group for the first time and was guided by the recommendations of the Task Force
on Climate-related Financial Disclosures (TCFD). The evaluation report and methodology drawn up will help to improve
the assessment and management of climate change risks, improve disclosures to the Group’s stakeholders and
strengthen the sustainability risk management in the Group.
The evaluation comprised climate-related physical risks (impact of occurrence of extreme weather events on
transmission infrastructure, buildings, offices) and transition risks (regulatory, technology, reputation, market, public
pressure), measures and indicators were developed to manage these risks.
7. MANAGEMENT REPORT
7.1. 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 “the Code”). The Code applies to the extent that the Articles of
Association of the Company do not provide otherwise. The Company has disclosed its compliance with the requirements
of the Code, and such information is available on the Company’s website at http://www.ambergrid.lt, and on the Central
Storage Facility at www.crib.lt.
Annual report 2023
50
7.2. ISSUED CAPITAL
The Company’s issued capital amounts to EUR 51,730,929.06. It is divided into 178,382,514 ordinary registered shares
with nominal value of EUR 0.29 each. One ordinary registered share with the nominal value of EUR 0.29 gives one vote
at the General Meeting of Shareholders. All shares are fully paid up.
The shareholder structure of the Company remained unchanged in 2023. 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.
7.3. 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. Pursuant to
Article 20 of the Law on Companies of the Republic of Lithuania (hereinafter the “Law on Companies”), only the General
Meeting of Shareholders of the Company may take decisions on the issuance of new shares and the purchase of its own
shares.
The Company is not aware of any arrangements between shareholders that may restrict the transfer of securities and/or
voting rights. There are no restrictions imposed on the voting rights at the Company.
In 2023, the Company did not acquire any own shares and did not enter in any transactions involving the acquisition or
disposal of own shares.
7.4. SHAREHOLDERS
As at 31 December 2023, Amber Grid had over 2,500 shareholders (Lithuanian and foreign natural and legal persons),
whereof 1 (one) shareholder held more than 5% of the Company’s shares.
Table 8. Shareholders of the Company
Shareholder
Registered office address/company
code
Ownership interest, number of shares
EPSO-G UAB
Laisvės ave. 10, Vilnius, Lithuania,
302826889
172,279,125
Minority shareholders
6,103,389
Total
178,382,514
Fig 16. Shareholder structure as at 31 December 2023
Annual report 2023
51
7.5. DATA ON TRADING IN SECURITIES ON REGULATED MARKETS
Since 1 August 2013, the Company’s shares have been traded on a regulated market and quoted on the Secondary List
of NASDAQ Vilnius Stock Exchange.
Table 9. Main data on Amber Grid’s shares
Main data on Amber Grid’s shares
ISIN code
LT0000128696
LEI code
097900BGMP0000061061
Ticker
AMG1L
Issue size (units)
178,382,514
In 2023, the Company’s turnover of trading in shares amounted to EUR 0.41 million (2022: EUR 0.40 million), 337,659
shares were transferred by way of transactions (2022: 338,463 shares).
Fig. 17. Share price dynamics on NASDAQ Vilnius, 2023
96,58%
3,42%
EPSO-G UAB Minority shareholders
Annual report 2023
52
Fig. 18. Amber Grid’s share price and turnover, 2023
As at 31 December 2023, Amber Grid’s share market capitalisation amounted to EUR 196.22 million. The quoted price
per share and the market capitalisation decreased by 12% in 2023.
7.6. DIVIDENDS
1,255
1,22
1,30
1,10 1,10
1,00
1,05
1,10
1,15
1,20
1,25
1,30
1,35
Opening price, EUR Weighted average price, EUR Highest price, EUR Lowest price, EUR Closing price, EUR
0
10 000
20 000
30 000
0,8
1,0
1,2
1,4
2023-01 2023-022023-03 2023-04 2023-05 2023-06 2023-07 2023-08 2023-09 2023-10 2023-11 2023-12
Share price, Eur Turnover, Eur
Annual report 2023
53
The Group’s and the Company’s Dividend Policy
3
stipulates uniform rules for estimation, payment and declaration of
dividends across all companies of the EPSO-G Group.
The main purpose of the Dividend Policy
4
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 11 April 2023, the Ordinary General Meeting of Shareholders made the decision to pay out dividends in total amount
of EUR 12.1 million or EUR 0.0676 per share.
On 20 April 2022, the Ordinary General Meeting of Shareholders made the decision to pay out dividends in total amount
of EUR 9.9 million or EUR 0.0555 per share.
7.7. AGREEMENTS WITH INTERMEDIARIES OF PUBLIC TRADING IN SECURITIES
Amber Grid has an agreement with SEB Bankas 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 Bankas calculates and pays out dividends to all the shareholders of the
Company, except for EPSO-G UAB.
Table 10. Bank details
Details of AB SEB Bankas
Company code
112021238
Registered office address
Konstitucijos ave. 24, LT-08105 Vilnius, Lithuania
Phone
+370 5 268 2800
Email
info@seb.lt
Website
www.seb.lt
7.8. MANAGEMENT STRUCTURE
The Company’s activities are governed by the Law on Companies and the Law on Securities, the Company’s Articles of
Association, and other legal acts of the Republic of Lithuania. The competence of the General Meeting of Shareholders,
the rights of shareholders and their enforcement are defined in the Law on Companies and in the Company’s Articles of
Association. The Company’s Articles of Association are available at www.ambergrid.lt/lt/apie_mus/rubrika-
investuotojams/istatai.
The Articles of Association provide that they may be amended in accordance with the procedure laid down in the Law
on Companies.
The management bodies of the Company specified in the Articles of Association:
• The general meeting of shareholders (hereinafter – the Meeting),
• The Board – a collegial management body,
• The Manager of the Company – the single-person management body.
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, except for the
3
The Company’s Dividend Policy is available athttps://www.ambergrid.lt/uploads/documents/EPSO-G%20Dividendu%20politika_2020-02-07(2).pdf
Annual report 2023
54
additional powers of the General Meeting of Shareholders stipulated in Article 25 of the Company’s Articles of
Association.
Article 25 of the Articles of Association provides that the General Meeting of Shareholders shall also decide on
(additional competence of the Meeting):
(i) appointment and removal of the Board members, remuneration of the Board members, conclusion of contracts
with the Board members and standard terms and conditions;
(ii) suspension or non-suspension of members of the Board and the adoption of a decision in the event of a conflict
of interest between members of the Board, in the cases provided for in Article 48 of the Articles of Association
4
;
(iii) approval of decisions of the Board referred to in Article 36 (iii) to (vii) of the Articles of Association, if the value,
price or amount of the transaction concerned exceeds EUR 20,000,000 (twenty million euro), and the decisions
referred to in Article 36(viii) to (ix) of the Articles of Association
5
.
The Board
The Articles of Association of Amber Grid stipulate that the Company’s Board consists of five members appointed by
the General Meeting of Shareholders for a term of four years. 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 of office and,
in any case, may not hold the Board member’s position for more than 10 (ten) consecutive years.
The selection of the Board members shall be carried out in accordance with the Description of the Procedure for the
Selection of Candidates to the Collegial Supervisory Body or Management Body of Municipal Enterprise, State or
Municipal Company or Subsidiary 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 34–41 and Article 43 of the Articles of Association.
Additional powers of the Board encompass approval of the fundamental documents of the Company (strategy, annual
performance targets, budget, etc.), determination of employment terms and conditions of the Company’s manager,
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) approves or opposes the conclusion of related party transactions, considering the opinion of AC;
(ii) approves the description of the procedure and conditions for the valuation of transactions with related parties
concluded on an arm's length basis in the ordinary course of business, as provided for in the Law on Companies;
(iii) supervises the performance of the Manager, provides feedback and proposals to the Meeting on the Manager’s
performance;
(iv) considers whether the Manager is fit to hold the office in case the Company is operating at a loss;
(v) proposes to the Manager to revoke his decisions that are contrary to laws and regulations, the Articles of
Association, decisions of the Meeting or the Board;
(vi) 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.
4
If the Board is unable to take a decision which is also related (directly or indirectly) to personal interests of the Board member concerned, because no Board member can vote on the matter due to a conflict of interest,
the General Meeting of Shareholders shall take the relevant decision.
5
36. (iii) the acquisition of fixed assets for a price exceeding EUR 2,000,000 (two million euro) (if the price exceeds EUR 20,000,000 (twenty million euro); (iv) the investment, disposal, lease of the Company's assets with
a carrying amount exceeding EUR 2,000,000 (two million euro) (calculated separately for each type of transaction) (if the value exceeds EUR 20,000,000 (twenty million euro), the Meeting's approval is required); (v)
pledging or mortgaging (calculated on the aggregate amount of transactions) of the Company's assets with a carrying amount exceeding EUR 2,000,000 (two million euro) (if the value exceeds EUR 20,000,000 (twenty
million euro), the Meeting's approval shall be required); (vi) guaranteeing or indemnifying the performance of other persons’ obligations in the amount of more than EUR 2,000,000 (two million euro) (if the value
exceeds EUR 20,000,000 (twenty million euro); (vii) enter into any other transactions / agreements (not mentioned in separate articles of the Articles of Association) on the basis of which the Company acquires goods,
services, works, the value of which, in a specific monetary expression, exceeds EUR 2,000,000 (two million euro) (if the value exceeds EUR 20,000,000 (twenty million euro); (viii) on the transfer, pledge, change of legal
status or encumbrance of disposal of the Company's assets included in the list of objects and assets of importance to ensuring national security provided for in the Law of the Republic of Lithuania on Protection of
Objects of Importance to Ensuring National Security, if the value of the said objects exceeds 1/20 of the Company’s authorised capital; (ix) the transfer of shares or other encumbrances on the disposal of shares or the
rights conferred by such shares or other encumbrances on the disposal of the objects referred to in point (viii) of this Article, the increase or decrease of the authorised capital of such companies or any other action
that may change the structure of the authorised capital of such companies (e.g., the issue of convertible bonds), and decisions on the reorganisation, spin-off, restructuring, liquidation, restructuring or any other action
which changes the legal status of the undertakings referred to in this point.
Table 11. Information on Amber Grid’s Board members, Manager and Chief Accountant
Annual report 2023
55
Full name
Position
Term of office
Other positions
held
Share-
holding in
Amber
Grid
Qualification
5
Dalius
Svetulevičius
Chairman of
the Board
Board member since
20/04/2022 (elected
on 20/04/2022)
Chairman of the
Board elected since
22/11/2022
EPSO-G UAB,
Technical Manager
None
Kaunas University of Technology,
Bachelor in Electrical Engineering;
Master in Measurement
Engineering; Vilnius University,
Master in Management and
Business Administration
Karolis
Švaikauskas
Board
member
Since 20/04/2020
(elected on
20/04/2022)
Head of the Group
for Competition in
Energy Sector,
Ministry of Energy
None
Vytautas Magnus University,
Bachelor in History, Master in
Political Science and Baltic
Studies; Humboldt University of
Berlin, Scandinavian and North
European Studies
Ignas
Degutis
Independent
member of
the Board
From 20/04/2020
CFO, 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
member of
the Board
From 20/04/2020
Council member,
the Faculty of
Economics and
Business
Administration,
Vilnius University
None
Vilnius University, Master in
Business Management and
Administration; ESMT European
School of Management and
Technology, Berlin, Post-graduate
Studies
Paulius
Butkus
Board
member
From 11/04/2023
Head of
Development and
Innovation at EPSO-
G UAB
None
Vilnius University, Bachelor in
Nuclear Physics; Vilnius
Gediminas Technical University,
Master in Electrical Engineering
and PhD in Electrical and
Electronic Engineering.
5
Information on the professional experience of the members of the Board is available on the Company’s website at
https://www.ambergrid.lt/lt/apie_mus/valdymas/valdyba, and on the professional experience of the CEO and other senior executives at
https://www.ambergrid.lt/lt/apie_mus/valdymas/vadovybe
Annual report 2023
56
Full name
Position
Term of office
Other positions
held
Share-
holding in
Amber
Grid
Qualification
5
Nemunas
Biknius
Company’s
Manager
From 08/04/2020
Chairman of
Supervisory Council,
Klaipėda State
Seaport Authority
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
From 02/12/2019
-
None
18 Board meetings were held in 2023.
Attendance at the Board meetings in 2023:
Attended
Absent
Table 12. Statistics of attendance at the Board meetings of Amber Grid
No
Meeting date
Dalius
Svetulevičius
Karolis
Švaikauskas
Sigitas
Žutautas
Ignas Degutis
Paulius Butkus
1
Jan 10
Not yet elected
2
Jan 24
Not yet elected
3
21 February
Not yet elected
4
7 March
(extraordinary)
Not yet elected
5
17 March
Not yet elected
6
28 March
Not yet elected
7
25 April
8
12 May
(extraordinary)
Annual report 2023
57
Key decisions of the Board in 2023:
10 January. Approval of Amber Grid's revised Strategy for 2021–2030, Operating Plan for 2023–2025 and
the CEO’s performance targets for 2023.
21 February. Approval of the preliminary material terms and conditions of the transaction for the sale of
GET Baltic UAB shares. Joining the updated Compliance Management Policy of the EPSOG Group.
7 March. Convening the extraordinary meeting of the Board. Approval, by a written vote, of the contract
for the purchase of ball and stop taps (Reconstruction works for the replacement of main gas pipeline shut-
off devices and connection to the SCADA remote control system (Phase 3, Part 3, Materials)) and of the
essential terms and conditions of the contract. Approval of the new version of the Rules for the use of the
natural gas transmission system of Amber Grid.
17 March. Approval of the sale of shares in UAB GET Baltic and the essential terms and conditions thereof.
Approval of updated report on implementation of Amber Grid Strategy for 2021-2030 for the year 2022.
Approval of the Annual Report and of the set of annual financial statements of Amber Grid. Approval of the
draft profit distribution and decision to submit it to the General Meeting of Shareholders.
No
Meeting date
Dalius
Svetulevičius
Karolis
Švaikauskas
Sigitas
Žutautas
Ignas Degutis
Paulius Butkus
9
23 May
10
20 June
11
July 25
12
8 August
(extraordinary)
13
August 22
14
September 19
15
October 24
16
14 November
(extraordinary)
17
November 21
18
December 12
02
February
03
March
01
January
Annual report 2023
58
28 March. Approval of the assessment of the achievement of 2022 goals set for the CEO of Amber Grid.
Approval of the updated plan of risk management measures of Amber Grid for 2023. Approval of the
conclusion of vehicle operating lease contracts under 6 (six) separate procurement object lots and of the
material terms and conditions of the contracts.
11 April. Convening the ordinary general meeting of shareholders of Amber Grid. Approval of the set of
consolidated and the Company’s financial statements for 2022. Approval of the distribution of Amber Grid’s
profit for 2022. Approval of the remuneration report of Amber Grid for 2022. Election of Paulius Butkus to
Amber Grid Board member’s position. Approval of the new version of Articles of Association. Approval of
the sale of shares in GET Baltic and the essential terms and conditions thereof.
12 March. Convening the extraordinary meeting of the Board. Approval, by a written vote, of the 2022 tax
loss transfer and takeover transaction with the related party EPSO-G UAB and of the essential terms and
conditions thereof.
23 May. Amendment to the terms and conditions of the employment contract of Amber Grid AB CEO by
changing the monthly remuneration and the position title from “Chief Executive Officer” to “Manager of the
Company”. Approval of the prices for gas transmission services set by Amber Grid. Approval of the updated
management structure of Amber Grid. Approval of the decision of the Manager of Amber Grid to join the
Association for HR Professionals.
20 June. Approval of the conclusion of the transaction for the provision of services of management holdings
with EPSO-G UAB and of the essential terms and conditions of the transaction. Amendment to some of the
essential terms and conditions of the P2P Lending and Borrowing Agreement between Amber Grid and
EPSO-G. Approval of entering into reconstruction contract for replacement of shut-off devices of the main
gas pipeline and connection to the remote control system SCADA, and approval of the essential terms and
conditions thereof.
25 June. Approval of amendment to the essential terms and conditions of the procurement contract in
relation to the implementation of remote control of gas transmission system (Replacement of shut-off
devices and connection to the remote control system SCADA) (the deadline for works extended to 31
December 2023). Approval of amendments to the essential terms and conditions of the construction
contract in relation to the project Installation of launching and receiving chambers for the monitoring device
and installation of remote control of gas transmission system (phase II) - the deadline for works extended
to 31 December 2023, the new contract price is set at: EUR 12,534,832.45 excl. VAT. Approval of new
management job levels and new version of the Company’s List of Risks and the Plan on Risk Management
Measures for 2023. The Company’s manager is obliged to seek the opinion of the Audit Committee prior to
entering into any related party transactions for the investment, acquisition, transfer, lease, pledge and
mortgage of assets, guaranteeing or guaranteeing the performance of obligations, where the amount of
such transactions or the total amount of such transactions during a financial year does not exceed 1/10 of
the value of the assets in the Company’s most recently drawn up audited balance sheet and where the latter
transactions are in the ordinary course of business and/or in standard market conditions. The Company’s
Manager is responsible for ensuring adequate disclosure of related party transactions on the Company’s
website and in annual reports.
8 August. Convening the extraordinary meeting of the Board. Decision to convene the extraordinary General
Meeting of Shareholders regarding the election of the audit company and the terms of remuneration for
the audit services for 2023-2025.
22 August. No decisions were adopted.
04
April
05
May
06
June
07
July
08
August
Annual report 2023
59
30 August. Convening the Extraordinary General Meeting of Shareholders. Selection of
PricewaterhouseCoopers UAB, company code 111473315, as the audit firm to perform the audit of the
Company’s financial statements and annual report for 2023–2025. The fee for the services will not exceed
EUR 432.9 thousand (excl. VAT) (including the EUR 143.4 thousand fee for the audit of interim financial
statements).
19 September. Adoption of the decision to launch hydrogen transport activities on 1 October 2023.
Approval of the Company’s updated organisation structure (as from 1 April 2024) and updated list of job
positions. Approval of the Company’s list of risks and the plan on risk management measures for 2023.
Granting a financial incentive of 1.5 times average remuneration to the Company’s manager.
24 October. No decisions were adopted.
14 November. Convening the extraordinary meeting of the Board. Approval, by a written vote, of the draft
version of the Company’s Strategy 2030 and its submission to public undertaking Governance Coordination
Centre for review.
12 December. Approval of the Company’s Board meeting calendar and action plan for 2024. Approval of the
monthly remuneration bands for the Company’s employees as of 1 January 2024. Approval of the monthly
remuneration bands for the Company’s employees in IT positions at 14-17 grades and for employees in
engineering positions at 11-14 grades. The remuneration exceeds the Company’s basic remuneration bands
by 20%. Determination of the Company’s risk appetite and approval of the plan of risk management
measures for 2024.
The Remuneration and Appointment Committee discussed the results of the self-evaluation of the collegial bodies
(CO) and identified the following areas and areas for improvement of the CO's activities in 2023:
• to organize strategic sessions companies belonging to EPSO-G group, focusing on strategic planning and discussion
of shareholder expectations;
• to organize the meetings of the new term EPSO-G Board and group management bodies, the Group committees
(within H1 2023, after the appointment of the new EPSO-G Board).
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 committees acting jointly within the EPSO-G Group:
• Remuneration and Nomination Committee
• Audit Committee
Full details about the Committees of Amber Grid are available in the consolidated annual report of the EPSO-G Group
and via the following links:
• https://www.epsog.lt/lt/apie-mus/valdymas/atlygio-ir-skyrimo-komitetas
• https://www.epsog.lt/lt/apie-mus/valdymas/audito-komitetas
• https://www.epsog.lt/lt/apie-mus/valdymas/vidaus-auditas-1
To ensure transparency and efficiency of its operations, the 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.
09
September
10
October
11
November
12
December
Annual report 2023
60
Audit of the financial statements
PricewaterhouseCoopers, UAB conducted audit of the Company’s and its subsidiaries’ annual financial statements
(including verification for regulated activity reports) for the year ended 31 December 2021, 2022 and 2023.
The fee for the audit services of PricewaterhouseCoopers UAB for the years ended 31 December 2021 and 2022 was
EUR 50.5 thousand per year.
The fee for the audit services of PricewaterhouseCoopers UAB for the years ended 31 December 2023 was EUR 92
thousand.
During 2023, PricewaterhouseCoopers UAB did not provide to the Company any services other than audit, and did not
receive any fee other than for audit services.
Remuneration management
On 25 October 2022, Amber Grid joined the updated EPSO-G Group Employee Remuneration, Performance Appraisal
and Self-development Policy (hereinafter the “Policy”), which applies to all employees of the Company and is available
on the Company's website. The Policy is approved/joined by decision of the Company’s Board considering the
recommendations of the EPSO-G Remuneration and Nomination Committee. The Remuneration and Nomination
Committee of EPSO-G periodically evaluates the provisions of the remuneration policy, its effectiveness,
implementation, and application. The aim of the policy is to manage remuneration costs in an efficient, clear, and
transparent way and, at the same time, to create motivational incentives and to encourage staff to perform better, to
contribute more actively to the achievement of objectives, to go beyond the formal performance of their duties, to
develop innovative, out-of-the-box solutions, and to improve performance.
The remuneration of EPSO-G Group employees consists of the following components: monthly remuneration; fringe
benefits provided for in the Labour Code of the Republic of Lithuania, internal regulations and collective agreements of
the Companies; financial incentives; project incentives; one-off bonuses for exceptional performance and innovation;
fringe benefits; non-financial remuneration.
Fig 19. Remuneration structure
Components of remuneration
Monthly remuneration is the largest and most important part of the monetary remuneration, which depends on the
level of the post, determined for each post according to a methodology used in international practice. The monthly
remuneration of staff members is set within the limits of the remuneration scales for the grade of the post concerned,
taking into account the staff member’s experience, competence, level of expertise and independence in performing the
functions assigned to the post, and the remuneration budget for the relevant year.
Annual report 2023
61
Financial incentives are determined by reference to the following standard criteria for assessing the employee’s
performance: the results of the assessment of the employee’s achievement of his/her objectives, the assessment of the
employee’s values, the results of the assessment of the employee’s quality of performance. Financial incentives for the
Company’s Manager are allocated by the Board of the Company, and for other employees – by the Company’s Manager.
The financial incentive is paid once a year when the Board of the Company approves the audited financial results of the
Company and when they are confirmed by the resolution of the General Meeting of Shareholders.
A one-off bonus for exceptional performance may be payable by the decision of the Company’s Manager. For the
purpose of maintaining continuous progress, different incentives may be payable to encourage innovation initiatives
across the EPSO-G UAB Group. Such incentives may be payable for innovation-driven approach and creativity of
employees as they present their innovative ideas.
Table 13. Amber Grid‘s average remuneration by category of employees in 2023:
Groups of job positions
2023
2022
Company’s Manager
15,612
13,264
Top Management
9,906
8,432
Middle and First-Level Managers
5,060
4,534
Expert professionals
3,171
2,790
Workers
1,768
1,639
Total:
3,078
2,743
Total annual wage guarantee fund, EUR thousand
13,755
11,612
Remuneration policy for members of collegial management bodies and the Manager
On 20 April 2020, the General Meeting of Shareholders of the Company approved the Remuneration Policy for the
Manager and Board Members of Amber Grid (the updated policy was approved by decision of the Company’s General
Meeting of Shareholders of 23 June 2022)
[1]
aimed at establishing common, clear and transparent principles of monetary
reward for work of the Company’s Manager and Board members and the remuneration system based on these
principles in order to effectively manage the Company’s operating costs and to create motivational incentives for the
CEO and Board members to contribute to the achievement of the Company's mission, vision, values and objectives.
The principles of remuneration of members of the Company’s management bodies are also regulated by the Guidelines
for determining the remuneration of members of the management bodies of the EPSO-G Group companies approved
by a decision of the sole shareholder of EPSO-G.
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 to join the Company‘s management.
Remuneration for the functions fulfilled in the Company‘s Board may be payable only to those Board members of the
Company who meet the criteria set forth in the effective legal acts of the Republic of Lithuania and the Guidelines for
Determining the Remuneration for Fulfilment of Functions in the Bodies of EPSO-G UAB and the EPSO-G UAB Group.
By decision of the Extraordinary General Meeting of Shareholders of 22 December 2022, the following fixed monthly
remunerations, before tax, were fixed as from the date of adoption of the decision of the General Meeting of
Shareholders:
Table 14. Monthly fixed remuneration before tax
Job position
Monthly fixed pay
component (EUR)
Annual report 2023
62
Chairman of the Board (independent)
4097
Member of the Board (independent)
3073
Member of the Board (civil servant), if the civil servant neither holds the position nor engages in activities
of the collegial body of another SE/SOE and/or ME/MOE
6
2458
Member of the Board (civil servant), if the civil servant holds the position and engages in activities of the
collegial body of another SE/SOE and/or ME/MOE
1536
In addition, by the said decision of the General Meeting of Shareholders of 22 December 2022, the total annual
budget for 2023 for the remuneration of the Company’s Board members and additional expenses to ensure activities
of the Board were set at EUR 101.4 thousand.
The tables below present information on remuneration of the members of the management bodies, and annual
changes in the remuneration amounts:
Table 15. Remuneration of the Chief Executive Officer
Position
Full name
Date of
appointmen
t
Parts of
gross wage
Gross wage (EUR)
2019
2020
2021
2022
2023
CEO
Nemunas
Biknius
October
2019
Total (EUR)
20,075
117,192
148,586
159,410
188,090
Variable
part (EUR)
0
4,581
33,488
38,603
55,462
Variable
part %
0%
4%
23%
24%
29%
The proportions of the remuneration of the Company's Chief Executive Officer were in line with the Remuneration Policy
and the variable part of the remuneration was set in line with the achievement of the annual goals set by the Board of
the Company.
The Chief Executive Officer is not remunerated in shares of the Company.
Table 16. Remuneration of Board members
Position
Full name
Remuneration for work in the Board (EUR)
2018
2019
2020
2021
2022
2023
Member of the
Board since
20/04/2022,
Chairman of the
Board since
22/11/2022
Dalius
Svetulevičius
-
-
-
-
-
-
Board member
Paulius Butkus
-
-
-
-
Independent
member of the
Board
Ignas Degutis
-
-
11,713
16,800
17,278
36,876
Independent
member of the
Board
Sigitas Žutautas
3,850
14,125
21,000
30,535
30,078
36,876
Board member
Karolis
Švaikauskas
-
-
-
-
439
18,432
6
SE - state enterprise, SOE - state-owned enterprise, ME - municipal enterprise, MOE - municipality-owned enterprise
Annual report 2023
63
The fixed monthly remuneration paid to the members of the Company's Board is not dependent on the financial or non-
financial performance of the Company. No variable remuneration or other bonuses are paid to the members of the
Company’s Board. Also, the Board members is not remunerated in shares of the Company.
[1]
The Policy is available on the Company’s website at www.ambergrid.lt
8. SUSTAINABILITY REPORT
8.1. ABOUT THE SUSTAINABILITY REPORT……………………………..…………………………………….…………….…72
8.2. SUSTAINABLE PERFORMANCE MANAGEMENT, PRINCIPLES AND PRIORITIES.………..…72
8.3. THE MOST SIGNIFICANT IMPACTS ON SUSTAINABILITY………………….………………......…….……79
8.4. ENVIRONMENTAL
SUSTAINABILITY…………………..……………………………………………………….……………81
Annual report 2023
64
8.5. SOCIAL
SUSTAINABILITY………………………..…………………………………………………………………...……………96
8.6. GOVERNANCE
SUSTAINABILITY…………………………….………………………………………..……………..………113
8.7. NASDAQ ESG
INDICATORS……………………………………………….……………………………..……………..……….118
8.8. CONTENT OF THE SUSTAINABILITY GRI INDICATORS…………………….……………..……….……….122
Annual report 2023
65
8.1. ABOUT THE SUSTAINABILITY REPORT
The following Sustainability Report 2023 of AB Amber Grid (hereinafter the ‘Company’ or ‘Amber Grid’) is an integral
part of the Company’s consolidated annual report for 2023. This Sustainability Report 2023 was prepared in accordance
with the Global Reporting Initiative (GRI) Sustainability Reporting Standards: Core option. The disclosures are made on
a materiality basis and reflect the Amber Grid’s progress in implementing the principles of the United Nations Global
Compact (UNGC) and the Company’s contribution to the United Nations Sustainable Development Goals (SDGs). The
Report complies with the requirements for social responsibility reports, as provided for in Lithuanian legislation. The
Report takes into account Nasdaq’s ESG (Environmental, Social and Governance) Reporting Guide and other
recommendations. The following information covers the period from 1 January to 31 December 2023. The Sustainability
Report should be read in conjunction with the Company’s consolidated annual report.
The report contains the most recent information available at the time of publication but it has not been formally audited.
The previous Sustainability Report and other information on the Company’s sustainability management and activities is
available on the website of Amber Grid (www.ambergrid.lt).
For any questions regarding the content of the Report or the Company’s sustainability activities, please contact
r.kazlauskiene@ambergrid.lt.
8.2. SUSTAINABLE PERFORMANCE MANAGEMENT, PRINCIPLES AND PRIORITIES
Sustainability is at the heart of the Company’s strategy and strategic plan. The Company has committed to
implementing its strategic activities along the following sustainability directions:
Sustainability directions:
ENVIRONMENTAL AREA
SOCIAL AREA
GOVERNANCE AREA
Enabling climate-neutral energy by
reducing the environmental impact of
activities
Building a progressive organisation
which acts in observance of principles
of sustainability
Transparent and efficient
management and development of
the energy exchange platform
It also aims to contribute directly to the implementation of United Nations Sustainable Development Goals by focusing
on ensuring access to clean and modern energy, combating climate change, developing modern infrastructure and
innovation, safe and decent working conditions, employee well-being and a sustainable supply chain.
The Company contributes to each of the United Nations Sustainable Development Goals through the following
actions:
GOAL 1.
Affordable and clean energy:
• We facilitate the connection of renewable energy producers to natural gas transmission infrastructure.
• We are developing a green gas origin guarantee exchange system.
• We aim to adapt gas transmission systems to hydrogen transportation.
Goal 2.
Appropriate work and economic growth:
• We take a proactive approach to employee health and safety.
• We are building an organisational culture based on human rights.
• We invest in the professional and personal development of our employees.
• We ensure clear and transparent remuneration principles.
• We support the unionisation of workers.
Goal 3.
Industry, innovation and infrastructure:
Annual report 2023
66
• We ensure reliable and safe operation of gas transmission systems.
• We associate corporate structure and incentive systems with promotion of innovation.
Goal 4.
Responsible consumption and production:
• We apply not only qualitative criteria, but also fairness and sustainability criteria to our partners.
• We ensure responsible waste sorting and management.
• We use green criteria in public procurement.
Goal 5.
Combating climate change:
• We assess the environmental impact of our activities and develop plans to reduce pollution.
• We implement advanced environmental management systems and preventive measures.
• We aim to increase the use of green energy in our operations.
Key Long-Term Objectives of the Company
A key goal se in the Company’s strategy is to work together on Lithuania’s energy transformation towards a climate
neutral economy. The natural gas transportation system, including main gas pipelines, gas distribution, metering and
compressor stations, is an integral part of the Lithuanian energy system. It plays an important role in the creation of an
environment-neutral economy and, more importantly, a cleaner and safer future. Amber Grid is ready to transform the
natural gas system by adapting it to the safe transportation of renewable energy sources, that is biogas, a mix of
methane and hydrogen and pure hydrogen, as well as to create a new system for hydrogen transportation. We aim to
integrate into the single European market by creating a unified system that will help the country to follow the European
Green Deal confidently, and consumers to benefit from clean energy at the best price.
One of the top priorities for the Company is to significantly mitigate the impact of operations on the environment. An
investment plan for the planned measures to reduce GHG emissions has been drawn up, and the measures set out in
the GHG emission education plan are being implemented. In 2023, the reduction target was exceeded by 18,999
thousand t of CO2. The Scope 3 emissions inventory took place in the Company.
We are actively examining and creating options for transporting a methane-hydrogen mixture. With this objective, we
are looking into the possibility of integrating a hydrogen production unit into the gas system. In 2023, preparations were
made to implement a project for the blending of hydrogen into the natural gas system. In addition, favourable conditions
for the connection of biomethane producers to the gas transmission system in 2023 have been created to ensure market
access for green gas.
The customer satisfaction survey, which was conducted for the third year in a row, showed very positive results (the
GCSI index reached 83%). In 2023, we focused on active engagement with our customers to meet their expectations as
expressed in the 2022 survey. The implementation of an automated 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 one of the objectives of this goal, an analysis was carried out together with Klaipėdos Nafta on the expansion
of the LNG terminal capacity. Opinion polls revealed that the extension project is not yet relevant for market
participants.
The Company builds an engaged organisation through a number of measures and developments. The Company develops
e-learning system, implements a motivating remuneration system in line with market trends, and has a plan for the
improvement of the employer’s image in place. There is a slight delay in the deployment of the interactive learning and
training platform. It has been decided to acquire this platform at EPSO-G group level. Both top managers and middle
managers and professionals take an active part in conferences.
16 table. Amber Grid sustainability directions and goals
Line
Goal
Performance in 2023
Performance in 2022
Performance in 2021
Sustainability lines of
the UN sustainable
development goals
Environmental area
Enabling climate-
neutral energy by
reducing the
By 2030, the negative
environmental impact
of activities will be
- 27.38%
- 47.70%
-2,77%
Goal 1.
Affordable and clean
energy
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67
environmental
impact of activities
reduced by 2/3
(66.67%) compared to
2019
Goal 5.
Combating climate
change
0 significant
environmental
incidents in
operations
1
0
0
Gas transmission
systems are adapted
to hydrogen
transportation
Together with the
Baltic and Finnish gas
transmission system
operators, the
Company has carried
out a technical
condition and
capability assessment
of adapting the gas
transmission grid to
transporting the
methane-hydrogen
mixtures.
A study on
Lithuania’s hydrogen
sector roadmap and
implementation plan
was conducted. A
study on the
adaptation of gas
transmission
infrastructure to
transport the
methane-hydrogen
mixture was
launched in
cooperation with
transmission
operators in
neighbouring
countries.
A feasibility study on
hydrogen
development was
launched.
Favourable
conditions for
connecting green
energy producers to
the energy
infrastructure
The connection of
biomethane
producers to the
transmission system
relaunched to
connect biomethane
producers within a
12-month timeframe
from the submission
of the application. In
2023, changes were
made to the rules
applicable in
Lithuania enabling
biomethane injection
into the gas grid
produced in facilities
remote from the gas
transportation
network. In the
summer of 2023, the
first guarantees of
origin were issued for
biomethane
produced in Lithuania
and injected into the
gas transmission
system.
By the end of 2023,
47 GWh of
biomethane was
produced in
Lithuania.
Import of
biomethane from the
Netherlands to
Lithuania with
guarantees of origin
was launched. A total
of 4.5 GWh of
biomethane was
imported.
A system of
guarantees of origin
of biomethane was
launched, but no
biomethane entered
the system in 2021.
Social area
Building a progressive
organisation which
acts in observance of
principles of
sustainability
0 cases of human
rights violations or
discrimination
0
0
0
Goal 2. Appropriate
work and economic
growth
0 serious or fatal
accidents of
employees and
contractors serious or
fatal accidents
0
0
0
Customer satisfaction
(GCSI) – at least 80%
under the GCSI
methodology
83%
82%
83%
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68
≥ 21% of women in
top management
(Board + TLE) by 2027
(compared to 2022)
9%
9%
Governance area
Transparent and
efficient
management and
development of the
energy exchange
platform
0 cases of corruption
0
0
0
Goal 3.
Industry, innovation
and infrastructure
Goal 4. Responsible
consumption and
production
A+ Good Governance
Index of the GCC
A+
A+
A
100% green
procurement every
year from 2023
>95% (some
procurements were
carried over from
2022, therefore the
result is below 100%)
50%
10%
Reliable and secure
operation of gas
transmission system
The proportion of
removed critical gas
leaks in the number
of identified critical
gas leaks 1
The proportion of
removed critical gas
leaks in the number
of identified critical
gas leaks 0
The proportion of
removed critical gas
leaks in the number
of identified critical
gas leaks 0
Sustainability criteria
integrated into the
requirements for
contracting
companies
More than 95% of the
Company’s
procurements (by
value) were green.
More than 50% of the
Company’s
procurements (by
value) were green.
The target for 2023 is
that 100% of the
Company’s public
procurements by
value should be
green
More than 10% of
green procurements
of the procurement
value of the public
procurements that
took place
Innovation projects
are financed as a
share of the transfer
revenue - at least
0.5% by 2025
The Company
proposed 19
innovative ideas, 14
of which have been
turned into projects
or tasks to be
implemented by
2025. In total, the
Company allocated
EUR 76.8 thousand to
innovation
development in 2023,
which represents
0.35% of
transmission
revenues
The Company
proposed 26
innovative ideas, 24
of which have been
turned into projects
or tasks to be
implemented by
2025. In total, the
Company allocated
over EUR 800,000 to
innovation
development in 2022.
The Company has
approved 16
innovative projects to
be implemented by
2025
Sustainability and risk management
The Company has integrated sustainability principles into its business processes, and the management of sustainability
domains by competency covers all levels.
The Company’s Board is responsible for setting, reviewing the long-term strategic sustainability objectives and
monitoring indicators. The Board also approves policies on the environment, equal opportunities, health and safety of
employees, anti-corruption, remuneration, performance evaluation and development. Within its remit, the Board also
approves the Company’s annual objectives, which include sustainability-related objectives.
EPSO-G Sustainability Development Manager is responsible for monitoring and coordinating the achievement of
sustainability objectives. Meanwhile, within the Company, the relevant environmental, social and governance objectives
are delegated to the Company’s different functional units (e.g. environmental, occupational safety, human resources,
risk and compliance management, etc.) according to their competences. The Company has delegated a separate person
responsible for ensuring equal opportunities within the Company.
The Company aims to integrate sustainability principles into all its activities and processes.
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69
The Company aims to transform the energy sector by striking a sustainable balance between environmental, social and
economic objectives.
Sustainability risks are treated as an integral part of the Company’s day-to-day operations and are integrated into the
risk management process. The Company assess all the risks against the criteria set for the sustainability risks. Risks that
meet these criteria are assigned to the relevant sustainability risk type.
Disclosures on compliance with the EU Taxonomy Regulation that relate to Amber Grid's taxonomic economic activities
are provided in the consolidated annual report of EPSO-G.
Since the average annual number of employees of the Company does not reach 500 employees, the Taxonomy
Regulation does not provide for the obligation for the Company to publish indicators of taxonomic activities.
In 2023, the following risks were assigned to sustainability (environmental, social and governance) risks:
Risks that meet environmental criteria:
• Risks of reducing the environmental impacts.
Risks that meet social criteria:
• Risks of non-compliance with occupational safety requirements.
• Risk of lack of relevant qualification employees, employee turnover and motivation.
Risks that meet governance criteria:
• Risk of regulatory change.
• Risk of too little competition in procurement procedures carried out.
• Cybersecurity risks.
In 2023, corruption, compliance, going concern risks are not included in the Company’s key risk register. All of these
risks are medium or low level because of applied effective risk management measures. However, the Company, being
aware of the importance of these risks for the achievement of the sustainability objectives, pays particular attention to
the management and disclosure of these risks (see ‘GOVERNANCE SUSTAINABILITY’).
More details on the main risks, their description and management measures can be fount the section ‘Key risks and
their management’ of the Company’s consolidated annual report.
The sustainability-related policies referred to in this report are publicly available on the Company’s website.
Sustainability Policy. In 2021, the Board of EPSO-G approved a new Sustainability Policy, replacing the previous Social
Responsibility Policy. The new Sustainability Policy defines sustainability guidelines and principles common to all the
Group’s companies and guides the Group’s activities. By adopting an umbrella policy governing sustainability and other
sustainability-related areas (environment, occupational health and safety, equal opportunities, etc.), the EPSO-G Group
is reinforcing its management of sustainability at a strategic level, defining the key directions and principles for the
development of sustainability, which guide the Group’s activities and the creation of a progressive organisational
culture. The implementation of this Policy is the responsibility of managers of the EPSO-G Group’s corporate managers
and sustainability functionaries.
Environmental policy. EPSO-G Group aims to contribute to the achievement of the environmental and climate change
goals set out in the United Nations 2030 Agenda for Sustainable Development, as well as the commitments set out in
the Paris Agreement, the European Green Deal, the National Strategy for Energy Independence and the National Climate
Change Management Agenda. This policy defines the key environmental principles that apply throughout the Group to
minimise the environmental impact of its activities and to promote a culture based on sustainable development in EPSO-
G and its environment The implementation of the environmental policy is the responsibility of the Group’s corporate
managers and environmental functionaries, who ensure that environmental aspects are identified in a timely manner,
that environmental objectives are set, that plans are drawn up, that targets are set to improve the environmental
situation and that sufficient resources are allocated to their implementation, that the results are monitored periodically,
and that the processes, technologies and working methods used are subject to auditing.
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70
The Occupational Safety and Health Policy (OSH Policy) defines the general principles of occupational safety and health
and the basic guidelines for their implementation. The implementation of this policy is the responsibility of the Group’s
corporate managers and functional supervisors of the OSH area, who ensure that OSH aspects are identified in a timely
manner, OSH objectives are set, plans are drawn up, that targets are set to improve the OSH status and sufficient
resources are allocated to their implementation, that the results are monitored periodically, and that the processes,
technologies and working methods used are subject to auditing. The functional supervisors of the OSH area of the Group
periodically provide the Group’s managers and the OSH functional curator of EPSO-G with reports and data on Incidents,
Accidents, Occupational Accidents and OSH violations to assess the status of OSH, the effectiveness of the policy and to
make decisions to improve OSH.
The Prevention of Corruption Policy defines the principles and requirements for the prevention of corruption and the
guidelines for ensuring compliance with them, the implementation of which creates the preconditions and conditions
for the implementation of the highest standards of transparent business conduct.
The Support Policy defines the key principles of support, clear and transparent criteria for selecting projects and
activities to be supported, and essential requirements for the transparency and public awareness of the support
provided.
The Equal Opportunities Policy defines the key principles to ensure that equal opportunities and non-discrimination
are respected in all areas of employment relationships.
The Selection Policy, which was updated on 01/08/2022, defines the Group’s overall selection principles and practices
to select transparently the best candidates who have the right qualifications, skills, experience, and values for collegial
bodies and for managerial and professional positions at all levels and who will contribute effectively to the achievement
of the Group’s objectives.
Employee Remuneration, Performance Assessment and Education Policy. On 25/10/2022, Amber Grid signed up to a
new Group policy that defines clear and transparent principles for the remuneration and performance assessment of
the Group’s employees, and the corresponding employee remuneration system, the principles of learning, refresher
courses, and professional development.
The Procurement Policy, which was updated on 21/02/2022, defines the key principles and objectives of procurement,
guidelines for procurement planning and preparation, the conduct and coordination of group procurement,
implementation of procurement principles and best practices, supply and supplier management, contract management
control, and review of disputes and decisions.
The Supplier Code of Conduct, which was approved on 25/11/2022, defines the standards of conduct that the Company
expects all its Suppliers and Sub-suppliers to adhere to in order to promote legitimate, professional, sustainable and fair
business practices that incorporate the objectives of environmental protection, human rights, labour standards, and
business ethics. The Supplier Code of Conduct is based on the principles of the United Nations Global Compact.
The Code of Ethics defines the principles and standards of business ethics the Company adheres to and the behaviour
it expects from its employees and partners in their daily work.
Stakeholder relations
When designing and implementing its sustainable development actions, the Company seeks the full engagement of its
stakeholders and promotes open and fair cooperation with consumers, producers and suppliers, the founder, society,
employees and other stakeholders.
It is important to us that the Company’s sustainable development directions and goals meet the needs of the
stakeholders, therefore, the materiality assessment was performed in 2021 prior to choosing the strategic directions of
sustainable development and setting the goals envisaged in the Company’s strategy. The Company’s stakeholders took
part in the materiality assessment (by way of opinion polling).
8.3. THE MOST SIGNIFICANT IMPACTS ON SUSTAINABILITY
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71
We are continuously developing our sustainability goals and their implementation programmes in priority areas. This
Report disclose the information on the implementation of the sustainability principles in the Company and its progress
in 2023 through each of the following priorities identified in the materiality assessment. The content of the Report has
been prescribed by analysing the views, opinions and expectations of key stakeholders and taking into account the
current business objectives as set out in the Company’s strategy and strategic plan. The Report contains material
information that is relevant to the stakeholders in assessing the Company’s performance or in making decisions
concerning the Company.
A double materiality assessment will be carried out in 2024, replacing the materiality matrix of sustainability topics that
the Company has used to date.
Figure 20. Matrix of significance of Amber Grid‘s sustainability topics
Explanation of environmental, social, and economic impacts.
Amber Grid assessed the materiality of 19 impacts, which were determined in accordance with the specifics of the
Company’s operations, its long-term strategy until 2030, and the Sustainability Accounting Standards Board’s (SASB)
and GRI guidelines for determining the materiality.
High and medium values
ENVIRONMENTAL IMPACTS:
• Reducing environmental impact and greenhouse gas (GHG) emissions in operations – reducing environmental
impacts (air, water, soil quality), pollution by sewage and GHG emissions (CO2, CH4, etc.) from the Company’s
operations.
• Preserving biodiversity and ecosystem – protecting terrestrial and aquatic wildlife, natural vegetation, and
habitats of high ecological value through activities.
• Sustainable and efficient use of resources in the Company’s operations – use of green energy in the
Company’s operations, efficient consumption of water and other resources.
• Reducing waste amounts, responsible sorting and management – reducing the amount of waste generated
by operations and ensuring the safe and proper management of hazardous and non-hazardous waste.
• Creating favourable conditions for increasing the share of renewable energy sources (RES) – ensuring efficient
connection of renewable energy producers to the grid, smooth operation of the energy guarantees of origin
system.
0
1
2
3
4
5
6
Assessment of stakeholders
Amber Grid’s assessment
Environmental area
1. Reducing environmental impact GH emissions in operations
2. Preserving biodiversity and ecosystems
3. Sustainable and efficient use of resources in operations
4. Reducing waste amounts, responsible sorting and management
5. Creating favourable conditions for increasing the share of RES
6. Adapting energy systems for decarbonisation
Social area:
7. Ensuring human rights and equal opportunities for employees
8. Ensuring professional development for employees
9. Employee well-being and job satisfaction
10. Occupational safety and health
11. Dialogue and involvement of local communities
12. Customer satisfaction with services
13. Public activities, volunteering, and social partnerships
Governance area:
14. Reliability and security of transmission networks
15. Transparent governance and creation of anti-corruption environment
16. Cybersecurity and data protection
17. Sustainable value for the economy and financial return for the State
18. Implementation of innovation, research, digitization
19. Sustainable management of the supply chain
A total of 180 respondents participated in the survey.
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
5 means that the topic of sustainability should be very important to the company, and 1 - not
important at all.
Annual report 2023
72
• Adapting energy systems for decarbonization – adapting transmission grids for reliable transportation of the
quantity of new and increased renewable energy sources (electricity /biogas, methane and green hydrogen).
SOCIAL IMPACTS:
• Ensuring human rights and equal opportunities for employees – ensuring human rights, creating culture
based on equal opportunities and non-discrimination within the Company.
• Ensuring professional development for employees – providing professional and personal development
opportunities for employees and actively developing the necessary competences.
• Employee well-being and job satisfaction – creating the environment that enhances employee well-being and
satisfaction and ensures work-life balance.
• Occupational safety and health – Ensuring that employees of the Company and its contractors comply with
safety requirements when carrying out work, and actively taking care of their good health.
• Dialogue and involvement of local communities – actively informing local communities about the activities
taking place in their environment, fostering a culture of dialogue and community involvement.
• Customer satisfaction with services – the quality of services provided to customers, improving customer-
centric services.
• Public activities, volunteering, and social partnerships – promotion of volunteering, educational activities and
targeted cooperation with non-governmental organisations (NGOs), academic and government institutions.
GOVERNANCE IMPACTS:
• Reliability and security of transmission networks – ensuring the safe, reliable, and efficient operation of
energy transmission systems.
• Transparent governance and creation of anti-corruption environment – compliance with standards of
transparency and business ethics, zero-tolerance of corruption and active fight against all its forms.
• Cybersecurity and data protection – ensuring the security of critical data, building a cyber-attack resistant
IT infrastructure, and creating the organizational culture.
• Sustainable value for the economy and financial return for the State - meeting shareholders’ financial return
targets, ensuring return on investment, economic and social returns.
• Implementation of innovation, research, digitization – creating the organizational culture that fosters
innovation, ensuring the appropriate funding for the implementation of innovations.
• Sustainable management of the supply chain – increasing the share of public procurement of goods and
services that meet environmental and sustainability standards, actively encouraging contractors, suppliers,
and other partners to follow the recognized environmental, anti-corruption and social standards.
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73
8.4. ENVIRONMENTAL SUSTAINABILITY
Our Approach
In the environmental field, the Company’s main objectives are to enable climate-neutral energy and to reduce the
environmental impacts of its operations, including greenhouse gas emissions. In its environmental policy adopted in
2021, the Company committed to monitoring the environmental impact of its activities, and to introducing modern
technologies and measures to reduce significant environmental impacts. The Company is committed to ensuring the
protection of biodiversity when operating, expanding or modernising the infrastructure of transmission systems. Amber
Grid has the objective of ensuring zero tolerance of environmental incidents. We also aim to hold contractors and other
business partners accountable for the environmental impacts of their activities and to seek to reduce them. In 2023,
212 in-house safety and environmental inspections and 197 safety and environmental inspections of contractors were
carried out at the Company’s sites.
The Company also follows the precautionary principle of carrying out environmental impact assessment procedures in
accordance with legal requirements before undertaking projects that may have a significant impact on the environment,
including biodiversity or society. The implementation of the environmental policy is the responsibility of the head of the
Company and its environmental functionaries, who ensure that environmental aspects are identified in a timely manner,
that environmental objectives are set, that plans are drawn up, that targets are set to improve the environmental
situation and that sufficient resources are allocated to their implementation, that the results are monitored periodically,
and that the processes, technologies and working methods used are subject to auditing.
Environmental and Occupational Health and Safety Management System
Since 2014, the Company has had an environmental management system compliant with the international standard ISO
14001, and since 2016, an occupational health and safety management system compliant with the OHSAS 18001
standard has been in place. The environmental and occupational health and safety management system is integrated
into all planning, organisation, and management processes of Amber Grid’s operations and is applied to all employees
of the Company.
In 2022, the Company’s management system was re-certified for the third time in accordance with ISO 14001 and re-
certified in accordance with the occupational health and safety management system standard ISO 45001. In 2023, the
external supervision audit of the Company’s management systems did not identify any non-compliances.
The management pays close attention to environmental protection and occupational health and safety issues, which
are closely linked to the Company’s strategic objectives. The Company continuously invests in new equipment,
information management and production process technologies to improve the environment and working conditions:
periodic health checks are carried out in accordance with the identified occupational risk factors, employees are given
prophylactic vaccinations against influenza and tick-borne encephalitis, and only reliable collective and personal
protective equipment that complies with quality standards is selected. The management has set a goal to contribute to
the development of green energy, aiming at climate-neutral operations, and it has set a target to reduce the
environmental impact (including, but not limited to GHG emissions) of the Company’s operations by 2/3 by the year
2030.
Employees are kept informed and educated on environmental protection and occupational health and safety issues,
thereby ensuring social cooperation and partnership.
The management system is subject to continuous monitoring and periodic reviews in light of the changing natural
environmental conditions and the dynamics of external and internal factors, in direct relation to the Company’s
environmental and occupational health and safety policy, the Company’s strategy, and the goals and objectives of its
implementation.
When outlining its long-term commitments, strategic directions (priorities) and objectives, the Company drew on the
IESE Business School’s approach to governance through the organisation’s mission and stakeholder theory. The
stakeholder theory approach encourages a broader view of the value created by the organisation than just through the
prism of shareholders, but by defining the value created for the key stakeholders and focusing on their well-being.
Procedures for recording incidents and potential incidents are in place to manage unsafe situations. Incidents and
potential incidents (unsafe workplaces) recorded by the Company are discussed by the Incident Prevention Committee,
including employees from different areas in the discussion. A mobile app and access at all workplaces have been
developed for easy recording of occupational safety and environmental incidents and unsafe situations.
Emergency Management
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74
The Company is a facility of national importance and an entity of national security significance – the Company is
registered in the Register of Facilities of National Importance and Hazardous Facilities as a facility of national importance
and is included in the list of Critical Information Infrastructure and its managers.
The Company’s Emergency Management Plan (hereinafter the ‘Plan’) is regularly reviewed, adjusted, supplemented,
and coordinated with the Fire and Rescue Department under the Ministry of the Interior and with the National Energy
Regulatory Council.
All employees of the Company are introduced to the Plan by organising civil protection training in the Company’s remote
education system. The employees involved in the emergency management process are made familiar with the Plan
against their signature. Staff members involved in the management and recovery of emergencies, related to natural gas
transmission system, are trained and each year undergo emergency response and preparedness drills of different levels
to maintain their practical skills.
Actions and Initiatives in 2023
In 2023, the Company focused on protection against potential radiological hazards. All the Company’s employees
received training on how to deal with radiation hazards. Approx. 140 employees responsible for ensuring the
uninterrupted transmission of natural gas to consumers received additional training on safe operation of transmission
system facilities in the event of a radiological emergency. The Company also purchased radiation protection measures
to equip its employees.
In 2023, the Company initiated an interagency exercise to test the preparedness of the Company, other operators and
public authorities to respond to a serious accident in the natural gas transmission system, shutting down or severely
restricting the transmission of natural gas to consumers.
Environmental Aspects
In order to reduce negative environmental impacts, the Company carried out a greenhouse gas inventory and a general
environmental impact assessment in 2021, and in 2022, based on the results of the inventory, an Environmental Impact
Mitigation Plan was prepared and approved until 2030. In order to ensure timely implementation of mitigation
measures, an investment and cost plan for mitigation measures until 2030 was drawn-up, assessed and agreed in 2023.
The plan of measures to be implemented was also reorganised to prioritise the measures in terms of both the highest
mitigation potential and value for money.
The inventory of direct and indirect greenhouse gas emissions in 2023 shows that the most significant environmental
aspects have changed compared to 2022 and include new indirect Scope 3 emissions, and
emissions from natural gas combusted during the incident in Pasvalys district on 13 January 2023. The incident was not
originally planned, and significant environmental impact which, if every effort is made to prevent such incidents, should
not happen again in future and should be eliminated from the assessment of significant environmental aspects. The
impact of purchased non-renewable electricity is also eliminated from the significant environmental aspects, as all the
electricity consumed by the Company comes from renewable sources.
21%
28%
23%
7%
1%
0%
20%
Methane leaks
Methane release
Emissions of stationary facilities
Incident-related emissions
Fuel consumption in vehicles
F-gas leakage and the acquired heat
Indirect Scope 3 emissions
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75
Actions and Initiatives in 2023
The inclusion of Scope 3 GHG emissions and emissions from the incident in the environmental aspects has slightly
changed the significance of the remaining ones compared to 2022: the overall significance of methane leakages and
releases has decreased by 2%, the significance of stationary combustion emissions has decreased by 21%, the
significance of methane releases has decreased by 7%, the significance of transport fuel consumption has decreased by
1%, and the significance of F-gas leakages and purchased heat has remained negligible (less than 1%). The significance
of the previously assessed aspects should again increase slightly with the disappearance of the gas consumption during
the event. However, no significant change in materiality is expected as indirect emissions in Scope 3 will now be assessed
in the future as well, as their materiality is as high as 21%. Emissions in this scope consist of employee travel, Company
costs, repairs, upgrades, employee commuting and waste. Scope 3 emissions are treated in the Greenhouse Gas
Protocol as indirectly caused by activities and the most difficult to reduce GHG emissions. However, the Company
intends to monitor this significant aspect and seek ways to reduce it.
The environmental damage caused by the Company’s incident on 13 January 2023 in the Pasvalys district is still under
investigation and the surrounding area was returned to the original state. According to the Company’s former definition
of a significant environmental incident, the event was not classified as a significant incident. Following the incident, the
definition of a significant environmental incident was revised. Among the Company’s other significant GHG emissions,
the gas combusted during the incident account for only 7%. No other breaches of environmental law or significant
environmental incidents were identified in 2023.
Water and Wastewater Management
In order to meet the water needs of the Company’s operations, water resources are obtained from municipal water
supply or extracted from 7 underground freshwater boreholes located at 5 of the Company’s sites. The 25-year
assessment of the use of the resources in the 2017 Inspection Report for the Piniava water extraction point and the
2019 Hydrogeological Report for the Jauniūnai GCS and Šakiai GMS concluded that there will be no significant adverse
impact on the environment and other water extraction points. Surface water and rainwater is not used in the Company.
Actions and Initiatives in 2023
As the in-house Environmental Communication Campaign continued in 2023, one of the priority areas was water
resource conservation. Therefore, during the annual ‘Environmental minute’, employees were reminded of the
importance and specific characteristics of drinking water in Lithuania, the need to conserve its resources. Employees
are also introduced to simple ways to save water both at home and work. In addition to water saving, employees are
encouraged to minimise the generation of wastewater and to gain understanding of the interrelation between water
consumption and wastewater generation. For this purpose, a new visual communication tool has been developed -
toilet flush stickers. As the toilets in the Company’s restrooms are equipped with a dual flush button feature, stickers
with a 6 litre and 3 litre drop signs were affixed to each button in all the Company’s restrooms. The stickers encouraged
employees to think and choose a button that uses less water and generates less wastewater. In 2023, for the first time,
visual posters at toilets drew employees’ attention not only to wastewater reduction in quantitative terms, but also to
reduction of contamination in wastewater by educating employees not to consider the toilet as a garbage disposal and
to avoid throwing toilet paper, coffee grounds, or other food waste.
The Company’s surface and domestic wastewater is treated in wastewater treatment plants: the Labko Biokem 30
biochemical reactor, sludge seling tanks and the NGP-S-30 oil traps. After treatment, the wastewater is discharged to
the natural environment or to centralised networks.
17 table. Amounts of water consumed
Indicator
Units of
Measurement
2023
2022
2021
Water consumption:
m
3
3,850.3
3,220
3,037
Municipal water supply
1,735.3
908
801
Boreholes
2,115
2,312
2,236
Treated wastewater discharged to centralised
networks:
1,547
676
693
Surface
0
0
0
Domestic
1547
676
693
Untreated wastewater discharged to centralised
networks
2,450.28
4,825.68
1,665
Treated wastewater discharged environment:
12,307
12,297
11,741
Annual report 2023
76
Surface
11,494
11,556
11,062
Domestic
813
741
679
Total wastewater generated
16,304
17,799
14,099
In 2023, repair of buildings commenced at the Company’s facilities, resulting in an unusual increase in water
consumption. Drinking water was used not only to satisfy the needs of employees, but also during and after repair works
and for cleaning the premises. This increase in consumption is not the result of the Company’s ordinary activities and is
therefore expected to be temporary and to decrease next year. For the above reason, an increase in domestic
wastewater is also observed in 2023 compared to 2022. Meanwhile, the amount of untreated surface wastewater
transferred to centralised wastewater treatment networks decreased by 68% compared to data in 2022. This decrease
is attributed to the revised methodology for estimation of the surface wastewater volumes of UAB Vilniaus Vandenys.
To ensure more accurate wastewater accounting at the Company’s facilities, in future periods surface wastewater will
be separated from domestic wastewater and accounted for separately in one of the Company’s largest departments.
To ensure the quality of the treatment of wastewater discharged into the natural environment, periodic monitoring of
wastewater pollution is carried out. The results of the wastewater pollution measurements are published on a quarterly
basis on the Company’s publicly accessible website at www.ambergrid.lt, under the heading ‘Environmental Pollution
Monitoring’. The monitoring ensures that only treated and clean wastewater compliant with the environmental
legislation of the Republic of Lithuania is discharged into the natural environment.
Waste management
Waste sorting is carried out in the Company’s units. Employees can sort household waste such as paper, plastic, metal,
glass, deposit containers, small electrical and electronic waste, and batteries. In addition, hazardous waste is separated
by type of waste and stored in marked containers protected from environmental impacts prior to removal. Specialised
waste carriers and handlers are contracted for the safe removal, handling, and disposal of waste generated by the
Company’s operations.
18 table. Amounts of waste
Waste category
2023
2022
2021
Waste
generated, t
Sent to
recycling, t
Sent to
disposal, t
Waste
generated, t
Sent to
recycling, t
Sent to
disposal, t
Waste
generated, t
Sent to
recycling, t
Sent to
disposal, t
Wastes from coatings
(paint and varnish)
0.171
0.171
0
0.077
0
0.077
0.004
0
0.004
Wastes from inorganic
chemical processes
0
0
0
0.594
0
0.594
0.077
0
0.077
Municipal wastes
7.20
1.61
5.59
46,403
2,986
43,417
6,358
1.86
4,498
Wastes from shaping
and physical and
mechanical surface
treatment of metals
and plastics
0
0
0
0.06
0
0.06
0
0
0
Oil wastes and wastes
of liquid fuels
16.97
11.45
5.52
11.156
11.148
0.008
27
23.462
3.538
Waste packaging
6.135
4.59
1.545
5.114
2.974
2.14
3,395
1,691
1,704
Construction and
demolition wastes
3042.92
3020.805
22,115
1099.261
1082.3
16,961
31,139
30.01
1,039
Wastes not otherwise
specified in the list
3.35
3.00
0.35
7,578
3,216
4,362
7,084
4,762
2,322
Wastes from
petroleum refining,
natural gas
purification
0
0
0
0
0
0
3.172
0
3.172
Total:
3076.75
3041.63
35.12
1170.24
1102.62
67.62
78.23
61,785
16.35
According to the information submitted by the waste management facilities, the Company’s hazardous and non-
hazardous waste were treated as indicated in the table below.
19 table. Type of waste / Management method
Type of waste/treatment option
Volume, t
2023
2022
2021
WASTE:
3076.75
1170.24
78.23
Annual report 2023
77
Hazardous sent for:
40.76
28,665
38,106
Reuse
0
0
0
Recycle
13.79
12,527
26,747
Combustion with energy recovery
26.97
16,138
11,359
Combustion without energy recovery
0
0
0
Disposal in landfills
0
0
0
Non-hazardous sent for:
3035.99
1141.578
40,123
Recycle
3027.84
1090.107
35,128
Composting
0
0
0
Combustion with energy recovery
5.80
23,433
2,524
Combustion without energy recovery
0
0
0
Disposal in landfills
2.35
28,038
2,471
In 2022 and 2023, the volume of hazardous and non-hazardous construction and demolition waste sent to waste
management facilities increased significantly. In 2022, volumes of this type of waste were higher than in the previous
years due to the completion of the GIPL pipeline. On 13 January 2023, a major gas leak occurred in a pipeline operated
by the Company, which led to an unplanned repair of this section of the gas pipeline. Additional diagnostics on similar
sections of the gas pipeline and unplanned repairs to the pipeline were carried out in response to this incident. In
addition to the incident, planned extensive reconstruction projects were implemented in 2023: reconstruction of a 16
km section in the Vilnius-Kaunas gas pipeline, reconstruction of five gas distribution stations (Šiauliai, Telšiai, Grigiškės,
Kėdainiai and Vievis) and reconstructions of a pressure relief valve in the main gas pipeline branch to the Marijampolė
gas distribution station. As a result of these works and high weight/mass of construction and demolition waste
compared to other types of waste, the Company has generated ~3 times more waste in recent years. Above all, as much
as 99% of this waste was managed by recycling.
The data presented above show that there was a decrease in the municipal waste sent to waste management facilities
in 2023, while packaging waste increased. The data show increased waste sorting efforts in the Company. All the
environmental communication measures implemented in 2023 invite employees to get involved, educate them, and
change attitudes and habits, not only within the Company, but also beyond. This is why the company has seen an
increase in the amount of waste sorted each year. The aim is to maintain these trends in the future.
Actions and Initiatives in 2023
By removing individual bins from offices in 2021, the Company uses fewer bin bags and employees take short breaks
more frequently and exercise while carrying waste to the sorting bins in common areas. In 2023, the Company launched
the Environmental Representatives Initiative to increase its employees’ involvement in the process of environmental
decision-making and resource saving, both inside and outside the Company. An environmental representative is an
exemplary employee who voluntarily and responsibly represents the environmental interests in his/her department and
across the organisation. During the initiative, 16 non-environmental professionals from different departments
volunteered for the initiative. In 2023, the representatives improved their environmental knowledge by visiting waste
(Vilnius Combined Heat and Power Plant, Vilnius Mechanical Biological Waste Treatment Plant) and wastewater (Vilnius
City Wastewater Treatment Plant) management facilities. Live employee training enhanced their understanding of
waste disposal outside the Company and importance of proper waste sorting. And after the visits, the representatives
shared their impressions with colleagues via intranet, an internal communication channel. In addition to direct
education, environmental representatives carried out a secret audit of Amberiukas waste sorting at the Company’s
facilities, following which they shared the results and matters to be corrected with all the Company’s employees. Once
the environmental representative initiative has been developed, the reminders of waste prevention, sorting and
management importance intensified through live on-site education, articles on the Company’s intranet, the updated
column accessible to all employees, a weekly newsletter, and in-house training.
On 21 April 2023, the DAROM campaign was organised in the Company’s units. Every year it receives considerable
attention from employees and their families. In 2023, more than 100 employees took part in the campaign. During the
campaign, employees, together with family, were cleaning the Gudeliai forest (within Vilnius city and Vilnius district)
and other areas (Panevėžys district).
Engaging the Public in Environmental Protection
Annual report 2023
78
When planning new economic activities or upgrades, the Company assesses their potential environmental impact and
identifies potential pollution mitigation measures early in the project. In the context of the environmental impact
assessment procedures, the public is given early access to the planned economic activities and pollution mitigation
measures, and it is given the opportunity to submit comments and proposals. The Company is actively concerned about
the environment and public well-being, it is open to providing information to interested authorities, public
organisations, and residents. For many years, the Company has focused on strengthening relations with communities.
There were no meetings with communities in 2023 on environmental impact assessment as no activities requiring
environmental impact assessment were planned.
Actions and Initiatives in 2023
In 2023, the Company uploaded approximately 50 individual public information notices on its publicly accessible website
at www.ambergrid.lt, under the heading ‘Announcements’, related to environmental protection, protection zones for
infrastructure in operation, special and local class area plans, their preparation, decision-making on the plans, and other
relevant information.
Ambient Air Pollution
The Company’s operations use a variety of combustion plants, such as compressors, boilers, power generators, etc.,
which emit nitrogen oxides and carbon monoxide into the air.
Although ambient air pollution is not very significant compared to the impact of greenhouse gases, it is an environmental
impact that needs to be monitored and reduced.
20 table. Air Pollution
Ambient Air Pollutant
Units of
Measurement
2023
2022
2021
Nitrogen oxide, NOX
T
35.0
58.6
27.3
Carbon monoxide, CO
T
51.01
73.3
35.21
Actions and Initiatives in 2023
Emissions into ambient air have been lower in recent years than in 2022.
In 2022, after completing the construction of GIPL pipeline, the operation of plants was not yet well established and
clear, leading to higher fuel consumption in the stationary installations and, consequently, increase in emissions into
ambient air. In 2023, stationary installations at gas compressor stations, gas distribution stations and Vilnius unit were
operating more steadily, resulting in a more efficient use of fuel.
In 2023, an efficiency improvement analysis carried out by external consultants at the Jauniūnai and Panevėžys gas
compressor stations showed that the most appropriate way to reduce fuel consumption and emissions into ambient air
at the stations is through the installation of new electric units. The public tender for the purchase of a new electric
compressor for the Jauniūnai Compressor Station was initiated in 2023, and the public tender for the purchase of design
and installation works for a new compressor is scheduled for 2024. The new electric compressor will operate without
fossil fuel and will take over most of the workload from the gas compressors, which should result in significant
reductions of both GHG emissions and air pollution from the facility. In the future, a similar upgrade is planned for the
Panevėžys Gas Compressor Station. As in the past, the reconstruction of gas distribution stations in 2023 involved the
replacement of conventional combustion installations with condensing installations, which reduce fuel consumption
and thus emissions into ambient air. In addition, the potential of replacing some fossil fuel boilers with electric boilers
is being explored, with a first pilot project scheduled for 2024.
Reducing Greenhouse Gas Emissions
The Company has set an ambitious target to reduce its environmental impact (including, but not limited to, GHGs) by
2/3 by 2030, compared to a base year of 2019, based on the goals of the Paris Climate Accords of 12 December 2015,
and the European Union and national ambitions to halt climate change. In order to achieve this goal and to contribute
to the global targets, the Company launched a group-wide (including the Company) inventory of GHG emission sources
and assessment of the overall environmental impact of its operations in 2021. The aim was to identify the group-wide
environmental impacts, to identify impact mitigation measures, and to assess the realistic feasibility of implementing
the measures. In 2022, an Environmental Impact Mitigation Plan up to 2030 was prepared in cooperation with external
experts, which was updated in 2023 by highlighting the priority of cost-effective measures and the planned date of first
Annual report 2023
79
results. In the same year, an Investment and Cost Plan for Mitigation Measures until 2030 was also drawn-up, thus
providing for the potential initial investments required for the implementation of the measures and consistent annual
support costs. The overall plan was introduced to the Technical and Innovation Committee and to the Board, which
support the implementation of the plans and are willing to examine the conditions for the implementation of each
measure.
21 table. Greenhouse gas emissions and leakages
Indicator
Units of
Measurem
ent
2023
2022
2021
Notes
Greenhouse Gas Emissions
Direct Scope 1 Emissions, including:
kg CO
2
e
50 397 889.8
35 108 527
58 788 621
Emissions from stationary combustion
plants
18 927 262.4
15 997 750.8
6 572 705
Emissions from mobile combustion
plants (transport, mobile compressor)
825 562.4
666 451
794 364
Renewable electricity generation
emissions
0
0
0
Controlled emissions of leaked (vented
out) gas (methane)
17 607 814.3
4 946 190.8
39 063 161
angl. Vented out
Uncontrolled emissions of leaked
(escaped) gases (methane,
f-gases)
13 037 250.7
13 498 134.6
12 358 391
angl. Escaped
Indirect Scope 2 Emissions, including
(market approach) *:
kg CO
2
e
2 829
1 188 994
1 741 779
Non-renewable electricity consumption
acquired
0
1 185 589
1 736 424
There no non-renewable
electricity acquired in 2023
Non-renewable electricity consumption
acquired
0
0
–
There no renewable electricity
acquired in 2021
Non-renewable electricity costs for
electric vehicles
0
48.4
–
Use of electric vehicles started in
2022
Thermal power consumption acquired
2 829
3 356.3
5 355
Indirect Scope 3 Emissions, including:
12 986 341,6
7 972 994,8
–
Scope 3 Emissions were not
assessed in 2021
Category 1
1 670 538.8
936 491.9
–
Category 2
8 159 853.6
3 706 969.7
–
Category 3
2 815 618,5
2 975 500,8
–
Category 5
66 522.4
32 732. 3
–
Category 6
24 692.0
53 976. 2
–
Category 7
249 116.2
267 323. 9
–
Total Scope 1–2 GHG emissions
50 400 719
36 297 521
60 530 400
Total Scope 1–3 GHG emissions (direct
and indirect)
63 387 060
44 270 516
–
Excluded emissions of biogenic origin
29 791
26 925
29 452
Scope 1–2 GHG emissions compare to
the 2019 base year
%
27.38
47.70
12.77
Relative performance indicator (GHG
intensity)
kg
CO
2
e/kWh
0.00086
0.00061
0.00115
Only Scope1–2 emissions are
used in assessment
Leaks
Natural gas loss, including:
m
3
1 801 471
1 025 999
2 864 945
Controlled releases of methane into the
environment
t
704.3
197.8
1 562.5
Uncontrolled leakage of methane into
the environment
519.7
538.1
492.4
* For the market-based emissions calculation, the company has chosen to use the derived emission factors (factors) calculated by the One Click LCA
- Life Cycle Metrics software, which are derived from the IPCC Emission Factor Database (EFDB) and the AIB reports. The market-based emission
Annual report 2023
80
factors were provided to EPSO-G by independent third party consultants licensed to use the One Click LCA software. Using the 'location based method',
i.e. based on the country-specific nature of energy production, Amber Grid's GHG emissions are 795 tCO2e in 2021, 515.4 tCO2e in 2022 and 455
tCO2e in 2023. Emission factors (factors) were used to calculate the local approach, based on data published by the Association of Issuing bodies
(AIB).
Actions and Initiatives in 2023
The Company signed a memorandum of understanding with the United Nations Environment Programme (UNEP) on 24
February 2023 to join the Oil and Gas Methane Partnership 2.0 (OGMP 2.0) to further reduce methane emissions – the
Company’s largest source of GHG emissions. This is the United Nations Environment Programme’s (UNEP) flagship
programme for oil and gas reporting and environmental impact reduction. It is the only comprehensive, measurement-
based reporting framework for industry that improves the accuracy and transparency of methane emissions reporting.
Being part of the OGMP 2.0 partnership and willing to meet the organisation’s targets, the Company has committed to
report annually its methane emissions at a higher level and to reduce its methane emissions by 20% by 2028 compared
to 2022. For the data of 2022 reported in 2023, Amber Grid, among the other operators, was awarded the Gold Standard
Pathway, the highest possible rating, given the Company’s reasonable plan to achieve the highest level of reporting and
the accuracy/clarity of the data reported.
A Scope 3 emissions inventory for 2022 was also carried out in 2023, which formed the basis for Scope 3 emission
calculations in 2023. Following the inventory of all three Scope emissions, the Company’s direct and indirect GHG
emissions and their sources were identified under the Greenhouse Gas Protocol. Currently, the Company’s main target
is to reduce its environmental impact (including but not limited to Scope 1 and 2 GHG emissions) by 2/3 by 2030,
compared to a base year of 2019, however, the Company intends to adjust the target to include Scope 3 GHG emissions
in the future.
Comparison of Scope 1 and 2 GHG data in 2023 with a base year of 2019 shows a 27.38 reduction in emissions. Such
reduction in emissions was mainly due to a shift in consumption of electricity generated from non-renewable resources
to 100% green electricity and targeted reductions in controlled and uncontrolled methane emissions. Although fuel
consumption for stationary installations, transport and a mobile compressor rose compared to 2022 due to an
unplanned natural gas combustion in Pasvalys district on 13 January 2023 and the implementation of major projects
(the reconstruction of a 16 km section in the Vilnius-Kaunas gas pipeline, the reconstruction of five gas distribution
stations (Šiauliai, Telšiai, Grigiškės, Kėdainiai and Vievis) and a pressure relief valve), it was still below a base year of
2019.
Emission reduction measures adopted include the use of the mobile compressor wherever possible, the replacement of
gas boilers at gas distribution stations with condensing boilers, and expansion of EV fleet. Use of the mobile gas
compressor for repair and reconstruction works in 2023 resulted in savings of more than 3.2 million m3 of natural gas,
or approx. 54.6 thousand tonnes of CO2 equivalent. All of the above reasons and the measures applied have contributed
to a reduction in Scope 1 and 2 GHG emissions in the Company.
The assessment of Scope 3 indirect emissions in 2023 indicates that Category 2 (non-current assets) and Category 3 (fuel
extraction and transport) emissions remain a priority, as was the case in 2022. Therefore, the Company’s will focus on
reducing fuel consumption, improving fuel efficiency in facilities and replacing fossil fuels with cleaner solutions such as
renewable electricity, biofuel and hydrogen. Category 2 indirect emissions are related to the Company’s capital
expenditures: reconstruction, repair of facilities, acquisition of new machinery, software upgrades. Scope 2 emissions
in 2023, compared to 2022, show increase of more than 2.2 times. As with Scope 1 emissions, Scope 3 Category 2
emissions have increased due to major reconstruction and repair projects in 2023, and upgrades that were not carried
out in previous years. Termination or reduction of upgrades in facilities and installations are not expected in the near
future, as they are essential for the adequate maintenance and safe operation of infrastructure. In addition, the
acquisition of new, more environmentally friendly installations, replacing outdated and inefficient equipment,
contributes to the reduction of direct and indirect emissions related to fuel consumption, however, can increase Scope
2 indirect emissions related to investments.
The Company also plans to focus on reducing less significant Scope 3 emissions: purchased goods and services (Category
1), waste (Category 5), business travel (Category 6) and employee commuting (Category 7).
Energy
The consumption of non-renewable energy sources and the emissions associated with their use are among the main
drivers of climate change in the Company’s operations. Therefore, the reduction of energy consumption, the efficient
use of energy resources, the substitution of non-renewable energy with renewable energy or the application of other
more environmentally friendly and innovative solutions are essential to reduce the Company’s GHG impact on the
environment.
22 table. Energy consumption
Annual report 2023
81
Indicator
Units of
Measurement
2023
2022
2021
Fuel for transport
Diesel fuel
Light-duty
l
59 989.42
52 760.61
Diesel fuel
Heavy-duty
168 848.87
151 110.99
171 305,53
Machinery
10 932.27
13 150.42
10 657,89
Petrol
Light-duty
39 292.419
34 084.38
Petrol
Heavy-duty
0.00
2 260.90
412,29
Machinery
0.00
38.00
0
Natural gas
MWh
642,506
178.61
474,105
Fuel for other purposes
Diesel fuel
l
10 362.15
7 627.48
7 060.65
Petrol
3 367.93
3 052.39
585.27
Natural gas
Technological needs
MWh
69 855.69
75 539.70
Natural gas
Combusted during
the incident*
20 200.776
–
–
Gas, water, space
heating
2 107.287
2 370.92
2 470,95
Cooling/Conditioning
Šaltnešys R410A
kg
21,50
22,30
23,40
Šaltnešys R32
0,00
0,00
0,20
Energy Generation
Solar
MWh
1 478.375
1 426.195
70.08
Other
–
–
–
Energy Usage
Renewable electricity acquired
MWh
1 913.18
23.24
0
Non-renewable electricity acquired
0
2 143.97
3 139.94
Renewable electricity produced and
consumed
492.711
288.509
0
Heat acquired from AB Vilniaus šilumos tinklai
57.30
67.98
93.45
* The incident in the line item of fuel consumption and emissions refers to an explosion of an underground gas pipeline on 13 January 2023 resulting in natural gas
combustion.
Actions and Initiatives in 2023
Annual report 2023
82
The Company aims to manage its transport fleet efficiently. Employees are encouraged to use car-sharing, public
transport, taxis, and to co-operate during business trips or other journeys, whenever it is possible to travel together.
The Company encourages its employees to organise meetings between different companies and departments of the
Company by videoconferencing, thus reducing transport costs and environmental emissions.
The Company’s car fleet is being upgraded and following the changes, in Q1 2024, the fleet will comprise 128 cars
(including 20 electric vehicles, 50 plug-in hybrid vehicles) and 53 special vehicles (special heavy-duty vehicles,
machinery, trailers). Partial renewal of a special fleet and partial replacement of the old fleet with a new one, and a
purchase of additional utility vehicles were scheduled for 2024 and 2025 (with the acquisition of 5 additional vehicles
and the replacement of 6 vehicles currently in operation with new vehicles). In 2023, the Company installed 4 charging
stations for electric vehicles at its production bases in Vilnius and Piniava. The Company has planned to expand the
electric vehicle charging network which will take place in two stages. 10 charging stations are scheduled for installation
in 2024 and 2025, and 18 charging stations at the production bases in Vilnius, Širvintos and Piniava in 2026. In 2024, as
in 2023, renewable electricity will be used to charge the electric vehicles.
Major reconstructions and repairs of the main gas pipeline and reconstructions of gas distribution stations were carried
out in 2023, as a result both light and heavy duty vehicles travelled longer distances to work sites than in 2022, when
repair and reconstruction works were of smaller quantity and scope In addition, gasoline-powered heavy-duty vehicles
were not used at all, which led to an increase in the use of diesel-powered heavy-duty vehicles and fuel costs. As the
Company’s fleet is gradually shifting to electric and hybrid vehicles, fossil fuel costs are expected to decrease, while
electricity and clean fuel costs are expected to increase.
The data shows that the consumption of natural gas for technological needs in 2023 was lower than in 2022, however
the total consumption of natural gas increased due to the incident on January 13. Meanwhile, fuel consumption for
technological needs is planned to be reduced even further in accordance with the Environmental Impact Mitigation Plan
in place. In 2023, the study on increasing the efficiency of compressor stations analysed different fuel cost efficiency
alternatives, of which the construction of a new electric compressor was chosen for the optimisation of the Jauniūnai
Gas Compressor Station. The new electric compressor should take the majority of the load off the gas compressors and,
using renewable electricity, should significantly reduce GHG and air pollution. In the light of the results of the study, the
Company’s further steps will be to increase fuel consumption efficiency of the Panevėžys Gas Compressor Station.
In 2021, 1.45 MWh solar parks were built at three sites of the Company. In February 2022, the renewable energy parks
became fully operational. In addition to renewable electricity, the Company plans to use green hydrogen and biogas for
its own needs in the future, which will also contribute to reducing the fossil fuel consumption and the negative
environmental impact. Analysis of the data for 2023 shows that the Company completely phase out non-renewable
electricity, and has increased the consumption of electricity generated by its own solar farms.
In recent years, the Environmental Representatives have also focused on educating employees about electricity saving.
This time, they were taught to unplug electric kettles and other small electronics when not in use. Employees were
reminded about ‘phantom’ power consumers through presentations and special stickers placed near power outlets:
‘You are done? Don’t forget to unplug’ with the symbol of ‘Amberiukas’. Employees have grown to like the Company’s
animated character ‘Amberiukas’ and, once they set it, they are reminded of environmental issues and developing new
habits.
Biodiversity
A balance of vegetation, greenery, and impermeable surface areas is maintained on and around most of the Company’s
sites. The sites are not fully surfaced with asphalt, most use water permeable crushed rock; vegetation is maintained to
the extent permitted by pipeline operation, fire safety and legal requirements.
In accordance with the national Cadastre of Protected Areas, the table below provides information on the Company’s
stations (compressor, gas metering, gas distribution stations) and gas pipelines that (including a 25-metre protection
zone) enter, border, or cross the protected areas and objects. In total, the Company’s stations border 3 protected areas
and, according to the Cadastre of Rivers, Lakes and Ponds of the Republic of Lithuania, they cross the Luponė stream.
Meanwhile, the Company’s Lithuania-wide main gas pipeline crosses 414 rivers, 9 ponds, enters the territory of 41
nature reserves, 2 botanical objects of natural heritage, 5 biosphere polygons, and 52 territories important for the
protection of habitats.
23 table. Biodiversity
Stations and protection
zones
Gas pipeline and protection zone
Territories important for
the protection of
habitats
Out of scope
Valley of Minija River, Gerviraistis Swamp II, Anykščiai Pinewood, Daugyvenės
neighbouring areas, Alioniai Swamp II, Marijampolis neighbouring areas, Gižai
neighbouring areas, Noris River, Novėžis lower reaches, Kiemeliškės village
neighbouring areas, Visinčia River near Gudeliai, Lapynai neighbouring areas, Karšuva
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Forest, Šešuvis River below Pašešuvis, Verknė middle reaches II, Rietavas Forests,
Merkys River, Šventoji River midstream, Minijos River, Žalioji Forest, Pamūšiai, Žeimena
river, Babtai-Varluva Forests, Būda and Pravieniškės Forests, Prienai Pinewood II, Noris
loop neighbouring areas, Virinta River,
Kazlų Rūda Forest IV, Minija River upper reaches, Žėbiškiai and Lomanka Forests,
Veiviržas and Šalpė Rivers and valleys, Sabališkiai Forest, Kaunas Lagoon, Nomunas
loops, Mera River and its valley, Širvinta River valleys II, Taujėnai-Užulėnis Forests, and
Karajimiškis village neighbouring areas, Labūnava Forest, Laukesa I, Pagramantis
Regional Park, Ąžuolija Forest, Lavoriškiai Forest, Čerkiškė neighbouring areas,
Strošiūnai Pinewood, Gubernija Forest, Naujakiemis neighbouring areas, Naujasis
Lentvaris neighbouring areas, Kernavė neighbouring areas, Strošiūnai Pinewood II,
Būdai Forest, Šešuoliai Forest
Biosphere polygons
Out of scope
Babtai-Varluva Forest Biosphere Polygon, Gubernija Forest Biosphere Polygon,
Labunava Forest Biosphere Polygon, Būda-Pravieniškės Forest Biosphere Polygon,
Taujėnai-Užulėnis Forest Biosphere Polygon
Biosphere reserves
Out of scope
Out of scope
Botanical objects of
natural heritage
Out of scope
The areas of the Uogintai oak and Triliemenis oak.
Reserves
Karajimiškis landscape
reserve
Veiviržas Ichthyological Reserve, Anykščiai Pinewood Landscape Reserve, Jūra
Landscape Reserve, Kurkliai Geomorphological Reserve, Geomorphological Reserve of
Vokė Old Valley Slopes, Punia Landscape Reserve, Merkys Ichthyological Reserve,
Drubengis Botanical Reserve, Landscape Reserve of Minija Old Valley, Novėžis
Landscape Reserve, Strošiūnai Landscape Reserve, Šventoji Ichthyological Reserve,
Minija Ichthyological Reserve, Karajimiškis Landscape Reserve, Kulis (Grabijolai)
Landscape Reserve, Judinis Geomorphological Reserve, Žeimena Ichthyological Reserve,
the Great Nomunas Loops Hydrographic Reserve, Upytė Hydrographical Reserve,
Šventininkai Botanical Reserve, Virinta Landscape Reserve, Daumėnai Geological
Reserve, Tatula Landscape Reserve, Sabališkės Pedological Reserve, Pamūšiai Landscape
Reserve, Minija River Breach Landscape Reserve, Praviena Hydrographical Reserve,
Baravykinė Landscape Reserve, Daugyvenė Hydrographical Reserve, Verdeikiai
Geomorphological Reserve, Jūra Ichthyological Reserve, Vokė Hydrographical Reserve,
Būda Botanical-Zoological Reserve, Ąžuolija Botanical-Zoological Reserve, Scot pine I
Genetic Reserve, Nomajūnai Landscape Reserve, Aliosia Hydrographical Reserve,
Naravai village Landscape Reserve, Prienai Pinewood Landscape Reserve, Karčiupis
Hydrographical Reserve, Naujasis Lentvaris Botanical Reserve
Parks
Biržai Regional Park
Anykščiai Regional Park
Noris Regional Park, Biržai Regional Park, Varniai Regional Park, Anykščiai Regional Park,
Sirvėta Regional Park, Nomunas Loops Regional Park, Pagramantis Regional Park,
Kaunas Lagoon Regional Park
Actions and Initiatives in 2023
After the completion of the GIPL (Gas Interconnection Poland-Lithuania) project in 2022, post-construction monitoring
of the individual phases will be carried out for 4 years. The monitoring is carried out in accordance with the
environmental monitoring programme agreed with the Environmental Protection Agency in 2016. During this
monitoring, how the local flora, fauna, and species diversity characteristic of the area are recovering from the
construction of the pipeline is monitored and it is decided whether additional measures are needed to restore or
improve the pre-construction situation. The monitoring area covers the route of gas pipeline from the connection –
valve site No 20B at the Jauniūnai Gas Compressor Station, Jauniūnai st., Širvintai district, to the border crossing
between the Republic of Lithuania and the Republic of Poland, Būdvietis st., Galiniai vlg., Lazdijai district municipality.
The monitoring plan includes not only monitoring the status of surface water bodies (Musė River, Strėva River and
Lapainia River), but also the status of the landscape, ornitofauna (Reed Bunting, Montagu’s Harrier, Spotted crake, Grey
Crane, Lesser Spotted Eagle, Black Stork, Middle Spotted Woodpecker), ichthyofauna (protected species in the Strėva,
Verknė and Lapainia rivers: Grayling, Schneider, Bitterling, Spined Loach, Freshwater Sculpin), entomofauna (Geranium
Argus, False Heath Fritillary, Woodland Brown, Large White-Faced Darter, Large Copper), herpetofauna (Painted Turtle,
Fire-Bellied Toads), and the introduction and spread of invasive alien species (Sosnowsky’s Hogweed, Manitoba Maple,
Garden lupine, Canada goldenrod), and vegetation cover. According to the data of one-to three-year monitoring period,
the construction of the Poland-Lithuania gas interconnection (GIPL) has not had a significant negative impact on and did
not affected the environment. As expected, biodiversity is recovering naturally.
Changes to natural habitats of European Community (EC) interest in the exposure zone of the pipeline are also recorded
and assessed following the construction of the GIPL. The parameters of natural habitats of EC interest are being
monitored: projection covering of vegetation cover, species composition and abundance in semi-permanent monitoring
plots. The monitoring helps to determine whether short-term changes in vegetation (following mechanical damage
during pipeline construction) are followed by renaturalisation, which enables the recovery of natural habitats of
European interest. The natural habitat meadows of EC interest close to the Skodiškės and Slabada villages, surveyed in
2023, were damaged during the construction, therefore the soil was ploughed, leveled, and the grass mixtures were
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overseeded after the construction. During the monitoring period of 2022-2023, no significant changes occurred in the
vegetation of the Fennoscandian lowland species-rich dry to mesic grasslands (code 6270) close to the Skodiškės village.
The stability of the herbaceous layer is controlled by cattle grazing in the habitat. The number of plant species remained
almost constant during the monitoring period, and no significant changes in the composition of the flora were detected.
This indicates that the previously damaged area of the habitat meadow is recovering and that the renaturalisation has
already started.
Green Gas Initiatives
We are ready to transform the natural gas system to transport renewable energy sources, such as
biomethane/hydrogen mixtures and pure green hydrogen, safely. We are ready to transform the natural gas system to
transport renewable energy sources, such as biomethane/hydrogen mixtures and pure green hydrogen, safely, and to
contribute to the development of a green or low-carbon hydrogen value chain, to participate in the raising a clear need
for, and the Company’s role in, capturing, storing, transporting and using CO2, and to participate in the development of
the chain of synthetic methane production and use.
In 2023, the Lithuania energy system transformation to 2050 study has been developed by EPSO-G together with other
Group companies experts from international consultancy DNV. The study is aimed at modelling the potential Lithuanian
energy system development scenarios taking into account development projects, opportunities, changes in energy
consumption, and responsible parties. The study recommendations are very important for the further development of
Amber Grid’s business and for establishing the 2050 long-term strategy. The forecasts in the Transformation Study
suggest that the demand for methane will remain stable up to 2030, and, from 2030 to 2050, it will be gradually
substituted by the demand for hydrogen or its derivatives. In response to these trends and taking into account the
energy transformation towards economic decarbonisation and the implementation of the European Green Deal, Amber
Grid launched its hydrogen transport activities in 2023 with the aim to become Lithuanian hydrogen grid operator. This
will allow for the timely development of new infrastructure, the adaptation of existing gas infrastructure for hydrogen
transport and the integration into the European green hydrogen transport network.
The intensive development of RES production and the significant increase in the share of RES in the overall energy
balance as well as the current and future challenges of balancing the electricity grid and integrating it into the electricity
transport system, create opportunities for the development of one of the most potential technologies, i.e. ‘Power-to-
Gas’, a green hydrogen technology produced from renewable electricity. By converting surplus electricity into green
hydrogen, it can be fed into the gas transmission system: stored in pipelines and, where necessary, can be reused for
generation of a clean electrical or thermal energy, used as a fuel in the transport sector, or used as a raw material for a
variety of industrial applications. This creates opportunities for the development of green hydrogen production capacity
and hydrogen transport infrastructure.
Actions and Initiatives in 2023
In 2023, the Company, together with its regional partners (the Baltic and Finnish gas transmission system operators),
completed a technical feasibility study on the adaptation of the gas transmission network for the transport of
methane/hydrogen mixtures, which will also lead to the identification of the system investment needs for different
hydrogen concentrations. The adaptation of the gas infrastructure for the transport of hydrogen is expected to take
place in several phases. By 2027, a P2G project for hydrogen blending in the natural gas network will be implemented
in cooperation with the gas distribution system and electricity transmission system operators as part of a research
programme to assess the technical parameters for adapting the natural gas infrastructure for transporting the
hydrogen/methane mixtures, the economic feasibility, the need for legislative changes, and the potential for adapting
the P2G technology to ensure energy system flexibility. The specific potential amount of hydrogen to be blended and
the investment in the natural gas network will be determined after taking into account the results of the planned studies,
the infrastructure capacities of the neighbouring countries, the EU requirements and the results of the economic
analysis. In the period up to 2030, gas transmission and distribution systems will be adapted to transport
methane/hydrogen mixtures of a set level.
In 2022, Amber Grid together with gas transmission system operators in Finland, Estonia, Latvia, Poland and Germany
has initiated the Nordic-Baltic Hydrogen Corridor project to create a green H2 transport corridor between Finland and
Germany as a way to connect H2 production, supply and storage hubs in Finland, Sweden, Estonia, Latvia, Lithuania,
Poland and Germany. This project is expected to be implemented by 2030. In 2023, this project was granted the status
of the infrastructure project of European interest (project of common interest) by the European Commission. A
feasibility study for this project was launched at the end of 2023.
The European Commission’s REPowerEU plan envisages an important role for biomethane in reducing the EU’s
dependence on Russian fossil fuels, as well as in addressing the significant volatility in energy prices. In 2022-2023, about
20 companies have applied for the opportunity to supply biomethane to Amber Grid’s network and received preliminary
Annual report 2023
85
conditions for connection to the transmission network. Some of them have already signed connection agreements. A
significant number of the companies that have applied are planning to connect to the transmission grid in 2024-2025.
In order to make the conditions more flexible for the companies, Amber Grid also offers a standard biomethane
connection agreement in which the biomethane producer undertakes to independently build a section of the long-
distance pipeline to be connected to the transmission system by the operator. It is estimated that if all the projects
planned to be connected to the transmission system were to come to fruition, the grid would be able to receive around
2 TWh of biomethane per year. In the long term, Lithuania's biomethane production could increase to as much as 2.5
TWh/year.
As from 2019, the Company administers the National Register of Guarantees of Origin for gas produced from RES, which
performs the functions of issuing, transferring and cancelling guarantees of origin, supervising and controlling the use
of guarantees of origin and recognizing in Lithuania of the guarantees of origin issued in other countries. The register is
useful for energy consumers using green gas produced in Lithuania or other EU Member States. The Company
cooperates with designated bodies in other countries and with organizations in the RES gas sector and their associations
to facilitate the exchange of guarantees of origin between EU Member States.
From the end of 2022, biomethane with guarantees of origin is imported from the Netherlands. This biomethane is used
in transport as fuel and the guarantees of origin are used in the Renewable Energy Fuel Units (REFU) system to cover
the obligations of fuel suppliers regarding the share of renewable fuels in the final fuel blend.
In the summer of 2023, the first guarantees of origin were issued for biomethane produced in Lithuania and injected
into the gas transmission system. By the end of 2023, 47 GWh of biomethane with guarantees of origin were produced.
In 2023, Amber Grid took active part in the preparation of the draft Guidelines for the Development of the Hydrogen
Sector in Lithuania until 2050, initiated by the Ministry of Energy, which presents the vision of the Lithuanian hydrogen
sector development, defines the strategic directions and stages of hydrogen development, the business environment
and tasks. The draft guidelines identifies the hydrogen pipeline from Finland to Germany through Lithuania as one of
the main hydrogen transport projects, which enable the export or import of hydrogen to/from other EU countries. The
project will provide Lithuania with the access to underground hydrogen storage facilities planned to be installed in other
countries. The draft guidelines defines the hydrogen blending in the natural gas network as a transitional measure to
promote the emergence of a green hydrogen market and to create the first hydrogen transport capacity.
8.5. SOCIAL SUSTAINABILITY
Our Approach
Integral elements of this culture include the well-being and development of employees, the promotion of a culture of
safe working practices, equal opportunities, the development of open and mutually trusting relationships with local
communities and ensuring customer satisfaction with the services provided. The Company aims to become an
organisation that is perceived by the majority of its suppliers, producers, consumers, employees, communities, and
other stakeholders as a sustainable organisation.
As at 31 December 2023, the Company had 345 employees
(excluding employees on childcare leave).
24 table. Distribution of employees by job title categories (excluding employees on childcare leave)
Job title category
Gender
Number of employees as
at 31/12/2023
Number of employees as
at 31/12/2022
Number of employees as
at 31/12/2021
Whole Company
Men
264
255
252
Women
81
77
72
Top Management
Men
5
5
5
Women
1
1
1
Middle Management
Men
27
27
26
Women
15
13
11
Professionals
Men
136
129
132
Women
64
62
59
Workers
Men
96
94
89
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86
Women
1
1
1
From the data in table, it may be concluded that, in 2023, the largest increase is observed in professionals (+7 men and
+2 women), with an increase of 2 in the number of workers men, while the number of top and middle level employees
remains unchanged.
25 table. Staff Turnover Indicators (incl. employees on childcare leave):
Year
Number of Staff at
the beginning of the
year
Number of Staff at
the end of the year
Average Number of
staff
FTEs (full-time
equivalent) at the
end of the year
Number of staff
under fixed-term
contracts
Number of part-
time staff
2021
317
329
320
326
9
3
2022
327
342
326
338
12
5
2023
342
351
339
349
6
3
In 2023, the number of staff under fixed-term contracts decreased, respectively due to the return of female
employees from a long-term maternity/parental leave, or the termination of employment with the Company after
such leave, or the expiry of fixed-term contracts.
Respectively, the decrease in number of fixed-term contracts was also influenced by fewer women taking long-term
maternity leave in 2023.
The higher number of employee on parental leave is observed among women than among men (the number of men
on long-term paternity leave is generally equal to zero), and thus the distribution of female employees under fixed-
term contracts is proportionally higher.
Data by gender (incl. employees on childcare leave):
26 table. The women working on the Amber Grid
WOMEN
TOTAL number of
women
TOTAL number of
women
FTE (full
-time equivalent)
Average number of
women
Women on maternity
leave
Women returned from
maternity leave
Women under fixed
-
term contracts
Women under a part
-
time employment
contract
Women working at the
end of the year
Women employed
during the year
Women
resigned/dismissed
during the year
Women with more than
one year service at the
end of the year
at the
beginning of
the year
at the end of
the year
at the end of
the year
<30 years
30-50 years
50+ years
<30 years
30-50 years
50+ years
<30 years
30-50 years
50+ years
<30 years
30-50 years
50+ years
2021
65
77
77
66
4
0
6
0
8
50
19
6
13
2
0
8
1
6
5
2
2022
77
85
84
73
5
1
9
1
10
55
20
5
15
1
1
10
2
3
10
0
2023
85
87
85
76
2
2
5
2
12
55
20
5
6
0
2
5
2
5
5
0
27 table. The men working on the Amber Grid
MEN
TOTAL number of men
TOTAL number of men
FTE (full
-time equivalent)
Average number of men
Men on paternity leave
Men returned from
paternity leave
Men under fixed
-term
contracts
Men under a part
-time
employment contract
Men working at the end
of the year
Men employed
during the year
Men resigned/dismissed
during the year
Men with more than one
year service at the end
of the year
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87
at the
beginning of
the year
at the end of
the year
at the end of
the year
<30 years
30-50 years
50+ years
<30 years
30-50 years
50+ years
<30 years
30-50 years
50+ years
<30 years
30-50 years
50+ years
2021
252
252
249
241
0
0
3
3
12
147
93
6
17
2
2
16
9
4
7
0
2022
250
257
254
240
0
0
3
4
16
145
96
8
19
3
1
16
6
5
15
2
2023
257
264
264
249
0
0
1
1
16
150
98
7
23
4
4
14
9
6
21
4
The Company ensured the rights of employees returning from parental leave in accordance with the provisions of the
Labour Code of the Republic of Lithuania: offering the same or equivalent workplace/position under terms of
employment no less favourable than those previously, including remuneration, and to make use of all improved
conditions, including the right to increased remuneration which the employee would have been entitled to had he or
she been working.
The Company employs employees with a wide range of background (excluding employees on childcare leave):
Table 28. "Distribution of Amber Grid employees by education
Employee education indicators (incl. employees on childcare leave):
Table 29. "Distribution of Amber Grid employees by education
Year
Employee WOMEN
Employee MEN
Number of WOMEN by education (year end)
Number of MEN by education (year end)
Higher
Education
Post-Secondary
Education
Secondary
Education
Basic Education
Higher
Education
Post-Secondary
Education
Secondary
Education
Basic Education
2021
66
8
3
0
150
34
68
0
2022
75
5
5
0
156
33
68
0
2023
79
4
4
0
165
24
75
0
From the data in table, it may be concluded that, in 2023, the number of employees with post-secondary education
decreased, but there is an exponential increase in the number of employees with higher education. Among male
employees, the number of employees with secondary education has also increased.
By valuing the contribution of every employee, we aim to retain and attract staff in a competitive market environment.
Staff turnover in 2023 was slightly lower than in the preceding year and is assessed by the Company as normal.
Education
Number of employees as at
31/12/2023
Number of employees as at
31/12/2022
Number of employees as at
31/12/2021
Higher Education
238
222
211
Higher Education by Gender,
Men/Women, %
69.3/30.7
69.4/30.6
71/29
Post-Secondary Education
28
38
42
Post-Secondary Education by
Gender, Men/Women, %
85.7/14.3
84.2/15.8
81/19
Secondary and Vocational
Education
79
72
71
Secondary and Vocational
Education by Gender,
Men/Women, %
94.9/5.1
95.8/4.2
95.8/4.2
Annual report 2023
88
30 table. Amber Grid employee turnover rates
2023
2022
2021
Turnover, %
9.7
11.04
11.21
Turnover by Gender,
Men/Women, %
73/27
64/36
75/25
The turnover of part-time employees and staff employed under fixed-term contracts is monitored. No significant
changes in the statistical indicators were recorded according to the criteria selected for monitoring.
31 table. Amber Grid employee turnover rates
2023
2022
2021
Number of Part-Time Employees/Number of Part-Time Employees
who Resigned
3/0
3/1
3/0
% of Part-Time Employees by Gender, Men/Women
33.3/66.7
66.7/33.3
100/0
% of Part-Time Employees who Resigned by Gender, Men/Women
0/0
100/0
0/0
Number of Staff Employed under Fixed-Term Contracts/Number of
Staff Employed under Fixed-Term Contracts who Resigned
6/2
15/5
9/2
% of Staff under Fixed-Term Contracts by Gender, Men/Women
16.7/83.3
20/80.
33.3/66.7
% of Staff under Fixed-Term Contracts who Resigned by Gender,
Men/Women
0/100
40/60
100/0
The average age of employees in 2023 was 44.8 years (42.2 for women; 45.6 for men).
32 table. Amber Grid employee age indicators
Age of
Employees
Number of
Employees
(%) in 2023
Number of
Employees
(%) in 2022
Number of
Employees
(%) in 2021
Age Group
Distribution by
Gender
(Men/Women, %) in
2023
Age Group
Distribution by
Gender
(Men/Women, %) in
2022
Age Group
Distribution by
Gender
(Men/Women, %) in
2021
<20-30
8.1
7
6.2
57.1/42.9
58.3/41.7
60/40
30-40
27
28
31.2
73.1/26.9
68.2/31.8
76.2/23.8
40-50
30.7
30
28
77.4/22.6
77.6/22.4
76.9/23.1
50-60
22.6
24
23.8
80.8/19.2
78.8/21.2
80.5/19.5
>60
11.6
11
10.8
87.5/12.5
91.7/8.3
88.6/11.4
The majority of the company’s employees are men. This is strongly influenced by the specific nature of the activities
carried out: women are less likely to opt for technical engineering and field-based technological work and directly
related professions.
Initiatives and actions implemented in 2023:
• The hybrid work model has been reviewed. Teamwork is a key to Amber Grid’s internal culture, and is considered as
the organization’s strengths and advantages by the employees. This is one of the core values that we want to
preserve by enabling teams to have more real-life interactions. Based on the employee survey findings, the Company
shifted to another hybrid work model, i.e. requesting to work in the office two days a week instead of one (bearing
in mind the type of work);
• Employer branding measures have been implemented to create an employer value proposition for potential and
existing employees. Efforts were made in the key areas of compensation, additional benefits, career and growth,
work environment, and organisation culture;
• Individual coaching sessions were held for employees. Coaching sessions help employees to better understand their
strengths, challenges and opportunities, and to develop new skills to achieve both individual and professional goals.
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89
Coaching sessions are useful for employees willing to manage stress and emotional tension at work. By implementing
strategies and developing skills that help manage stress, employees can better respond to challenges and improve
their own well-being.
Cooperation with educational institutions:
• Staff visited schools to raise awareness of energy sector and career in energy (10 presentations);
• We attended the defence of student’s final thesis at the Panevėžys College. To raise interest in career opportunities,
Amber Grid attended the defence of student’s final thesis, making presentation about the Company and interesting
and meaningful career opportunities in energy;
• We participated in the Vilnius Tech event, where we had a discussion with students about innovation;;
• We took part in two career fairs, and introduced our Company to stimulate young people’s willingness to take up a
career in energy engineering;
• The GROWING ENERGY PROFESSIONALS traineeship (paid) project has been launched. We aim to demonstrate to
energy students the versatility of the energy profession, to present Amber Grid as an attractive employer, and to give
students the opportunity to learn practical skills while being paid a salary. We had two trainees. We intend to
continue this project in 2024
Digitalisation solutions for people management:
• A digital tool for the analysis and mapping of staff data has been put in place;
• The Talent Acquisition and Management (TAM) information system has been set up and put in use. The system
provides an opportunity to improve the candidates' recruitment experience, ensure data protection, perform data
analysis, automate processes, etc.);
• Workers’ performance appraisal has been changed by including workers in the overall performance appraisal
system. Annual appraisal meetings have been introduced for workers to ensure equal performance appraisal and
the opportunity to receive and give feedback;
• The procurement of a distance e-training information system was completed. We strive to be innovative, deliver
employee training in a way that makes the information accessible, clear, engaging and easy-to-remember. This will
allow to monitor employee progress and will facilitate training process management.
Staff surveys and studies:
• Hybrid working model survey. To better respond to the needs of employees working under a hybrid work model and
to make the best decision, we invited employees to take the survey and express their views on the most appropriate
working method for organisation;
• The Exit interviews-surveys.
• Although the organisation’s turnover rate is low, the experience of employees leaving the organisation and reasons
behind it are monitored and analysed. This information complements other measures related to employee
motivation, rewards, development, working environment, etc.;
• Newcomer surveys. The organisation focuses on the successful adaptation from the very first day of a newcomer’s
employment. The surveys provide an insight into the newcomer’s experience, which makes the basis for relevant
upgrades and changes in the adaptation system;
• Intern and trainee surveys. Our goal is for students/trainees to have a positive experience at Amber Grid, and this is
how we want to improve, therefore their feedback is a great tool to improve the standard of practice;
• Executive 360 Assessment. The organisation periodically conducts a 360 feedback survey to build trust, a better
workplace culture, a culture of equal opportunities, where the feedback is shared by both the manager and the
employee, and to enable managers develop self-awareness and plan self-development, etc.;
• Engagement survey. The organisation conducts a periodic engagement survey to analyse various aspects of the
organisation’s performance that have effect on the employee engagement and motivation. Survey findings provide
basis for improvements in relevant areas to increase employee motivation and, at the same time, create a success
story for the organisation and for all its employees. The employee engagement rate increases steadily each year:
65% in 2021, 70% in 2022 and 72% in 2023
Cooperation with the Trade Union
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90
The aim of the trade union is to represent the professional, labour, economic, and social rights and legitimate interests
of its members. Periodic meetings are organised between Trade Union representatives and the Company’s management
to discuss topical issues.
The Company cooperates closely with the Trade Union and develops a constructive social dialogue. In 2023, the
Company actively cooperated with the representatives of the Trade Union Council, jointly implementing initiatives,
sharing best practices, and seeking the best solutions:
• In 2023, periodic meetings with the Trade Union Council were held by the Company on quarterly basis to touch on
relevant issues such as the findings of the Employee Engagement Survey, changes in remuneration, the fulfilment of
obligations under the collective agreement, and the Company’s employee initiatives implemented and to be
implemented.
• In 2023, one request was submitted in accordance with the collective agreement’s principles for granting material
assistance to employees in the event of accidents and illnesses. The request was upheld and the material was
granted.
Remuneration
From the beginning of 2023, the Company applies the remuneration, performance appraisal and training policy of the
EPSO-G Group (the ‘Policy) that applies to all employees of the Company and is made available to public on its official
website. The aim of the Policy is to manage remuneration costs in an efficient, clear, and transparent way and, at the
same time, to create motivational incentives and to encourage staff to perform better, to contribute more actively to
the achievement of objectives, to go beyond the formal performance of their duties, to develop innovative, out-of-the-
box solutions, and to improve performance.
In 2021–2023, the remuneration consistently grew for employees in all job title categories. The average
remuneration of the Company’s employees increases by 14.3% in 2022 and by
12.2% in 2023.
Average remuneration in 2021-2023 by job title category, gender:
Table 33. Average Amber Grid. salaries by employee group
Job title category
Gender
Average remuneration in 2023
Average remuneration in 2022
Average remuneration in 2021
Whole Company
Men
3107.59
2768.46
2452.28
Women
3024.38
2580.36
2263.62
Top Management
Men
11111.71
9380.82
8422.37
Women
No data*
No data*
No data*
Middle and First-Level
Managers
Men
5316.23
4984.59
4260.83
Women
4120.13
3458.15
3154.87
Professionals
Men
3112.73
2723.23
2316.81
Women
2684.04
2317.90
2006.50
Workers
Men
2065.19
1901.03
1786.76
Women
No data*
No data*
No data*
* Consists of one employee, therefore the data cannot be disclosed to the public due to GDPR requirements.
The average remuneration paid to male managers is slightly higher than that paid to female managers, since more men
work in higher-level positions. Moreover, the average remuneration paid to male professionals is higher than that paid
to female professionals as relatively more men work outside the standard work schedule and are paid the bonuses
established in the Labour Code of the Republic of Lithuania, the Company’s internal regulations and collective
agreements.
Average remuneration in 2021–2023 by gender and age groups:
Table 34. Average Amber Grid. salaries by gender and age group
Job title category
Age
Average remuneration in 2023
Average remuneration in 2022
Average remuneration in 2021
Women
<30 years
2042.50
1568.03
1084.69
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30-50 years
3147.32
2675.34
2506.78
50+ years
3318.56
2842.01
2074.64
Men
<30 years
2452.56
1773.68
1449.98
30-50 years
3391.31
3041.55
2643.02
50+ years
2736.36
2500.83
2042.50
Whole Company
<30 years
2276.82
1691.42
1296.17
30-50 years
3348.74
2941.68
2607.95
50+ years
2832.50
2558.22
2223.66
In the Company, remuneration is determined and reviewed irrespective of an employee’s age. The average
remuneration of women in the Company is increasing with each age category due to growing experience and
competence, while the average remuneration of men in the 50+ age category is lower than in the 30-50 age category
as the lowest job categories are predominantly occupied by men (in 2023, we had 96 male and 1 female worker).
Employees under 30 years of age earn on average less among both women and men, because this age category mostly
comprises workers who are in entry/associate professional/worker-level positions and have recently entered the labour
market or changed their field of work.
Collective Agreement and Additional Benefits
The Company supports cultural and health activities, various festive events and individual team events and other social
activities in which all employees of the Company are entitled to participate without discrimination or restriction. The
collective agreement establishes working, remuneration, social, economic, and professional conditions and guarantees,
which are not regulated by law or other normative legal acts. Employees are entitled to additional financial guarantees
(payments in the event of accidents, illness, death of relatives, support for the birth of a child, support for raising three
or more children or a disabled child), additional days of vacation (after the birth of a child, the death of a relative, etc.),
and other guarantees.
All the Company employees are entitled to additional benefits.
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The Company encourages employees whose nature of activity and technical conditions allow them to work remotely to
use this form of work organisation to carry out their assigned functions as necessary. As of May 2022, remote work was
replaced by a hybrid model of work organisation, in which the employee works part of the time from home and part of
the time at the office.
A Learning Organisation – Developing Competences
In order to successfully develop the organisation’s activities, to remain competitive on the market, and to have
motivated and committed employees who are successful, we set high competences development goals. In a context of
rapid change and in order to be ready to take on new challenges, to focus on new quality, to apply new ways of working,
to innovate, to make flexible and appropriate decisions at different levels, we need to have the necessary knowledge
and competences, to keep learning and improving.
We have refined the educational orientations that will guide us in the coming years:
• Strengthening of professional competences;
• Efficiency of activities (innovation and digitalisation);
• energy transformation;
• Management and leadership;
• Emotional well-being of employees.
Staff learning is guided by the following general principles:
• The principle of linking to the Group’s and the Company’s strategy, values, performance assessment, competences
model, shift work planning, assessment of professional and technical qualifications;
• The principle of personal responsibility, where the employee is responsible for their own learning outcomes, with
the employer providing the conditions and opportunities for learning and development.
The 70-20-10 principle, whereby 70% of development, improvement, and learning activities come from the employee’s
work experience, 20% come from interaction and collaboration with colleagues and executives with diverse experiences
and competences, and 10% come from structured training events.
The consistent application of this model not only strengthens professional competences, but also inter-departmental
cooperation, and improves relations with colleagues and stakeholders.
In order to build an effective, competent, progressive leadership organisation based on shared values, the Company’s
general and leadership competency model identifies the strategic skills and capabilities of employees, the competences
that have the greatest impact on the success of the organisation, the achievement of its strategic goals, and the
development of leadership. The Company’s ambition is to become a competence centre for the energy of the future,
shaping future energy trends, legislation, and business models.
Based on the organisation’s strategic goals, development orientations, and each employee’s objectives and
development needs, a development plan is drawn up for each employee, which is regularly reviewed and the
employee’s personal progress is monitored.
Actions and Initiatives in 2023
In 2023, various initiatives were implemented in the area of staff development/learning:
• An ongoing training programme for executives at all levels to improve theoretical and practical leadership skills;
• Continuous micro-learning using the EMOTIKA app;
• ‘Growing with AG’ training with in-house lecturers;
• relaunched initiative to give employees a better insight into the activities of other units and the Company, where
employees from different departments present their activities;
• A new staff onboarding programme;
• A series of seminars on emotional well-being;
• English language skills development programme, depending on every employee’s individual level of English;
• Acquisition of e-training platform.
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We aim to train executives at all levels, develop a programme of in-house lecturers, and foster leadership and
professional development by finding different ways of learning and applying them in practice. Staff are familiar with
microlearning, use e-learning platforms, and participate in remote and live training.
The Company gives its employees the opportunity to participate in seminars and conferences both in Lithuania and
abroad, where employees improve their work-related skills, learn about innovations in their field and best practices of
other companies. Employee development and creativity are encouraged through hackathons.
The Company carries out its core business in a regulated energy environment, where there are clear requirements for
the professional training and certification of staff to perform main and additional functions. In accordance with the legal
framework, the Company organises professional and other compulsory training for staff as well as certification of energy
personnel.
The Company ensures that all mandatory training is organised in a timely manner (fire safety, civil protection, first aid,
manual cargo handling) and that participating employees receive not only theoretical knowledge, but also practical
skills. In order to maintain a high level of emergency readiness among employees, the Company periodically organises
fire and emergency response and civil protection table-top exercises and functional drills.
To develop employees’ professional competences, the Company organises additional training on safety, technical and
environmental issues (working with chemicals, using and checking lifting equipment, using fall protection equipment,
etc.).
Every year, the Company’s Occupational Safety and Environment Department organises a Safety Week and a Health
Week, during which occupational safety and health training is provided. In 2023, a presentation on the adequate and
intended use of personal protective equipment and a Safety Hackathon were organised. During Health Week, staff
received training on healthier diets for people of working age and infection-free travel. Employees were also provided
with live training on stress, emotions and professional burnout.
At least once a year, environmental awareness training is organised for staff. In 2023, during an environmental
awareness lesson the employees were introduced to the drinking water’s importance, water saving and received
practical tips on how to reduce water usage at home and in the workplace. The second part of the presentation
debunked myths related to waste sorting and answered the frequently asked questions on this matter, proving that
sorting is both useful and financially rewarding.
To educate staff, the Environmental Representatives Initiative was developed, with 16 non-environmental volunteering
staff members travelling to environmental facilities (Vilnius Combined Heat and Power Plant, Vilnius Mechanical
Biological Waste Treatment Plant, Vilnius City Wastewater Treatment Plant) and improving their environmental
knowledge by live experience and sharing impressions with colleagues. Environmental representatives conducted an
employee survey on environmental relevance and engagement, and delivered the findings in an animated video with
voice-over created using Animaker program. They also invited Rima Aukštuolytė, host of the Žinių Radio programme
‘What's Your CO2 Footprint?’, to give a presentation on ‘Greenwashing’ and ability to spot and avoid it. The event was
attended by more than 100 employees of the Company.
Number of Employees Trained:
Table 35. Number of staff who have received training
Type of Training
Number of Trainees
Number of Employees
Trained
Duration of Training, hrs
% of Employees Trained
Compared to the Total
Number* of Employees
2023
2022
2021
2023
2022
2021
2023
2022
2021
2023
2022
2021
Vocational Training
466
382
215
166
167
130
9516
6148
3866
50
51
67
Certification of
Energy Personnel
352
204
346
171
127
199
352
226
346
50
39
62
Compulsory Training
759
404
360
356
331
321
2709
1462
1289
105
101
100
Technical Training
172
251
206
126
153
141
2491
1182
577
45
47
64
General Training
2415
2477
2005
372
283
289
11290
11027
3952
110
87
90
* Calculated as a % of the average annual number of employees (339 employees in 2023, 326 employees in 2022; 321 employee in 2021)
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Average training hours by job title category:
Table 36. Number of staff trained by function
Job title category
Average training hours in
2023
Average training hours in
2023
Average training hours in 2023
Top Management
83.20
139.60
136.30
Middle and First-Level Managers
84.46
122.35
134.63
Professionals
67.18
54.85
44.43
Workers
67.47
35.50
36.38
The average training hours for the Company’s management in 2021-2022 are significantly higher than those for
employees in other categories, as the Company focused on strengthening leadership competencies and has organised
continuous leadership development programs for entry, middle and senior management positions. In 2023, the
number of training hours for management was lower, resulting in an insignificant difference in average training hours
for managers, professionals and workers. In 2021-2023, training hours for workers and professionals increased by
more than 50%.
Average training hours by gender:
Table 37. Number of staff trained by gender
Job title category
Average training hours in 2023
Average training hours in 2023
Average training hours in 2023
Women
66.6
59.5
34.83
Men
78.29
61.54
43.9
For both men and women, average learning hours have been rising between 2021 and 2023.
Staff Succession
The succession process is a series of actions to mitigate the risk of disruption to operations and to ensure continuity of
critical and management functions. The relevance of critical and management functions is reviewed annually by adding
new and removing obsolete posts. After the identification of critical posts and the review of the list of managerial
positions, the employees ready to take over and ensure business continuity, when needed, are determined. Succession
readiness is subject to monitoring and periodic evaluation. The organisation aims to provide every opportunity for the
line manager to ensure availability of high-potential employees on a shift. The main methods of knowledge transfer and
development for shift positions are the design and implementation of a personal development plan, the assessment of
leadership competences (360-degree feedback survey), management training, conferences, projects, substitution,
representation of the organisation, etc.
Employee selection
The Company’s Selection policy and selection process are two documents setting out the general principles and
practices for the recruitment of employees, which helps to select transparently the best candidates with the right
qualifications, skills, experience and values to contribute effectively to the achievement of the Company’s objectives.
All selections are made on the basis of the principles of transparency, objectivity, non-discrimination, confidentiality,
zero tolerance of nepotism and cronyism, clear accountability, promotion of internal career development, and the
widest possible search for the best candidates. The selection process aims to ensure the most equal treatment possible
for all candidates, and it is the direct responsibility of the hiring manager.
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In 2023, to improve the candidate experience and ensure even better protection of personal data, a selection
management platform was set up and put in use, and a path of a candidate’s experience was reviewed by ensuring a
candidate-centred ‘one-stop-shop’ experience.
Career
Given that career opportunities are one of the key motivational factors for employees, the Company encourages
employees to take part in selections for open vacancies and to grow their career horizontally or vertically, both within
the Company and within the Group. When creating career opportunities for employees and making information on
vacancies more easily accessible, great deal of attention has been paid to the dissemination of job vacancies within the
Company and the Group.
Table. 38. Amber Grid job change
Change at Post Level
2023
2022
2021
Executives-Executives
0
2
0
Experts-Executives
5
2
7
Experts-Experts
14
11
9
Workers-Experts
1
0
2
Workers-Workers
0
6
1
Adaptation of Newcomers
The organisation takes a responsible approach to the adaptation and integration of new employees.
The newcomer adaptation process is designed to help newcomers get acquainted with the Company’s organisational
culture faster, integrate into the team, establish and feel comfortable in their role. The successful adaptation of the
employee in the organization consists of two elements:
1) Employee adaptation to the workplace. Manager and immediate colleagues (where possible, a mentor is assigned)
are responsible for an employee’s adaptation to the workplace according to an agreed adaptation plan. The
employee is introduced to the main functions, duties and responsibilities, etc.;
2) Employee adaptation to the organisation. Employee adaptation to the organisation is handled by a team of
newcomer trainers who introduce the newcomers to the organisation, its initiatives, relevant information,
information systems, people, culture, values, energy innovations, etc. The trainers review and update the training
content annually to address the needs of newcomers.
After the adaptation period, newcomers are invited to complete an e-survey, to gather their feedback and to improve
the process in line with their needs. The results of the adaptation survey show that 80% of the respondents rate the
adaptation process as positive and very positive (areas of assessment: induction, familiarisation with the organisation,
tasks during the adaptation period, training of new recruits, discussion of adaptation with the manager). Also, the
aspects that contributed to a successful adaptation were: engaged colleagues, the team, the culture of the organisation.
Staff Performance Assessment System
Performance assessment is one of the most important management and effective leadership techniques for achieving
organisational goals, building positive relationships between executives and their subordinates, planning the
employees’ careers, and increasing their motivation. A new StaffRemuneration, Performance Assessment and Learning
Policy and a Description of the StaffRemuneration and Performance Assessment Procedure were approved at the end
of 2022. The new performance assessment system became effective in 2023. The annual appraisal meeting is an
employees’ performance management tool that provides a framework for setting, assessing, and holding employees
accountable for their individual goals, linked to value behaviours and the remuneration system and contributing to a
progressive, results-oriented organisational culture. The Company aims to set individual strategy-related goals for each
employee, which they pursue in line with the Company’s values of professionalism, cooperation, and progress. Goals
must be measurable, specific, time-bound, achievable, and motivating. The annual appraisal meeting helps to assess
how well the employee has achieved their goals and to set new ones; it creates a culture of feedback between executives
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and subordinates. During the meeting, the employee’s competences, learning and career opportunities, and the
employee’s expectations are discussed as well. In 2021-2022, the employees in the category ‘Workers’ were subject to
quarterly performance appraisals, and from 2023, workers have been included in a common appraisal system and
annual performance appraisal meetings are held for all employees of the Company.
Table 39. . Annual evaluation of Amber Grid employees
Year
Top
Management
Middle and
First-Level
Managers
Professionals
Workers
Number of WOMEN who
undergone a formal performance
appraisal/annual appraisal
meetings (annual/quarterly/etc.)
Number of MEN who undergone
a formal performance
appraisal/annual appraisal
meetings (annual/quarterly/etc.)
2021
6
37
182
90
72
253
2022
6
40
182
92
76
256
2023
6
42
192
94
73
255
Protection of Human Rights and Equal Opportunities
Last year, the Company updated its Equal Opportunities Policy.
This policy is the Company’s equal opportunities ‘code’, establishing the principles of equal opportunities and diversity
that are binding on all, specifying how they are to be implemented and how, in the event of a violation of equal
opportunities, reports are made and dealt with. The principles of equal opportunities and diversity are enshrined not
only in a separate dedicated policy, but also integrated into our other internal legislation: Code of Ethics, Sustainability
Report, Remuneration Policy.
The Company conducted an employee survey called ‘Equal Opportunity Ruler’ that measures the status of equal
opportunities at the workplace in different dimensions, namely organisational culture, discriminatory attitudes, HR
processes and the Company’s policy on diversity and inclusion. The Equal Opportunity Ruler is certified and managed
by the Office of the Equal Opportunities Ombudsperson of Lithuania. After evaluating the results, the Office awarded
the Company with a score of 8.5 out of 10, and that evidences that equal opportunities are ensured in the Company.
Actions and Initiatives in 2023
To maintain and foster organisational culture based on the principle of equal opportunities and to build a good working
environment that everyone enjoys regardless of their gender, nationality, religion, beliefs, age, sexual orientation,
disability, religion and other non-discrimination grounds, the Company has organised a number of trainings on what is
equality and equal opportunities and what attitudes and stereotypes contribute to inequality. Participants learned
about the concept of discrimination, its grounds and forms. Explored the principles of a safe and respectful workplace.
Discussed how to build a culture based on equal opportunities and create a diversity-friendly environment in your
organisation. 80% of the Company’s employees attended the trainings.
The Company had no discrimination incidents or other incidents related human rights abuses in 2023 (and none
from 2021 to 2022).
Occupational Safety
Actions and Initiatives in 2023
In 2023, the Occupational Health and Safety Information System (DARSIS), which does not have an equivalent in
Lithuania, was designed and implemented to ensure the consistent assessment and structured management of
occupational risks to which employees are exposed. DARSIS is based on an occupational risk assessment, taking into
account an employee’s role, work to be done, environment, equipment to be used and chemicals. The DARSIS algorithm
helps to structurally provide all occupational risk reduction and management measures depending on the risk and its
magnitude. DARSIS will make risk management and internal control related to occupational safety and health (such as
the provision of personal protective equipment, coaching, training and certification, health examination, personal
protective equipment inspection, incident recording) simple and limited to a single platform.
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In 2023, the Company had one minor accident resulted in a minor injury to an employee (2 minor accidents in 2022, 1
minor occupational accident in 2021). In total, throughout the Company’s history since 2013, there have been 6
occupational accidents, all classified as minor.
Since 2014, the Company has had an Occupational Safety and Health Committee, which consists of two safety and health
representatives elected by the employees and two committee members appointed by the employer. The employees’
safety and health representatives and the members of the committee are elected for a two-year term. On 1 February
2023, elections for 15 new safety and health representatives and committee members were held. The committee
meetings are held at least every quarter. The agenda and the frequency of the meetings of the committee depend on
the reports of the employees’ safety and health representatives, the Company’s processes, accidents, and other matters
relating to the employees’ safety and health. All the employees’ safety and health representatives and members of the
Committee received training for a better understanding of the rights and obligations of employees and employees’
safety and health representatives, as well as the basic knowledge of occupational safety necessary for the performance
of their functions.
To ensure social cooperation and partnership on environmental protection and occupational safety and health issues,
all employees of the Company are continuously informed and educated by organising various events, distributing
information materials, and providing internal training.
The Incident Prevention Committee, established in 2018, operates in the Company. Its main activity is examining
potential risks and unsafe situations and safety incidents, identifying and eliminating the causes of such incidents, and
providing for preventive measures. In 2023, the employees were more proactive in observing and reporting potential
and actual incidents, the number of reported actual and potential incidents was 27, of which 8 were investigated
(compared to 8 in 2022, 15 in 2021 and 19 in 2019). The mobile app is used for the convenience of employees and for
easier and quicker management of information on safety incidents.
Occupational Health
The Company cares about the health of its employees, so it continuously promotes a healthy lifestyle and exercising, it
organises compulsory preventive health check-ups and preventive vaccinations for the employees.
Table 40.. Amber Grid employee health prevention
Measure
Number of employees
in 2023
Number of employees
in 2022
Number of employees
in 2021
Compulsory preventive health check-ups
248
141
263
Vaccinations against tick-borne encephalitis
75
69
110
Vaccinations against influenza
92
96
101
The Company provides regular first-aid training, training in the use of automated defibrillators and trainings for
resuscitation volunteers, general leaflets on a balanced diet, correct sitting posture, work activities, specific mobility
exercises, and measures to promote physical activity.
In 2023, the new health insurance is a company-funded employee health insurance that gives insured employees faster
and more convenient access to health services: medical treatment at selected public or private healthcare institutions,
doctors’ appointments, various tests, medicines, and other health promotion services.
Support and Public Relations
Financial support may be allocated to:
• Developing cooperation with the communities in which the Company operates or implements projects or
programmes, as well as with other groups whose interests are affected by the Company’s activities, including
projects or programmes to improve the well-being of the communities where the Company operates. The Company
encourages voluntary and unpaid involvement of employees in such activities;
• Educational activities, studying at universities or other higher education institutions in programmes closely linked to
the Company’s activities;
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• In exceptional cases, with the approval of the Company’s board, support may be granted for other purposes set out
in the legislation to targeted groups of beneficiaries.
Actions and Initiatives in 2023
Investing in the most sought-after professions of the future, Amber Grid signed cooperation agreements with Vilnius
Tech University and Panevėžys College in 2022 and provided EUR-50,000 in financial support for engineering students’
scholarships. In 2023, our scholarships, established in 2022, were given to 14 Vilnius Tech students (1 in automation and
13 in mechanics) and 6 Panevėžys College students (3 in electro-automation and 3 in electro-mechanics).
To ensure the safety of people living close to gas pipelines and to raise the awareness of the population, Amber Grid
implemented a public awareness campaign ‘Protect yourself and the pipeline’ in 2023. The campaign was designed to
draw the attention of people living or working, or having a property close to the main gas pipeline to the gas pipeline,
its protection zones, and class territory of the area ensuring safety. The campaign raised public awareness of the
standards for property development near gas transmission system facilities, encouraged people to plan their activities
near gas pipelines more carefully, to check the applicable activity restrictions and to comply with the rules.
This security awareness campaign used a stylised Amber Grid logo symbol. It was
coiled around by a grass-snake revered by Lithuanians, which is a symbol of a
clean environment and a safe home, as well as energy and life. The shape of the
grass-snake resembles a pipeline beneath the ground that keeps the energy that
powers the economy flowing. Grass-snakes are symbols of stability, order and
respect, and are welcomed in people’s homes, and they are genuinely cared for.
By making visual association between the pipeline to the grass-snake, we
wanted to convey a message to residents that the pipeline ensures energy flow
and security, and to emphasise that the pipeline is safe when cared for.
As part of the ‘Protect yourself and the pipeline’ campaign, Amber Grid has
updated the ‘For Landowners’ section of its website to provide concentrated
visual and textual information on the applicable requirements for landowners.
Additionally, videos were produced on the protection zones and classes of the
area. The posters informing about the classes of the area and the protection zones of the pipelines have been displayed
in the most populated areas close to the pipelines and in the protection zones. The municipalities through whose
territory the pipeline runs published articles on their websites on the applicable special conditions on land use set for
the classes of the area, as well as awareness campaigns to help people find answers to their questions. Furthermore,
the campaign included outdoor advertising in major Lithuanian cities, encouraging people to protect themselves and
the pipeline. Digital marketing tools were also used on Google, Youtube channels, the most popular classifieds portals
and real estate marketplaces to encourage people seeking to buy real estate to check whether their land plot is not
subject to restrictions related to main gas pipeline infrastructure.
During Amber Grid’s largest infrastructure project in 2023, i.e. the reconstruction of sections in the Vilnius-Kaunas gas
pipeline, high priority was given to the local community. Kaunas and Kaišiadorys district municipalities, elders and
residents were kept informed through direct interpersonal communication and information posters about the start of
the work, the main planned stages of the work and related temporary inconveniences, as well as about the completion
of the work. The project involved cooperation with local residents and contractors on the repair of roads.
In 2023, five meetings of the ‘Security Conversations’ series of events for communities took place. The initiative aims to
build a sustainable relationship with citizens living or having property close to the pipeline, to explain the importance
of the protection zones and the steps we are taking to ensure the safety and reliability of the pipeline. During the
meetings, we introduced measures Amber Grid takes to ensure safety of the main gas pipeline, described pipeline
protection zones and classes of the areas, and discussed energy independence. Kęstutis Kilinskas, a military historian,
PhD, former participant in special missions, shared his insights on the national security, touched upon the local historical
facts of the communities, and presented future perspectives. The aim of these events is to show interest and empathy
towards the history, culture and lifestyle of local communities, to raise peoples’ awareness of actions taken by Amber
Grid to ensure safety of the main pipeline, to update them on global geopolitical developments and the impact they
have on Lithuania and the local communities, and to present the potential future scenarios and the role off the region
therein.
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The Company encourages its employees to volunteer. In 2023, 37% of the Company’s employees joined volunteering
activities, participating in Darom, Blood Donation, Favourable Pinwheel campaigns, etc.
8.6. GOVERNANCE SUSTAINABILITY
Our Approach
Amber Grid aims to ensure transparent and efficient management and development of the energy exchange platform.
This includes the reliable and secure operation of the gas transmission system, the development of an anti-corruption
culture, the improvement of the supply chain based on sustainability standards, and the promotion and implementation
of innovation in operations.
Anti-Corruption and Transparency
The Company’s anti-corruption activity is based on the zero tolerance to corruption principle, i.e. Corruption and any
related behaviour is not tolerated in the Company and the following anti-corruption measures of the Group are
implemented to manage corruption risks:
• setting restrictions on the acceptance and provision of Gifts, and procedures for making donations;
• using measures to manage interests of employees and members of the collegial bodies to ensure the primacy of
interests;
• screening of business partners;
• ensuring the credibility of staff;
• operating a Helpline;
• conducting internal investigations;
• transactions between Group companies are subject to transparency measures;
• training, communication and other targeted actions are used to raise the anti-corruption awareness of Employees;
• ensuring transparency of procurement.
Actions and Initiatives in 2023
The Company’s anti-corruption activities are based on corruption risk assessment and management. Corruption risks in
the Company are identified by establishing adequate management measures on an annual basis, and assessing the
implementation of the management measures and the risk status on quarterly basis. In 2023, the following corruption-
related risks were identified at the Company’s Prevention Department level:
• The risk that the Company’s employees will abuse and misuse their powers, and will act arbitrarily;
• The risk that the Company’s employee, in the exercise of his/her powers or duties, will act unlawfully and misuse
his/her office/authority, acquaintance or other potential influence to leverage another company (contractor’s
employee, etc.), institution, organisation, civil servant or equivalent to take unlawful actions or refrain from actions
in the exercise of his/her powers or duties;
• Risk of the Company’s employees engaging in bribery (accepting/offering).
In creating an anti-corruption environment in the Company, a great emphasis is paid one the development of anti-
corruption awareness among employees through various means and methods. In 2023, the Company organised anti-
corruption training, attended by 44 newcomers, i.e. 13% of the Company’s total workforce. 4 (8%) managers and 40
(14%) professionals participated in the training. The Company employees’ corruption resilience is also enhanced
through other measures, such as internal communication, and by bringing to the attention of employees and members
of management bodies to the most important Group’s and the Company’s internal anti-corruption legislation. In 2023,
the internal documents were made available to 345 employees or 100% of the total number of the Company’s
employees, of these, 51 (15%) were managers and 294 (85%) were staff members.
In 2023, as every year, the Company conducted an anonymous employee tolerance to corruption survey to identify the
employees’ perception of corruption and their willingness (not) to tolerate any forms of corruption. 134 employees
participated in the survey (2022: 147 employees). The survey shows that 131 (98%) employees have not encountered
any forms corruption in their work in the last 3 years (2022: 143 (97%)), and 127 (95%) of them whom to contact if
encounter corruption (2022: 137 (93%)). The trend in the survey results shows that the anti-corruption objectives are
being implemented purposefully.
Annual report 2023
101
During the reporting period, the Group’s key anti-corruption legislation applicable to the Company was updated: the
Group’s Anti-Corruption Policy and the Group’s Policy of Management of Interests of Members of Collegial and
Supervisory Bodies and Employees. The Group’s anti-corruption policy has established that the Group’s anti-corruption
activities are based on the Anti-Corruption Management System in accordance with the international standard ISO
37001:2016 ‘Anti-bribery management systems. Requirements with guidance for use’. The anti-corruption management
system is fully implemented in the Company. In 2023, the Company made preparations and implemented the standard,
and in 2024 will seek certification under LST ISO 37001:2017 ‘Anti-Bribery Management Systems – Requirements with
Guidance for Use’. To this end, the procurement of external certification audit services has been already initiated.
In 2023, employees were invited to participate in a non-traditional training, a lecture on modern corruption.
Key anti-corruption indicators:
Table 41. Anti-corruption indicators
Indicator
2021
2022
2023
Cases of corruption identified
0
0
0
Staff members sanctioned and dismissed for corruption
0
0
0
Corruption-related cases filed against the Company/employees
0
0
0
Corruption identified due to which contracts with business partners were not
concluded/renewed
0
0
0
The Company also has the Helpline - https://ambergrid.lt/mes/atsakomybe/pasitikejimo-linija/807,
sauga@ambergrid.lt, +370 699 68653, +370 666 06084, where employees and other stakeholders can directly or
anonymously report, without fear of negative consequences, potential violations, unethical or unfair behaviour. In 2023,
the Helpline received total of 2 reports. The reports received were not related to manifestations of corruption, thus
were referred to the Asset Management and Operations Departments for resolution. (10 reports in 2022; 5 reports in
2021).
Interest management
The management of conflicts of interest in the Company is guided by the Group’s Policy of Management of Interests of
Employees and Members of Collegial Bodies, which was updated on 2023. The Policy, which aims to ensure the priority
of the Group’s interests and the timely identification and appropriate management of potential conflicts of interest,
defines three main groups of conflict of interest management measures to be implemented in the Company: the
declaration of private interests; the monitoring, surveillance and control of interests; and the management of conflicts
of interest (abstention and recusal). These measures are provided in more detail in internal legislation. The Company
periodically provides training or other awareness-raising activities to raise awareness of the management of conflicts of
interest and related measures.
The Company has an integral model of declaration of private interests, which includes declaration via the PINREG, a
register managed by the State Ethics Commission, and, where required by the Law on the Harmonisation of Public and
Private Interests of the Republic of Lithuania, submission of internal declarations, the form of which has been approved
in the Group’s Policy of Management of Interests of Employees and Members of Collegial Bodies. The Company
periodically verifies whether all employees have declared their private interests, and whether they have done so
properly, and makes the necessary recommendations. The declaration of private interests is one of the critical
responsibilities of employees, enabling the Company to ensure early management of conflicts of interest.
The Company’s employees shall avoid situations where their private interests are, or may be, in conflict (conflict of
interest), and, if conflict, they shall recuse themselves. Conflicts of interest between staff members are reported to the
parties concerned: the line manager and the head of department, as well as the Prevention Department. Conflicts of
interest arising for the Company’s management and members of the collegiate bodies shall be disclosed to the Group’s
senior management.
Personal Data Protection
Annual report 2023
102
In ensuring the protection of personal data, the Company is guided by the Group’s Personal Data Protection Policy and
the Description of the Personal Data Management Procedure outlining the basic requirements for the processing of
personal data in the Company. All employees of the Company are introduced to the Description. The protection of
personal data in the Company is ensured by documenting personal data processing activities, conducting a data
protection impact assessment, evaluating technical and organisational data security measures in place, and managing
risks and incidents related to the protection of personal data. In addition, the Company conducts periodic training and
knowledge tests for its employees to ensure compliance with personal data protection requirements in practice and to
promote a culture of personal data protection.
In 2023, no any personal data breaches were identified in the Company.
The Company did not receive any complaints related to the protection of personal data, neither from external
organisations, nor from regulators.
Compliance Management
The Company has compliance measures in place to ensure the Company’s compliance with the requirements of the
legal acts of the European Union and Republic of Lithuania, internal documents, other legally binding instruments, good
practices and standards in the energy sector critical to national security.
The Company’s compliance activities are governed by the Group’s Compliance Management Policy. In ensuring
compliance, the Company is guided by the Three Lines Principle and principle of the risk-based approach. It focuses the
Company’s attention and resources on priority areas of compliance, i.e. areas where most instances of non-compliance
occur or are likely to occur, and/or where there is the greatest likelihood of the realisation of non-compliance risks,
which could have a material adverse effect on the Company and/or the Group. In 2023, the following priority areas were
approved by the Company:
• Area of inside information;
• Personal Data Protection area;
• Procurement area;
• Area of the transmission system operator’s independence.
The Company’s is guided by the principle that compliance is everyone’s responsibility - each employee has a
responsibility to ensure compliance. In addition to complying with and ensuring compliance with applicable
requirements in their daily activities, the aim is for employees to participate in compliance training, to report non-
compliances observed and to make recommendations for non-compliance process improvement. Training and targeted
communication activities are carried out to promote employee contribution to compliance management activities. Both
employees and third parties are encouraged to report non-compliances observed to the Helpline:
https://ambergrid.lt/mes/atsakomybe/pasitikejimo-linija/807.
In 2023, no significant non-compliance with laws was identified in the Company. During the reporting period, the
Company did not pay any penalties both for 2023 and for previous periods.
Cybersecurity
The Company’s operations are directly dependent on the proper functioning of the Company’s core Information
Technology (IT) and Operational Technology (OT). A disruption in IT and OT, a data breach or a cyber-attack may disrupt
the Company’s operations. Cybersecurity is therefore an essential component of the overall safety and security of the
Company’s operations.
Annual report 2023
103
We manage cybersecurity risks by periodically assessing the information security risks of vital processes, IT and OT
systems. To ensure information security, we systematically respond to information security incidents and vulnerabilities.
The Company has designated owners of information assets, IT and OT systems, and vital business processes.
The Company ensures information security by acting in accordance with international information security standards
(ISO 27001, IEC 62443) and best global information security practices. On 23 February 2022, the Company’s information
security management system was certified in accordance with ISO 27001:2017, which forms the basis for the overall
data protection management strategy and objectives.
Information security obligations are included in contracts with third parties, who must ensure the same level of
information security as the Company.
We pay close attention to safe remote work and awareness-raising of the employees by organising periodic information
security training, which is compulsory for all employees, and by conducting periodic tests involving mock attacks against
our employees.
Particular attention is paid to infrastructure and services, the disruption of which would be detrimental not only to the
Company, but also to the Republic of Lithuania. To ensure their cybersecurity, we constantly cooperate with the National
Cybersecurity Centre and other authorised authorities.
Public Procurement
In planning and performing procurements and procurement contracts, the Company is guided by the provisions of the
Law of the Republic of Lithuania on Procurement by Entities Operating in the Field of Procurement, Waste Water
Management, Energy, Transport or Postal Services (the ‘Law’), other legal acts regulating procurement and applicable
to the Company, or by good commercial practice where the Law does not apply to certain procurements.
The Company implements projects of regional and national importance. These are projects require large investments.
Their success depends on the understanding, trust, and support of shareholders, partners, controlling and regulatory
authorities, and the people of Lithuania. Therefore, in its operations, the Company focuses on oversight of public
procurement processes and prevention of corruption. The Company has effective measures in place to ensure that
procurement is carried out in a transparent manner, in accordance with the requirements of equality, non-
discrimination, mutual recognition and proportionality, and does not accept fraud, bribery or other illegal, anti-
competitive practices. Information on the procurement plans for the year, their implementation and the persons
responsible is made public on the Company’s website. In order to ensure fair competition, the Company makes available
to potential suppliers information on the projects to be implemented and the planned works for which it intends to
organise tenders for contract works.
Supply Chain Management
The success of the Company’s activities and its projects depends on transparent and fair procurement of goods, services
and works.
Green procurement criteria are integrated into the Company’s procurement policy. The Company is committed to
reducing its environmental impact and is therefore committed to prioritising green procurement. Amber Grid
undertakes to carry out at least 100% of green procurements every year since 2023.
It should be noted that the Company has developed a green procurement tool facilitating the selection of the most
appropriate green criteria in procurement processes. The Company also provides green procurement training at regular
intervals.
Actions and Initiatives
In 2022, the Company adopted a Supplier Code of Conduct. The Supplier Code of Conduct has been developed in
conformity with the Organisation for Economic Cooperation and Development’s Guidelines for Multinational
Enterprises, the principles of the United Nations Global Compact, and the best sustainability practices of international
energy companies.
Annual report 2023
104
From the end of 2023, organisations participating in the Company’s public procurements will have to commit to the
Supplier Code of Conduct. As part of the Company’ monitoring of compliance with the Code, form 2024, the Company
will invite suppliers to provide information on their value chain and geography, policies, employment, anti-corruption
and environmental practices. Suppliers and their employees will also be able to report to the Company any behaviour
that violates the Code through the Helpline channel.
Social Criteria
In 2023, Amber Grid set a target for at least 5% of its purchases to include social criteria. For the proper application of
these criteria appropriately, a tool for socially responsible procurement has been developed facilitating the selection of
the most appropriate social criteria in procurement processes. Training on socially responsible procurement is also
available.
In all its public procurements publicly advertised (>95% of procurements by value in 2023), the Company also verifies
grounds for exclusion of suppliers, including social criteria such as offences concerning trafficking in human beings,
failure to perform obligations arising from the payment of taxes, including social security premiums, non-compliance
with environmental, social and labour law obligations, etc.
The social criteria to be applied by the Company in 2024 will be introduced to its suppliers at a ‘Suppliers' Day’ event.
Suppliers will be consulted on the application of social criteria.
Procurement from Lithuanian and Foreign Suppliers
In 2023, more than 96% of Amber Grid’s public procurements contract (by value) were awarded to Lithuanian suppliers.
This keeps supply chains short and avoids unnecessary logistical costs and environmental impacts.
Innovations
In order to foster innovation and the search for potential new activities, the Company, together with other companies
in the EPSOG Group, followed a functional action plan for the creation of an innovation ecosystem in the EPSOG Group
for the period from 2022 to 2024, and the activities set out in the plan are planned to be implemented in 2024.
In view of the prospects for hydrogen development and its importance in the green energy transition, the Company has
completed the technical feasibility study on adapting gas transmission networks in the Baltic States and Finland for
transporting methane and hydrogen mixture in 2023, as well as study on modernisation measures and the investment
requirements.
Following in-depth examination of the situation, independent foreign experts have provided estimates of the required
investments in the natural gas transmission network to ensure technical capacity for the transport of the methane-
hydrogen mixture.
This is the fifth year that the Company has participated in the Juran Benchmarking initiative, the European efficiency
benchmarking for gas transmission system operators. The Company’s operations were improved based on the analysis
results provided by this initiative in 2020 and 2021. This is a long-term project, and in 2024 we will further increase the
efficiency of our operations based on the analysis.
8.7. NASDAQ ESG INDICATORS
The information provided covers the period from 1 January to 31 December 2023 and the indicators should be
considered in conjunction with the Sustainability Report. The data for the ESG (Environmental, Social and Governance)
indicators presented below have not been verified by external organisations and reflect information available at the
time of disclosure.
Annual report 2023
105
Environmental Indicators
2023
2022
2021
E1. Greenhouse Gas Emissions, kg
Scope 1
50 397 889.8
35 108 527
58 788 621
Scope 2
2 829.02
1 188 994
1 741 780
Total Scope 1–2
50 400 719
36 297 521
60 530 400
Scope 3
12 986 341,5
7 972 994,8
–
Total Scope 1–3
63 387 060
44 270 516
–
Of biogenic origin
29 791
26 925
29 452
E2. GHG Emission Intensity, g of CO
2
eq./kWh
0.86
0.61
1.15
E3. Energy Usage
Renewable Electricity Generated, MWh
1 478.4
1 426.2
70.1
Renewable Electricity Produced and
Consumed, MWh
492.7
288.5
0
Renewable Electricity Purchased, MWh
1 913.18
23.24
0
Non-Renewable Electricity Purchased, MWh
0.0
2 143.97
3 139.94
Natural Gas, MWh:
92 806.3
78 089.2
32 442.6
Transport
642.5
178.61
474.11
Technological needs
69 855.7
75 539.70
2 9497.54
Gas, water, space heating
2 107.3
2 370.92
2 470.95
Combusted during the incident
20 200.8
–
–
Diesel Fuel, l:
250 132.71
224 649.50
244 751.47
Light Duty Vehicles
59 989.42
52 760.61
55 727.40
Heavy Duty Vehicles
168 848.87
151 110.99
171 305.53
Machinery
10 932.27
13 150.42
10 657.89
Other Purposes
10 362.15
7 627.48
7 060.65
Petrol, l:
42 660.35
39 435.67
43 744.73
Light Duty Vehicles
39 292.42
34 084.38
42 747.17
Heavy Duty Vehicles
0.00
2 260.90
412.29
Machinery
0.00
38.00
0
Other Purposes
3 367.93
3 052.39
585.27
Thermal Power, MWh
57.30
67.98
93.45
E4. Energy Intensity, GJ/MWh
0.0066
0.0056
0.0033
E5. Energy Mix
Renewable Electricity, %
100
12.62
0
Non-Renewable Electricity, %
0
87.38
100
E6. Water Usage, thousands of m³
3.850
3.220
3.037
E7. Environmental Operations
Does the Company comply with a formal
environmental policy? Yes/ No
Yes
Yes
Yes
E8. Climate Oversight/Board
Does the Board oversee and/or manage
climate-related risks?
Yes
Yes
Yes
E9. Climate Oversight/Management
Does the top-level executive team oversee
and/or manage climate-related risks?
Yes
Yes
Yes
E10. Climate Risk Mitigation
Total annual investment in climate-related infrastructure, resilience, and product development:
Green Production, MEUR
0
0.615
0.314
Modernisation of Gas Networks, MEUR
24.9
3.7
9.6
Annual report 2023
106
Social Responsibility Indicators
2023
2022
2021
2020
S1. CEO/Staff Pay Ratio
Ratio of the CEO’s salary and bonuses (X) to
the average salary of full-time staff X:1
5.1
4.9
5.1
4.42
S2. Gender Pay Ratio
Ratio of the average total salary of men (X) to
the average salary of women X:1
0.95: 1
0.95:1
0.91:1
0.85:1
S3. Employee Turnover
Total staff turnover during the period, %
9.7
11.04
11.21
10.69
Turnover of part-time staff during the period,
%
0
0.31
0
0.63
Turnover of staff employed under fixed-term
contracts during the period, %
6
1.53
0.62
1.57
S4. Gender Diversity
Total share of women and men actually in
employment, %
76.5 % Men
23.5 % Women
77 % Men
23 % Women
78 % Men
22 % Women
80 % Men
20 % Women
Worker posts held by men and women, %
99 % Men
1 % Women
99 % Men
1 % Women
99 % Men
1 % Women
98 % Men
2 % Women
Expert posts held by men and women, %
68 % Men
32 % Women
68 % Men
32 % Women
69 % Men
31% Women
71 % Men
29 % Women
Middle management (MM and UM from 2021
onwards) posts held by men and women, %
64.3 % Men
35.7% Women
68 % Men
32 % Women
77 % Men
23 % Women
69 % Men
31 % Women
Top-level executive (TLE) posts held by men
and women, %
83 % Men
17 % Women
83 % Men
17 % Women
83 % Men
17 % Women
83 % Men
17 % Women
S5. Temporary Worker Ratio
Share of part-time staff, %
0.87
0.9
0.93
0.63
Share of staff employed under fixed-term
contracts/consultancy contracts, %
1.7
3
2.8
1.57
S6. Non-Discrimination
Does the Company comply with a policy to
prevent sexual harassment and/or
discrimination?
Yes
Yes
Yes
Yes
S7. Injury Rate
Injury frequency per number of employees, %
0.3
0.6
0.3
0.3
S8. Global Health & Safety
Does the Company publish and comply with an
occupational health and safety policy and/or a
general health and safety policy?
Yes
Yes
Yes
Yes
S9. Child & Forced Labour
Does the Company comply with a child labour
policy?
Yes
Yes
Yes
Yes
Does the Company comply with a policy on
forced labour?
Yes
Yes
Yes
Yes
If so, does the child and/or forced labour
policy also apply to suppliers and vendors?
No
No
No
No
S10. Human Rights
Does the Company publish and follow a human
rights policy?
Yes
Yes
Yes
Yes
Annual report 2023
107
If so, does the human rights policy also apply
to suppliers?
Yes
Yes
No
No
Governance Indicators
2023
2022
2021
2020
G1.
Total share of board posts held by
women (compared to men), %
0%
25% until 20 April
2022
0% from 20 April
2022
25%
Until 20 April 2020 - 4(0) (4 out of 4
members were men); 0%
From 20 April 2020 to 31 August
2020 - 5(1) (1 woman out of 5
members of the board); 20%
From 31 August 2020 - 4(1) (1
woman out of 4 members of the
board); 25%
G2. Board Independence
Does the Company forbid its director
from holding the post of the
chairperson of the Board?
Yes
Yes
Yes
Yes
Total number of independent
members of the Board, %
40%
50% until 20 April
2022
40% from 20 April
2022 to 18
November 2022
50% from 18
November 2022
50%
50% until 20 April 2020
20% from 20 April 2020 to 31 August
2020
50% from 31 August 2020
Total number of independent
members of the Supervisory Council,
%
There is no
Supervisory Council
There is no
Supervisory Council
There is no
Supervisory Council
There is no Supervisory Council
G3. Incentivized Pay
Are executives formally incentivised
to obtain sustainability results?
Yes
Yes
Yes
No
G4. Collective Bargaining
Total share of employees with
collective agreements compared to
the total number of employees, %
100
100
100
100
G5. Supplier Code of Conduct
Are suppliers required to comply with
the Code of Conduct?
In part
No
No
No
G6. Ethics & Anti-Corruption
Does the Company comply with the
Anti-Corruption Policy? Yes/No
Yes
Yes
Yes
Yes
If it does, what percentage of
employees have formally confirmed
their compliance with the policy? %
100
100
100
100
G7. Data Privacy
Does the Company comply with the
Personal Data Policy? Yes / No
Yes
Yes
Yes
Yes
Has the Company taken steps to
comply with the GDPR? Yes / No
Yes
Yes
Yes
Yes
G8. ESG Reporting
Does the Company publish a
Sustainability Report? Yes / No
Yes
Yes
Yes
Yes
Are sustainability data included in
reporting to supervisory authorities?
Yes
Yes
Yes
Yes
G9. Disclosure Practices
Does the Company provide
sustainability data to sustainability
reporting systems? Yes/No
Yes
Yes
Yes
In part
Annual report 2023
108
Does the Company focus on specific
Sustainable Development Goals
(SDGs)? Yes / No
Yes
Yes
Yes
In part
Does the Company set targets and
report on progress towards SDGs of
the UN?
Yes
Yes
Yes
In part
G10. External Assurance
GRI indicators of sustainability? Yes /
No
In part
In part
In part
In part
8.8. GRI INDICATORS OF SUSTAINABILITY
General Standard Disclosures
GRI standard
Topic
Page
Organisational Profile
102-1
Name of the organisation
4
102-2
Activities, brands, products, and services
4
102-3
Location of headquarters
4
102-4
Location of operations
4
102-5
Ownership and legal form
4
102-6
Markets served
22
102-7
Scale of the organisation
5
102-8
Information on employees and other workers
91-93
102-9
Supply chain
112-113
102-10
Significant changes to the organisation and its supply chain
112
102-11
Precautionary Principle or approach
46, 50, 70
102-12
External initiatives
107
102-13
Membership of associations
8-10
Strategy
102-14
Statement from senior decision-maker
5-7, 15
102-15
Key impacts, risks, and opportunities
15
Ethics and Integrity
102-16
Values, principles, standards, and norms of behaviour
5-7, 15
102-17
Mechanisms for advice and concerns about ethics
105
Governance
102-18
Governance structure
122
102-19
Delegating authority
55-57
102-20
Executive-level responsibility for economic, environmental, and social topics
55-57, 70
102-21
Consulting stakeholders on economic, environmental, and social topics
73
102-22
Composition of the highest governance body and its committees
55-57
102-23
Chair of the highest governance body
55-57
102-24
Nomination and selection of the highest governance body
55-57
102-25
Conflicts of interest
15, 55-57
102-26
Role of highest governance body in seeing purpose, values, and strategy
15, 55-57
102-27
Collective knowledge of the highest governance body
15, 55-57
102-28
Collective knowledge of the highest governance body
15, 55-57
Annual report 2023
109
102-29
Evaluating the highest governance body’s performance Identifying and managing
economic, environmental, and social impacts
66-68
102-30
Effectiveness of risk management processes
46-50, 70
102-31
Review of economic, environmental, and social topics
66-68
102-32
Role of the highest governance body in sustainability reporting
70, 115
102-33
Communicating critical concerns
73-74
102-34
Nature and total number of critical concerns
73-75
102-35
Remuneration policies
61-64, 97-98
102-36
Process for determining remuneration
61-64, 97-98
102-37
Stakeholders’ involvement in remuneration
61-64
102-38
Annual total compensation ratio
63, 97, 115
102-39
Percentage increase in annual total compensation ratio
63, 97, 115
Stakeholder engagement
102-40
List of stakeholder groups
16-18, 73
102-41
Collective bargaining agreements
96
102-42
Identifying and selecting stakeholders
16-17, 73-74
102-43
Approach to stakeholder engagement
73-74
102-44
Key topics and concerns raised
73-74
Reporting Practice
102-45
Entities included in the consolidated financial statements
66
102-46
Defining report content and topic boundaries
73
102-47
List of material topics
73
102-48
Restatements of information
66
102-49
Changes in reporting
66
102-50
Reporting period
66
102-51
Date of most recent report
66
102-52
Reporting cycle
66
102-53
Contact point for questions regarding the report
66
102-54
Claims of reporting in accordance with the GRI Standards
66
102-55
GRI content index
118
102-56
External assurance
66, 118
Identified Material Sustainability Topics and their Boundaries
103-1
Explanation of the material topic and its boundary
66
103-2
The management approach and its components
66
103-3
Evaluation of the management approach
2, 66-67
Economic Performance
201-1
Direct economic value generated and distributed
35, 54, 115
201-2
Financial implications, other risks and opportunities due to climate change
112
Procurement Practices
204-1
Proportion of spending on local suppliers
69, 113
Anti-Corruption
205-2
Communication and training about anti-corruption policies and procedures
108-112, 117
205-3
Confirmed incidents of corruption and actions taken
110, 117
Energy
302-1
Energy consumption in the organisation
85-86, 114
302-3
Energy intensity
85-86, 114
Annual report 2023
110
Biodiversity
304-1
Operational sites owned, leased, managed in, or adjacent to, protected areas and areas
of high biodiversity value outside protected areas
87-89
304-2
Significant impacts of activities, products, and services on biodiversity
87-89
Emissions
305-1
Direct (Scope 1) GHG emissions
83, 114-115
305-2
Energy indirect (Scope 2) GHG emissions
83, 114-115
305-4
GHG emissions intensity
83-85, 114-115
305-5
Reduction of GHG emissions
83-85, 114-115
Waste
306-1
Waste generation and significant waste-related impacts
80
306-2
Management of significant waste-related impacts
80-81
306-3
Waste generated
80-81
Environmental Compliance
307-1
Non-compliance with environmental laws and regulations
75-78
Supplier Environmental Assessment
308-1
New suppliers that were screened using environmental criteria
71-73
308-2
Negative environmental impacts in the supply chain and actions taken
71-73, 77-78
Employment
401-1
New employee hires and employee turnover
91-95, 115
401-2
Benefits provided to full-time employees that are not provided to temporary or part-
time employees
91, 94, 98
401-3
Parental leave
92-94
Labour/Management Relations
402-1
Minimum notice periods regarding operational changes
97
Occupational Health and Safety
403-1
Occupational health and safety management system
105-106
403-2
Hazard identification, risk assessment, and incident investigation
46, 105-107
403-3
Occupational health services
105-106
403-4
Worker training on occupational health and safety
101
403-8
Workers covered by an occupational health and safety management system
105-106
403-9
Work-related injuries
116
Training and Education
404-1
Average hours of training per year per employee
100-105
404-2
Programs for upgrading employee skills and transition assistance programs
100-105
403-3
Percentage of employees receiving regular performance and career development
reviews
103-104
Diversity and Equal Opportunity
405-1
Diversity of governance bodies and employees
105
405-2
Ratio of basic salary and remuneration of women to men
98
Non-Discrimination
406-1
Incidents of discrimination and corrective actions taken
105
Local Communities
Annual report 2023
111
413-1
Operations with local community engagement, impact assessments, and development
programs
107-108
9. SIGNIFICANT EVENTS DURING THE REPORTING PERIOD
In fulfilling its obligations under legal acts governing the securities market applicable to it, the Company publishes
significant events and other regulated information at the EU level. This information is accessible on the Company’s
website (www.ambergrid.lt/lt/apie_mus/rubrika-investuotojams/esminiai-ivykiai) and on the website of NASDAQ
Vilnius Stock Exchange (www.nasdaqbaltic.com).
Significant events during the reporting period 2023:
Table 42. Significant events of Amber Grid during 2023
Date
Significant events during the reporting period
16/01/2023
Regarding the gas pipeline incident in Pasvalys district
06/02/2023
Consolidated operating results of Amber Grid Group of 2022
07/03/2023
Adjusted Amber Grid's investor calendar for 2023
16/03/2023
Regarding the selection of a strategic partner for Amber Grid’s subsidiary gas exchange GET Baltic
17/03/2023
Correction: updated Amber Grid’s investor calendar for 2023
17/03/2023
Notice of the convening the ordinary General Meeting of Shareholders of Amber Grid AB
11/04/2023
Decisions taken at the ordinary General Meeting of Shareholders of Amber Grid AB
11/04/2023
Annual Information of Amber Grid for 2022
20/04/2023
Ex-dividend date
25/04/2023
Procedure for the payment of Amber Grid dividends for 2022
02/05/2023
Amber Grid Group Consolidated Operating Results for the 1st Quarter of 2023
09/05/2023
On Natural Gas Transmission System Operator’s Revenue Cap of Regulated Activities for 2024
09/05/2023
GET Baltic UAB, a subsidiary of Amber Grid AB, intends to conclude a 2022 tax loss transfer transaction with
EPSO-G UAB
16/05/2023
Amber Grid and EEX signed an agreement on the sale of shares of the gas exchange GET Baltic
23/05/2023
Regarding new prices for natural gas transmission services
29/05/2023
New prices for natural gas transmission services have been approved
31/05/2023
Amber Grid and EEX closed an agreement on the sale of shares of the gas exchange GET Baltic
02/06/2023
Amber Grid applied to the Prosecutor Office regarding the fittings of GIPL
31/07/2023
Correction: updated Amber Grid Investor’s Calendar for 2023
08/082023
Notice on Convening an Extraordinary General Meeting of Shareholders of Amber Grid AB
25/08/2023
Amber Grid Group Consolidated Operating Results for the 1st half of 2023
30/08/2023
Decisions adopted in the Extraordinary General Meeting of Shareholders of Amber Grid A
06/11/2023
Amber Grid Group Consolidated Operating Results for 9 months of 2023
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.
10. ANNEXES
Annex 1
Annual report 2023
112
Amber Grid organisational structure
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 12(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 Group 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 website (www.ambergrid.lt)
and EPSO-G’s website (www.epsog.lt).
Annual report 2023
113
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.
Corporate governance structure:
• The General Meeting of Shareholders;
• The Board (five members, of which two are independent members, two are nominated by the shareholder EPSO-G UAB (currently
one member), and one is a civil servant);
• The Committees operating at the Group level:
• The Remuneration and Nomination Committee (mainly composed of independent members);
• The Audit Committee (mainly composed of independent members).
• The Innovation and Development Committee (until 1 December 2022);
• CEO.
The Group has a centralised internal audit function. In order to ensure the independence of the internal audit, it is established that the
head of the internal audit function is appointed and dismissed by the Board of EPSO-G UAB, which is mainly composed 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 the 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.
The operating policies that are currently effective at the Company:
Annual report 2023
114
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.
Annual report 2023
115
Principles/recommendations
Yes/No/Not
Applicable
Comments
Principle 1: General Meeting of Shareholders, fair treatment of shareholders and shareholders' rights
The corporate governance system should ensure fair treatment of all shareholders. The corporate governance system should protect shareholders’
rights.
1.1. All shareholders should have equal access to the
information and/or documents provided for by law and should
be able to participate in decisions that are important for the
company.
Yes
Pursuant to the Law on Companies of the Republic of Lithuania
and Chapter IX of the Company’s Articles of Association,
information on general meetings of shareholders being
convened, their draft decisions 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 opportunities to its shareholders
to vote on the adoption of relevant decisions at the General
Meetings of Shareholders (by completing the general voting
ballot, representing a shareholder by proxy, etc.).
1.2. It is recommended that a company’s capital should
consist only of shares that give their holders equal voting,
ownership, dividend and other rights.
Yes
The Company’s issued 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 shares are intangible and 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. Exceptional transactions of major importance, such as
the disposal of all or almost all of the company's assets, which
would effectively amount to a disposal of the company,
should be subject to the 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. The procedures for organising and participating in the
General Meeting of Shareholders should give shareholders
equal opportunities to participate in the General Meeting of
Shareholders and should not prejudice the rights and
interests of shareholders. The choice of the place, date and
time of the General Meeting should not preclude the active
participation of shareholders in the General Meeting. In the
notice of the General Meeting, the company should indicate
the latest date on which the proposed draft resolutions can
be submitted.
Yes
The Company convenes the General Meetings of
Shareholders and implements other meeting-related
procedures in accordance with the procedure established 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 website.
Annual report 2023
116
7
For the purposes of this Code, heads of the administration are the employees of the company who hold top level management positions.
1.6. In order to ensure the right of shareholders living
abroad to access information, it is recommended that, where
possible, the documents prepared for the General Meeting of
Shareholders be made public in advance not only in
Lithuanian, but also in English and/or in other foreign
languages. It is also recommended that the minutes of the
General Meeting of Shareholders, after signing, and/or the
decisions adopted be made public not only in Lithuanian but
also in English and/or other foreign languages. It is
recommended that this information be published on the
company's website. Not all documents may be made publicly
available if their public disclosure would be prejudicial to the
company or would disclose the company’s business secrets.
Yes
Information on the general meetings of shareholders being
convened, their draft decisions and decisions made are
published on the Company’s website and on NASDAQ Vilnius
stock exchange in the Lithuanian and English languages, by
indicating location, date and time of the meeting.
1.7. Shareholders entitled to vote should be able to vote at
the meeting of shareholders, either present or absent in
person. Shareholders should not be prevented from voting in
advance in writing by completing a single ballot paper.
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. In order to increase shareholders' ability to participate
in General Meetings of Shareholders, it is recommended that
companies should make greater use of modern technology to
enable shareholders to participate and vote in General
Meetings of Shareholders by electronic means. In such cases,
the security of the information transmitted must be
guaranteed and the identity of the person who participated
and voted must be identifiable.
No
Given the challenges in ensuring the security of the
information transmitted and the establishment of the identity
of shareholders, these options are not yet available to
shareholders. However, shareholders are provided with other
opportunities to exercise their rights: to vote in the General
Meeting of Shareholders in person; to vote by proxy; to vote
by concluding voting rights entrustment agreement; voting in
writing in advance by completing the general voting ballot.
1.9. It is recommended to disclose in the notice of the draft
decisions of the convened General Meeting of the
Shareholder the new nominations of the members of the
collegial body, the remuneration proposed for them, the
proposed appointment of the audit company, if these issues
are included in the agenda of the General Meeting of
Shareholders. When proposing to elect a new member of the
collegial body, it is recommended that the member's
educational background, work experience and other
management positions held (or proposed to be held) be
disclosed.
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
7
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.
1.11. 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.
Annual report 2023
117
2.1. Establishment of the Supervisory Council
The procedure for the establishment of the Supervisory Council should ensure that conflicts of interest are properly managed and that the
company is governed efficiently and fairly.
2.1.1. The members of the Supervisory Council elected by the
General Meeting of Shareholders should collectively ensure a
diversity of qualifications, professional experience and
competences, as well as a gender balance. In order to maintain
an appropriate balance between the qualifications of the
members of the Supervisory Council, it should be ensured that
the members of the Supervisory Council as a whole have a
broad range of knowledge, views and experience to perform
their tasks properly.
Not
applicable
Supervisory Council is not formed at the Company.
2.1.2. Members of the Supervisory Council should be
appointed for a fixed term, with the possibility of individual re-
election for a new term, in order to ensure the necessary
growth in professional experience.
Not
applicable
Supervisory Council is not formed at the Company.
2.1.3. The Chair of the Supervisory Council should be a person
whose current or former position would not be an obstacle to
the impartial exercise of his/her functions. A former Manager
or the Board member of the company should not immediately
be appointed as a Chair of the Supervisory Council. Where a
company chooses not to comply with these recommendations,
information should be provided on the measures taken to
ensure operational impartiality.
Not
applicable
Supervisory Council is not formed at the Company.
2.1.4. Each member should devote sufficient time and
attention to his/her duties as a member of the Supervisory
Council. Each member of the Supervisory Council should
undertake to limit his/her other professional commitments (in
particular management positions in other companies) in such
a way that they do not interfere with the proper performance
of his/her duties as a member of the Supervisory Council. If a
member of the Supervisory Council attended less than half of
the Supervisory Council meetings during the company’s
financial year, the company’s shareholders should be
informed.
Not
applicable
Supervisory Council is not formed at the Company.
2.1.5. Where the appointment of a member of the Supervisory
Council is proposed, it should be disclosed which members of
the Supervisory Board are considered independent. The
Supervisory Council 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 Council is not formed at the Company.
2.1.6. The amount of remuneration for members of the
Supervisory Council should be approved by the company’s
General Meeting of Shareholders for their activities and
participation in the meetings of the Supervisory Council.
Not
applicable
Supervisory Council is not formed at the Company.
Annual report 2023
118
2.1.7. The Supervisory Council should carry out an evaluation
of its own performance each year. It should include an
assessment of the structure, organisation and ability to act as
a group, as well as an assessment of the competence and
effectiveness of each member of the Supervisory Council and
an assessment of whether the Supervisory Council has
achieved its stated performance objectives. The Supervisory
Council should publish, at least once a year, relevant
information on its internal structure and operating
procedures.
Not
applicable
Supervisory Council is not formed at the Company.
Principle 3: The Board
3.1. Functions and responsibilities of the Board
The Board should ensure the implementation of the company’s strategy, as well as good corporate governance, taking into account the interests
of shareholders, employees and other stakeholders.
3.1.1. The Board should ensure the implementation of the
company’s strategy, as approved by the Supervisory Council, if
it is established. In cases where the Supervisory Council is not
established, the Board is also responsible for approving the
company’s strategy.
Yes
Paragraph 34 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. The Board, as the collegial management body of the
company, performs the functions assigned to it by the Law and
the company’s Articles of Association and, in cases where the
company does not have a Supervisory Board, also performs the
supervisory functions provided for in the Law. In carrying out
its functions, the Board should take into account the needs of
the company, shareholders, employees and other
stakeholders, as appropriate, in order to build a sustainable
business.
Yes
Section 7.3 of the Company’s Articles of Association stipulates
that the Company’s Board undertakes the supervisory
functions. By performing the functions assigned to it, the
Board takes into account the Audit Committee’s
recommendations, as well as the needs of the company’s
shareholders, employees and other stakeholders.
3.1.3. The Board should ensure compliance with the laws
and internal company policies applicable to the company or
group of companies to which it belongs. It should also put in
place appropriate risk management and control measures to
ensure regular and direct accountability of executives.
Yes
Article 36(xxi) of the Company’s Articles of Association
provides that the Board takes decisions on the non-application
to the Company or the application with exceptions of the
documents applicable at the level of the Group of companies
approved by the Board of the parent company.
The Board ensures and regularly monitors the implementation
of the documents it approves (strategy, performance plans,
budget, etc.) within the Company.
3.1.4. Moreover, the management board should ensure
that the measures included into the OECD Good Practice
Guidance
8
on Internal Controls, Ethics and Compliance are
applied at the company in order to ensure adherence to the
applicable laws, rules and standards.
Yes
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;
-there is the Code of Conduct and the EPSO-G Group Anti-
Corruption Policy, the EPSO-G Group Sponsorship and Charity
Policy, Sponsorship and Charity Policy, and the EPSO-G Group
Conflict of Interest Management Policy in place.
8
For the purposes of this Code, heads of the administration are the employees of the company who hold top level management positions.
For the purposes of this Code, the criteria of independence of members of the supervisory council are interpreted as the criteria of unrelated
parties defined in Article 31(7) and (8) of the Law on Companies of the Republic of Lithuania.
Annual report 2023
119
3.1.5. In appointing the company’s manager, the Board
should take into account the appropriate balance of
qualifications, experience and competence of the candidate.
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.
Article 55 of the Company’s Articles of Association provides
that, when assessing the suitability of a candidate for the
position of the Manager, the Board shall assess the candidate’s
compliance with the requirements set out in the Articles of
Association and applicable legislation and may, for that
purpose, require the candidate to submit documents
substantiating such compliance and/or request the competent
public authorities to provide the necessary information about
the candidate.
3.2.Establishment of the Board
3.2.1. The members of the Board elected by the Supervisory
Board or by the General Meeting of Shareholders if no
Supervisory Council is established should collectively ensure a
diversity of qualifications, professional experience and
competences, and strive for gender balance. In order to
maintain an appropriate balance between the qualifications of
the members of the Board, it should be ensured that the
members of the Board as a whole have a wide range of
knowledge, views and experience to perform their tasks
adequately.
Yes
Paragraph 27 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 aimed 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 Committee in
accordance with the approved matrix of the Board
competences.
The Board members carry out their performance assessment
on annual basis. In addition, the Remuneration and
Nomination Committee evaluates the performance of the
Board on an annual basis and provides recommendations on
performance improvement.
3.2.2. The names of the candidates for election to the
Board, their education, qualifications, professional
experience, positions held, other relevant professional
commitments and potential conflicts of interest should be
disclosed, without prejudice to the requirements of the
legislation governing the processing of personal data, at the
meeting of the Supervisory Council at which the Board or its
individual members will be elected. If the Supervisory Council
is not established, the information set out in this point should
be submitted to the General Meeting of Shareholders.
The Board should compile the data on its members referred to
in this point each year and disclose it in the company’s annual
report.
Yes
Information is disclosed to public in the Company’s interim
and annual report and on the Company’s official website.
3.2.3. All new members of the Board should be briefed on
their duties, the company’s structure and its activities.
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.
Annual report 2023
120
3.2.4. Members of the Board should be appointed for a
fixed term, with the possibility of individual re-election, in
order to ensure the necessary growth in professional
experience and sufficiently frequent reconfirmation of their
status.
Yes
Paragraph 26 of the Company’s Articles of Association
stipulates that the Board is a collegial management body of the
Company consisting of five members. The members of the
Board are elected for a four-year term of office by the General
Meeting of Shareholders, to which the Board is accountable. A
member of the Board may not serve as a member of the Board
for more than two consecutive full Board terms and in any case
may not serve as a member of the Board for more than 10 (ten)
consecutive years.
3.2.5. The Chair of the Board should be a person whose
current or former position would not be an obstacle to the
impartial conduct of business. A former manager of the
company should not immediately be appointed as a Chair of
the Board. Where a company chooses not to comply with
these recommendations, information should be provided on
the measures taken to ensure operational impartiality.
Yes
Paragraph 28 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 paragraph 46 of the
Company’s Articles of Association, i.e. he/she should be
elected from among the Board members nominated by the
parent company.
3.2.6. Each member should devote sufficient time and
attention to his or her duties as a Board member. If a member
of the Board has attended less than half of the meetings of the
Board during the company’s financial year, the company’s
Supervisory Council should be informed, or, if there is no
Supervisory Council, the General Meeting of Shareholders.
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 2023, none of the Board members, who was
elected and performing the duties, missed any of the Board
meetings.
As provided for in Paragraph 51 of the Company’s Articles of
Association, the Board of the Company shall account for its
activities by providing the General Meeting of Shareholders
with its annual report of activities on the Board, including
information about adopted resolutions and the annual self-
assessment. The report can be submitted within the
framework of the annual report of the Company.
3.2.7. If, in the cases provided for in the Law, when the
Board is elected in the absence of a Supervisory Council, some
of the members of the Board will be independent
i
, it should be
published which members of the Board are considered
independent. The Board may decide that a particular member
of the Board, although fulfilling all the criteria for
independence set out in the Law, may not be considered
independent because of special personal or company-related
circumstances.
Yes
The Company’s 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 potential conflicts of interest related to the agenda
items.
3.2.8. The amount of remuneration to be paid to members
of the Board for their activities and participation in Board
meetings should be approved by the company’s General
Meeting of Shareholders.
Yes
The General Meeting of Shareholders decides on the
appointment and removal of Board members, fixing the
remuneration of Board members, conclusion of contracts with
Board members and their standard terms and conditions.
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.
Annual report 2023
121
3.2.9. Board members should act honestly, diligently and
responsibly in the best interests of the company and its
shareholders and represent their interests, taking into account
other interest holders. They should not pursue personal
interests in their decision-making, should be subject to non-
competition agreements, and should not, to the detriment of
the company's interests, take advantage of business
information and opportunities that are relevant to the
company's activities.
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 independent members are assessed for their
independence. In addition, paragraph 31 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 service, duties at the Company and other legal
entities (in view of the restrictions set in paragraph 28 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. Members of the Boards have signed
commitments to protect the information confidential. No-
compete agreements are not concluded with the members of
the Board. The need for such agreements was not established
because the Company conducts a monopoly business.
3.2.10.Every year the management board should carry out an
assessment of its activities. It should include an assessment of
the structure, organisation and ability to act as a group, as well
as an assessment of the competence and effectiveness of each
member of the Board and an assessment of whether the Board
has achieved its stated performance 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 performance
improvement plan.
In addition, the Remuneration and Nomination Committee
and the Audit Committee, acting at the EPSO-G Group level,
evaluate annually decisions made by the Board and provide
recommendations on performance improvement
The results of assessment of the Board’s activities are
presented in the Company’s annual report.
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Principle 4: Working procedures of the Company’s Supervisory Council and the Board
The company's procedures for the work of the Supervisory Council, if established, and the Board should ensure the effective work and decision-
making of these bodies and promote active cooperation between the company’s bodies.
4.1. The Board and the Supervisory Council, if established,
should work closely together for the benefit of both the company
and its shareholders. Good corporate governance requires an
open discussion between the management board and the
supervisory board. The Board should regularly and, if necessary,
promptly inform the Supervisory Council of all matters of
importance to the company in relation to planning, business
development, risk management and control, and compliance
with the company’s obligations. The 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 Council is not formed at the Company.
4.2. It is recommended that meetings of the company’s collegial
bodies be held at appropriate intervals in accordance with a pre-
approved schedule. It is up to each company to decide on the
frequency of meetings of the collegial bodies, but it is
recommended that they should be held at such a frequency as to
ensure the uninterrupted discussion of the company’s key
governance issues. Meetings of the company’s collegiate bodies
should be convened at least once a quarter of the year.
Yes
Article 45 of the Company’s Article of Association provides that
the Board shall adopt its resolutions at the meetings of the
Board. The regulation of the convocation of Board meetings and
the voting procedure, as well as other procedural issues shall be
as provided by the Law on Companies and related legal acts, and
shall be defined in detail in the rules of procedure of the Board,
which shall be approved by the Board.
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. The members of the collegial body should be informed in
advance of the convening of the meeting in order to allow
sufficient time for adequate preparation of the issues to be
discussed at the meeting and for the discussion leading to the
adoption of decisions. The members of the collegial body should
be provided with all relevant material relating to the agenda of
the meeting together with the notice of the meeting. The agenda
should not be amended or supplemented during a meeting unless
all members of the collegiate body are present and agree to such
amendment or supplementation or unless there is an urgent
need to deal with important matters of the company.
Yes
The work of the Board is guided by the Rules of Procedure of
the Board, governing the convening of meetings, the
information of the Board members, the submission of material
and other procedural issues.
The Board follows the recommendation to amend the agenda.
4.4. In order to coordinate the work of the company’s collegial
bodies and to ensure an efficient decision-making process, the
chairpersons of the company’s collegial supervisory and
management bodies should coordinate the dates and agendas of
the meetings to be convened and should cooperate closely on
other issues related to the company’s management. Meetings of
the company’s Supervisory Council should be open to the
members of the company’s Board, in particular where the
meeting deals with matters relating to the removal of members
of the Board, their liability and the determination of
remuneration.
Not
applicable
The Supervisory Council is not formed at the Company.
Principle 5: Nomination, Remuneration and Audit Committees
5.1. Purpose and composition of committees
The committees established within the company should enhance the effectiveness of the Supervisory Council and, if the Supervisory Council is not
established, of the Board, which performs supervisory functions, by ensuring that decisions are taken after due deliberation and by helping to
organise the work in such a way as to ensure that decisions are not affected by material conflicts of interest.
The Committees should act independently and in a principled manner and make recommendations related to the decision of the collegial body,
but the final decision is taken by the collegial body itself.
5.1.1. Depending on the specific circumstances of the company
and the governance structure chosen, the company’s Supervisory
Council and, if the Supervisory Council not established, the Board,
which performs the supervisory functions, form committees. It is
recommended that the collegial body form Nomination,
Remuneration and Audit committees
9
.
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
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9
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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5.1.2. Companies may decide to have fewer than three
committees. In this case, companies should provide an
explanation as to why they have chosen the alternative approach
and how the chosen approach meets the objectives set by the
three separate Committees.
Yes
EPSO-G UAB and acts in accordance with the regulations
approved by the body that forms it.
Given the close links between remuneration and nomination
issues and the need for experts with the same qualifications, it
has been decided to form a single Remuneration and
Nomination Committee.
5.1.3. The functions assigned to the committees formed in
companies may be performed by the collegial body itself in the
cases provided for by law. In such a case, the provisions of this
Code relating to committees (in particular as regards their role,
functioning and transparency) should, where appropriate, apply
to the collegiate body as a whole.
Not
applicable
Please see par. 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 the EPSO-G Group
level and the areas of their competence.
The aforementioned statutes state that the Remuneration and
Nomination and Audit Committees shall consist of at least three
members.
It is ensured that from among three members there is at least
one independent member in the Remuneration and
Nomination Committee, and more than half of the members in
the Audit Committee.
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 when performing the
external selection of an independent member of 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 report to the collegial body on their activities
and performance on a regular basis. The Rules of Procedure of
each committee, defining its role and specifying its rights and
duties, should be published at least once a year (as part of the
information that the company publishes annually about its
governance structure and practices).
Companies should also publish each year in their annual report,
without prejudice to the requirements of the legislation on the
processing of personal data, the composition, number of
meetings and attendance of members of the existing committees
during the previous year, as well as the main lines of their
activities and their performance.
Yes
Yes
The authority of the committees is 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 10).
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
consolidated Group’s annual report.
5.1.6. In order to ensure the independence and objectivity of
committees, members of the collegial body who are not
members of the committee should normally be entitled to attend
committee meetings only at the invitation of the committee. The
Committee may invite or require the attendance of certain
employees or experts of the Company. The Chair of each
committee should be able to communicate directly with
shareholders. The cases in which this should be done should be
specified in the rules governing the operation 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 the companies of
the EPSO-G UAB group of companies, employees,
representatives, candidates for certain positions or other
persons and to obtain from them the necessary explanations
within their competence as well as require for that purpose that
necessary actions would be carried out needed for the
performance of the functions of the Committees.
5.2. Nomination committee.
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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 assess the balance of skills, knowledge and
experience in the governing body, develop a description of the
functions and skills required for the specific position and assess
the time required to complete the assignment;
(2) to 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) to devote the attention necessary to ensure succession
planning.
Yes
The Remuneration and Nomination Committee of EPSO-G UAB
serves as the 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.The Company’s Manager should be consulted on matters
relating to members of the collegial body who have an
employment relationship with the company and to the Senior
Management, with the right to make proposals to the
Nomination Committee.
Yes
The Regulations establish that the right of initiative to convene
the Remuneration and Nomination Committee is exercised by
the boards or general managers of the group of companies that
also propose the agenda of the meeting by submitting issue-
related materials and draft resolutions.
Currently, the Company’s Board has no members who have
employment relations with the Company.
5.3. Remuneration Committee.
The main functions of the Remuneration Committee should be:
1) submit to the collegial body proposals on the
remuneration policy applied to members of the
supervisory and management bodies and the heads of
the administration for approval. Such policies should
cover all forms of remuneration, including fixed
remuneration, performance-related remuneration,
financial incentive schemes, pension schemes,
severance payments, as well as conditions that would
allow the company to recover amounts or suspend
payments, indicating the circumstances that would
make it appropriate;
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 point 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
10
.
Yes
The Audit Committee of EPSO-G UAB serves as the advisory
body to the Board of EPSO-G UAB and to the Company’s Board.
The main functions of the Committee are as follows:
10
For the purposes of this Code, heads of the administration are the employees of the company who hold top level management positions.
For the purposes of this Code, the criteria of independence of members of the supervisory council are interpreted as the criteria of unrelated
parties defined in Article 31(7) and (8) of the Law on Companies of the Republic of Lithuania.
Annual report 2023
126
-
supervision of the preparation of the financial statements of
the companies of the Group and performance of their audit;
-
ensuring compliance with the principles of independence
and objectivity by the auditors and audit firms of the
companies of the Group;
-
oversight of the effectiveness of the Group companies’
internal control, risk management and internal audit systems
and business processes;
-
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
complaints handling;
-
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 Audit
Committee should be informed by the company’s
executives of the accounting treatment of significant and
unusual transactions, which may be accounted for in
different ways.
Issues 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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127
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 able to meet the persons concerned, if
necessary, without the presence of members of the management
bodies.
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 companies
of the group, their employees, representatives, candidates for
certain positions or other persons, and obtain from them the
necessary explanations within their competence, as well as
require for that purpose that necessary actions would be taken
for the performance of the functions of the Committee.
5.4.4. The Audit Committee should be informed about the
internal auditor’s work programme and should be furnished with
internal audit reports or periodic summaries. The Audit
Committee should also be informed of the work programme of
the external auditors and should receive a report from the audit
firm describing any relationship between the independent audit
company and the company and its group.
Yes
Please see par. 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 applicable provisions regulating the
possibility of lodging a complaint or reporting anonymously
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 investigation of such
issues and appropriate follow-up actions.
Yes
The Audit Committee ensures the functioning of the complaints
system and the handling of complaints.
5.4.6. The Audit Committee should submit to the supervisory
board or, where the supervisory 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: Avoidance 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 system should recognise the rights of stakeholders as established by law and promote active cooperation between
the company and stakeholders to create wealth, jobs and financial stability. In the context of this principle, stakeholders include investors,
employees, creditors, suppliers, customers, the local community and others with an interest in the company.
A member of a company’s supervisory and management body
should avoid a situation where his or her personal interests
conflict or may conflict with the interests of the company. If such
a situation does arise, a member of the supervisory or
management body of the company should, within a reasonable
period of time, inform the other members of the same body, or
the body of the company that elected him or her, or the
shareholders of the company of the existence of such a conflict
of interests, indicating the nature of the interests and, where
possible, the value.
Yes
This obligation is set out in paragraphs 56-57 of the Company’s
Articles of Association, the Regulations of the management
bodies, and the Policy of Management of Interests of Members
of Collegial Bodies, Executives and Employees of EPSO-G Group.
Principle 7: Company’s remuneration policy
The company’s remuneration policy and the procedures for its review and disclosure should prevent potential conflicts of interest and abuse in
determining the remuneration of the members of the collegiate bodies and of the executives, and ensure the openness and transparency of the
company's remuneration policy, as well as the company’s 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 the 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.
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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 the
EPSO-G 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 salaries and should generally not exceed
a fraction of two years' fixed remuneration or its equivalent.
Termination payments should not be paid if the contract is
terminated because of poor performance.
No
The Remuneration, Performance Appraisal and Training Policy
of the EPSO-G 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 remuneration policy should contain sufficient
information about the retention of shares after the award
thereof. In the case of a share-based award, the shares should
not vest for at least three years after the award. After vesting,
members of the collegiate bodies and executives should retain a
certain number of shares until the end of their term of office,
depending on the need to cover any costs associated with the
acquisition of shares.
Not
applicable
No such schemes are applied at the Company.
7.6. The company should publish information about the
implementation of the remuneration 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 provide an overview of
how the remuneration policy was implemented in the previous
financial year. This type of information should not contain
information of commercial value. Particular attention should be
paid to significant 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 employee remuneration is made available to
public on a quarterly basis on the Company’s website.
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.
Schemes where members of the collegial body and employees
are remunerated 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 Remuneration for
Service at the Bodies of EPSO-G UAB and the EPSO-G Group
Companies, which are approved by the sole shareholder EPSO-
G UAB.
No such schemes are applied at the Company.
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, stakeholders include investors, employees, creditors, suppliers, customers, the local community and others with an interest in the
company.
8.1. The corporate governance framework should ensure that the
rights and lawful interests of stakeholders are protected.
Yes
The Company has adopted the Transparency and
Communication Policy of the EPSO-G Group of Companies,
which establishes goals to increase awareness and
understanding of stakeholders about the activities of the EPSO-
G Group of companies and individual group companies; to
ensure employee engagement; to create and maintain
sustainable relationship with stakeholders based on mutual
respect.
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8.2. The corporate governance framework should create
conditions for stakeholders to participate in corporate
governance in the manner prescribed by law. Examples of
participation 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 other important matters, participation
of employees in the company’s authorised capital, involvement
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 consultations, negotiations
and briefings on the processes for improving efficiency of the
Company’s operations.
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 information.
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, occupational 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.
Principle 9: Disclosure of information
The corporate governance framework should ensure that timely and accurate disclosures are made on all material matters concerning the
company, including its financial position, performance and corporate governance.
9.1. Without prejudice to the Company’s procedures for
confidential information and trade secrets, as well as to the
requirements of the legislation governing the processing of
personal data, the Company’s public disclosures should include,
but not be limited to:
Yes
The Company applies the Transparency and Communication
Policy of the EPSO-G 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. the company’s performance and financial results;
Yes
Information is disclosed to public in the Company’s interim and
annual report and on the Company’s official website.
9.3. the company's business objectives and non-financial
information;
Yes
Information is disclosed to public in the Company’s interim and
annual report and on the Company’s official website.
9.4. the persons owning or controlling a shareholding in the
company, directly and/or indirectly and/or jointly with
associated persons, as well as the structure of the group
of companies and the interrelationships between them,
with an indication of the ultimate beneficial owner;
Yes
Information is disclosed to public in the Company’s interim and
annual reports and on the Company’s and/or the Group
companies’ website.
9.5. the members of the company’s supervisory and
management bodies, which of them are considered
independent, the company’s manager, their
shareholdings or votes in the company, and their
involvement in the management 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 from existing committees on their composition,
number of meetings and attendance of members during
the previous year, as well as on their main activities and
results;
Yes
Information is disclosed to public in the Company’s interim and
annual reports and on the Company’s and/or the Group
companies’ website.
9.7. the 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.
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130
9.9. key issues relating to employees and other stakeholders
(e.g. human resources policies, employee participation in
the management of the company, incentives in the form
of shares or share options, relations with creditors,
suppliers, the 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. the company’s governance structure and strategy;
Yes
Information is disclosed to public in the Company’s interim and
annual report and on the Company’s official website.
9.11. initiatives and measures of social responsibility policy and
anti-corruption fight, 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 relieve a
company of its obligation to disclose information as required by
law.
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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131
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 discloses the information via the information
disclosure system used by the NASDAQ Vilnius stock exchange
in the 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.
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 Council or, if the Supervisory
Council 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 non-audit services
provided by the audit company shall be in accordance with the
policy approved by the Audit Committee of EPSO-G Group on
the purchase of non-audit services from the audit company or
from any network to which the audit company belongs. 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.
Annex 3
INFORMATION ON COMPLIANCE WITH TRANSPARENCY GUIDELINES
Annual report 2023
132
EPSO-G UAB and its subsidiaries comply
11
with Resolution No 1052 of the Government of 14 July 2010 On the Approval
of the Description of the Guidelines for Ensuring the Transparency of the Activities of State-Owned Enterprises
(hereinafter the “Transparency Guidelines”). The application of the Transparency Guidelines is mandatory to EPSO-G as
it is a state-owned enterprise (hereinafter the “SOE”). In order to ensure compliance with the Transparency Guidelines
across EPSO-G Group, the Business Transparency and Communication Policy of the 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 the 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 SOE complies with the provisions of the Corporate Governance
Code for the Companies Listed on Nasdaq Vilnius AB
12
that are related to public disclosure of information. Information
on how Amber Grid complies with the provisions of the Code is provided in Annex to Amber Grid’s Annual Report -
Amber Grid Notice of Compliance with the Corporate Governance Code for the Companies Listed on Nasdaq Vilnius AB.
Below is structured information on the implementation of the Transparency Guidelines:
11
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.
12
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 Amber Grid’s
website (www.ambergrid.lt):
Company name, company code and the register in which the data on the Company is collected and stored, registered office
(address)
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
Operational objectives, vision and mission
Implemented
Structure
Implemented
Manager’s details*
Implemented
Data on the chairperson and members of the Board*
Implemented
Details of the Chair and members of the Supervisory Council*
Not
applicable
Names of committees, their chairs and members*
Not
applicable
*The following details are published: name, surname, date of commencement of duties, other management positions held in other legal
entities, education, qualifications, professional experience; whether the member of the collegial body is elected or appointed as an
independent member.
Total amount of the nominal values of the shares owned by the State (to the nearest euro cent) and the percentage of
Amber Grid’s issued capital
Implemented
Implementation of special obligations established under the recommendations approved by the Minister of Economy and
Innovations 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 corporate social responsibility initiatives and measures, major investment projects underway or planned
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’s annual financial statements, Amber Grid’s annual report, as well as an auditor’s report on Amber
Grid’s annual financial statements must be published on Amber Grid’s website within 10 working days from the date of
approval of the set of annual financial statements
Implemented
Annual report 2023
133
The sets of Amber Grid’s interim financial statements and Amber Grid’s interim reports must be published on website not
later than within 2 months after the end of the reporting period
Implemented
Since Amber Grid is a parent, 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 name, company code and the register in which the data on the Company is collected and stored, registered office
(address)
Implemented
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
The following documents must be provided/other requirements must be implemented on Amber Grid’s
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
The business strategy or a summary thereof where the business strategy contains confidential information or information
considered to be 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
Sets of annual and interim financial statements for a period of at least five years and auditor’s reports on the annual
financial statements
Implemented
The above documents are published in PDF format and are technically printable
Implemented
Other requirements must be met/published in the financial statements and reports:
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 forth in the Law on Financial Reporting by Undertakings of the Republic of Lithuania, the
following information must be disclosed by Amber Grid :
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 for the objectives set out in the Operational Strategy
Implemented
Profitability, liquidity, asset turnover, debt ratios
Implemented
Compliance with specific obligations
Implemented
Implementation of the investment policy, ongoing and planned investment projects and investments during the year under
review
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 salary bill, average monthly salary by position and/or department
Implemented
Annual report 2023
134
It is recommended that SOEs that are not required to prepare a corporate social responsibility, include information on
environmental, social and human resources, human rights, anti- corruption and anti-bribery issues in their annual report or
annual activity report, as appropriate
Implemented
The consolidated annual report shall include the structure of the group, the name, code and register number of each
subsidiary company in which data on the Company are collected and stored, the registered office (address), the percentage
of shares held in the subsidiary company’s issued capital, and the financial and non-financial performance of 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
AMBER GRID AB
CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS,
CONSOLIDATED ANNUAL AND THE INDEPENDENT AUDITOR’S REPORT
FOR THE YEAR ENDED 31 DECEMBER 2023
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.
CONTENT
CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
Separate statement of changes in equity
Consolidated and separate statement of cash flow
Notes to consolidated and separate
Consolidated and separate statement of financial position
(All amounts are in EUR ’000 unless otherwise stated)
Group | Company | |||||
Notes | At 31 December 2023 | At 31 December 2022 | At 31 December 2023 | At 31 December 2022 | ||
ASSETS | ||||||
A. | Non-current assets | 298,968 | 292,179 | |||
I. | Intangible assets | 6 | 2,559 | 2,584 | ||
II. | Property, plant and equipment | 7 | 284,353 | 281,089 | ||
II.1. | Land | 136 | 125 | |||
II.2. | Buildings | 7,647 | 6,526 | |||
II.3. | Structures and equipment | 228,189 | 229,892 | |||
II.4. | Plant and machinery | 37,702 | 33,831 | |||
II.5. | Vehicles | 135 | 220 | |||
II.6. | Other PP&E | 4,668 | 3,849 | |||
II.7. | Construction work in progress | 5,876 | 6,646 | |||
III. | Right-of-use assets | 9 | 3,100 | 3,365 | ||
IV. | Non-current financial assets | 4,870 | - | |||
IV.1. | Investments in subsidiaries and associates | 8 | 3,644 | - | ||
IV.2 | Derivatives | 10 | 1,226 | - | ||
V. | Deferred tax assets | 34 | 4,086 | 5,141 | ||
B. | Current assets | 34,421 | 53,168 | |||
I. | Inventories and prepayments | 5,668 | 13,735 | |||
I.1. | Inventories | 11 | 4,874 | 12,833 | ||
I.2. | Prepayments | 794 | 902 | |||
II. | Receivables | 28,104 | 38,220 | |||
II.1. | Trade receivables | 12 | 9,030 | 18,498 | ||
II.2. | Other receivable | 13 | 19,074 | 19,722 | ||
III. | Prepaid income tax | - | - | |||
IV. | Other financial assets | 14 | 528 | 423 | ||
V. | Cash and cash equivalents | 15 | 121 | 21 | ||
VI. | Assets held for resale (assets of disposal group) | 16 | - | 769 | ||
Total assets | 333,389 | 345,347 | ||||
(cont’d on the next page)
The accompanying notes form an integral part of these financial statements.
Consolidated and separate statement of financial position
(All amounts are in EUR ’000 unless otherwise stated)
Group | Company | |||||
Notes | At 31 December 2023 | At 31 December 2022 | At 31 December 2023 | At 31 December 2022 | ||
EQUITY AND LIABILITIES | ||||||
C. | Equity | 187,526 | 183,392 | |||
I. | Issued capital | 17 | 51,731 | 51,731 | ||
II. | Reserves | 122,370 | 115,941 | |||
II.1. | Legal reserve | 19 | 5,173 | 5,173 | ||
II.2. | Other reserves | 19 | 114,430 | 110,768 | ||
II.3. | Revaluation reserve | 7,19 | 2,767 | - | ||
III. | Retained earnings (deficit) | 13,425 | 15,720 | |||
D. | Payables and liabilities | 145,863 | 161,955 | |||
I. | Payables after one year and non-current liabilities | 66,092 | 78,777 | |||
I.1. | Non-current borrowings | 21 | 60,962 | 73,496 | ||
I.2. | Lease liabilities | 22 | 2,933 | 3,012 | ||
I.3. | Contract liabilities | 23 | 1,530 | 1,271 | ||
I.4. | Provisions | 24 | 667 | 998 | ||
II. | Payables within one year and current liabilities | 79,771 | 83,178 | |||
II.1. | Current borrowings | 21 | 25,435 | 9,571 | ||
II.2. | Current portion of non-current borrowings | 21 | 5,649 | 17,895 | ||
II.3. | Current portion of lease liabilities | 22 | 317 | 502 | ||
II.4. | Trade payables | 25 | 5,335 | 13,668 | ||
II.5. | Prepayments received and contract liabilities | 26 | 622 | 882 | ||
II.6. | Income tax liability | - | - | |||
II.7. | Employment-related liabilities | 2,853 | 2,754 | |||
II.8. | Other payables and current liabilities | 27 | 39,097 | 37,142 | ||
II.9. | Provisions | 24 | 463 | 764 | ||
II.10. | Liabilities of disposal group | 16 | - | - | ||
Total equity and liabilities | 333,389 | 345,347 | ||||
The accompanying notes form an integral part of these financial statements.
Consolidated and separate statement of comprehensive income
(All amounts are in EUR ’000 unless otherwise stated)
Group | Company | ||||
Notes | 2023 | 2022 (reclassified) | 2023 | 2022 (reclassified) | |
Revenue | 28 | 80,029 | 96,046 | ||
Other income | 29 | 1,308 | 606 | ||
Total revenue and other income | 81,337 | 96,652 | |||
Purchases of natural gas and other services | 31 | ( | ( | (25,352) | (39,834) |
Payroll and related expenses | ( | ( | (13,840) | (11,942) | |
Purchases of repair and maintenance services | 4 | ( | ( | (3,055) | (3,149) |
Other expenses | 4,32 | ( | ( | (13,351) | (10,762) |
Total expenses: | ( | ( | (55,598) | (65,687) | |
EBITDA | 25,739 | 30,965 | |||
Dividend income | 30 | 542 | 598 | ||
Result on loss of control and revaluation of associates | 8 | 10,146 | - | ||
Gain (loss) on derivatives | ( | (208) | - | ||
Depreciation and amortisation | 6,7,9 | ( | ( | (12,595) | (12,854) |
Revaluation of property, plant and equipment | 7 | ( | (7,940) | - | |
Loss on impairment and write-off of property, plant and equipment | 4 | ( | (229) | - | |
Operating profit (loss) (EBIT) | 15,455 | 18,709 | |||
Finance income | 22 | 21 | |||
Finance costs | ( | ( | (1,780) | (642) | |
Total finance costs, net | 33 | ( | ( | (1,758) | (621) |
Share of results of associates | 8 | 295 | - | ||
Profit (loss) before income tax | 13,992 | 18,088 | |||
Income tax | |||||
Current year income tax expenses | ( | ( | - | (1) | |
Deferred tax benefit (expenses) | ( | ( | (567) | (2,367) | |
Total income tax | 34 | ( | ( | (567) | (2,368) |
Net profit (loss) | 13,425 | 15,720 | |||
Other comprehensive income | |||||
Items that will not be reclassified to profit or loss | |||||
Gain on revaluation of non-current assets | 3,255 | - | |||
Deferred tax (expenses) | ( | (488) | - | ||
Total other comprehensive income | 2,767 | - | |||
Total comprehensive income for the period | 16,192 | 15,720 | |||
Basic and diluted earnings /(loss) per share (EUR) | 35 | 0.08 | 0.09 | ||
The accompanying notes form an integral part of these financial statements.
Consolidated statement of changes in equity
(All amounts are in EUR ’000 unless otherwise stated)
Issued capital | Legal reserve | Other reserves | Revaluation reserve | Retained earnings | Total | |
Balance as at 31 December 2021 | ||||||
Reserves established | ( | |||||
Dividends declared | ( | ( | ||||
Total transactions with owners | ( | ( | ||||
Net profit (loss) for the year | ||||||
Other comprehensive income | ||||||
Total comprehensive income /(loss) for the period | ||||||
Balance as at 31 December 2022 | ||||||
Reserves established | ( | |||||
Dividends declared | ( | ( | ||||
Eliminating the impact of loss of control | ( | |||||
Total transactions with owners | ( | ( | ( | |||
Net profit (loss) for the year | ||||||
Other comprehensive income | ||||||
Total comprehensive income/(loss) for the period | ||||||
Balance as at 31 December 2023 |
The accompanying notes form an integral part of these financial statements.
Separate statement of changes in equity
(All amounts are in EUR ’000 unless otherwise stated)
Issued capital | Legal reserve | Other reserves | Revaluation reserve | Retained earnings | Total | |
Balance as at 31 December 2021 | 51,731 | 5,173 | 97,505 | - | 23,164 | 177,573 |
Reserves established | - | - | 13,263 | - | (13,263) | - |
Dividends declared | - | - | - | - | (9,901) | (9,901) |
Total transactions with owners | - | - | 13,263 | - | (23,164) | (9,901) |
Net profit (loss) for the year | - | - | - | - | 15,720 | 15,720 |
Other comprehensive income | - | - | - | - | - | - |
Total comprehensive income /(loss) for the period | - | - | - | - | 15,720 | 15,720 |
Balance as at 31 December 2022 | 51,731 | 5,173 | 110,768 | - | 15,720 | 183,392 |
Reserves established | - | - | 3,662 | - | (3,662) | - |
Dividends declared | - | - | - | - | (12,058) | (12,058) |
Total transactions with owners | - | - | 3,662 | - | (15,720) | (12,058) |
Net profit (loss) for the year | - | - | - | - | 13,425 | 13,425 |
Other comprehensive income | - | - | - | 2,767 | - | 2,767 |
Total comprehensive income/(loss) for the period | - | - | - | 2,767 | 13,425 | 16,192 |
Balance as at 31 December 2023 | 51,731 | 5,173 | 114,430 | 2,767 | 13,425 | 187,526 |
The accompanying notes form an integral part of these financial statements.
Consolidated and separate statement of cash flows
(All amounts are in EUR ’000 unless otherwise stated)
Group | Company | |||||
Notes | 2023 | 2022 | 2023 | 2022 | ||
I. | Cash flows from operating activities | |||||
I.1. | Net profit/(loss) | 13,425 | 15,720 | |||
Adjustments for non-cash items and other corrections: | ||||||
I.2. | Depreciation and amortisation | 6,7,9 | 12,595 | 12,854 | ||
I.3. | Revaluation of property, plant and equipment | 7 | 7,940 | - | ||
I.4. | Loss on impairment and gain/loss on disposal/write-off of property, plant and equipment | ( | ( | (78) | (44) | |
I.5. | Gain/loss on impairment and write-off of inventories, trade receivables | ( | (31) | 142 | ||
I.6. | Income tax expenses (benefit) | 34 | 567 | 2,368 | ||
I.7. | Grants recognised as income | ( | ( | (54) | (101) | |
I.8. | Increase (decrease) in provisions | 37 | - | |||
I.9. | Elimination of other non-cash items | ( | - | (8) | ||
Elimination of results of financing and investing activities: | ||||||
I.10. | Dividend income | 30 | (542) | (598) | ||
I.11. | Result on loss of control and revaluation of associate | 8 | ( | (10,146) | - | |
I.12. | Gain/loss on derivatives | 208 | - | |||
I.13. | Share of results of associate | 8 | ( | (295) | - | |
I.14. | Interest expenses | 33 | 1,778 | 635 | ||
I.15. | Interest income | 33 | ( | (9) | - | |
Changes in working capital: | ||||||
I.16. | (Increase) decrease in inventories, prepayments and other current assets | ( | 8,167 | (4,822) | ||
I.17. | (Increase) decrease in trade receivables | ( | 9,466 | (7,757) | ||
I.18. | (Increase) decrease in other receivables | ( | 1,109 | 1,286 | ||
I.19. | (Decrease) increase in trade payables | ( | (6,079) | 4,189 | ||
I.20. | (Decrease) increase in other payables and current liabilities | ( | 1,484 | (5,754) | ||
I.21. | (Increase) decrease in other financial assets | ( | 398 | 882 | ||
I.22. | Income tax (paid) | ( | ( | - | - | |
Net cash flows from operating activities | 8 | 39,940 | 18,992 | |||
The accompanying notes form an integral part of these financial statements.
(cont’d on the next page)
Consolidated and separate statement of cash flows (continued)
(All amounts are in EUR ’000 unless otherwise stated)
Group | Company | |||||
Notes | 2023 | 2022 | 2023 | 2022 | ||
II. | Cash flows from investing activities | |||||
II.1. | (Acquisition) of property, plant and equipment and intangible assets | ( | ( | (37,625) | (14,363) | |
II.2. | Proceeds from disposal of property, plant and equipment | 749 | 69 | |||
II.3. | Grants received | 20 | 14,259 | 9,429 | ||
II.4. | Sale (acquisition) of subsidiaries (associates) | 8 | 6,500 | - | ||
II.5. | Loans granted (repayments received) | - | - | |||
II.6. | Interest received | 8 | - | |||
II.7. | Dividends received | 542 | 598 | |||
II.8. | Decrease (increase) in deposits | 14 | ( | (503) | - | |
Net cash flows used in investing activities | 8 | ( | ( | (16,070) | (4,267) | |
III. | Cash flows from financing activities | |||||
III.1. | Dividends (paid) | ( | ( | (12,051) | (9,900) | |
III.2. | Proceeds from borrowings | - | - | |||
III.3. | (Repayments) of borrowings | ( | ( | (24,780) | (10,174) | |
III.4. | Change in overdraft | 15,437 | 6,287 | |||
III.5. | Interest (paid) | ( | ( | (1,864) | (542) | |
III.6. | Liabilities settled in relation to right-of-use assets | ( | ( | (512) | (387) | |
III.7. | Other cash flows from financing activities | - | - | |||
Cash flows from/used in financing activities | 8 | ( | ( | (23,770) | (14,716) | |
IV. | Change in cash and cash equivalents included in disposal group | 16 | ( | - | - | |
V. | Net increase (decrease) in cash and cash equivalents | ( | 100 | 9 | ||
VI. | Cash and cash equivalents at the beginning of the year | 15 | 21 | 12 | ||
VII. | Cash and cash equivalents at the end of the period | 15 | 121 | 21 | ||
The accompanying notes form an integral part of these financial statements.
Notes to the consolidated and separate financial statements
(All amounts are in EUR ’000 unless otherwise stated)
1. General information
Its registered office address is as follows:
Laisvės pr. 10,
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 .
Acting as a natural gas transmission system operator, the Company provides the following services to the system users, other operators and gas market participants:
natural gas transmission in the territory of Lithuania;
natural gas flow balancing within the transmission system;
administration of funds intended to compensate the construction and fixed operating expenses of the liquefied natural gas (LNG) terminal, its infrastructure, connector, and the reasonable supply costs of the required quantity of liquefied natural gas incurred by the designated supplier;
administration of the register of guarantees of origin of gas produced from renewable energy sources.
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 2022 and 2021, 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 2023 and 2022, the Company’s shareholders were as follows:
Number of shares held | Ownership interest, (%) | |
EPSO-G UAB (company code 302826889, Laisvės ave. 10, Vilnius) | 172.279.125 | 96.58 |
Other shareholders | 6.103.389 | 3.42 |
178.382.514 | 100 |
The Group consists of the parent company Amber Grid AB and its subsidiary GET Baltic. On 31 May 2023, upon sale of 66% shares in GET Baltic UAB (hereinafter “GET Baltic”), the Company lost control in GET Baltic. The retained investment in GET Baltic is accounted for as investment in associate. The more detailed information about the loss of control and accounting for the retained shareholding is provided in Note 8.
In the Group’s financial statements for the year ended 31 December 2022, the Company’s investment in the subsidiary was accounted for as asset held for sale (disposal group) at the carrying amount of the investment that was lower than the fair value of the investment.
Information on the subsidiary as at 31 December 2023 and 2022 is presented below:
Shareholding | ||||
Company name | Company’s registered office | As at 31 December 2023 | As at 31 December 2022 | Profile of activities |
GET Baltic UAB | Geležinio Vilko st. 18A, LT-08104 Vilnius, the Republic of Lithuania | 34% | 100% | Licensed activities of natural gas market operator trading natural gas short-term and long-term products. |
As at 31 December 2022 and 2022, the share capital of GET Baltic amounted to EUR 580,450, and it was divided into 3,055,000 shares with a par value of EUR 0.19 each.
As at 31 December 2023, the average number of employees on payroll at the Company was 340 (31 December 2022: 328).
2. Summary of material 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 2023 are set out below:
2.1 Basis of preparation
The Group’s and the Company’s financial statements for the year ended 31 December 2023 have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union and corresponds to them.
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 and derivative financial instruments carried at fair value.
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 27 March 2024. The shareholders of the Company have a statutory right to approve these financial statements or not to approve those and request for a preparation of the new financial statements.
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 and IFRIC interpretations were adopted by the Group and the Company for the first time in the financial year ended 31 December 2023:
IFRS 17 “Insurance contracts” (issued on 18 May 2017 and effective for annual periods beginning on or after 1 January 2023). IFRS 17 replaces IFRS 4, which has given companies dispensation to carry on accounting for insurance contracts using existing practices. Based on the Group’s and the Company’s assessment, these amendments have no material impact on the financial statements.
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 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 have evaluated the following changes in the preparation of the 2023 financial statements and in adjusting accounting policy disclosures and opting not to disclose immaterial accounting policy information.
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:
Amendments to IFRS 16 Leases – Lease Liability in a Sale and Leaseback (issued on 22 September 2022 and effective for annual periods beginning on or after 1 January 2024). The amendments relate to sale and leaseback transactions which satisfy the requirements of IFRS 15 to be accounted for as a sale. Based on the Group’s and the Company’s management assessment, these amendments will not have a material impact on the financial statements.
Amendments to IAS 1: Classification of liabilities as current or non-current (originally issued on 23 January 2020 and subsequently amended on 15 July 2020 and 31 October 2022, ultimately effective for annual periods beginning on or after 1 January 2024). These 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. The October 2022 amendment established that loan covenants to be complied with after the reporting date do not affect the classification of debt as current or non-current at the reporting date. Management’s expectations whether they will subsequently exercise the right to defer settlement do not affect classification of liabilities. 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. There is an exception for convertible instruments that might be converted into equity, but only for those instruments where the conversion option is classified as an equity instrument as a separate component of a compound financial instrument. Based on the Group’s and the Company’s management assessment, these amendments will not have a material impact 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
The Group’s consolidated financial statements included Amber Grid AB and its subsidiary GET Baltic UAB until the loss of control. 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.
2.4 Investments in subsidiaries and associates 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.
Investments in associates are recorded in the subsidiary’s separate financial statements using the equity method. Under the equity method, the carrying amount of investment in associate is subsequently increased or decreased by the post-acquisition change in the share of the associate’s net assets, less any impairment of investments.
The Group’s and Company’s share of the acquired associate’s post-acquisition profits or losses is recognised in profit or loss in the statement of comprehensive income, and the Group’s and Company’s share of post-acquisition movements in other comprehensive income is recognised in other comprehensive income. The carrying amounts of investments in associates are adjusted by these amounts.
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 6.
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.
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 conditions mean 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. 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 Note 24).
Maintenance costs and other subsequent expenditures of intangible assets
Maintenance costs of intangible assets are recognised as expenses in the reporting period when they are incurred. Updating and development costs of intangible assets incurred subsequent to their acquisition or creation are recognised as expenses in the reporting period when they are incurred, except for software updating, modification, upgrading or new version installation costs that are capitalised by adding them to the cost of that software or recognising as a separate item of non-current intangible assets. In such case, the remaining useful life of the former software is re-measured and impairment is recognised for the remaining net book amount, if any.
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 7).
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, after considering 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.
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.
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. 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-
Buildings25 - 60years
Other structures and engineering networks18 – 25 years
Gas pipelines and associated equipment55 – 70 years
Plant and machinery5 - 25years
Motor vehicles7years
Other PP&E4 - 10years
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 line item “construction work in progress”.
Maintenance, repair, reconstruction and other subsequent costs of property, plant and equipment
Maintenance costs of property, plant and equipment are recognised as expenses of the reporting period when they are incurred. The costs of the day-to-day servicing of an item of PP&E are not included in the cost of that item. Rather, these costs are recognised as expenses when they are incurred. The purpose of these expenditures is often described as for the ‘repairs and maintenance’ of the property, plant and equipment. When property, plant and equipment is subject to reconstruction (major enhancement), such reconstruction/major enhancement works are recognised as a separate component of PP&E and the net book amount of the component of the replaced part of assets is written off. A condition of continuing to operate an item of property, plant, and equipment may be performing regular major inspections for faults regardless of whether parts of the item are replaced, its cost is recognized in the carrying amount of the item of property, plant, and equipment as a separate component if the recognition criteria are satisfied and the costs of such inspection are material. Any remaining carrying amounts of the cost of previous inspection (as distinct from physical parts) are written-off to operating expenses of the reporting period in the statements of profit or loss and other comprehensive income.
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.
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 Right of use assets
Right-of-use assets are assets that the Group and the Company have the right to manage during the lease term. The Group and the Company recognise right-of-use assets for all types of leases, including the lease of a right-of-use asset in case of sublease, but excluding leases of intangible assets, short-term leases and leases of low value assets.
Initial measurement of right-of-use assets
At the commencement date, the Group and the Company measure right-of-use assets at cost, which consists of: the present value of the initial measurement of the lease liability, initial costs incurred directly attributable to the underlying asset, any lease payments at the commencement date, less any lease incentives.
Subsequent measurement of right-of-use assets
After the initial recognition, the Group and the Company apply a cost method for right-of-use assets: the carrying amount of the asset at the respective date is calculated as the difference between the acquisition cost and the accumulated depreciation, plus any subsequent adjustments for the remeasurement of lease liability.
The calculation of depreciation of right-of-use assets is started from the date on which the assets are transferred for the use (the commencement date) until the earlier of these dates: the end of the lease term and the end of the useful life.
The Company calculates depreciation of right-of-use assets using the following rates:
Land*99 years
Buildingsfrom 5 to 10 years
Vehiclesfrom 3 to 4 years
* The Company applies the portfolio method for the land lease agreements concluded with the municipalities not by auction, i.e. a set of the agreements of the Company is accounted for as a single agreement due to similar criteria. Regardless of the remaining term of the land lease agreement, in accordance with the requirements of the legal acts, the agreements must be extended for as long as the facilities of the Company exist on the land plots. When assessing the flow generated by the infrastructure assets of the Company (for the calculation of the recoverable amount of assets), an infinite flow is projected as the ongoing reconstruction and repair works allow using the assets for a longer period than the established original depreciation rates. For this reason, the lease of land is subject to a substantially infinite rate corresponding to the original term of the agreement – 99 years.
2.8 Financial assets and liabilities
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.
Financial assets measured at amortised cost
Loans and receivables 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 amortised cost using the effective interest rate method. Gains and losses are recognised in the statement of profit or loss when the assets are derecognised or impaired, as well as through the amortisation process.
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.
Expected credit losses
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 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.
a) active market no longer exists for financial assets as a result of financial difficulties;
b) financial assets are purchased or granted at a significant discount, thereby showing credit losses incurred.
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.
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.
2.9 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).
Purchases of natural gas during the period from 1 March 2022 exclude gas purchased for the balancing of the system user.
2.10 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.
2.11 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.
2.12 Assets held for sale and discontinued operations
The Group classifies its long-lived assets and disposal groups as assets held for sale if:
1.It is expected that the carrying amount of the asset will be recovered principally through a sale transaction rather than through continuing use;
2.The asset is available for immediate sale; and
3.The sale of the asset is highly probable in its present condition and subject to terms that are usual and customary for sales of such assets (or disposal group).
The sale is considered as highly probable if:
1.management is committed to a plan to sell an asset (or a disposal group);
2. an active programme to locate a buyer and complete the plan has been initiated;
3. the asset (or disposal group) must be actively marketed for sale at a price that is reasonable in relation to its current fair value; and
4. the sale is expected to qualify for recognition as a completed sale within one year from the date of classification as assets held for sale.
Non-current assets held for sale are stated at the lower of the carrying amount and fair value less costs to sell.
Discontinued operations represent a component of operations and cash flows that can be clearly distinguished from the rest of operations and cash flows of the Company and that either has been disposed of, or is classified as held for sale, and:
‐represents a separate major line of business or geographical area of operations;
‐is part of a single coordinated plan to dispose of a separate major line of business or geographical area of operations; or
‐is a subsidiary acquired exclusively with a view to resale.
When eliminating intragroup transactions, the Group and the Company consider whether the elimination of intragroup transactions should be performed from the assets and liabilities of disposal group/whether from assets and liabilities unassigned to disposal group. If the intragroup transactions and balances are expected after the disposal, the elimination entries will be made from the assets and liabilities of disposal group. If it is unlikely that the intragroup transactions will be conducted after the disposal, the elimination entries will be made from the assets/liabilities unassigned to disposal group.
2.13 Lease liabilities
Initial measurement of the lease liability
The amount of the initial measurement of lease liability is calculated as the present value of lease payments 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.
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 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.
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 Company classifies assets as right-of-use assets by recognising under non-current assets in the statement of financial position, if the asset and lease contract meet all of the following criteria:
‐the lease is not a short-term (12 months or more) or short-term lease with a purchase option;
‐value of the leased item or group of items/underlying asset is not less than EUR 4,000 and therefore does not qualify as a lease of a low-value asset;
‐if the contract conveys the right to control the use of an identified asset for a period of time, i.e. to obtain economic benefits from use of the identified asset and to direct the use of the identified asset.
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.
2.14 Long-term employee benefits
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.
2.15 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 period and 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.
2.16 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 2023 and 2022. Current year income tax may be reduced by tax losses carried forward. 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 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.
2.17 Revenue recognition
Recognition and measurement of the Group’s and the Company’s revenue is based on a 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.
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 transmission services
Revenue from system users for natural gas transmission services is recognised over time based on the reported data on 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 services
Based on the EC regulation establishing a network code on gas balancing of transmission networks (the “Regulation“), the system users bear the responsibility of balancing their inputs against their off-takes. If the system users fail to balance gas at the entry/exit points, the Company is entitled to undertake the balancing actions as set forth in the Regulation. In accordance with the Regulation, the Company undertakes the balancing actions in respect of the system users with reference to measures on each gas day.
Revenue from balancing services is recognised when the transmission system user‘s imbalance quantity becomes negative, thereby causing natural gas shortfall. Expenses from balancing services are recognised when the transmission system user‘s imbalance quantity becomes positive, thereby causing natural gas surplus. As the Company seeks to ensure financial neutrality, it levies a neutrality charge for each reporting month with effect from 1 March 2022. Neutrality charge means a charge payable to/by the transmission system operator due to performance of its balancing activities. The neutrality charge represents the difference between the expenses and revenue of the transmission system operator from the balancing activities. The neutrality charge may be both positive and negative. When the neutrality charge is negative, the transmission system operator pays the neutrality charge to the system users. When the neutrality charge is positive, the system users pay the neutrality charge to the transmission system operator. The purpose of the neutrality charge is to ensure financial neutrality of the transmission system operator.
Due to amendments introduced in regulation of balancing activities with effect from 1 March 2022, the Company acts as an agent in its gas purchase/sale transactions and reports net result of balancing activities in the financial statements. The neutrality charge is expected to ensure a zero gain/(loss) from balancing activities. Acting as an agent in balancing gas purchase/sale transactions is explained by limited control of the balancing services and purchases of gas, absence of economic benefits, no discretion in establishing the price for the balancing services since the pricing is governed by law, no discretion in choosing a counterparty and inability to regulate demand. In addition, the activities of the Company, as the transmission system operator, are not associated with trade in natural gas, and the regulated balancing actions are performed for the benefit of all system users rather than for the benefit of a specific system user.
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 agent 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 are collected and transferred to the recipients of the LNG terminal funds: the LNG terminal operator (until 1 May 2022), 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. 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 the 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.
2.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.
2.18 Expense recognition
Expenses incurred in relation to revenue earned during the reporting period are recognised by the Group and the Company on an accrual basis, and based on the following principles: 1) the costs are recognised as expenses to the extent of the value of goods sold or services rendered, since the criterion for recognition of expenses is that they have been incurred to earn revenue of the reporting period; 2) the costs incurred by the Group company during the reporting period are recognised as expenses of the reporting period immediately, unless they can be linked to earning of the specific revenue, and no income is expected to be earned in relation to such expenses in the next periods.
The Group and the Company use expense classification by type. Taxes such as real estate tax, land tax, land rent tax, taxes related to environmental pollution, non-deductible value added tax, etc. are recognized as expenses.
2.19 Finance income and costs
Finance income
Finance income includes income earned by the Company from financing activities, such as foreign exchange gain, interest income on cash balance.
The Group‘s and the Company‘s finance costs include as follows:
‐foreign exchange loss,
‐interest on borrowings,
‐undisputed fines and interest on late payments.
Interest income and expenses are recognised on accrual basis considering the outstanding balance of debt and the applicable interest rate.
2.20 Cash flows
The Group and the Company report cash flows using the indirect method. Reporting of cash flows from operating activities based on the indirect method means that net profit/(loss) for the reporting period is presented as cash inflows or outflows from operating activities of the Group and the Company for the reporting period. Cash inflows and outflows from investing and financing activities for the reporting period are presented separately unless cash flows are presented on a net basis.
For the purpose of the Group‘s and the Company‘s financial statements, dividends paid are reported as cash flows of financing activities, whereas dividends received are reported as cash flows of investing activities.
For the purpose of the Group‘s and the Company‘s financial statements, interest paid is reported as cash flows of financing activities, whereas interest received is reported as cash flows of investing activities.
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 determination of revalued amount of property, plant and equipment (Notes 3.1, 7), loss of the control in the subsidiary and revaluation of the investment retained (Notes 3.2 and 8), GET Baltic’s share options (Notes 3.3 and 10), accounting policies applicable to balancing of system users (Note 3.4). 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 Consideration of PP&E for revaluation and impairment as at 31 December 2022
As at 31 December 2023, the Company revalued its property, plant and equipment by recognising a EUR 4,685 thousand impairment. An increase in value of property, plant and equipment of EUR 3,255 thousand was recognised in other comprehensive income, and the loss of revaluation of EUR 7,940 thousand was recognised in profit or loss. The assumptions used in determining the fair value are described in more detail in Note 7.
3.2 Loss of control of a subsidiary
On 31 May 2023, upon sale of 66% shares in the subsidiary, the Company lost control in GET Baltic. The retained investment in GET Baltic was recognised at fair value at the time of loss of control, with the revaluation result of the remaining part of the investment recognised in profit or loss. More information on the loss of control is disclosed in Note 8.
On acquisition of the investment in the associate, the Company’s management carried out allocation of acquisition cost of the investment in the associate and identified that the difference between the acquisition cost of the associate and its identifiable net assets gives a perceived goodwill, which is included in the carrying amount of the investment in associate. More information on allocation of acquisition cost is disclosed in Note 8.
As at 31 December 2023, the investment in associate GET Baltic was reported in the separate and consolidated financial statements using the equity method.
In the financial statements for the year ended 31 December 2022, the investment in the subsidiary GET Baltic was recorded as an asset held for sale (disposal group).
The disposal group did not qualify as discontinued operations because the subsidiary did not represent a separate major line of business or geographical area of operations, and accordingly, the effects of discontinued operations were not recognised in the statement of profit or loss and cash flow statement.
For the purpose of the consolidated financial statements for the year ended 31 December 2023 and 2022, intercompany transactions with GET Baltic will be eliminated from the disposal group.
3.3 GET Baltic’s share options
On 31 May 2023, the Company purchased a put option enabling the Company to sell the remaining shareholding in GET Baltic at a fixed price within 24 months of the date on which the investor fulfils its obligations. Under the same option agreement, the Company issued a call option for the investor to purchase the remaining shares of GET Baltic at a fixed price within 24 months of the date on which the obligations under the shareholders’ agreement are fulfilled. The investor’s obligations shall be fulfilled within 24 months from the date of entry into force of the shareholder’s agreement. In the Company management’s assessment, these options meet the definition of derivatives. The put option, given the maximum 48-month option expiration term, creates a non-current financial asset for the Company that is measured at fair value. The investor’s call option creates a financial liability for the Company that can be exercised at any time after the investor has fulfilled its obligations. Based on the Company management’s estimates, the expected exercise period of the call option is 24 months from the put option date, i.e. upon fulfilment of the contractual obligations by the investor. As the Company does not have an irrevocable right to defer the put option, the liability is recognised as a current liability and measured at fair value. More information on options is disclosed in Note 10.
3.4 Accounting policies for balancing of system users
Following the amendments introduced in regulation of balancing activities with effect from 1 March 2022, the Company assessed whether it acts as a principal or as an agent in its transactions of balancing services. The Company‘s management concluded that with effect from 1 March 2022 it acts as an agent in its transactions of balancing services (see Note 2.16), and therefore, the net result of the balancing activities is reported in the financial statements. Before 1 March 2022, the Company acted as a principal in its transactions of balancing services, and therefore, revenue and expenses from transmission and balancing services were reported in the financial statements.
4. Reclassification of comparative figures in the financial statements
The Group and the Company presented additional financial ratios of EBITDA and EBIT in the statement of comprehensive income, as the Group believes that these financial ratios provide valuable information to the Group’s and the Company’s management and stakeholders in making operational decisions. These financial ratios are not a substitute for the mandatory items in the statement of comprehensive income as defined by IFRS, but are presented in addition to the required information. After the reclassification, the statement of comprehensive income includes only the major expense items, with a more detailed classification presented in a separate note to the financial statements.
EBITDA is profit before interest, taxes, depreciation and amortisation, loss on revaluation, impairment and write-off of property, plant and equipment.
EBIT is operating profit before interest, taxes and passive income from investment activities (e.g. share of results of associates). EBIT measures the operating profit of the Company and the Group, by ignoring finance expenses.
Bellow is the effect of reclassification on the item of the Company’s and the Group’s statement of comprehensive income in 2022:
Group | |||
2022 | |||
Before reclassification | Reclassification | After reclassification | |
Revenue | 97,600 | 97,600 | |
Other income | 606 | 606 | |
Total revenue and other income | 98,206 | - | 98,206 |
Purchases of natural gas | (39,834) | (39,834) | |
Payroll and related expenses | (12,423) | - | (12,423) |
Purchases of repair and maintenance services | (4,646) | 1,497 | (3,149) |
Taxes other than income tax | (2,812) | 2,812 | - |
Telecommunications and IT system expenses | (1,953) | 1,953 | - |
Other expenses | (4,644) | (6,262) | (10,906) |
Total expenses: | (66,312) | - | (66,312) |
EBITDA | - | - | 31,894 |
Dividends | - | - | - |
Depreciation and amortisation | (13,045) | - | (13,045) |
Assets write-off expenses (reversal) | - | - | - |
Operating profit (loss) (EBIT) | - | - | 18,849 |
Total finance costs, net | (719) | - | (719) |
Profit (loss) before tax | 18,130 | - | 18,130 |
Income tax | - | ||
Current income tax expense for the reporting year | (98) | - | (98) |
Deferred income tax (expense) benefit | (2,367) | - | (2,367) |
Total income tax | (2,465) | - | (2,465) |
Net profit (loss) | 15,665 | - | 15,665 |
Company | |||
2022 | |||
Before reclassification | Reclassification | After reclassification | |
Revenue | 96,046 | 96,046 | |
Other income | 606 | 606 | |
Total revenue and other income | 96,652 | - | 96,652 |
Purchases of natural gas | (39,834) | (39,834) | |
Payroll and related expenses | (11,942) | - | (11,942) |
Purchases of repair and maintenance services | (4,646) | 1,497 | (3,149) |
Taxes other than income tax | (2,808) | 2,808 | - |
Telecommunications and IT system expenses | (1,840) | 1,840 | - |
Other expenses | (4,617) | (6,145) | (10,762) |
Total expenses: | (65,687) | - | (65,687) |
EBITDA | - | - | 30,965 |
Dividends | 598 | 598 | |
Depreciation and amortisation | (12,854) | - | (12,854) |
Assets write-off expenses (reversal) | - | - | - |
Operating profit (loss) (EBIT) | - | - | 18,709 |
Total finance costs, net | (621) | - | (621) |
Profit (loss) before tax | 18,088 | - | 18,088 |
Income tax | |||
Current income tax expense for the reporting year | (1) | - | (1) |
Deferred income tax (expense) benefit | (2,367) | - | (2,367) |
Total income tax | (2,368) | - | (2,368) |
Net profit (loss) | 15,720 | - | 15,720 |
5. Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The Group’s chief operating decision-maker, who is responsible for allocating resources and assessing performance, has been identified as the Board of Directors that makes strategic decisions.
The Group has two business segments which are consistent with the business directions stipulated in the Group’s strategy:
Natural gas transmission segment;
Natural gas exchange operator’s segment (activities of GET Baltic until 31 May 2023).
The Group has two business segments which are consistent with the business directions stipulated in the Group’s strategy:
Natural gas transmission segment;
Natural gas exchange operator’s segment (activities of GET Baltic until 31 May 2023).
The Group has a single geographical segment – the Republic of Lithuania. All non-current assets of the Group are domiciled in Lithuania, where the Group operates.
The Board as the main decision-making body monitors the results with reference to the financial reports that have been prepared using the same accounting policies as those used for the preparation of the financial statements, i.e., information on profit or loss, including the reported amounts of income and expenses.
Key performance indicators are net profit and profit before interest, taxes, depreciation and amortisation, loss on revaluation, impairment and write-off of property, plant and equipment (EBITDA). These indicators are calculated on the basis of data reported in the financial statements.
The Board also monitors adjusted performance indicators, particularly the adjusted EBITDA. Adjusted EBITDA ratio is EBITDA ratio further adjusted by adding management’s adjustments. That is non-IFRS alternative performance measure. Management’s adjustments include temporary regulatory differences resulting from the Council’s decisions. Management’s adjustments may have both positive and negative impact on the adjusted ratios for the period. In management’s view, adjusted EBITDA ratio more accurately presents results of the operations and allows for an objective comparison of the results between the periods as revenue and costs have been adjusted due to the regulator’s decisions or are of a one-off nature.
Management also analyses investments and net debt of each individual segment.
The table below contains information on the Group’s operating segments for the year ended 31 December 2023:
Transmission of natural gas | Natural gas exchange operator’s activities | Total | |
Revenue and other income | 81,337 | 892 | 82,229 |
Operating expenses, excl. depreciation, write-off and impairment | (55,598) | (324) | (55,922) |
EBITDA | 25,739 | 568 | 26,307 |
Adjusted EBITDA | 24,680 | 568 | 25,248 |
Temporary regulatory differences for previous periods | (2,883) | - | (2,883) |
Temporary regulatory differences for reporting period | 1,824 | - | 1,824 |
Overall effect of management’s adjustments on EBITDA | (1,059) | - | (1,059) |
EBITDA (under IFRS) reconciliation to Net profit/loss | (12,314) | (980) | (13,294) |
Depreciation and amortisation | (12,595) | (85) | (12,680) |
Revaluation of property, plant and equipment | (7,940) | - | (7,940) |
Loss on impairment and write-off of property, plant and equipment | (229) | - | (229) |
Finance income | 22 | 445 | 467 |
Finance costs | (1,780) | (1) | (1,781) |
Income tax | (567) | (140) | (707) |
Dividend income | 542 | (542) | - |
Result on loss of control and revaluation of associates | 10,146 | (657) | 9,489 |
Gains (losses) on derivative financial instruments | (208) | - | (208) |
Share of net profit of associates | 295 | - | 295 |
Net profit/(loss) | 13,425 | (412) | 13,013 |
Total assets | 333,389 | - | 333,389 |
Investments (additions of property, plant and equipment | 95,175 | - | 95,175 |
Investments (additions of property, plant and equipment and intangible assets) | 35,703 | - | 35,703 |
The table below contains information on the Group’s operating segments for the year ended 31 December 2022:
Transmission of natural gas | Natural gas exchange operator’s activities | Total | |
Revenue and other income | 96,652 | 1,554 | 98,206 |
Operating expenses, excl. depreciation, write-off and impairment | (65,687) | (625) | (66,312) |
EBITDA | 30,965 | 929 | 31,894 |
Adjusted EBITDA | 34,881 | 929 | 35,810 |
Temporary regulatory differences for previous periods | 8,776 | - | 8,776 |
Temporary regulatory differences for reporting period | (4,860) | - | (4,860) |
Overall effect of management’s adjustments on EBITDA | 3,916 | - | 3,916 |
EBITDA (under IFRS) reconciliation to Net profit/loss | (15,245) | (984) | (16,229) |
Depreciation and amortisation | (12,854) | (191) | (13,045) |
Loss on impairment and write-off of property, plant and equipment | - | - | - |
Finance income | 21 | 24 | 45 |
Finance costs | (642) | (122) | (764) |
Income tax | (2,368) | (97) | (2,465) |
Dividend income | 598 | (598) | - |
Net profit (loss) | 15,720 | (55) | 15,665 |
Total assets | 345,347 | 203,009 | 548,356 |
Net financial debt | 104,630 | - | 104,630 |
Investments (additions of property, plant and equipment and intangible assets) | 42,852 | - | 42,852 |
As at 31 December 2023, there were two customers of the Company each generating over 10% of the Company’s total revenue. Revenue from customers totalled EUR 37,738 thousand, whereof:
Customer A – EUR 24,713 thousand;
Customer B – EUR 13,025 thousand;
As at 31 December 2022, there were three customers of the Company each generating over 10% of the Company’s total revenue. Revenue from customers totalled EUR 78,594 thousand, whereof:
Customer A – EUR 41,840 thousand;
Customer B – EUR 22,754 thousand;
Customer C – EUR 14,000 thousand.
6. Intangible assets
Movements on intangible assets account during the current and previous reporting period were as follows:
Patents and licences | Computer software | Other intangible assets | Protected areas | Total | |
As 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 value as at 31 December 2021 | 9 | 2,022 | - | 2,179 | 4,210 |
Additions | - | 315 | - | - | 315 |
Write-offs | - | - | - | - | - |
Adjustment for changes in assumptions | - | - | - | (889) | (889) |
Amortisation charge | (3) | (1,049) | - | - | (1,052) |
Off-set of grants against non-current assets | - | - | - | - | - |
As at 31 December 2022 | 6 | 1,288 | - | 1,290 | 2,584 |
Acquisition/revaluation amount | 51 | 4,808 | 5 | 1,290 | 6,154 |
Accumulated amortisation | (45) | (3,520) | (5) | - | (3,570) |
Net book value as at 31 December 2022 | 6 | 1,288 | - | 1,290 | 2,584 |
Additions | 4 | 767 | - | - | 771 |
Write-offs | - | (4) | - | - | (4) |
Adjustment for changes in assumptions | - | - | - | (264) | (264) |
Amortisation charge | (3) | (525) | - | - | (528) |
Off-set of grants against non-current assets | - | - | - | - | - |
As at 31 December 2023 | 7 | 1,526 | - | 1,026 | 2,559 |
Acquisition/revaluation amount | 55 | 5,571 | 5 | 1,026 | 6,657 |
Accumulated amortisation | (48) | (4,045) | (5) | - | (4,098) |
Net book value as at 31 December 2023 | 7 | 1,526 | - | 1,026 | 2,559 |
The Company’s intangible assets with the acquisition cost of EUR 101 thousand as at 31 December 2023 (31 December 2022: EUR 441 thousand) was fully amortised, but still in use. Depreciation of grants in amount of EUR 205 thousand as at 31 December 2023 (31 December 2022: EUR 352 thousand) was reported in the statement of profit or loss as an offsetting of depreciation of related assets against proceeds from grants.
Given that lower volumes for protected zone registration services were established to ensure more clarity in legal regulation, relevant services were acquired by way of a public procurement procedure in order to fulfil the actions necessary for the establishment and registration of protected zones and class location areas and the value of contracts for those services was lower than the preliminary value applied in the assumptions used for provisioning purposes, an taking into account changes in the prices of services provided by the State Enterprise Centre of Registers (e-delivery, submission of registration data), the Company reviews the estimated cost of establishing special land use conditions and remeasures the intangible asset and liability over the expected term of fulfilment of obligation. Due to changes in assumptions, the value of provision and related intangible assets was reduced by EUR 264 thousand as at 31 December 2023, and by EUR 889 thousand as at 31 December 2022.
7. Property, plant and equipment
Movements on the property, plant and equipment account during the current and previous reporting period were as follows:
Land | Buildings | Structures and equip- ment | Plant and machinery | Vehicles | Other PP&E | Constru- ction work in progress | Total | |
As at 31 December 2021 | 125 | 6,529 | 199,940 | 37,143 | 373 | 4,060 | 7,808 | 255,978 |
Acquisition/revaluation amount | 125 | 7,431 | 214,157 | 47,448 | 967 | 7,375 | 7,808 | 285,311 |
Accumulated depreciation | - | (902) | (14,217) | (10,305) | (594) | (3,315) | - | (29,333) |
Net book value as at 31 December 2021 | 125 | 6,529 | 199,940 | 37,143 | 373 | 4,060 | 7,808 | 255,978 |
Additions | - | - | 26,844 | - | - | 277 | 15,416 | 42,537 |
Write-offs | - | - | (27) | - | - | - | - | (27) |
Sales | - | - | - | - | - | - | - | - |
Reclassification from/to inventories | - | - | (44) | (7) | - | - | - | (51) |
Reclassification from/to intangible assets | - | - | - | - | - | - | - | - |
Reclassifications between categories | - | 289 | 9,086 | 130 | - | 1,050 | (10,555) | - |
Depreciation charge | - | (291) | (5,908) | (3,435) | (153) | (1,538) | - | (11,325) |
Off-set of grants against non-current assets | - | - | - | - | - | - | (6,023) | (6,023) |
As at 31 December 2021 | 125 | 6,527 | 229,891 | 33,831 | 220 | 3,849 | 6,646 | 281,089 |
Acquisition/revaluation amount | 125 | 7,720 | 250,016 | 47,571 | 967 | 8,702 | 6,646 | 321,747 |
Accumulated depreciation | - | (1,193) | (20,125) | (13,740) | (747) | (4,853) | - | (40,658) |
Net book value as at 31 December 2022 | 125 | 6,527 | 229,891 | 33,831 | 220 | 3,849 | 6,646 | 281,089 |
Additions | - | - | 83 | 25 | 2 | 55 | 34,767 | 34,932 |
Write-offs | - | (13) | (440) | (183) | - | (9) | - | (645) |
Disposals | - | - | - | - | - | (1) | - | (1) |
Impairment (reversal) of assets | - | - | (57) | - | - | - | 11 | (46) |
Revaluation | 11 | 85 | (8,821) | 4,010 | 21 | 9 | - | (4,685) |
Reclassification from/to inventories | - | - | (38) | (12) | - | (1) | - | (51) |
Reclassification from/to intangible assets | - | - | - | - | - | - | - | - |
Reclassifications between categories | - | 1,343 | 13,727 | 3,414 | - | 2,378 | (20,862) | - |
Depreciation charge | - | (295) | (6,156) | (3,383) | (108) | (1,612) | - | (11,554) |
Off-set of grants against non-current assets | - | - | - | - | - | - | (14,686) | (14,686) |
As at 31 December 2023 | 136 | 7,647 | 228,189 | 37,702 | 135 | 4,668 | 5,876 | 284,353 |
Acquisition/revaluation amount | 136 | 7,647 | 228,189 | 37,702 | 135 | 4,668 | 5,876 | 284,353 |
Accumulated depreciation after revaluation | - | - | - | - | - | - | - | - |
Net book value as at 31 December 2023 | 136 | 7,647 | 228,189 | 37,702 | 135 | 4,668 | 5,876 | 284,353 |
The Group’s part of property, plant and equipment with the carrying amount of EUR 94 thousand as at 31 December 2023 (31 December 2022: EUR 133 thousand) was fully depreciated but still in use.
The cost of PP& in 2023 included: the reconstruction of separate sections of the main gas pipeline Vilnius-Kaunas amounting to EUR 13,233 thousand; the replacement of overground passes with the underground passes and deepening of not deepened sections of main gas pipeline (MD A2 stage II) amounting to EUR 3,237 thousand; investments in the reconstruction of the Grigiškės, Kėdainiai, Vievis, Šiauliai, Telšiai GDSs amounting to EUR 6,699 thousand; the reconstruction of the main gas pipelines based on diagnostics results amounting to EUR 1,252 thousand; and reconstructions of a pressure relief valve in the main gas pipeline branch to the Marijampolė gas distribution station amounting to EUR 1,011 thousand.
Depreciation of grants in amount of EUR 4,293 thousand as at 31 December 2023 (31 December 2022: EUR 4,109 thousand) was reported in the statement of profit or loss as an offsetting of depreciation of related assets against proceeds from grants.
In 2023, part of the Company’s capitalised borrowing costs (interest) were added to the cost of PP&E and amounted to EUR 329 thousand (2022: EUR 21 thousand). The annual interest capitalisation rate in 2023 was 3.834% (2022: 0.652%).
Had the value of the Company‘s PP&E been not reduced by the amount of grants, the carrying amount of PP&E as at 31 December 2023 would be higher by EUR 137,451 thousand (31 December 2022: EUR 127,087 thousand). Information on grants received/receivable used to reduce the value of property, plant and equipment:
As at 31 December 2023 | As at 31 December 2022 | |
Carrying amount at the beginning of the period | 127,087 | 125,179 |
Grants used for the acquisition of fixed assets | 14,686 | 6,023 |
Depreciation charge | (4,293) | (4,109) |
Write-offs | (29) | (6) |
Carrying amount at the end of the period | 137,451 | 127,087 |
Value of PP&E in 2023
The Company accounts for property, plant and equipment at revalued amount in accordance with IAS 16 Property, Plant and Equipment. Based on the requirements set forth in paragraph 34 of IAS 16, the Company carried out valuation of property, plant and equipment and determined that, as at 31 December 2023, the fair value of the property, plant and equipment (including construction in progress) was EUR 284,353 thousand, which was EUR 4,685 thousand lower than the carrying amount of PP&E before remeasurement as at 31 December 2023. The valuation of the assets was carried out by the Company's in-house finance and accounting experts, with the assistance of experienced external asset valuation consultants throughout the process. The Company last revalued the assets as at 31 December 2018. The above-mentioned 2018 valuation process was carried out entirely with the Company's internal resources, without the use of external consultants or valuers.
The valuation of property, plant and equipment was carried out using the replacement cost method and the discounted cash-flow methods.
The change in the value of property, plant and equipment was largely influenced by the regulatory principles applied to natural gas transmission activities, the rate of return on investments set by the Council for natural gas transmission activities, which was actually lower than the discount rate.
The valuation involved the following steps:
estimation of the fair value of property, plant and equipment using the discounted cash flow method because the Company’s assets constitute a single cash-generating unit;
The replacement cost was determined for new assets.
The physical obsolescence was determined for the assets.
The assets were tested for economic obsolescence (by allocating the total fair value to individual items).
The cost method involves determining the replacement cost of a new asset (RCN) at the level of the individual asset item. A direct cost method was applied to 68% of PP&E (based on the asset’s carrying amount as at 31 December 2023), whereby RCN was estimated for new assets. RCN includes the cost of materials, installation works, labour, transportation and handling fees, overall costs of contractor. The market prices were determined using the data of the Company’s transactions for the last three years, the financial statements of the European Union Agency for the Cooperation of Energy Regulators (ACER), other enterprises operating in natural gas sector, and other publicly available data.
During the valuation, indirect cost method was applied to assets, for which it was impossible to apply a direct cost method due to their multiple nature or for which insufficient data was available. Indirect cost method was applied to approx. 1% of PP&E value (determined when calculating carrying amount as at 31 December 2023). The indirect cost method was used to determine the current replacement value of each new asset by indexing (based on consumer price, gas price, metal price and building cost indices published by Statistics Lithuania) the capitalized historical cost of the new asset.
The asset’s RCN value which fell below the regulated asset base (RAB) after physical and functional obsolescence was treated as equal to RAB.
The direct market value method was used to determine the values of land and process gases, however, after adjusting for economic obsolescence, the values were treated as equal to RAB. This method was applied to approx. 1% of PP&E value (determined when calculating carrying amounts as at 31 December 2023).
RCN was calculated at underlying asset level, while the Iowa-type survivor curves were applied to allocate the identified value of the asset item to asset components. These curves were used to determine the life cycle of asset based on economic useful life, in view of current repairs and maintenance. The application of residual value was conditioned on the asset class (Hold Factor).
Further reduction in RCN by the amount of obsolescence resulted in the amount of the depreciated replacement cost (DRC). The DRC premium is the difference between DRC and RAB. The assets fair value was obtained by applying the 3.4% economic obsolescence, plus the RAB value.
The following key assumptions of the replacement cost method were used in valuation:
1.RCN values, which reflect all costs that are incurred upon creation of new identical assets;
2.Hold factor, which establishes the minimum value for an asset, since the Company can continue to use fully depreciated assets.
3.The economic obsolescence was estimated at 3.4%.
In discounted cash flow method (DCF), future cash flows are estimated and discounted by using cost of capital to give their present values. This method was applied to measure the fair value of property, plant and equipment and to estimate the economic obsolescence.
For the purpose of fair value measurement and estimation of the economic obsolescence, the cash flow forecast was developed for the period from October 2023 to 2028. The terminal value of cash flows is applied in subsequent periods.
Key assumptions of the DCF model:
In the Certificate No O5E-389 of 8 May 2023, the Council set the cap on the revenue from natural gas transmission activities of the Company of EUR 67,011 thousand for 2024;
The Council approved a 5.04% pre-tax return on investments (WACC) for 2024, while in the long term, based on the Council’s WACC methodology and market trends, the rate of return on investments will increase and will be equal to the discount rate of 6.07% (pre-tax);
A discount rate (post-tax) of 5.16% was applied to discount the cash flows.
The Company’s operating costs are estimated in accordance with the Council’s methodology for determining the revenue and prices of natural gas transmission activities. Some costs are not included in the regulated prices.
The estimation of the going-concern value of discounted cash flows excludes the growth rate (equal to 0)
Asset values estimated using the DRC method were reduced in proportion to the results of the economic obsolescence test (the total fair value of assets was determined using DCF method), except for assets for which such allocation would have resulted in a value lower than the asset’s RAB value. For such assets the RAB was considered to be its fair value. The amount of reduction that would otherwise have been allocated to the asset was allocated pro rata to the other assets. In order to distribute the value of economic obsolescence among separate items of assets so that the resulting value would reflect more accurately the fair value of the respective separate item of assets, the Company followed a policy whereby the fair value of particular item of assets would not be lower than the RAB assumption used in respect of that particular item of assets.
Economic obsolescence was applied (i.e. distributed) to all assets, except for the following categories (or separate items of assets from different categories), where DRC was approximated to the carrying amount of these assets:
construction in progress; because new projects reflect the fair value best, which is included in RAB at full;
other items of property, plant and equipment that are not directly related to the underlying technological asset (e.g. office buildings, furniture, tools, computers, equipment);
assets with the fair value equal to the net book amount for the purpose of valuation (assets acquired during the period from 1 January 2023 to 31 December 2023).
The main reasons for the change in the value of separate items of assets include the following:
Impact of the economic obsolescence: the differences between financial and regulatory accounting polices resulted in recognition of the CBCA contribution to the Polish TSO as a non-current asset in the financial accounts, but it was not recognised as RAB by the Council (the asset’s value decreased), however, the other assets were accounted for at a carrying amount which was lower the value of the RAB set for these assets (as a result the value of the assets increased);
new values were established (set) for fully depreciated assets that are still in use.
Fair value hierarchy of property, plant and equipment. The fair value of revalued property, plant and equipment is attributed to Level 3 of the fair value hierarchy (fair value hierarchy levels are specified in Note 2.22).
Sensitivity analysis. Based on the provisions set forth in paragraph 93 of IFRS 13, the Company performed fair value sensitivity analysis in respect of changes in unobservable inputs. The fair value measurement is the most sensitive to the rate of return (WACC) set by the Council and the discount rate.
The fair value of the asset sensitivity is presented for the following scenarios:
Scenario (1) of sensitivity analysis:
to determine the level of revenue from 2024 onwards, the Council would apply a rate of return of 6.04/4.04% (currently WACC is set at 5.04% for 2024) with a 1% increase/decrease in the rate of return and the other valuation parameters remaining unchanged; a 1% increase in WACC would result in the EUR 9,727 thousand increase in the fair value of property, plant and equipment, and a 1% drop in WACC would result in the EUR 9,727 thousand decrease in the fair value of property, plant and equipment.
Scenario (2) of sensitivity analysis:
applying a 1% higher/lower discount rate (after tax), which is 6.16/4.16%, with the other valuation parameters remaining unchanged; a 1% increase in the discount rate would result in the EUR 11,544 thousand decrease in the fair value of property, plant and equipment, and a 1% decrease in the discount rate would result in the EUR 12,181 thousand increase in the fair value of property, plant and equipment.
Below is the table on the asset’s sensitivity analysis:
WACC (pre-tax return on investments approved by the Council) | |||||
Discount rate (post-tax) | Change | 4 04% | 5 04% | 6 04% | |
-1 0% | 0 0% | 1 0% | |||
4 16% | -1 0% | 2,189 | 12,181 | 22,174 | |
5 16% | 0 0% | (9,727) | - | 9,727 | |
6 16% | 1 0% | (21,017) | (11,544) | (2,070) | |
The table below presents the net book values of property, plant and equipment, which would have been recognised had the historical cost method been used, less grants received and negative revaluations that would be treated as an impairment equivalent, as at 31 December 2023 and 31 December 2022:
Land | Buildings | Structures and equipment | Plant and machinery | Vehicles | Other PP&E | Construction work in progress | Total | |
As at 31 December 2023 | 125 | 7,553 | 226,645 | 36,135 | 114 | 4,651 | 5,876 | 281,099 |
As at 31 December 2022 | 125 | 6,527 | 229,891 | 33,831 | 220 | 3,849 | 6,646 | 281,089 |
The revaluation impact on profit or loss and other comprehensive income is presented below:
Recognised in other comprehensive income (revaluation reserve) | Recognised through profit or loss | Total revaluation impact | |
Increase in net book value as at 31 December 2023 | 3,255 | 18,568 | 21,823 |
(Decrease)in net book value as at 31 December 2023 | - | (26,508) | (26,508) |
Total revaluation impact at 31 December 2023: | 3,255 | (7,940) | (4,685) |
8. Loss of control of subsidiary
In the separate financial statements for the year ended 31 December 2022, the investment in GET Baltic was recorded under asset held for sale, as all the criteria for recognition as asset held for sale were met. The asset held for sale was measured at carrying amount that was lower than the fair value of the investment. For the purpose of the consolidated financial statements, the investment in GET Baltic was recorded as a disposal group.
Once the General Meeting of Shareholders approved the sale of shares in GET Baltic and the material terms and conditions thereof on 11 April 2023, the sale of a 66 % shareholding in GET Baltic was completed on 31 May 2023.
The Company lost control of GET Baltic following the completion of the share sale transaction on 31 May 2023. The remaining part of the investment in GET Baltic after the loss of control is recognised as an investment in an associate, which is accounted for using the equity method and measured at fair value at the time of loss of control. The fair value of investment in GE Baltic was determined on the basis of the sale of 66% of the shares.
In the consolidated statement of comprehensive income, the result of disposal of the subsidiary (after considering the GET Baltic shares’ call/put options) and revaluation of the remaining part of investment in associate was EUR 9,489 thousand, of which gain on disposal of control was EUR 6,627 thousand, and gain on revaluation of investment in associate was EUR 2,862 thousand. In the separate financial statements, the result of disposal of the subsidiary (after considering the GET Baltic shares’ call/put options) and revaluation of the remaining part of investment in associate was EUR 10,146 thousand, of which gain on disposal of control was EUR 7,059 thousand, and gain on revaluation of investment in associate was EUR 3,087 thousand.
Effect of loss of control on consolidated statement of comprehensive income items:
2023 | |
Gain on disposal of subsidiary, cash | 6,500 |
Fair value after the revaluation of the remaining part of the investment | 3,348 |
Fair value of options at the date of issue | 1,070 |
Fair value of the loss of control transaction | 10,918 |
Net assets of subsidiary | (1,429) |
Gain on loss of control and revaluation of associates | 9,489 |
Effect of loss of control on separate statement of comprehensive income items:
2023 | |
Gain on disposal of subsidiary, cash | 6,500 |
Fair value after the revaluation of the remaining part of the investment | 3,348 |
Fair value of options at the date of issue | 1,070 |
Fair value of the loss of control transaction | 10,918 |
Carrying amount of investment in subsidiary | (769) |
Other transaction costs | (3) |
Gain on loss of control and revaluation of associates | 10,146 |
Main categories of assets and liabilities over which the control was lost at the moment of loss of control:
Non-current assets | 498 |
Intangible assets | 409 |
Property, plant and equipment | 3 |
Right-of-use assets | 82 |
Non-current financial assets | 4 |
Current assets | 41,791 |
Prepayments | 20 |
Receivables | 7,274 |
Other current financial assets | 33,304 |
Cash and cash equivalents | 1,193 |
Total assets: | 42,289 |
Non-current liabilities | 48 |
Non-current lease liabilities | 48 |
Current liabilities | 40,812 |
Current portion of lease liabilities | 34 |
Trade payables, prepayments received and other payables | 40,602 |
Income tax liability | 59 |
Employment-related liabilities | 117 |
Total liabilities: | 40,860 |
Net assets | 1,429 |
Information on the cash flow generated by the subsidiary is provided below:
As at 31 December 2023 | As at 31 December 2022 | |
Net cash flows from operating activities | 494 | 776 |
Net cash flows used in investing activities | 437 | (104) |
Net cash flows from/used in financing activities | (555) | (749) |
Net increase in cash generated by the subsidiary | 376 | (77) |
Summarized statement of financial position of GET Baltic as at 31 December 2023:
As at 31 December 2023 | |
Non-current assets | 353 |
Current assets | 74,900 |
Total assets: | 75,253 |
Non-current liabilities | 36 |
Current liabilities | 72,920 |
Total liabilities: | 72,956 |
Net assets | 2,297 |
Group's share, % | 34% |
Group's share of net assets | 781 |
Goodwill attributable to the Group | 2,863 |
Carrying amount of investment in associate | 3,644 |
Summarized statement of comprehensive income of GET Baltic for the period from the date of loss of control until 31 December 2023:
1 June - 31 December 2023 | |
Revenue | 1,111 |
Profit before tax | 1,027 |
Income tax benefit (expenses) | (159) |
Net profit (loss) | 868 |
Other comprehensive income | - |
Total comprehensive income for the period | 868 |
Total comprehensive income attributable to the Company/ Group | 295 |
Dividends paid to Company/Group | - |
Changes in carrying amount of the investment in associate due to the application of the equity method:
As at 31 December 2023 | As at 31 December 2022 | |
Carrying amount at the beginning of the period | - | - |
Acquisition | 3,348 | - |
Associate’s net profit (loss) | 295 | - |
Associate’s other comprehensive income | - | |
Dividends received | - | - |
Carrying amount at the end of the period | 3,644 |
As at 31 May 2023, the management carried out allocation of the purchase consideration of the investment in the associate GET Baltic, and arrived at the fair value of the net assets of GET Baltic attributable to the Company’s share held in GET Baltic. The calculations below show the difference between the purchase consideration of GET Baltic and net assets:
Purchase consideration of the investment in the associate GET Baltic | 3,348 |
Net assets of GET Baltic | 1,429 |
Group’s share of net assets (34%) | 485 |
Difference between fair value of net assets and purchase consideration | 2,863 |
The allocation of the purchase consideration considers the composition of net assets, and the fair value of assets and liabilities at the date the investment in associate is acquired. The Company’s management estimates that the value of GET Baltic’s net assets corresponds to their fair value, as the evaluation did not identify any:
Non-identifiable assets, acquisition of rights, internally generated intangible assets and assets the value of which does nots corresponds to their fair market value.
Liabilities not recognised or the value of which is significantly different from the carrying amount.
The purchase consideration of GET Baltic was determined using the fair value of the sale transaction of GET Baltic, which, in the management’s assessment, corresponds to the fair value of Get Baltic’s shares. Based on estimations of the Company’s management, the difference between the purchase consideration of the associate and the identifiable net assets is recognised as perceived goodwill, which is included in the carrying amount of the investments in associate. The goodwill include GET Baltic’s potential, customer base, know-how, access to the Baltic Sea: the Finnish trading platforms, a market that will offer a big potential for gas trading once the GIPL pipeline, and thus the pan-European gas market, becomes operational. This does not meet the criteria for recognition of intangible asset.
9. 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, 3-4 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.
To mitigate the environmental impact, the Company renewed its fleet of cars by replacing polluting vehicles with electric cars or less polluting vehicles. As at 31 December 2023, the initial cost of electric cars recognised as right of use assets amounted to EUR 217 thousand, lease period was 3-4 years.
Buildings | Land | Vehicles | Total | |
Net book amount of assets recognised at 31 December 2021 | 1,672 | 1,493 | 572 | 3,737 |
New leases | - | - | 105 | 105 |
Indexation | - | - | - | - |
Write-offs | - | - | - | - |
Depreciation charge | (177) | (15) | (285) | (477) |
Net book amount as at 31 December 2022 | 1,495 | 1,478 | 392 | 3,365 |
- | ||||
Net book amount of assets recognised at 31 December 2022 | 1,495 | 1,478 | 392 | 3,365 |
New leases | - | - | 217 | 217 |
Indexation | 31 | - | - | 31 |
Write-offs | - | - | - | - |
Depreciation charge | (180) | (16) | (317) | (513) |
Net book amount as at 31 December 2023 | 1,346 | 1,462 | 292 | 3,100 |
Initial cost | 1,747 | 1,534 | 1,442 | 4,723 |
Accumulated depreciation | (401) | (72) | (1,150) | (1,623) |
Net book value at 31 December 2023 | 1,346 | 1,462 | 292 | 3,100 |
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.
10. Derivatives
The Company’s derivatives are reported under the following items of the statement of financial position:
As at 31 December 2023 | |
Non-current assets | |
Put option of GET Baltic | 1,226 |
Total non-current derivative assets: | 1,226 |
Current liabilities | |
Call option of GET Baltic | 364 |
Total current derivative liabilities: | 364 |
Information on the fair values of derivatives is presented below:
Share option | Subscription date | Maturity | Exercise price | Fair value of option | |
As at 31 December 2023 | As at 31 May 2023 | ||||
Put Option | As at 31 May 2023 | As at 31 May 2027 | 4.07 | 1226 | 1392 |
Call Option | As at 31 May 2023 | As at 31 May 2025 | 3.62 | 364 | 322 |
The call option can be exercised at any time after the investor has fulfilled its obligations, therefore this obligation is classified as a current liability. The fair value was determined based on the most likely option exercise period of 24 months estimated by the management.
The Black-Scholes model was used to estimate an option's fair value. The assumptions used in estimating the option’s fair value were as follows:
Put Option | Call Option | |
Current stock price, EUR | 3.5 | 3.5 |
Strike price, EUR | 4.07 | 3.62 |
Time to maturity (years) | 3.417 | 1.417 |
Dividend yield (%) | 5.26 | 5.26 |
Volatility (%) | 29.26 | 29.26 |
Risk free interest rate (%) | 2.57 | 2.57 |
Sensitivity of the put option’s fair value as at 31 December 2023 to changes in key assumptions, the impact is presented for a 34% shareholding:
Volatility (%) | 24 26% | 29 26% | 34 26% | ||
Current stock prce | Pokytis | -5 00% | 0 00% | 5 00% | |
3 15 | -10 00% | (93) | (187) | (280) | |
3 50 | 0 00% | 114 | - | (114) | |
3 85 | 10 00% | 291 | 166 | 42 | |
Sensitivity of the call option’s fair value as at 31 December 2023 to changes in key assumptions, the impact is presented for a 34% shareholding:
Volatility (%) | 24 26% | 29 26% | 34 26% | ||
Current stock prce | Pokytis | -5 00% | 0 00% | 5 00% | |
3 15 | -10 00% | 208 | 135 | 73 | |
3 50 | 0 00% | 73 | - | (83) | |
3 85 | 10 00% | (21) | (104) | (187) | |
11. Inventories
As at 31 December 2023 | As at 31 December 2022 | |
Raw materials, spare parts and other inventories | 1,052 | 1,135 |
Natural gas | 4,339 | 12,250 |
Assets held for sale | - | - |
Inventories, gross | 5,391 | 13,385 |
Less: impairment | (517) | (552) |
4,874 | 12,833 |
Changes in the value of natural gas inventories mostly influenced by the decrease in natural gas prices.
The acquisition cost of the Company’s inventories accounted for at net realisable value as at 31 December 2023 amounted to EUR 1,052 thousand (31 December 2022: EUR 1,135 thousand). Inventory write-down allowance was included in other expenses.
Inventories recognised as expenses during the reporting period amounted to EUR 26,854 thousand as at 31 December 2023 (31 December 2022: EUR 40,772 thousand).
12. Trade receivables
As at 31 December 2023 | As at 31 December 2022 | |
I. Trade receivables under contracts with customers | ||
I.1 Receivables after one year | - | - |
Net book of receivables after one year: | - | - |
I.2. Current trade receivables | ||
Receivables for transmission of natural gas | 6,770 | 13,834 |
Receivables for natural gas | 713 | - |
Receivables for balancing of transmission system | 1,553 | 4,473 |
Receivables for other services | 2 | - |
Less: expected credit losses for trade receivables | (19) | (17) |
Trade receivables under contracts with customers | 9,019 | 18,290 |
II. Trade receivables under other contracts | ||
Other trade receivables | 11 | 208 |
Less: impairment of trade receivables | - | - |
Total trade receivables under other contracts | 11 | 208 |
Total trade receivable | 9,030 | 18,498 |
Current trade receivables are interest free and their settlement term is typically between 7 and 20 calendar days. Impairment allowance of EUR 19 thousand was established for trade receivables as at 31 December 2023 (31 December 2022: EUR 17 thousand). The decrease in trade receivables resulted from falling natural gas prices.
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 receivables.
To determine credit losses for receivables, the Company applies an individual assessment and a provision matrix. The loss ratio matrix is based on historical data for a period exceeding 36 months on settlements of debts by customers. The loss ratios may be adjusted in view of macroeconomic forecasts. The loss ratios are classified into separate groups of receivables on the basis of credit risk characteristics and overdue period. Entities in bankruptcy and/or liquidation are subject to a credit loss ratio of 100%.
Expected credit losses of trade receivables as at 31 December 2023 were as follows:
As at 31 December 2023 | Not past due | 1-30 days | 31-90 days | 91-180 days | 181 and more days | Total: |
Trade receivables assessed individually | 2,945 | - | - | - | - | 2,945 |
Expected credit losses | (7) | - | - | - | - | (7) |
Trade receivables assessed collectively | ||||||
State-owned companies | 2,174 | - | - | - | - | 2,174 |
Loss ratio (%) | 0% | 0% | 0% | 0% | 0% | |
Expected credit losses | - | - | - | - | - | - |
Other entities | 3,764 | 6 | 159 | - | 1 | 3,930 |
Loss ratio (%) | 0,04% | 2,99% | 5,83% | 17,55% | 100% | |
Expected credit losses | (2) | - | (9) | - | (1) | (12) |
Total trade receivables | 8,883 | 6 | 159 | - | 1 | 9,049 |
Total expected credit losses | (9) | (9) | (1) | (19) |
Expected credit losses of trade receivables as at 31 December 2022 were as follows:
As at 31 December 2022 | Not past due | 1-30 days | 31-90 days | 91-180 days | 181 and more days | Total: |
Trade receivables assessed individually | 9,038 | - | - | - | - | 9,038 |
Expected credit losses | (13) | - | - | - | - | (13) |
Trade receivables assessed collectively | ||||||
State-owned companies | 3,196 | - | - | - | - | 3,196 |
Loss ratio (%) | 0% | 0% | 0% | 0% | 0% | |
Expected credit losses | - | - | - | - | - | - |
Other entities | 6,236 | 44 | - | - | 1 | 6,281 |
Loss ratio (%) | 0,04% | 2,99% | 5,83% | 17,55% | 100% | |
Expected credit losses | (2) | (1) | - | - | (1) | (4) |
Total trade receivables | 18,470 | 44 | 1 | 18,515 | ||
Total expected credit losses | (15) | (1) | (1) | (17) |
For the purpose of the individual assessment, the range of expected credit losses was 0-1.04% in 2023 (2022: 0-1.9%). Movement on impairment allowance account of the Group‘s trade receivables:
Movement on impairment allowance account of the Group‘s trade receivables:
As at 31 December 2023 | As at 31 December 2022 | |
Carrying amount at the beginning of the period | 17 | 67 |
Impairment (reversal of impairment) | 2 | (50) |
Carrying amount at the end of the period | 19 | 17 |
13. Other amounts receivable
As at 31 December 2023 | As at 31 December 2022 | |
Non-financial assets | ||
LNG terminal funds receivable | 9,377 | 7,802 |
Grants receivable | 7,360 | 6,976 |
Taxes receivable | 37 | 2,147 |
Total non-financial assets | 16,774 | 16,925 |
Contract assets | 1,798 | 2,780 |
Financial assets | ||
Other receivables | 502 | 17 |
Total financial assets | 502 | 17 |
Total other receivables | 19,074 | 19,722 |
As at 31 December 2023, LNG terminal funds receivable included an overdue amount of EUR 6,582 thousand, whereof overdue amount of Achema AB amounted to EUR 6,432 thousand. As at 31 December 2022, the overdue amount included in LNG terminal funds receivable amounted to EUR 5,688 thousand. The legal dispute with Achema AB is disclosed in Note 40.
Grants receivable include support from the EU structural funds to finance the investment projects implemented by the Company.
The Company does not recognise impairment for the LNG terminal funds receivable, 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 based on the obligations of the administrator of the LNG terminal funds that are not related to the administration of the LNG terminal funds. No impairment was established for the Company‘s other receivables.
No impairment was established for the Company‘s other amounts receivable.
14. Other financial assets
As at 31 December 2023 and 2022, the Company’s other financial assets comprised security deposits collected from the system users. Security deposits received from the system users are held in the form of term bank deposits: two term deposit agreements for EUR 503 thousand (12-month term deposit) and EUR 25 thousand (3-month term deposit). The bank with whom the term deposit agreements were concluded, complies with a long-term credit rating in foreign currency, as indicated in Note 15.
A at 31 December 2023 | As at 31 December 2022 | |
LNG terminal funds | - | 1 |
Deposits received | 528 | 422 |
Total other financial assets | 528 | 423 |
15. Cash and cash equivalents
As at 31 December 2023 | As at 31 December 2022 | |
Cash at bank | 121 | 21 |
121 | 21 |
The Company keeps its cash balances on bank accounts. As at 31 December 2023, the cash balance was not material due to the Company’s and the Group’s treasury management policy aimed at maintaining minimum cash balances.
The table below presents the long-term foreign currency credit ratings of the banks with which the Group kept its cash balances as at 31 December 2023:
Bank | Cash at bank a at 31 December 2023 | Credit rating agency | ||
Moody‘s | Standart&Poor‘s | Fitch Ratings | ||
Bankas No.11) | 119 | Aa3 | A+ | AA |
Bank No.21) | 2 | Aa3 | A+ | AA- |
1) The ratings assigned to the parent banks as at 31 December 2023.
16. Assets held for sale, assets and liabilities of disposal group
As at 31 December 2022, below indicated assets and liabilities were reclassified to held for sale, in view of GET Baltic stock sale plan implemented by the Company:
As at 31 December 2022 | |
Non-current assets | |
Intangible assets | 474 |
Other property, plant and equipment | 4 |
Right-of-use assets | 85 |
Other non-current financial assets | 4 |
Current assets | - |
Prepayments | 26 |
Trade receivables | 12,767 |
Other receivables | 632 |
Other current financial assets | 188,969 |
Cash and cash equivalents | 817 |
Total assets of disposal group | 203,778 |
Non-current liabilities | |
Non-current lease liabilities | 57 |
Current liabilities | - |
Current portion of lease liabilities | 29 |
Trade payables | 56,415 |
Prepayments received | 145,932 |
Income tax liability | 15 |
Employment-related liabilities | 136 |
Other payables and current liabilities | 13 |
Total liabilities of disposal group: | 202,597 |
17. Share capital
The Company‘s share capital amounted to EUR 51,731 thousand and it is divided into 178,382,514 ordinary registered shares with par value of EUR 0.29 each. For more details on the share capital of the subsidiary, see Note 1.
18. Dividends
During the Company‘s Ordinary General Meeting of Shareholders held on 11 April 2023, the decision was made to pay put dividends in total amount of EUR 12,059 thousand, i.e. EUR 0.0676 per share. During the Company‘s Ordinary General Meeting of Shareholders held on 20 April 2022, the decision was made to pay put dividends in total amount of EUR 9,901 thousand, i.e. EUR 0.0555 per share.
2023 | 2022 | |
Dividends per share |
19. Reserves
Legal reserve
A legal reserve is a compulsory reserve under the laws 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 Meeting of Shareholders regarding the proposed appropriation of profit. When approving the proposed appropriation of profit for 2022, an unutilised reserve for support of EUR 166 thousand was reclassified back to retained earnings, a EUR 3,827 thousand was transferred to other reserves of which EUR 471 thousand a target reserve for support. When approving the proposed appropriation of profit for 2021, the total amount of profit for appropriation of EUR 13,263 thousand was transferred to other reserves of which EUR 166 thousand a target reserve for support.
Revaluation reserve
Below is the impact of revaluation of property, plant and equipment on revaluation reserve as at 31 December 2023. More information on the revaluation is disclosed in Note 7.
As at 31 December 2023 | |
Carrying amount at the beginning of the period | - |
PP&E revaluation impact | 3,255 |
Effect of deferred income tax | (488) |
Carrying amount at the end of the period | 2,767 |
Pursuant to Articles 39, 42, 51 and 59 of the Law on Companies of the Republic of Lithuania, no part of the revaluation reserve may be distributed, either directly or indirectly, it may be used only to increase the issued capital. The general meeting of shareholders may not adopt a decision to pay dividends if the equity capital of the company is lower or upon payment of dividends would become lower than the revaluation reserve, i.e. the use of the revaluation reserve for profit/loss allocation is prohibited.
20. Grants
Grants comprise grants for the acquisition of non-current assets and compensation of expenses. Movements in grants in 2023 and 2022 were as follows:
Opening balance | As at 31 December 2023 | As at 31 December 2022 |
Grants receivable (Note 13) | 6,976 | 10,330 |
Grants received in advance (current liabilities) | (107) | (151) |
6,869 | 10,179 | |
Recognised grants | ||
Transfer to property, plant and equipment (Note 7) | 14,686 | 6,023 |
Transfer to intangible assets (Note 6) | - | - |
Write-off | - | (5) |
Grants used for compensation of expenses | 54 | 101 |
14,740 | 6,119 | |
Grants received | ||
Grants received as cash | 14,259 | 9,429 |
14,259 | 9,429 | |
Grants received in the form of assets | - | - |
Closing balance | ||
Grants receivable (Note 13) | 7,360 | 6,976 |
Grants received in advance (current liabilities) | (10) | (107) |
7,350 | 6,869 | |
21. Borrowings
On 30 June 2023, the Company fully repaid the long-term loan of EUR 30,000 thousand under the agreement with OP Corporate Bank pic Lithuanian branch signed in 2018. After fulfilling this obligation, as at 31 December 2023, the Company had two long-term loan agreements with Nordic Investment Bank and European Investment Bank.
The balance of borrowings from Nordic Investment Bank, less the current portion of non-current borrowings, amounted to EUR 13,043 thousand as at 31 December 2023 (31 December 2022: EUR 15,217 thousand).
The balance of the borrowing from European Investment Bank, less the current portion of the non-current borrowing, amounted to EUR 47,918 thousand as at 31 December 2023 (31 December 2022: EUR 58,279 thousand) The significant change was driven by the early repayment of the EUR 7,000 thousand loan in 2023.
To balance its working capital, on 1 March 2022 the Company and EPSO-G entered into a cash pool contract, based on which the maximum borrowing limit (overdraft) from EPSO-G was set in amount of EUR 40,000 thousand. On 12 July 2023, an additional arrangement was made to increase the borrowing limit to EUR 70,000 thousand. As at 31 December 2023, the Company’s borrowings under this contract amounted to EUR 25,009 thousand (31 December 2022: EUR 9,571 thousand).
As at 31 December 2023, the weighted average interest rate on the Company’s borrowings was 2.60% (31 December 2022: 1.53%). A EUR 48,095 thousand loan is subject to a variable interest rate, and a EUR 43,525 thousand loan is subject to a fixed interest rate. The interest rate is linked to variable 3-6-month EURIBOR rate.
As at 31 December 2023, the Company complied with the covenants and obligations set forth in the loan agreements with the abovementioned banks.
As at 31 December 2023 | As at 31 December 2022 | |
Non-current borrowings | 60,962 | 73,496 |
Current borrowings | 31,084 | 27,466 |
Current borrowings (EPSO-G UAB) | 25,009 | 9,571 |
Current portion of non-current borrowings | 5,649 | 17,895 |
Accrued interest payable | 426 | - |
Total borrowings | 92,046 | 100,962 |
Borrowings grouped by maturity:
As at 31 December 2023 | As at 31 December 2022 | As at 31 December 2023 | As at 31 December 2022 | |
Borrowings with a fixed interest rate | Borrowings with a fixed interest rate | Borrowings with a variable interest rate | Borrowings with a variable interest rate | |
2023 | - | 1,475 | - | 16,420 |
2024 | 2,951 | 2,951 | 2,699 | 3,158 |
2025 | 2,951 | 2,951 | 2,699 | 3,158 |
2026 | 2,951 | 2,951 | 2,699 | 3,158 |
2027 | 2,951 | 2,951 | 2,699 | 3,158 |
2028 | 2,951 | 2,951 | 2,699 | 3,158 |
2029 | 2,951 | 2,951 | 2,699 | 3,158 |
2030 | 2,951 | 2,951 | 2,699 | 3,158 |
2031 | 2,951 | 2,951 | 525 | 984 |
2032 | 2,951 | 2,951 | 524 | 983 |
2033 | 2,951 | 2,951 | 524 | 983 |
2034 | 2,951 | 2,951 | 524 | 983 |
2035 | 2,951 | 2,951 | 524 | 983 |
2036 | 2,951 | 2,951 | 524 | 983 |
2037 | 2,951 | 2,951 | 524 | 983 |
2038 | 2,211 | 2,211 | 524 | 983 |
43,525 | 45,000 | 23,086 | 46,391 | |
All borrowings of the Company were obtained in the euros, and therefore, the outstanding balances of borrowings were denominated in the euros for the period from 31 December 2023 and 2022, 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 2023 and 2022:
Cash | Borrowings | Lease liabilities | Total | |
Net debt as at 31 December 2021 | 12 | (104,917) | (3,812) | (108,717) |
Changes in cash and cash equivalents | 9 | - | - | 9 |
Loan (received) | - | - | - | - |
Loan repaid | - | 10,174 | - | 10,174 |
Change in overdraft | - | (6,287) | - | (6,287) |
Lease payments | - | - | 387 | 387 |
Concluded lease contracts | - | - | (105) | (105) |
Lease modifications | - | - | - | - |
Other movements | ||||
Interest charges expensed and interest capitalised | - | (623) | (30) | (653) |
Interest paid | - | 512 | 30 | 542 |
Other non-cash changes | - | 4 | 16 | 20 |
Net debt as at 31 December 2022 | 21 | (101,137) | (3,514) | (104,630) |
Changes in cash and cash equivalents | 100 | - | - | 100 |
Loans (received) | - | - | - | - |
Loans repaid | - | 24,780 | - | 24,780 |
Change in overdraft | - | (15,437) | - | (15,437) |
Lease payments | - | - | 512 | 512 |
Concluded lease contracts | - | - | (217) | (217) |
Lease modifications | - | - | (31) | (31) |
Other changes | - | - | - | - |
Interest charges expensed and interest capitalised | - | (2,071) | (30) | (2,101) |
Interest paid | - | 1,834 | 30 | 1,864 |
Other non-cash changes | - | (15) | - | (15) |
Net debt as at 31 December 2023 | 121 | (92,046) | (3,250) | (95,175) |
22. Lease liabilities
Lease liabilities and their movement were as follows:
As at 31 December 2023 | As at 31 December 2022 | |
Carrying amount of lease liabilities as at 1 January | 3,514 | 3,812 |
Indexation | 31 | - |
Concluded lease contracts | 217 | 105 |
Termination of lease (write-off of debt and accrued interest) | - | - |
Interest charged | 30 | 30 |
Lease payments (principal and interest) | (542) | (433) |
Carrying amount as at 31 December | 3,250 | 3,514 |
Non-current lease liabilities | 2,933 | 3,012 |
Current lease liabilities | 317 | 502 |
Lease liabilities | As at 31 December 2023 | As at 31 December 2022 |
Current portion | 317 | 502 |
Maturity of non-current liabilities: | 2,933 | 3,012 |
Between 1 and 2 years | 295 | 247 |
Between 2 and 3 years | 291 | 222 |
Between 3 and 5 years | 386 | 404 |
After 5 years | 1,961 | 2,139 |
Interest charged on lease liabilities and included in the Group’s finance costs amounted to EUR 30 thousand as at 31 December 2023 (31 December 2022: EUR 31 thousand).
The Company has a lease contract for office premises with variable lease payments not included in the value of lease liabilities. As from 1 January 2023, the lease rate for office premises may be revised in view of changes in the average consumer price index as a result of inflation, however, to an extent not higher than 2%. In 2023, the Company’s lease payments (principal amount) totalled EUR 542 thousand (2022: EUR 433 thousand). The Company had no short-term lease contracts. The EUR 142 thousand lease payments were recognised as expenses under low-value leases which are not part of the lease liabilities.
23. Contract liabilities
Funds from connection of new system users to the gas transmission system are recognised as liabilities under contracts with customers.
Contract liabilities included as follows:
As at 31 December 2023 | As at 31 December 2022 | |
Non-current portion of contract liabilities under connection contracts | 1,530 | 1,271 |
Total non-current contract liabilities | 1,530 | 1,271 |
Current portion of contract liabilities under connection contracts | 70 | 34 |
Prepayments received for connection services | - | 318 |
Total current liabilities under contracts with customers | 70 | 352 |
Total contract liabilities | 1,600 | 1,623 |
24. Provisions
As at 31 December 2023 | As at 31 December 2022 | |
Provisions for pension benefits to employees | 774 | 738 |
Provisions for registration of special land use conditions (protected areas) | 356 | 1,024 |
Carrying amount | 1,130 | 1,762 |
Non-current provisions | 667 | 998 |
Current provisions | 463 | 764 |
Movement in provisions:
Provisions for pension benefits to employees | Provisions for registration of protection zones | Total | |
Carrying amount as at 31 December 2021 | 602 | 2,157 | 2,759 |
Calculated | 136 | - | 136 |
Revised estimate | - | (889) | (889) |
Payments made | - | (244) | (244) |
Carrying amount as at 31 December 2022 | 738 | 1,024 | 1,762 |
Calculated | 36 | - | 36 |
Revised estimate | - | (264) | (264) |
Payments made | - | (404) | (404) |
Carrying amount as at 31 December 2023 | 774 | 356 | 1,130 |
As at 31 December 2023, the Company’s and the Group’s employee benefit obligations related to payment of one-off benefits to employees leaving the Company at retirement age amounted to EUR 774 thousand (31 December 2022: EUR 738 thousand). There are no other long-term employee benefit obligations for long-term service of employees 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:
As at 31 December 2023 | As at 31 December 2022 | |
Discount rate | 1 24% | 0,83% |
Annual employee turnover rate | 6 91% | 7,65% |
Annual salary growth | 3 00% | 4,00% |
Average time to retirement (years) | 19.81 | 20,06 |
The Company has obligation to register special conditions for the use of land (protection zones). As at 31 December 2023 and 2022, the Company re-measured the provision for registration of special land use conditions (protected areas) and the related intangible assets in view of changes in assumptions. As at 31 December 2023, the provision reduced by EUR 264 thousand (31 December 2022: EUR 889 thousand). The Company’s outstanding obligation to register special conditions for the use of land (protection zones) amounted to EUR 356 thousand as at 31 December 2023 (as at 31 December 2022, EUR 1,024 thousand).
25. Trade payable
As at 31 December 2023 | As at 31 December 2022 | |
Payables for property, plant and equipment | 900 | 3,159 |
Payables for goods and services | 1,892 | 2,043 |
Payables for repair services | 127 | 244 |
Payables for natural gas | 1 | 2,600 |
Payables for balancing services | 2,415 | 5,622 |
5,335 | 13,668 |
Trade payables are interest free and their settlement term is typically between 30 and 60 days.
26. Prepayments received
As at 31 December 2023 | As at 31 December 2022 | |
Financial liabilities | ||
Security deposits received | 528 | 422 |
Total financial liabilities | 528 | 422 |
Non-financial liabilities | ||
Contract liabilities | 70 | 352 |
Advance grants received | 6 | 60 |
Other accrued revenue | 4 | 47 |
Other prepayments received | 14 | 1 |
Total non-financial liabilities | 94 | 460 |
Total prepayments received and contract liabilities | 622 | 882 |
As at 31 December 2023, prepayments received amounted to EUR 528 thousand and comprised security deposits received from the system users as a contract enforcement measure. The system user, before entering into the transmission contract, must provide the Company with appropriate contract enforcement measures.
27. Other amounts payable and current liabilities
As at 31 December 2023 | As at 31 December 2022 | |
Non-financial liabilities | ||
Administered LNG terminal funds payable | 8,906 | 7,635 |
Accrued administered LNG terminal funds1) | 471 | 328 |
Real estate tax payable | 732 | 666 |
Payable value added tax | - | - |
Other taxes payable | 19 | 29 |
Other payables | - | - |
Total non-financial liabilities | 10,128 | 8,658 |
Financial liabilities | ||
Payable CBCA contribution | 27,450 | 27,450 |
Payable dividends | 65 | 58 |
Other payables | 1 | - |
Accrued expenses | 1,089 | 976 |
Derivative liabilities | 364 | - |
Total financial liabilities | 28,969 | 28,484 |
Total other payables | 39,097 | 37,142 |
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 classified as payable LNG terminal funds when a VAT invoice is issued to the Company for the extra charge on the natural gas transmission price related to natural gas supply security.
Other payables of EUR 27,450 thousand include the commitment to pay CBCA contribution. In accordance with the cross-border cost allocation principles, as part of GIPL project, the CBCA contribution will be paid to the Polish transmission system operator upon receipt of its payment request based on the audited value of the GIPL pipeline construction works on the Polish side.
28. Revenue
The Group‘s and the Company‘s revenue includes as follows:
Group | Company | |||
2023 | 2022 | 2023 | 2022 | |
Revenue under contracts with customers | ||||
Transmission of natural gas in the territory of Lithuania | 67,364 | 65,383 | 67,364 | 65,383 |
Revenue from system balancing products | 12,544 | 30,569 | 12,544 | 30,569 |
Revenue from trading on exchange | 812 | 1,364 | - | - |
Revenue from connection of new consumers (deferred revenue) | 42 | 33 | 42 | 33 |
Other income | 90 | 190 | 10 | - |
Total revenue from contracts with customers | 80,852 | 97,539 | 79,960 | 95,985 |
Revenue other than under contracts with customers | ||||
Revenue from administration of LNG terminal funds | 69 | 61 | 69 | 61 |
Total revenue other than under contracts with customers | 69 | 61 | 69 | 61 |
Total revenue | 80,921 | 97,600 | 80,029 | 96,046 |
Group | Company | |||
2023 | 2022 | 2023 | 2022 | |
Revenue recognised over the period | ||||
Transmission of natural gas in the territory of Lithuania | 67,364 | 65,383 | 67,364 | 65,383 |
Revenue from transmission system balancing service | 12,544 | 30,569 | 12,544 | 30,569 |
Membership revenue | - | 85 | - | - |
Other income | 201 | 266 | 121 | 94 |
Total revenue recognised over the period | 80,109 | 96,303 | 80,029 | 96,046 |
Revenue recognised at a point in time, upon provision of services | ||||
Revenue from trading on exchange | 812 | 1,297 | - | - |
Total revenue recognised at a point in time, upon provision of services: | 812 | 1,297 | - | - |
Total revenue under contracts with customers | 80,921 | 97,600 | 80,029 | 96,046 |
29. Other income
The Group‘s other income includes as follows:
Group | Company | |||
2023 | 2022 | 2023 | 2022 | |
Grants recognised as income | 54 | 101 | 54 | 101 |
Sale of goods | 875 | 248 | 875 | 248 |
Rental income | 1 | 23 | 1 | 23 |
Gain on disposal of PP&E | 19 | 47 | 19 | 47 |
Interest on late payment | 40 | 27 | 40 | 27 |
Other income | 319 | 160 | 319 | 160 |
1,308 | 606 | 1,308 | 606 | |
30. Dividend income
Group | Company | |||
2023 | 2022 | 2023 | 2022 | |
Dividend income | - | - | 542 | 598 |
In 2023 the Company received EUR 542 thousand in dividends (2022: EUR 598 thousand) from its subsidiary GET Baltic.
31. Purchase of natural gas
Purchase of the Group’s and Company’s natural gas were consisted of:
Group | Company | |||
2023 | 2022 | 2023 | 2022 | |
Expenses for natural gas system balancing products | (18,210) | (26,827) | (18,210) | (26,827) |
Expenses for natural gas technological needs | (7,142) | (13,007) | (7,142) | (13,007) |
Total | (25,352) | (39,834) | (25,352) | (39,834) |
32. Other expenses
Other expenses of the Group and Company were consisted of:
Group | Company | |||
2023 | 2022 | 2023 | 2022 | |
Telecommunications and IT system expenses | (2,336) | (1,953) | (2,285) | (1,840) |
Business trips | (259) | (187) | (259) | (187) |
Consulting services | (117) | (162) | (117) | (162) |
Expenses of governing bodies | (92) | (48) | (92) | (48) |
Management services | (349) | (127) | (349) | (127) |
Personnel development | (227) | (149) | (227) | (149) |
Public relations | (236) | (201) | (236) | (201) |
Premise expenses | (1,071) | (759) | (1,071) | (759) |
Transport | (702) | (735) | (702) | (735) |
Council fee | (1,321) | (913) | (1,321) | (913) |
Taxes | (2,979) | (2,808) | (2,979) | (2,808) |
Business protection | (542) | (500) | (542) | (500) |
Membership fees | (242) | (238) | (242) | (238) |
Insurance | (520) | (216) | (520) | (216) |
Other expenses | (2,426) | (1,910) | (2,409) | (1,879) |
Total | (13,419) | (10,906) | (13,351) | (10,762) |
33. Financing activities
Group | Company | |||
2023 | 2022 | 2023 | 2022 | |
Interest income | 454 | - | 9 | - |
Interest income on late payments | - | 10 | - | 10 |
Other | 13 | 35 | 13 | 11 |
Total finance income | 467 | 45 | 22 | 21 |
Interest on borrowings | (1,778) | (603) | (1,778) | (603) |
Other finance costs | (3) | (161) | (2) | (39) |
Total finance costs | (1,781) | (764) | (1,780) | (642) |
Net financial result | (1,314) | (719) | (1,758) | (621) |
34. Current and deferred income tax
Income tax expenses include as follows:
Group | Company | |||
2023 | 2022 | 2023 | 2022 | |
Current income tax expense for the reporting year | (140) | (98) | - | (1) |
Deferred income tax expenses (benefit) | (567) | (2,367) | (567) | (2,367) |
Income tax expenses/(benefit) for the reporting period | (707) | (2,465) | (567) | (2,368) |
Movements in deferred income tax assets and liabilities (before offsetting the amounts relating to the same tax authority) were as follows:
Deferred income tax assets | PP&E revaluation (impairment) | Fees on connection of new consumers | Impairment of inventories and receivables | Accrued expenses | Unutilised investment incentive | Other | Total |
As at 31 December 2021 | 2,490 | 201 | 71 | 261 | 4,608 | - | 7,631 |
Recognised in profit or loss | (148) | (5) | 15 | 42 | (2,416) | 145 | (2,367) |
Recognised in other comprehensive income | - | - | - | - | - | - | - |
As at 31 December 2022 | 2,342 | 196 | 86 | 303 | 2,192 | 145 | 5,264 |
Recognised in profit or loss | 1,068 | 44 | (6) | 61 | (1,744) | 56 | (521) |
Recognised in other comprehensive income | - | - | - | - | - | - | - |
As at 31 December 2023 | 3,410 | 240 | 80 | 364 | 448 | 201 | 4,743 |
Deferred tax liabilities | Effect of capitalisation of interest | PP&E revaluation | Total |
As at 31 December 2021 | (122) | - | (122) |
Recognised in profit or loss | (1) | - | (1) |
Recognised in other comprehensive income | - | - | - |
As at 31 December 2022 | (123) | - | (123) |
Recognised in profit or loss | (46) | - | (46) |
Recognised in other comprehensive income | - | (488) | (488) |
As at 31 December 2023 | (169) | (488) | (657) |
As at 31 December 2023 | As at 31 December 2022 | |
Deferred tax assets before valuation allowance | 4,743 | 5,264 |
Less: valuation allowance | - | - |
Less: deferred tax assets offset against deferred tax liabilities | (657) | (123) |
Deferred tax asset, net | 4,086 | 5,141 |
Deferred income tax, net, at 31 December 2021 | 7.508 |
Deferred income tax, net, at 31 December 2022 | 5.141 |
Deferred income tax, net, at 31 December 2023 | 4.086 |
According to the provisions of the Law on Corporate Income Tax, income tax relief may be applied to investments in non-current assets meeting the criteria set out in the Law on Corporate Income Tax. When calculating income tax for the year 2023 the Company utilised the income tax incentive and reduced the income tax expenses for the year 2023 by the total amount of EUR 40 thousand (2022: EUR 266 thousand).
Under the assessment of the Company EUR 888 thousand net deferred income tax will be realized within 12 months, EUR 3,198 thousand over a period of more than 12 months.
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 authority.
When estimating the components of deferred income assets and liabilities in 2023 and 2022, 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:
2023 | 2022 | |
Profit (loss) before tax | 13,992 | 18,088 |
Income tax (expenses) at the effective income tax rate | (2,099) | (2,713) |
Non-deductible expenses, non-taxable income | (29) | 80 |
Disposal of subsidiary and revaluation of the remaining investment in associate | 1,521 | - |
Investment relief utilised during the reporting period | 40 | 266 |
Other | - | - |
Additional unutilised investment incentive | - | - |
Adjustments to previous year income tax | - | (1) |
(567) | (2,368) |
35. Basic and diluted earnings per share
Group | ||
2023 | 2022 | |
Net profit attributable to equity holders of the Group (EUR ’000) | 13,013 | 15,665 |
Weighted average number of shares (’000 units) | 178.383 | 178.383 |
Basic and diluted earnings (loss) per share (EUR) | 0.07 | 0.09 |
36. Cash flows from investing and financing activities
The impact of significant investment and financing transactions, classified as non-cash transactions, on the cash flows from financing and investing activities is disclosed below.
When calculating cash flows from investing and financing activities as at 31 December 2023, the Company took into consideration the following: changes in payables for non-current assets of EUR 2.260 thousand, re-measurement of provision for registration of special land use conditions and related intangible assets of EUR 264 thousand, payments made to set special land use conditions of EUR 404 thousand, and capitalised interest costs of EUR 329 thousand. Reclassification from non-current assets (including construction work in progress) to inventories and assets held for sale amounted to EUR 59 thousand, and change in grants receivable to EUR 427 thousand.
When calculating cash flows from investing and financing activities as at 31 December 2022, the Company took into consideration the following: changes in payables for non-current assets of EUR 28,468 thousand, re-measurement of provision for registration of special land use conditions and related intangible assets of EUR 889 thousand, payments made to set special land use conditions of EUR 238 thousand, and capitalised interest costs of EUR 21 thousand. Reclassification from non-current assets (including construction work in progress) to inventories and assets held for sale amounted to EUR 80 thousand, and change in grants receivable to EUR 3,410 thousand.
37. 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 Group‘s Treasury and Financial Risk Management Policy.
Financial instruments by category based on the items of the statement of financial position:
Financial assets | Note | As at 31 December 2023 | As at 31 December 2022 |
Financial assets at fair value through profit or loss | 1,226 | - | |
Derivatives | 10 | 1,226 | - |
Financial assets at amortised cost | 10,181 | 18,959 | |
Trade receivables | 12 | 9,030 | 18,498 |
Other receivables | 13 | 502 | 17 |
Cash and cash equivalents | 15 | 121 | 21 |
Other financial assets | 14 | 528 | 423 |
Total financial assets: | 11,407 | 18,959 |
Financial liabilities | Note | As at 31 December 2023 | As at 31 December 2022 |
Financial liabilities at fair value through profit or loss | 364 | - | |
Derivatives | 10 | 364 | - |
Financial liabilities measured at amortised cost | 126,514 | 143,536 | |
Borrowings | 21 | 92,046 | 100,962 |
Trade payables | 25 | 5,335 | 13,668 |
Other payables and liabilities | 27 | 29,133 | 28,906 |
Total | 126,878 | 143,536 |
The table below provides information on the values of balance sheet items exposed to credit risk:
Note | As at 31 December 2023 | As at 31 December 2022 | |
At fair value through profit or loss | 10 | 1,226 | - |
At amortized cost | 37 | 10181 | 18959 |
Contract assets | 13 | 1798 | 2780 |
13,205 | 21,739 |
Liquidity risk
Liquidity risk is managed continuously by making short-term and long-term cash flow forecasts of the Group. Where necessary, the Company relies on the forecasts to make decisions aimed at ensuring its solvency, i.e. uses the credit limit on EPSO-G’s cash pool account to balance its working capital. The cash pool agreements concluded with EPSO-G UAB is effective until 28 February 2025. Balance of undrawn credit limit as at 31 December 2023 was EUR 44,991 thousand (as at 31 December 2022, EUR 30,429 thousand).
The Group’s liquidity ratios (after elimination of effects of the LNG terminal funds under administration) were as follows as at 31 December 2023 and 2022:
As at 31 December 2023 | As at 31 December 2022 | |
Current ratio | 0.36 | 0.89 |
Quick ratio | 0.28 | 0.84 |
Decrease in trade receivables resulted in changes in liquidity indicators. Moreover, decrease in inventories had impact on the current ratio. With the balance of undrawn credit limit, the liquidity ratio would be 0.99 as at 31 December 2023.
The table below presents the Company’s financial liabilities grouped by maturity as at 31 December 2023 and 2022, based on the undiscounted contractual payments (scheduled payments 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 | 11,103 | 17,533 | 27,166 | 51,649 | 107,451 |
Lease liabilities | 125 | 406 | 974 | 3,281 | 4,786 |
Other liabilities | 1,456 | 27,450 | - | - | 28,906 |
Trade payables | 13,668 | - | - | - | 13,668 |
Balance as at 31 December 2022 | 26,352 | 45,389 | 28,140 | 54,930 | 154,811 |
Interest-bearing borrowings and liabilities | 27,653 | 4,427 | 26,129 | 40,501 | 98,710 |
Lease liabilities | 101 | 251 | 1,075 | 3,081 | 4,508 |
Other current liabilities | 1,683 | 27,450 | 364 | - | 29,497 |
Trade payables | 5,335 | - | - | - | 5,335 |
Balance as at 31 December 2023 | 34,772 | 32,128 | 27,568 | 43,582 | 138,050 |
Credit risk
The maximum exposure to credit risk is equal to the amount of trade receivables (except for receivable LNG terminal funds), other receivables, 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 82% of the Company’s total trade receivables as at 31 December 2023 (31 December 2022: 81%).
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 15). 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 2023 and 2022, the Group had borrowings with variable interest rates. Exposure to interest rate risk arises from variable interest rates that are linked to EURIBOR. In view of the situation in market of the interbank offered rates, the Group did not enter into any financial instrument transactions intended to manage the interest rate risk during 2023 and 2022.
The table below demonstrates the sensitivity of the Company's profit before tax to theoretic potential shifts 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 | |
As at 31 December 2023 | 100 | (1.230) |
As at 31 December 2022 | 100 | (2.031) |
Natural gas price risk
The Group is exposed to a risk arising from changes in the natural gas purchase price. The changes are driven by fluctuations in Lithuanian and international natural gas markets and exchanges. In 2023, 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 received and granted is measured using the interest rate for the same or similar issues or on the current rates available for debt with the same maturity profile and similar credit risk. The Group estimated that the carrying amount of interest-bearing long-term loans was EUR 11,627 thousand as at 31 December 2023 (EUR 10,931 thousand as at 31 December 2022).
38. 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 consumption of natural gas for both energetic 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. A key goal se in the Company’s strategy is to work together on Lithuania’s energy transformation towards a climate neutral economy. One of the main sustainability objectives of the Company is to mitigate the environmental impact of its operations.
To significantly reduce the impact on environment, the plan of measures has been developed and consistently implemented: pilot projects are planned, market analysis is carried out, investment plans are created. Actions are focused on preparing for the new EU legal framework for methane emissions.
In the view of the Company’s management, the requirements related to climate change do not cast doubt on the Company’s ability to continue as a going concern, and the estimates and assumptions do not pose a significant risk of material adjustments to the carrying amounts of assets and liabilities, or of impairment of non-current assets and inventories.
39. Off-balance sheet commitments and contingencies
Litigations
Currently, the Company is involved in one civil case regarding award of the LNG terminal funds of EUR 4,678 thousand and late interest of EUR 818 thousand from Achema AB under the natural gas transmission service contracts of 21 December 2012 and 22 December 2014. The District Court of Kaunas suspended the proceedings, as it is pending the decision of the European Commission on the compatibility of the LNG terminal surcharge funds collected for the period from 1 January 2016 to 31 December 2018 with the State aid rules under the EU law.
On 12 September 2023, the Company submitted a statement to the Kaunas District Court regarding the increase of the claim (hereinafter the “Statement”), asking the Court to award EUR 974 thousand of late interest from Achema AB in favour of the Company and EUR 6,024 thousand of LNG terminal surcharge funds under the said contracts. The issue of acceptance of the Company’s Statement will be decided by the Kaunas District Court after resuming the proceedings.
In respect of the civil case regarding award of the LNG terminal funds, the Company acts solely as an administrator of the LNG terminal funds, transfers the LNG terminal funds to their recipients only after collecting them from the buyers, and accordingly, the Company does not incur credit risk in respect of the disputed amount.
Commitments to acquire non-current assets
As at 31 December 2023, the Company had off-balance sheet contractual commitments to acquire non-current assets for the amount of EUR 1.3 million (31 December 2022: EUR 18.7 million).
The Company have not received any insurance payment to cover damage of EUR 132 thousand incurred during the fire. Management expects to receive the insurance claim. The receipt of the insurance payment is not time-bound until the incident investigations are completed, but this should not result in a significant change in the amount of the insurance payment.
40. 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.
The Group’s and the Company’s related parties as at 31 December 2023 and 2022 were as follows:
‐the Company’s parent company EPSO-G UAB, which is wholly owned by the Lithuanian Ministry of Energy;
EPSO-G Group companies:
‐Litgrid AB (common shareholders);
‐TETAS UAB (common shareholders);
‐Baltpool UAB (common shareholders);
‐Energy Cells UAB (common shareholders);
Associate GET Baltic.
The companies of Ignitis Grupė AB:
‐Energijos Skirstymo Operatorius AB
‐Ignitis UAB
‐Ignitis Gamyba UAB
‐Transporto Valdymas UAB
‐Ignitis Polska sp. z.o.o.
‐Other companies of Ignitis Grupė AB.
Other state-owned enterprises:
‐Klaipėdos Nafta AB (as from 10 January 2024, the legal name changed to KN Energies AB);
‐VĮ Ignalinos Atominė Elektrinė (natural gas transmission agreement terminated on 1 February 2022);
‐Other state-owned enterprises or entities under significant influence;
‐Management
The tables below present the Company’s related-party transactions and their balances as at 31 December 2023 and 2022:
Purchases | LNG terminal funds (purchases) | Sales | LNG terminal funds (sales) | Receivables | LNG terminal funds receivable | (Proceeds) from borrowings | Payables | LNG terminal funds payable | Divi-dends received | Finance costs | |
GET Baltic UAB | 19,210 | - | 4,801 | - | 796 | - | - | 5 | - | 4 | - |
EPSO-G | 349 | - | - | - | - | - | 25,009 | 227 | - | - | 683 |
TETAS UAB | 4 | - | - | - | - | - | - | - | - | - | - |
Ignitis gamyba AB | 2,811 | - | 4,947 | 3,172 | 625 | 640 | - | 293 | - | - | - |
Energijos skirstymo operatorius AB | 474 | - | 354 | 58 | 167 | 12 | - | 21 | - | - | - |
Ignitis UAB | 4,845 | 11,235 | 13,024 | 2,796 | 1,457 | 528 | - | 704 | 4,932 | - | - |
Transporto valdymas UAB | 401 | - | - | - | - | - | - | 40 | - | - | - |
KN Energies AB | - | - | - | - | - | - | - | - | 3,975 | - | - |
Ignitis Polska sp. Z.o.o. | - | - | 121 | - | - | - | - | - | - | - | - |
Other state-owned enterprises | 184 | - | - | - | - | - | - | 2 | - | - | - |
28,278 | 11,235 | 23,247 | 6,026 | 3,045 | 1,180 | 25,009 | 1,292 | 8,907 | 4 | 683 | |
Purchases | LNG terminal funds (purchases) | Sales | LNG terminal funds (sales) | Receivables | LNG terminal funds receivable | (Proceeds) from borrowings | Payables | LNG terminal funds payable | Dividends received | Finance costs | |
GET Baltic UAB | 42,143 | - | 14,000 | - | 214 | - | - | 2,604 | - | 598 | - |
EPSO-G | 127 | - | - | - | - | - | 9,571 | 54 | - | - | 81 |
TETAS UAB | 4 | - | 30 | - | - | - | - | - | - | - | - |
Ignitis gamyba AB | 1,475 | - | 7,460 | 6,368 | 1,019 | 432 | - | 378 | - | - | - |
Energijos skirstymo operatorius AB | 2,630 | - | 270 | - | 49 | 8 | - | 15 | - | - | - |
Ignitis UAB | 13,091 | 18,996 | 22,749 | 6,163 | 1,876 | 402 | - | 2,334 | 3,660 | - | - |
Transporto valdymas UAB | 402 | - | - | - | - | - | - | 43 | - | - | - |
KN Energies AB | - | 10,729 | - | - | - | - | - | - | 3,975 | - | - |
State Enterprise Ignalina Nuclear Power Plant | - | - | 4 | 7 | - | - | - | - | - | - | - |
Ignitis Polska sp. Z.o.o. | 74 | - | 214 | - | 38 | - | - | - | - | - | - |
Other state-owned enterprises | 68 | - | - | - | - | - | - | 9 | - | - | - |
60,014 | 29,725 | 44,727 | 12,538 | 3,196 | 842 | 9,571 | 5,437 | 7,635 | 598 | 81 | |
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 2023, the Company neither formed nor recognised any impairment provisions for receivables from related parties.
2023 | 2022 | |
Employment-related payments | 805 | 673 |
Payments to Board members | 92 | 48 |
897 | 721 |
The management of the Company is deemed to include the Company’s manager, 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 Company.
As at 31 December 2023, the accrued vacation reserve attributable to the Company’s management totalled EUR 94 thousand, and the financial incentives amounted to EUR 101 thousand.
41. Audit and non-audit services
In the period of from 2023 to 2022 the audit firm provided the following audit and non-audit services to the Group and to the Company. Information on non-audit services is disclosed based on the date of services rendered:
Group | Company | |||
Nature of services | 2023 | 2022 | 2023 | 2022 |
Audit services | 77 | 45 | 77 | 34 |
Total audit services | 77 | 45 | 77 | 34 |
Non-audit services | ||||
Assurance and other related services | 14 | 14 | 14 | 14 |
Other services | 4 | 4 | 3 | 3 |
Total non-audit services: | 18 | 18 | 17 | 17 |
Audit costs are shown in the statement of comprehensive income under other expenses.
42. 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 2023 and 2022, the Company and its subsidiary complied with this requirement. Under the Lithuanian Law on Companies, there are certain restrictions for distribution and payment of dividends. The Group‘s dividend policy defines the principles for setting, payment and declaration of dividends. There are no other external or intra-group imposed capital requirements on the Company.
43. Events after the end of the financial year
There were no other events after the reporting period until the date of approval of the financial statements that could have a material impact on the Company’s financial statements.
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
27 March 2024
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 2023, 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 2023 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)
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 subsidiary
(together - the “Group”) as at 31 December 2023 , and of the Company’s and of the Group’s separate
and consolidated financial performance and 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 27 March 2024.
What we have audited
The Group’s consolidated and the Company’s separate financial statements comprise:
● the consolidated and separate statement of financial position as at 31 December 2023;
● the consolidated and separate statement of comprehensive income for the year then ended;
● the consolidated and separate statements of changes in equity for the year then ended;
● the consolidated and separate statement of cash flows for the year then ended; and
● the notes to the consolidated and separate financial statements, comprising material accounting
policy information 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 2023 to 31 December 2023 are disclosed in note 42 to the separate and consolidated
financial statements.
Our audit approach
Overview
● Overall Group and Company materiality is the same and equals
Eur 800 thousand.
● We performed a full scope audit of the Company. At the Group level
we tested the consolidation process and performed analytical
procedures to be able to report on the consolidated financial
statements as a whole. Our audit addressed 100% of group assets
and 99 % of revenue.
● Property, plant and equipment at revalued amount
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 800 thousand (Euro 900 thousand)
Overall Group materiality
Euro 800 thousand (Euro 900 thousand)
How we determined it
Overall Company and Group materiality represents 1% of
average annual revenue for 3-year period
Rationale for the materiality
benchmark applied
We chose revenue as the benchmark for the overall
materiality because it is the measure against which the
performance of the Company and the Group is assessed by
Materiality
Group
scoping
Key audit
matters
the regulatory bodies as well as external creditors and other
stakeholders. The Company and the Group’s results depend
on approved tariffs for regulated activities, therefore the
Company’s and Group‘s profit before tax fluctuates widely
year over year, whereas its revenue is more stable and
growth-oriented indicator which can be compared to other
market participants. Because of 2021-2023 revenue
fluctuations due to changes in energy prices, we chose
average 3-year revenue figure as the benchmark.
We chose 1% which are 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 40 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
Property, plant and equipment at revalued
amount
(refer to Notes 2.6, 3 and 7)
The Group applies the revaluation model for
subsequent measurement of property, plant
and equipment (‘PPE’). As at 31 December
2023 the carrying value of PPE amounted to
EUR 284,353 thousand, being its fair value at
the date of the revaluation, less subsequent
accumulated depreciation and impairment
losses recognized until 31 December 2023.
The Group’s management performed the PPE
revaluation in 2023. The total net revaluation
loss for the Group amounted to EUR 4,685
thousand, of which the increase of EUR 3,255
thousand was recognised directly in equity,
and the decrease of EUR 7,940 thousand was
recognised in profit or loss.
The valuation of gas transmission networks
assets was carried out in the following stages:
(i) replacement costs of new assets (RCN)
were estimated; (ii) the physical deterioration
and functional obsolescence of the assets was
determined; and (iii) the economic
We obtained an understanding and evaluated
management’s policies, processes and controls in
determination of fair values of items of PPE.
We analysed management’s valuation
methodology and their assessment of changes in
tariff setting regulations that occurred during 2023.
We obtained the model for calculating the RCN
and DRC, tested the reasonableness of inputs
used and the determination of the physical
deterioration and functional obsolescence of the
assets for selected items, by comparing to recent
construction prices of comparable new assets and
verifying formulas and data used to arrive from
RCN to DRC.
We obtained the cash flow model used by the
management to determine the economic
obsolescence of PPE. We checked the model and
tested whether it is mathematically accurate and
that the results were accurately compared to the
carrying values of PPE.
We examined the management’s assumptions
which had material impact on the valuation
results: the rate of return on regulated assets and
obsolescence of the assets was assessed
(using the income approach).
In determining the replacement costs, the
management took into account asset-specific
current information such as the cost of
materials and works, or overall construction
costs.
Then physical deterioration and functional
obsolescence of the assets was determined to
estimate depreciated replacement cost (DRC)
for each individual asset.
The income approach was used to determine
the economic obsolescence of the assets.
Based on the results of the economic
obsolescence test, the values of the assets
determined by DRC method were reduced on
a pro rata basis, except for assets for which
such allocation would have resulted in a value
lower than the asset’s regulated asset base
(hereinafter – RAB value). For such assets the
RAB value was considered to be their fair
value. The amount of reduction that would
otherwise have been allocated to an asset was
allocated pro rata to the other assets.
Finally, the management compared previous
carrying values of individual assets against
revalued amounts determined using the
approach described above, and calculated the
revaluation gains or losses to be accounted
through profit and loss, or other
comprehensive income as appropriate.
We focused on this area due to the
significance of the PPE balance to the
consolidated statement of financial position
and because the management’s assessment
of fair values of PPE is an area of significant
management judgement.
the discount rate, expected capital expenditures,
values of regulated assets. As appropriate, we
traced these assumptions to external or to the
Company’s internal sources of information.
We involved our internal valuation experts to
assist us in discount rate assessment and overall
assessment of the methodology used in
developing the valuation model.
Also, we assessed sensitivity of the cash flow
model to the changes in the rate of return and the
discount rate.
We also checked the allocation of the fair value
surplus or reduction to individual items based on
economic obsolescence principles and performed
detailed fair value allocation testing for selected
items.
We also considered whether or not there was a
bias in determining fair value.
We have considered the adequacy and
completeness of disclosures in Notes 2.6, 3 and
7.
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 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 analytical procedures over
financial results of the 5 - month period ended 31 May 2023 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, the remuneration report and
social responsibility (sustainability) 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, including the corporate governance report and the
remuneration report, we considered whether the consolidated annual report, including the corporate
governance report and the remuneration report, includes the disclosures required by the Law of the
Republic of Lithuania on Consolidated Reporting by Groups of Undertakings, the Law of the Republic
of Lithuania on 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, including the corporate governance report
and the remuneration report, for the financial year for which the financial statements are prepared,
is consistent with the financial statements; and
● the consolidated annual report, including the corporate governance report and the remuneration
report, has been prepared in accordance with the Law of the Republic of Lithuania on
Consolidated Reporting by Groups of Undertakings and the Law of the Republic of Lithuania on
Reporting by Undertakings.
The Company and the Group presented the social responsibility (sustainability) report as a part of the
consolidated annual report.
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 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 Group’s consolidated
financial statements, including the consolidated annual report, for the year ended 31 December 2023
(the “Single Electronic Reporting Format of the consolidated financial statements”).
Description of a subject matter and applicable criteria
The Single Electronic Reporting Format of the 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 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 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 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 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 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 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 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 consolidated financial statements,
including the preparation of the XHTML format and marking up the consolidated financial
statements;
• verification whether the XHTML format was applied properly;
• evaluating the completeness of marking up the 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 consolidated financial statements for the
year ended 31 December 2023 complies, in all material aspects, with the ESEF Regulation.
Report on the compliance of the format of the separate financial statements with the
requirements of the European Single Electronic Reporting Format
The European single electronic reporting format has been applied by the management of the
Company to the Company’s separate financial statements to comply with the requirements of Article 3
of 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”). These
requirements specify the Company’s obligation to prepare its separate financial statements in a
XHTML format. We confirm that the European single electronic reporting format of the separate
financial statements for the year ended 31 December 2023 complies with the ESEF Regulation in this
respect.
Appointment
We were first appointed as auditors of the Company and the Group on 23 April 2015 and had an
engagement appointment of 3 years for 2015-2017 audits. After a 2-year break our appointment was
renewed for 2020-2022 audits and renewed again for 2023 audit on 30 August 2023, representing a
total period of engagement appointment of 7 years, out of which 4 years represent the latest
uninterrupted period of engagement.
The key audit partner on the audit resulting in this independent auditor’s report is Rasa Radzevičienė.
On behalf of PricewaterhouseCoopers UAB
Rasa Radzevičienė
Partner
Auditor's Certificate No.000377
Vilnius, Republic of Lithuania
27 March 2024
The auditor's electronic signature is used herein to sign only the Independent Auditor's Report