LITGRID AB
The Company’s financial statements, annual report and
independent auditor’s report for the year ended
31 December 2023
CONFIRMATION OF RESPONSIBLE PERSONS
29
th
March 2023, Vilnius
Following the Law on Securities of the Republic of Lithuania and the Rules on Information
Disclosure approved by the Bank of Lithuania, we, Rokas Masiulis, Chief Executive Officer of LITGRID
AB, Vytautas Tauras, Head of the Finance Department of LITGRID AB and Asta Vičkačkienė, Head of
the Accounting Division of LITGRID AB, hereby confirm that, to the best of our knowledge, the attached
financial statements of LITGRID AB for the year 2023 prepared in accordance with the International
Financial Reporting Standards adopted by the European Union give a true and fair view of the
Company’s assets, liabilities, financial position, profit and loss and cash flows; the annual report for the
year 2023 presents a fair overview of the business development and performance, the Company’s
financial position together with the description of its exposure to key risks and contingencies.
Rokas Masiulis
Chief Executive Officer
(The document is signed by a qualified electronic signature)
Vytautas Tauras
Head of the Finance Department
(The document is signed by a qualified electronic signature)
Asta Vičkačkienė
Head of the Accounting Division
(The document is signed by a qualified electronic signature)
ANNUAL REPORT
(All amounts are in EUR thousands unless otherwise stated)
3
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.
TABLE OF CONTENTS
Annual report 4
Sustainability report 73
The Company’s statement of financial position 122
The Company’s statement of comprehensive income 123
The Company’s statement of changes in equity 124
The Company’s statement of cash flows 125
Notes to the Company’s financial statements 126
Independent auditor’s report 163
The financial statements were approved on 29
th
March 2024
Rokas Masiulis
Chief Executive Officer
(The document is signed by a qualified electronic signature)
Vytautas Tauras
Head of the Finance Department
(The document is signed by a qualified electronic signature)
Asta Vičkačkienė
Head of the Accounting Division
(The document is signed by a qualified electronic signature)
ANNUAL REPORT
(All amounts are in EUR thousands unless otherwise stated)
4
The Company’s performance
Report for 2023
ANNUAL REPORT
(All amounts are in EUR thousands unless otherwise stated)
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Statement of the Chairman of the Board
Dear all
We will remember the year 2023 as the year of one of the most important agreements - in August, the heads of all
three Baltic states confirmed that the energy systems of the Baltic countries will be connected to the energy
networks of Western Europe in February 2025, almost a year earlier than planned.
The Lithuanian electrical energy system is undergoing a transformation: in addition to taking the last steps towards
reunification with the synchronous zone of continental Europe, we are creating conditions for the development of
electricity production and energy storage from rapidly renewable resources. All this requires large investments in
the electricity transmission network and smooth implementation of projects. We are currently carrying out almost
140 different projects - from the construction of the infrastructure required for synchronization and the installation of
management systems to works related to the connection of new producers and consumers, railway electrification,
innovations.
While supervising and managing the electricity transmission system, Litgrid continued to implement the planned
goals of electricity supply reliability indicators and made efforts to achieve the goals of renewable energy
development in Lithuania. For the first time, the share of electricity produced in power plants from renewable
energy sources is about 67 percent. all electricity produced in the country.
In 2023 we paid special attention to the sustainable development of operations. When performing work and fulfilling
obligations, we conduct our activities in accordance with the principles of sustainable activity. We have taken steps
to reduce the impact of Litgrid - we have installed solar power plants in substations and to generate electricity for
our own needs, from a renewable source, we are refurbishing devices by replacing them with safer ones for the
environment, studying the impact of our devices on the environment, marking lines on bird migration routes,
measuring noise levels and we implement mitigating measures.
Last year, we continued to provide assistance to Ukraine defending itself against the Russian invasion. During the
year, Ukrenergo, the operator of the country's electricity transmission system, received two 330 kV
autotransformers from us. These are the main and most important devices used in the substation of the
transmission network. We sent other equipment, the support provided by Litgrid to Ukraine ensured electricity
supply to Ukrainian cities in extremely difficult conditions.
Synchronization of electricity grids is the most important goal for which we mobilized not only the Litgrid team, but
also many interested institutions, international partners, and contractors. I am grateful to everyone who contributes
to the development of Lithuania's energy independence.
Tomas Varneckas,
Chairman of the Board of Litgrid
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(All amounts are in EUR thousands unless otherwise stated)
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Statement of the CEO of Litgrid
Dear all,
I am glad to present you the 2023 Annual Report of Litgrid. In 2023, the Litgrid team implemented key strategic
synchronisation projects with continental European grid, ensured reliable electricity transmission, developed
innovations, and carried out sustainable operations initiatives, and improved the renewable energy performance.
improving conditions for the development of energy sources.
Over the past year, we have taken very important steps in the preparation of Lithuania's electricity for the
disconnection of the Lithuanian electricity grid from the Russian-controlled system and the connection to
Continental Europe's synchronous zone. We successfully completed the Lithuanian Electricity test of the isolated
operation of the Lithuanian power system, we implemented the automatic generation control system, brought and
started connecting the first synchronous compensators. At the same time, we agreed with the Latvian and Estonian
operators on a specific date for synchronisation, which we will do in February next year.
To ensure the development of renewable energy sources, at the beginning of the year, the State Agency for
Energy Regulatory Council (ERC) approved Litgrid's new A new description of the procedure for the use of
electricity transmission networks. During the year, Litgrid In the course of the year, Litgrid signed Letters of Intent
with developers for 24 new projects with a total 1.7 GW of permitted generation capacity to connect to the
transmission grid onshore.
Electricity transmitted through Lithuanian transmission networks In 2023, the amount of electricity transmitted to the
country's electricity grids was 9.525 TWh, 6.9% less than the 10.234 TWh in 2022. Transmission The lower amount
of energy transferred was due to the growing number of people connected to the distribution grid. The increase in
the number of generating consumers connected to the distribution network.
By maintaining and managing the electricity transmission system, Litgrid continued to implement the planned goals
of electricity supply reliability indicators. In 2023 the average duration of interruptions (AIT) was 0.835 min, and the
energy quantity index (ENS) amounted to 23,232 MWh. Comparatively, VERT is having established that AIT
should not exceed 0.934 min and ENS should not exceed 27.251 throughout the year MWh.
Intersystem connections with Sweden (NordBalt) and Poland (LitPol Link) overall availability were respectively
92.79 and 98.19 percent. In autumn 2023 repair works of on the Swedish side had the biggest impact on
connection availability.
We are paying particular attention to the sustainability of our operations development. Our activities are carried out
in line with our commitments in line with the principles of sustainable operations. In our daily operations We have
taken a number of steps to reduce Litgrid's impact by installing solar parks, We will be installing new solar power
plants at substations and generating our own electricity, from renewable source, replacing our fleet of cars,
upgrading our facilities replacing them with new ones that are safer for the environment, studying the impact of our
installations the environment, marking lines on bird migration routes, measuring noise levels and install noise
protection equipment.
I sincerely believe that the Litgrid team will successfully meet the targets and overcome any challenges.
Rokas Masiulis
Litgrid CEO
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1. BASIC DETAILS
The annual report has been prepared for the period ended 31 December 2023.
1.1. The issuer and its contact details:
Name LITGRID AB (Litgrid or the Company)
Legal form Public limited liability company
Date and place of registration 16 November 2010, the Register of Legal Entities of the Republic of Lithuania
Company code 302564383
Registered office address Karlo Gustavo Emilio Manerheimo g. 8, LT-05131, Vilnius
LEI code 529900CTIUKTEFNNH157
Registry State registry centre
Address for correspondence Karlo Gustavo Emilio Manerheimo g. 8, LT-05131, Vilnius
Telephone +370 707 02171
Email info@litgrid.eu; www.litgrid.eu
Litgrid is part of the EPSO-G group of companies:
EPSO-G UAB is a state-owned group of energy transmission and exchange companies. The rights and obligations of the
shareholder of holding company EPSO-G UAB are implemented by the Ministry of Energy of the Republic of Lithuania. EPSO-G
UAB owns 97.5 % of shares of Litgrid.
Shares of other companies owned by Litgrid:
The Baltic Regional Coordination Centre (RCC) provides
network security services to the electricity transmission
system operators of the Baltic countries - Litgrid of
Lithuania, Elering of Estonia and AST of Latvia. RCC was
established by the electricity transmission system operators
of the three Baltic states in accordance with the
requirements of the European Union's Clean Energy
Package. The Baltic RCC is one of the six regional
coordination centers operating in Europe.
The RCC carries out five main tasks: calculates cross-
country power line bandwidths, assesses system reliability
and adequacy, plans line disconnections, and develops an
overall network model. All this will ensure the smooth
operation of the countries, which are working more closely
every day in preparation for synchronization, and after that
they will maintain a close relationship by operating within
the common network of continental Europe
Name
Baltic RCC
Country of incorporation
The Republic of Estonia
Registered office address
Harju maakond, Tallinn,
Mustamäe linnaosa, Kadaka tee
42, 12915
Litgrid’s shareholding
33,3 of shares and voting rights
attached thereto
Major changes
No changes.
Minor
shareholders
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1.2. Activities of Litgrid
Litgrid, the Lithuanian electricity transmission system operator (the TSO).
Main activities of Litgrid. The Company is responsible for maintaining the balance between electricity consumed and
produced in the Lithuanian electricity system and reliable transmission of electricity, it implements strategic national electricity
projects. Its vision and strategic operating guidelines are based on the long-term goals identified in the National Energy
Independence Strategy (the NEIS).
The most important activity areas and responsibilities of the Lithuanian TSO include the maintenance of the country’s
electricity infrastructure and its integration with the electricity infrastructure of Western and Northern Europe; development of the
electricity market and participation in the creation of a single electricity market of the Baltic States and the European countries;
and integration of the electricity systems of Lithuania and continental Europe for synchronous operation. In implementing the
programme on the synchronisation with the European continental networks, the Company carries out 19 projects of strategic
importance approved by the Government of the Republic of Lithuania.
As the Company systematically carries out its daily functions, ensures uninterrupted and smooth operation of the electricity
transmission system and implements projects of national importance, it aims to create value for its customers – the Lithuanian
society.
Litgrid not only transmits electricity via high-voltage lines, but also takes care of the reliability of the operation of the entire
transmission network: it is important for us that electricity is uninterruptedly supplied to electricity consumers and that all
breakdowns are eliminated as soon as possible. Reliability of electricity supply guarantees the growth of the economy.
2. BUSINESS ENVIRONMENT
2.1. Business model
Litgrid is a Lithuanian-wide electricity transmission system operator. The Company maintains high-voltage electricity
transmission networks and secures the stable operation of the country’s electricity system, manages electricity flows, and
creates conditions for competition in the free electricity market, it is responsible for the integration of the Lithuanian electricity
system into the European electricity infrastructure and the single electricity market.
Electricity transmission is an intermediate link between electricity generation and distribution to consumers. The voltage of
transmission networks is high or very high (110-440 kV). Electricity transmission networks consist of electricity transmission
lines with substations. Electricity lines are connected in the electricity substations that contain the switchyards of a higher and
lower voltage and the transformers linking them. In the substation transformers voltage is reduced to the voltage of distribution
networks.
Electricity transmission is a licensed activity. Prices of the electricity transmission service are regulated by the National Energy
Regulatory Council (NERC) that sets the price caps for these services.
2.2. Services provided by electricity transmission system operator Litgrid
Electricity transmission over high voltage (110-400 kV) electrical installations
The electricity transmission service is electricity transmission over high voltage (400, 330 and 110 kV) electrical installations.
The transmission system operator transmits electricity from producers to consumers that are connected to the transmission
network, and to the operators of the distribution networks.
The main activities of the TSO include the management of the high voltage electricity transmission network and securing
reliable, effective, high-quality, transparent and safe transmission of electricity.
Additional services
To maintain reliable system operations, Litgrid purchases from energy generating companies the services for the capacity
reserve assurance at the electricity generation facilities, reactive power and voltage management, and emergency, disruption
prevention and response services, isolated work ensurance and provides consumers with system services. The capacity
reserve is needed when electricity production suddenly and unexpectedly falls or its consumption increases.
Trade in imbalance and balancing electricity
Litgrid ensures a balance between production and consumption of electricity in the country. Imbalance electricity is electricity
that is consumed or produced outside of established electricity consumption or production schedules. Litgrid organises trade in
imbalance electricity, buys and sells imbalance electricity that is necessary to ensure the country’s electricity production and
consumption balance.
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Balancing electricity is electricity that is bought and/or sold on instruction of the transmission system operator as electricity
necessary for performing the function of balancing the country’s electricity consumption and production. Litgrid organises trading
in balancing electricity by auction. The auction participants are suppliers of balancing energy and TSOs of other countries
possessing technical facilities that enable them to quickly change the electricity generation and consumption conditions and
having concluded a relevant agreement with Litgrid.
Issuance and cancellation of guarantees of origin
Guarantee of origin - a certificate proving that energy is produced from renewable sources or during efficient cogeneration. The
guarantee of origin is valid for 12 months from its issuance. Guarantees of origin can be of two types:
Guarantee of origin of renewable resources to confirm the origin and quantity of electricity. A guarantee of origin is
proof that all or part of the energy has been produced from renewable energy sources.
Guarantee of origin of efficient cogeneration, intended to confirm the origin and quantity of electricity produced during
the process of high-efficiency cogeneration.
2.3. Customers of the transmission system operator
Litgrid’s direct customers are the electricity transmission network’s users and suppliers of imbalance and balancing electricity.
The users of the transmission network are as follows:
Distribution network operators ESO, Dainavos Elektra UAB;
Electricity consumers whose electrical installations are connected to the electricity transmission network and who
purchase electricity for use;
Electricity producers connected to the electricity transmission network.
The suppliers of imbalance and balancing electricity include the electricity producers and suppliers.
2.4. Operating indicators of electricity transmission and the network’s reliability
In accordance with the requirements approved by the NERC for reliability and quality of service of electricity transmission, the
following indicators are used to determine the transmission reliability level: ENS (energy not supplied), i.e. the quantity of
electricity not transmitted due to interruptions, and AIT (average interruption time), i.e. the average interruption duration in
electricity transmission.
TSO’s operating indicators
2023
2022
2021
Quantity of electricity transmitted, million kWh
9 525
10 234
10 936
ENS (Energy Not Supplied due to interruptions), MWh
*
23.232
10.617
3.356
AIT (Average Interruption Time), min. *
0.835
0.356
0.112
* Only due to the operator’s fault or due to undetermined causes.
2.5. Electricity interconnections
The reliably functioning interconnections are an essential part of the system enabling it to operate together with the energy
systems of other Western and Northern European countries and to develop a single European market.
LitPol Link is a double-circuit transmission line from Alytus in Lithuania to Elk in Poland and the Alytus back-to-back converter.
The LitPol Link interconnection was available to the market 98.19% of the time throughout 2023. Scheduled works for the
implementation of the project on the expansion of the interconnection had a major impact on the unavailability of the LitPol Link
interconnection.
The NordBalt electricity interconnection is one of the longest submarine cables in the world, the operation of which significantly
increases safety of energy supply to Lithuania and the Baltic States. The NordBalt interconnection was available to the market
92.18% of the time throughout 2023. Scheduled repair works had a major impact on the unavailability of the NordBalt
interconnection.
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2.6. Maintenance of the electricity network
Litgrid employees maintain 6966.2 km of overhead lines and 326.4 km of cable kilometres of high-voltage lines, 242 transformer
substations and distribution boards, 2 high-voltage direct current converters.
In order to maintain the stable service life of the airline lines and ensure the stable operation of the equipment, during 2023,
repair and maintenance work of the main equipment, inspection of the operation of the relay protection and automation
equipment, and all planned works were completed in 33 110-330-400 kV transformer substations and switchboards , the
planned maintenance works of 110 kV and higher voltage overhead lines were carried out (a total of 1165 kilometres), a total of
191 units were replaced during the repair. supports.
In order to ensure a stable electricity supply, overhead lines and facilities, 1,828 hectares of overhead lines were cleared in
2023, and 89,172 trees endangering the reliable operation of the lines were removed.
The constant repair and maintenance of transmission network facilities directly affects the reliability of the electricity system and
the transmission of electricity. Planned works in the transmission network are carried out according to the periodicity established
by the legal acts of the Republic of Lithuania, but the evaluation of the quantities and scope of the works is based on the actual
condition of the facilities and the need to ensure the reliable operation of the network and the efficient use of financial resources.
In order to increase the reliability of transmission network devices, a new unit was established - the Diagnostics
Group, which assesses the current condition of devices and lines by performing various measurements
(thermovision, electrical measurements, inspections with drones, etc.). The second phase of the investment project
Installation of new automated monitoring systems (AMS) dedicated to monitoring the performance and oil quality of
autotransformers is also being implemented.
in 2023 a contract for the supply of support emergency recovery systems was concluded. These systems are made
of lightweight, reusable metal structures that will allow for quick restoration of power transmission during an
emergency. Also, these systems will be adapted for repair works, by constructing temporary lines bypassing the
repaired sections, thus avoiding long disconnections.
In assessing the consequences of the war in Ukraine, new purchases of equipment needed for the emergency
reserve are planned, as well as the restoration of the quantities of equipment transferred to the Ukrainian
transmission system operator in the reserve.
The company successfully uses flying manned aircraft to determine the locations of airline failures and the causes
of failure. High-resolution cameras installed in drones allow you to see even minor damage to line wires, supporting
structures and other line elements without disconnecting the line. Airline engineers appreciate this innovation as
saving their work time and increasing the reliability of line work. 3 drones capable of carrying the necessary
equipment are used for inspections of air lines and transformer substations, switchboards. Trained employees of
the Company are implementing efforts to increase the reliability of line work and prompt detection of defects.
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3. OPERATING AND REGULATORY ENVIRONMENT
The strategic goal of Litgrid is the integration into the European market. The Company’s activities are also affected by the
development trends of the country’s economy, objectives and targets of the European Union.
3.1. Energy sector environment in the EU
Last year, electricity production in Lithuania grew by a third and was the highest since 2010, and renewable energy power
plants produced a record amount of electricity – it accounted for 70 percent of the country's total production. Electricity
consumption decreased by 1.2 percent during the year.
in 2023 it was a historic year for green energy in the country. For the first time, the share of electricity produced by renewable
energy power plants accounted for more than two-thirds of the total electricity produced in the country.
In 2021, renewable energy power plants produced 48 percent of the country's electricity, in 2022 this share reached 60 percent,
and in 2023 it was 70 percent. produced significantly more environmentally friendly electricity. Production in wind power plants
increased by 66.8 percent, and in solar power plants - by as much as 131.5 percent. Analyzing the absolute numbers, the
growth rate of wind energy is even more impressive, with wind generation increasing by more than one terawatt hour. The latter
change was mainly due to the significant increase in the number of wind farms connected to the transmission grid. At the same
time, the production of hydropower plants grew by a little less than a third.
Wind power generation increased from 1.513 TWh to 2.524 TWh, solar power from 0.273 TWh to 0.633 TWh, and hydro power
generation from 0.457 TWh to 0.589 TWh.
Compared to 2022, the amount of energy produced by thermal power plants increased by 12.9 percent (from 1,161 TWh to
1,311 TWh). The total energy produced by renewable resources was 3,972 TWh per year. The entire electricity production of
Lithuania in 2023 reached 5,664 TWh, 33.3 percent more than in 2022.
In general, last year, electricity was produced in Lithuania the most since 2010 - the first year after the closure of the Ignalina
nuclear power plant. Evaluating how much electricity Lithuania produces itself, last year the share of local production from the
total consumption reached 48 percent. – this is also the highest indicator since 2010. In comparison, production provided 35
percent last year. total consumption.
In 2023, 11,056 TWh of electricity was consumed in Lithuania. This is 1.2 percent less than last year, when the figure was
11,192 TWh. Annual data show that electricity consumption increased slightly in the industrial sector, and decreased the most in
the residential and service sectors. The decrease in consumption in the population and service sectors is caused by the
increasing number of producing consumers - consumers who have installed solar power plants consume part of the energy
locally and do not transfer it to the distribution and transmission networks.
Compared to 2022, electricity consumption in the industrial sector increased by 1.3 percent - from 3.999 TWh to 4.053 TWh.
Electricity consumption in agriculture remained stable at 0.248 TWh. In the transport sector, electricity consumption decreased
by 5.9 percent - from 0.096 to 0.091 TWh, in the service sector it decreased by 3.7 percent - from 3.558 TWh to 3.427 TWh.
Compared to 2022, residents consumed 4.6 percent less electricity per year - from 3.289 TWh to 3.138 TWh.
In 2023, 9,794 TWh of electricity was imported into Lithuania, 12.7 percent less than in 2022, and exported - 2,865 TWh or 8
percent more than in 2022.
Imports from Estonia grew by 39.3 percent (0.331 TWh), imports from Sweden decreased by 1.2 percent (4.967 TWh), and
imports from Poland grew by 5.1 percent (1.161 TWh). Imports from Latvia decreased by 19.3 percent (3,290 TWh).
After the implementation of the provisions of the Law on Necessary Measures to Protect Yourself from the Threats of Unsafe
Nuclear Power Plants of Third Countries, Lithuania did not conduct direct commercial transactions with Belarus either last year
or the year before. From 2022 in the first half of the year, there is no electricity trade with Russia either.
The largest share of electricity exports in 2023 consisted of exports to Poland - 1,694 TWh or 10.5 percent less than in 2022.
Exports to Latvia grew the most - 192.3 percent to 0.370 TWh.
3.2. Regulatory environment in Lithuania
Electricity transmission activities carried out by Litgrid are licensed activities. The licence grants exclusive rights to provide
transmission services in Lithuania, thus the prices of services are regulated by the state. The regulatory function and
supervision of the licensed activities in Lithuania are performed by the National Energy Regulatory Council.
The decisions taken by the regulator directly affect Litgrid's financial performance, the funds available for necessary operating
costs, investments to ensure the reliability of the electricity transmission system, as well as the ability to finance strategic and
other development projects with own or borrowed funds. The price of the electricity transmission service shall be regulated by
setting a price cap for the five-year regulatory period and a component for the acquisition of ancillary services on top of the price
of the transmission service. The price cap shall be adjusted each year in response to changes in the volume of services,
inflation and other objective factors beyond the control of the operator and may be adjusted no more than twice a year.
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The price cap shall consider the reasonable indispensable costs of the regulated activity and a reasonable return on investment,
calculated as the product of the rate of return on investment (WACC) and the value of the regulated assets (RAB).
4. THE COMPANY’S STRATEGY AND STRATEGIC PRIORITIES,
PLANNING
4.1. Strategy
A client-focused organisation and a centre of competences for the energy sector, state-of-the-art technological and digital
solutions, sustainable energy development that will double the current generation volume of electricity, and opportunities for
market participants to exchange electricity freely at a competitive price. These are the goals set out in the Litgrid’s strategy that
was approved by the Company’s Board in January 2023. The strategy establishes the Litgrid’s long-term vision of becoming
one of the smartest electricity transmission system operators in Europe.
Litgrid plans to expand its activities by focusing on several priority areas. One of the most important priorities is the fight against
climate change through the development and adaptation of the transmission system for electricity generation from renewable
energy sources and the reduction of the impact of Litgrid’s own infrastructure on the environment.
The strategy pays special attention to the development of renewable energy, sustainability and organizational development.
Litgrid aims to become an efficient exchange platform that enables and encourages market participants and consumers to freely
exchange electricity, choose to produce or consume climate-neutral energy and receive it at a competitive price.
in 2023 Litgrid in 2030 the strategy has been updated, taking into account the internal and external factors affecting the
company's operations, aligned with the 2023 results of the Lithuanian energy system transformation study and EPSO-G group
strategy changes. In the updated strategy, the focus remains on the implementation of strategic synchronization projects,
ensuring successful synchronization with continental European networks in 2025. in February
With the acceleration of energy production from the sun and wind, we create conditions for the smooth integration of these
renewable energy resources (RES) in the Lithuanian electricity transmission network, with the aim of producing 100% of
electricity in Lithuania. electricity is consumed here, while ensuring system stability and network reliability.
The transformation of the energy system requires a strong partnership, so our goal is to become a customer-oriented
organization that creates innovative and flexible services that meet their expectations. Therefore, a review of customer journeys
and a continuous feedback system and tracking of key indicators will enable us to constantly know how well we are meeting
customer needs.
We aim to work according to global best practices in customer experience management. We will implement digital
transformation and enable artificial intelligence solutions in our operations in the future. We will open up data for faster and more
advanced decision-making, and ensure sustainable value for shareholders.
We have a strong focus on enabling renewable energy sources (RES). in 2022 the established and smoothly developing Center
for Renewable Energy Resources (RES) provides relevant data to the market and ensures the availability of the most important
data related to RES. The "Litgrid" team contributed to the implementation of an innovative solution - the Procedure Description
for Connection to Electricity Networks (PETA). It describes and legalizes a new bandwidth reservation principle that enables
developers to connect up to 300% of the existing network bandwidth, separately evaluating solar, wind and storage generation
profiles. We are actively looking for IT solutions that will ensure prompt connection of customers to electricity networks. We
focus on increasing the satisfaction of RES customers - the RES connection process is reviewed and optimized.
We continue the energy transformation process. in 2023 III quarter EPSO-G Group companies, together with the consulting
company DNV, prepared the Lithuanian energy system until 2050. transformation study. The study presents scenarios for the
possible development of the Lithuanian energy system, assessing development projects, opportunities, changes in energy
consumption, and the responsible party. According to the Lithuanian energy system transformation study, in 2024 it is planned
to prepare a new Litgrid long-term strategy as an integral part of the company group's strategy.
Through its activities, the company aims to directly contribute to the implementation of the United Nations Sustainable
Development Goals, focusing on ensuring access to clean and modern energy, combating climate change, developing modern
infrastructure and innovation, creating safe and decent working conditions, employee well-being and a sustainable supply chain.
In the long-term strategy until 2030 we identified clear areas of sustainable development in the organization, strategic goals,
indicators and planned activities to achieve these goals. We will continue to work in a socially responsible manner, giving priority
to reducing the impact of our activities on the environment. in 2024 we plan to prepare a plan for measures to reduce GHG
emissions and a simulation of GHG reduction goals.
The Litgrid’s strategy is available at https://www.litgrid.eu/index.php/apie-litgrid/strategija-vizija-misija-ir-vertybes/452
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4.2. Stakeholders
4.3. Strategic priorities
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4.4. Measures for the implementation of the strategy
The Company’s strategy is reviewed and updated annually referring to the National Energy Independence Strategy (NEIS), the
Company’s activities and amendments to the legal acts regulating the electricity sector, the strategy of EPSO-G, a holding
company of the group, significant events in the Lithuanian and foreign electricity systems and electricity markets, works
performed during the year as well as by assessing new eternal circumstances beyond the Company’s control.
The Litgrid’s strategy comprises a ten-year (long-term) implementation period based on the main and long-term objectives in the
electricity sector laid down in the NEIS. Each year the Company updates and prepares a ten-year development plan of the
transmission network which is an integral part of the strategy.
In order to regularly assess the efficiency and application of the measures selected by the Company, the Company’s operational
plan is reviewed after the end of each quarter. The implementation of the strategic objectives and the operational plan,
performance of the divisions and employees are monitored. The measures stipulated in the operational plan are included in the
operating objectives of the divisions and personal performance objectives of employees, the achievement of which at the end of
the year determines a variable part of remuneration.
The strategic planning and control mechanism at the Company is based on the Integrated Planning and Monitoring Policy of the
EPSO-G Group of Companies which is applied in the activities of Litgrid to a full extent.
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4.5 Long-term development plan of the electricity transmission networks.
According to the Law on Electricity of the Republic of Lithuania, an electricity transmission system operator manages electricity
transmission networks, ensures the operation, development, maintenance and long-term capacity of these networks to meet
justified electricity transmission needs, and is also responsible for the interconnection of the electricity system of the Republic of
Lithuania with electricity systems of other countries, performs balancing and dispatch control of the electricity system and has a
corresponding operating licence.
From 2023 Litgrid will prepare the long-term development plan once every two years - in 2023. the plan was not updated, the
long-term development plan prepared and approved in 2022 is valid.
The Ten-Year Electricity Transmission Network Development Plan of Litgrid is available at the Company’s website at:
https://www.litgrid.eu/index.php/tinklo-pletra/lietuvos-elektros-perdavimo-tinklu-10-metu-pletros-planas-/3850
ANNUAL REPORT
(All amounts are in EUR thousands unless otherwise stated)
17
5. IMPLEMENTATION OF PROJECTS
One of the fundamental directions of the implementation of the National Energy Independence Strategy of the Republic of
Lithuania adopted by the decision of the Parliament on 21 June 2018 establishes the connection of the electricity system of the
Republic of Lithuania to the continental European networks for operation in a synchronised mode (the “Synchronisation”).
Following a full-fledged integration of Lithuania into the European electricity system in 2025, the European system management
standards will be introduced in the electricity sector ensuring management of electricity flows based on market principles and
participation in maintaining the system’s frequency.
A timely implementation of the synchronisation programme in the most economically efficient manner is one of the most
important objectives of Litgrid.
The synchronous operation with the continental European networks will ensure:
reliable operation of energy systems and secure transmission of electricity;
coordinated actions in facility maintenance and network development planning;
common rules for the management of energy systems – network codes which will be applied uniformly in all
countries in the European Union;
availability of electricity from energy systems of Western Europe.
In July 2021, the Government of the Republic of Lithuania approved the list of the energy projects carried out in implementing
the synchronisation of the electricity system. Litgrid is responsible for the implementation of 19 out of 20 projects included in this
list.
According to the requirements of the Republic of Lithuania Law on the Protection of Objects of Importance to Ensuring National
Security, before the conclusion of transactions that comply with the requirements of this law, in all cases Litgrid informs the
Commission for Coordination of Protection of Objects of Importance to Ensuring National Security about such transactions.
Such transactions are concluded only upon the receipt of the commission’s conclusions.
ANNUAL REPORT
(All amounts are in EUR thousands unless otherwise stated)
18
5.1. The status of the implementation of the main strategic
The stage of completion of the strategic projects under the synchronisation programme reached 75 % in December 31
st
2023
ANNUAL REPORT
(All amounts are in EUR thousands unless otherwise stated)
19
5.2. Strategic infrastructure projects
Reconstruction of the 330/110/10 kV Neris transformer substation
The aim of the project is to reconstruct the Neris transformer substation to enable the planned connection of one of three
synchronous compensators to the transmission network and the launch of operation of to be constructed 330 kV Vilnius-Neris
electricity transmission line. This is one of the most important projects related to the synchronisation with the continental
European networks that strengthens the country’s network for electricity transmission.
In 2023, the reconstruction works of the substation were carried out, which, according to the contract, are planned to be
completed in 2025.
Construction of the 330 kV Kruonis PSHP-Bitėnai electricity transmission line
The aim of the project is to strengthen the electricity transmission network in the western part of Lithuania and to ensure its
reliable operation by forming a new 330 kV transmission line, which is important for the smooth synchronous operation of the
Lithuanian electricity system with the continental European electricity networks.
The project covers the reconstruction of a part of the already existing line Jurbarkas-Bitėnai by replacing a single-circuit line with
a double-circuit line, the construction of a new section between the line Jurbarkas-Bitėnai and the line Kruonis PSHP-Sovetsk
and the reconstruction of the Bitėnai transformer substation.
In 2023 the construction phase of the 330kV overhead line has been completed.
Construction of the 330 kV Darbėnai-Bitėnai electricity transmission line
The aim of the project is to strengthen the electricity transmission network in the western part of Lithuania and to ensure its
reliable operation by forming a new 330 kV transmission line, which is important for the smooth synchronous operation of the
Lithuanian electricity system with the continental European electricity networks.
In 2023 the first phase of construction is completed.
Installation of new synchronous condensers in the Lithuanian electricity system
The aim of the project is to implement the necessary measures for the synchronisation with the continental European networks:
installation of three synchronous condensers, thus ensuring the required quantity of inertia and the dynamic stability of the
system in the most efficient way.
In 2023 delivered power transformers for Alytus, Telšiai and Neris synchronous compensator stations.
Construction of the 330 kV Mūša switchyard
The project’s aim is to strengthen the electricity transmission network of Western Lithuania and ensure its reliable operation by
building a new 330 kV Mūša switchyard and connecting to it three overhead lines to Telšiai, Šiauliai and Viskali.
In 2023 the construction works of the 330 kV switchyard Mūša have already started; the design works of the switchyard were
completed in 2023.
Construction of a new 330 kV Vilnius-Neris electricity transmission line
The project’s aim is to strengthen the electricity hub in Vilnius by ensuring the reliability of electricity supply after the
synchronisation with the continental European networks and meeting an increasing demand for electricity in the capital, by
constructing the 330 kV electricity transmission line linking the Vilnius and Neris 330 kV transformer substations. To this
purpose, a part of the existing 330 kV overhead line Vilnius-Molodečno will be reconstructed and a section of the new line to the
Neris 330 kV substation will be constructed.
Construction of the 330 kV Darbėnai switchyard
The project’s aim is to enhance the reliability of the transmission network and security of electricity supply during the
synchronous operation of the Lithuanian electricity system with the continental European networks by building a new 330 kV
Darbėnai switchyard and connecting to it three overhead lines with the voltage of 330 kV to Bitėnai, Klaipėda, Grobinė and the
direct current interconnection to Harmony Link.The interconnections with the wind power parks will also be designed at the 330
kV switchyard.
In June n 2023 the construction of the 330kV switchboard began.
Construction of the Harmony Link interconnection
The project’s aim is to ensure the integration of the electricity market after the synchronisation with the continental European
networks by constructing a new submarine HVDC link (Harmony link) with Poland. The Harmony Link interconnection will
ensure commercial trade in electricity after the synchronisation of the Baltic States with the continental European networks.
Negotiations regarding the procurement for the main converter and the cable for Harmony link were finalised in 2022. Final
proposals from the participants in the procurement for the cable were received, the proposal of the converter was still pending in
2023.
Litgrid AB implements the project together with the Polish electricity transmission system operator PSE
ANNUAL REPORT
(All amounts are in EUR thousands unless otherwise stated)
20
5.3. Strategic non infrastructure projects
Installation of Automatic Generation Management (AGM)
The aim of the project is to automatically activate the frequency restoration reserves and restore the system frequency and
power balance by installing an automatic generation management system.
In the end of 2023, the project was successfully implemented. This system will ensure the main parameters of the electricity
network - production and consumption balance and frequency and will open up additional opportunities for market participants
to provide power reserve services. The AGM system will start participating in the balance management of the Lithuanian
electricity system in the second half of 2024. Until then, the balance operators will be trained to use this system, and tests of the
AGM system will be organized, connecting to it the balancing service capable of providing energy production and storage
devices.
Isolated operation test of the power system of the Republic of Lithuania
An isolated test of the energy system was successfully completed in the April 2023.
Installation of the Frequency Stability Assessment System (FSAS)
The aim of the project is to install a system to ensure the frequency stability of the Baltic electricity system in the event of an
unforeseen disconnection from the continental European grids and in the event of islanding of the Baltic electricity system.
The FSAS procurement was started in 2023.
Development of a new energy balance and ancillary services management system
Litgrid, together with the Estonian and Latvian TSOs, signed the Baltic Power System Connection Agreement with the
Continental European Power Grids, which sets out the technical requirements (hereafter referred to as the Catalogue
Requirements) that need to be implemented in order to ensure the reliable operation of the Baltic Power Systems and the
Continental European Synchronous Area. Most of the balance and system service management processes will be upgraded
prior to the final synchronisation with the Continental European grids.
As part of the implementation of the European Commission Regulation 2017/2195 of 23 November 2017 laying down guidelines
for electricity balancing, Litgrid will update the processes related to balancing and imbalance accounting and balance
management.
5.4. Other projects
"Litgrid" contributes to the development of Lithuanian green energy through its activities and implements projects for connecting
renewable energy resources to the transmission network while performing the functions of the operator of the electricity
transmission network. The result of these projects is the connection of green electricity producers to the transmission network,
enabling electricity consumers to use clean and sustainable energy.
Litgrid in 2023 started 14 wind farm connection projects, the power of the parks to be connected is 987 MW; in 2023 it is
planned to start at least 47 projects for connecting wind RES producers.
"Litgrid" contributes to the development of the electrification infrastructure of Lithuanian railways by implementing projects for
connecting users to the transmission network. Electrification projects of Lithuanian railways, part of which includes connection to
the transmission network and ensuring electricity supply, is one of Litgrid's activities for the coming year. After the
implementation of these projects, there will be a transition from fossil fuels to the use of renewable energy resources, saving
electricity and using green energy, which will allow us to achieve the goals of the European Green Course.
in 2023 27 new airline reconstruction projects have been launched, which will contribute to ensuring the stability and reliability
level of the transmission network and ensure the necessary bandwidths for the connection of RES to the transmission network.
It is also planned for 2023-2031. finish, continue or start execution 102 pcs. 330-110 kV substation reconstruction projects In
2023, 8 transformer substation reconstruction projects were completed, work continued on 30 transformer substation
reconstruction projects.
The total number of Litgrid network reconstruction projects is increasing rapidly and will reach 132 in 2024.
5.5. Financing of strategic projects
A total of EUR 459.9 million has been allocated for financing the implementation of strategic investment projects from the
European Infrastructure Networks Facility. EUR support, from which in 2023 received (received) 10.5 million EUR, and a total of
EUR 95 million since the beginning of the implementation of the projects. Eur.
Other investment projects are financed with own, borrowed and EU structural funds
ANNUAL REPORT
(All amounts are in EUR thousands unless otherwise stated)
21
5.6. Project portfolio
The stability, reliability, power and energy balances of the electrical energy system depend not only on the behavior of market
participants, but also on the determination of the appropriate parameters for the work of the connected power plants, the
coordination of the work of the power plants, and the timely development.
Litgrid, as the operator of the Lithuanian electricity transmission system, plans the operation of the electricity system in the long
term, assessing the requirements of electricity supply and safety, reliability, quality, efficiency, consumption, management and
environmental protection. For this purpose, a ten-year plan for the development of Lithuanian EES 400-110 kV networks is
being prepared, one of the goals of which is to predict the direction of the development of the transmission network, the extent
of reconstruction, to determine indicative investments for the development and reconstruction of the network by forming a long-
term investment plan. A portfolio of projects is formed in the investment plan. The portfolio consists of projects that are
necessary for achieving the strategic goals of the state, ensuring the reliability of the transmission network and electricity supply,
updating or installing information technologies, or projects that are initiated at the initiative of the users of the electricity
transmission network.
5.7. Innovations
Through its actions in the field of innovation, the Company aims to contribute to the effective implementation of Litgrid and
National energy independence strategies. This is done by creating an effective innovation ecosystem, where innovative ideas
are initiated, experts' time is allocated to their analysis and testing, they are implemented and started to be applied in daily
activities.
In the field of innovation, the company operates in accordance with the Scientific Research and Experimental Development and
Innovation Activity Guidelines of the UAB EPSO-G Group of Companies approved by the Board of UAB EPSO-G (hereinafter -
R&D Activity Guidelines).
The purpose of the R&D activity guidelines is to ensure the continuity and efficiency of UAB EPSO-G group companies'
activities, competitiveness or creation of conditions for competition through research, innovation and new solutions, a significant
contribution to the implementation of the National Energy Independence Strategy, and the creation of added value for society.
The R&D activity guidelines define the concepts of scientific research and experimental development, innovation and innovative
activities common to the entire Group, general directions and priorities of R&D activities, classification principles and
recommendations to transmission system operators regarding the allocation of funds for R&D activities that are not classified as
regulated activities.
Innovation Ecosystem
The company has implemented a Research and Experimental Development and Innovation (R&D) system. It defines the basic
principles and innovation processes of an environment favorable to creativity and the implementation of innovations. Innovation
activities are focused on the implementation of the goals and objectives set out in the Climate Change and National Energy
Independence Strategy (NENS), because without innovation it is difficult to imagine or even impossible a reliably functioning
electricity system, transitioning from fossil fuel power plants to renewable energy resources and creating a competitive national
economy in the Baltics. In the region of Scandinavia and Central and Eastern Europe.
More about innovative projects in the "Sustainability Report".
.
ANNUAL REPORT
(All amounts are in EUR thousands unless otherwise stated)
22
6. FINANCIAL INFORMATION
6.1. Revenue
In 2023, gross revenue decreased by EUR 50.5 million compared to 2022 and totalled EUR 369.8 million. The highest decrease
of revenue was observed in ancillary services, whereas largest increase was in transmission services.
Revenue, EUR million
2023
2022
Change
Change, %
Sales
206.5
72.5
134.0
185%
Balancing energy
108.3
175.1
-66.9
-38%
Ancillary services
28.0
137.2
-109.2
-80%
ITC
14.9
1.6
13.4
838%
PSO
0.0
28.9
-28.9
-100%
Congestion
3.2
1.9
1.3
68%
Reactive energy and
administration of
guarantees of electricity
origin
6.0
1.8
4.2
233%
Other activities
3.0
1.4
1.6
114%
Total revenue
369.8
420.3
-50.5
-12%
Revenue from electricity transmission amounted to EUR 206.5 million, which is a 2.8 times increase compared to 2022
(including EUR 142.3 million congestion management revenue used to reduce transmission tariff for 2023). The main reason for
the increase in transmission revenue – at the time of approving electricity transmission price cap for 2023, the compensated
costs of regulated activities include 5-times higher costs of compensating losses in the grid due to 5-times higher electricity
purchase price.
Sales volumes of imbalance and balancing (hereinafter the “balancing”) electricity increased by 46.2%, however, revenue
decreased by 38.2% to EUR 108.3 million due to a 55.9% lower average sale price. Change in revenue does not affect the
Company’s profitability because according to the regulated imbalance pricing the current year revenue compensates expenses,
including the Company’s internal expenses, attributable to this activity according to the description of the regulation accounting.
Revenue from ancillary services decreased by 79.6% to EUR 28 million due to a 57.5% decrease in the ancillary services
purchasing component to the price of the transmission services and a 5.6% decrease in the volume of services rendered.
According to the regulated pricing of the ancillary services, revenue must compensate expenses, including the Company’s
internal expenses, attributable to this activity according to the description of the regulation accounting. Difference between
revenue and expenses for the N-year is taken into consideration when approving the acquisition component of ancillary services
for the N+2 year.
Other income related to the transmission activity include:
Inter-Transmission System Operator Compensation (ITC) revenue, which is a fee for electricity imported from countries
outside the European ITC mechanism (the import activities were discontinued from May 2022) and the transit
compensation revenue from ITC fund. The total amount of the revenue was EUR 14.9 million. The revenue does not
affect the long-term profitability as is assessed when determining the price of the transmission service and calculating
the actual return on investments in the transmission service.
PSO – services were discontinued by the Company from 2023.
Reactive energy revenue amounting to EUR 5.9 million. The revenue does not affect the long-term profitability as is
assessed when determining the price of the transmission service and calculating the actual return on investments in
the transmission service.
Revenue from congestion management services amounting to EUR 3.2 million. The revenue does not affect the
Company’s profitability because revenue compensates expenses incurred in ensuring the use of allocated capacity of
the interconnections.
Revenue from administration of guarantees of electricity origin amounting to EUR 0.1 million.
Other revenue increased more than 2 times to EUR 3 million due to a EUR 0.9 million increase in penalties from the contractors
for delays in the performance of works, EUR 0.5 million increase in revenue from sale of material assets, and EUR 0.3 million
increase in other income.
Transmission
56%
Balancing
energy
29%
Ancillary
services
8%
Other
related to
electricity
6%
Other
activities
1%
Revenue
structure
2023
ANNUAL REPORT
(All amounts are in EUR thousands unless otherwise stated)
23
6.2. Expenses
In 2023, the Company’s operating expenses totalled EUR 333.2 million, which is 30.3% lower compared to 2022.
Expenses, EUR million
2023
2022
Change
Change, %
Related to electricity
251.3
420.1
-168.8
-40%
Balancing energy
108.5
174.8
-66.3
-38%
Ancillary services
98.1
111.6
-13.5
-12%
Compensation of
technological losses
38.3
99.6
-61.3
-62%
ITC
3.2
3.4
-0.3
-9%
PSO
-
28.8
-28.8
-100%
Ensuring the utilisation of
allocated grid capacity
3.2
1.9
1.3
68%
OPEX.
40.3
36.7
3.6
10%
Wages and salaries
17.6
15.6
2.0
13%
Repair and maintenance
9.4
8.8
0.7
7%
Telecommunication and
IT systems
2.5
2.2
0.3
14%
Taxes
5.2
4.0
1.2
30%
Other
5.6
6.1
-0.6
-9%
Other
41.6
21.0
20.7
98%
Depreciation and
amortisation
19.7
20.6
-0.8
-4%
Impairment of property,
plant and equipment
21.7
-
21.7
Other
0.2
0.4
-0.2
-50%
Total expenses
333.2
477.8
-144.6
-30%
Expenses of purchase of electricity and related services accounted for a major portion of the Company’s operating expenses:
EUR 251.3 million (75.4% of the Company’s total expenses). These expenses decreased by 40.2% compared to 2022.
Expenses for ancillary services decreased by 12.1% to EUR 98.1 million. Balancing electricity expenses decreased by 37.9%
due to a lower purchase price though the volume acquired was higher.
Expenses of compensating for electricity purchase technological losses in the transmission network decreased 2.6 times to
EUR 38.3 million due to 2.6 times lower average electricity purchase price. ITC expenses totalled EUR 3.2 million. No expenses
for provision of PSO services were incurred as the Company discontinued these services from 2023. The expenses of ensuring
the allocated capacity of the interconnections totalled EUR 3.2 million.
Operating expenses increased by 9.7% to EUR 40.3 million compared to 2022. Increase in remuneration expenses by EUR 2
million was affected by a 6.4% increase in the average number of employees due to the implementation of the synchronisation
project and a higher average salary. Other expenses increased by EUR 1.6 million: the largest increase was observed in tax
expenses – by EUR 0.9 million due to higher tax payable to the NERC.
The result of revaluation of the property, plant and equipment (PPE) made by the Company is that fair value of PPE on 30
September 2023 is EUR 5.8 million higher than residual balance sheet value of PPE on 30 September 2023. EUR 21.7 million
impairment loss were recorded in profit (loss) statement and EUR 27.4 million profit due to PPE revaluation was recorded in
other comprehensive income.
6.3. Return and other financial ratios
EBITDA = operating profit + depreciation and amortisation + impairment loss + write-offs.
Adjusted EBITDA is a recalculated EBITDA by considering temporary regulatory deviations from the regulated profitability
indicator approved by NERC. The adjusted EBITDA is calculated by assessing a revenue adjustment for the prior periods,
which has already been approved by NERC’s decision when establishing regulated prices for the reporting period, and by
assessing deviation of an actual profitability from a reporting period profitability permitted (regulated) by NERC, which will be
assessed when establishing regulated prices for the upcoming year by NERC.
Balancing
energy
33%
Ancillary
services
29%
Compensation ot
technological losses
11%
Other related
to electricity
2%
OPEX
12%
Other activities
12%
Cost structure
2023
ANNUAL REPORT
(All amounts are in EUR thousands unless otherwise stated)
24
Adjusted net profit is a recalculated net profit by considering: the difference between adjusted EBITDA and EBITDA after
income tax; the impairment of property, plant and equipment after income tax, and the income tax incentive for investments for
previous periods.
Adjusted net profit = actual net profit + (adjEBITDA – EBITDA) x (1-15%)
Adjusted net profit for 2022 was calculated by making additional one-time adjustment - adding EUR 2.9 million income tax
incentive for investments in 2022 which was recorded in 2023.
Adjusted net profit for 2023 was calculated by making additional one-time adjustments: deducting income tax incentive for
investments in 2019-2022 which was recorded in 2023 and adding impairment loss after income tax.
The reasons for increase in adjusted EBITDA were as follows:
- EUR 1.1 million higher return on investments due to the
increase in value of regulated assets from EUR 330 million
to EUR 351.7 million and the increase in the rate of return
on investments from 4.03% to 4.09%;
- EUR 1.6 million bigger revenue from non-regulated activities
(penalties for the contractors and other revenue).
Adjusted EBITDA for 2023 was calculated by making the
following adjustments to EBITDA:
- deducting EUR 4.1 million, i.e. the difference between
the permitted and actual return on investments of
transmission activity in 2020-2021, by which revenue
from transmission services for 2023 was increased;
- deducting EUR 107 million, i.e. the difference between
an actual and permitted return on investments of
transmission activity in 2023, by which revenue from
transmission services should be reduced in future
periods. The difference is calculated by the Company,
but not yet approved by the Auditor and the NERC;
- adding EUR 27.1 million, i.e. the result of ancillary
services in 2021 (revenue less expenses), by which
revenue from ancillary services for 2023 was reduced;
- adding EUR 43 million, i.e. the difference between the
expenses and revenue of ancillary services in 2023, of
which EUR 29.8 million will be recovered in 2024, and
the remaining amount of the difference will be used to
increase revenue from ancillary services for 2025. The
difference is calculated by the Company, but not yet
approved by the Auditor and the NERC.
-36.5
78.3
34.6
37.3
2022 2023
EBITDA, adjEBITDA
EUR million
EBITDA
Adjusted EBITDA
ANNUAL REPORT
(All amounts are in EUR thousands unless otherwise stated)
25
The adjusted net profit for 2023 was calculated by making the
following adjustments:
- deducting EUR 34.9, i.e. the difference between adjusted
EBITDA and financial EBITDA after income tax;
- adding EUR 18.4 of impairment loss after income tax;
- deducting EUR 10 million income tax incentive for
investments in 2019-2022.
The adjusted net profit growth was mainly driven by a EUR 5.3
million improvement in financing activities and a EUR 2.7 million
change in adjusted EBITDA.
The adjusted ROE increased from 7.1% to 10.9%, mainly due
to the increase in adjusted net profit.
Investments (excluding assets received free of charge from
third parties and capitalised wages) improved mainly due to
growing investments in strategic and electricity projects of
national significance. These investments accounted for 64% of
total investments made in 2023. A significant portion of
investments was made in the following projects:
- EUR 32.4 million - installation of new synchronous
compensators;
- EUR 32.1 million - construction of the 330 kV line
Darbėnai-Bitėnai;
- EUR 17.2 million construction of the 330 kV line Kruonis
HAE-Bitėnai;
- EUR 16 million - reconstruction of the 330 kV Kruonis
HAE switchyard.
-49.5
48.4
13.8
22.0
2022 2023
Net profit, Adjusted net profit
EUR million
Net profit
Adjusted net profit
-25.5%
23.9%
7.1%
10.9%
2022 2023
ROE, Adjusted ROE
%
ROE
Adjusted ROE
22.7
98.5
33.5
55.0
2022 2023
Investments
EUR million
Reconstruction
and
development of
the electricity
transmission
network and
others projects
Strategic
electricity
projects
56,2
153.5
45.6
39.2
2022 2023
Net financial debt
EUR million
1.3
1.1
2022 2023
Net financial debt/Adjusted EBITDA
times
ANNUAL REPORT
(All amounts are in EUR thousands unless otherwise stated)
26
Net financial debt decreased by EUR 6.4 million, as part of the
loan was repaid on schedule.
The net financial debt to adjusted EBITDA ratio decreased
from 1.3 to 1.1 due to lower net financial debt and higher
adjusted EBITDA.
Balance sheet and cash flows
Balance sheet, EUR million
2023
2022
Change
Non-current assets
413
384
29
Intangible assets
5
5
-1
Property, plant and equipment
401
367
33
Deferred tax asset
7
11
-4
Current assets
265
335
-70
Receivables and other current
assets
93
95
-2
Loan granted to EPSO-Granted to
related parties
167
232
-65
Other financial assets
4
7
-3
Cash and cash equivalents
1
0
0
TOTAL ASSETS
677
719
-41
Equity
239
167
72
Issued capital and share premium
155
155
0
Reserves
35
62
-26
Retained earnings
48
-49
98
Non-current liabilities
300
139
161
Financial debts and lease
liabilities
33
40
-6
Congestion management revenue
264
64
200
Other non-current liabilities
3
35
-33
Current liabilities
139
413
-274
Current portion of long-term
loans and other short-term
borrowings
6
6
0
Current portion of congestion
management revenue
37
287
-251
Trade payables
56
70
-14
Prepayments received and other
current assets
39
49
-9
Total liabilities
439
552
-113
TOTAL EQUITY AND LIABILITIES
677
719
-41
During the year, the Company’s assets decreased by EUR 41 million (-6%) and amounted to EUR 677 million as at 31
December 2023. Non-current assets representing 61% of the Company’s total assets increased by EUR 29 million (+8%), the
main reason – the capital investments were higher than depreciation costs even after the investments set off against subsidies.
Current assets decreased by EUR 70 million (-21%), mainly due to the EUR 65 million drop in loans granted (temporarily
unused accumulated congestion management revenue connected to the Group account and temporary borrowed to EPSO-G).
Shareholders’ equity increased by EUR 72 million (+43%) during the year due to the total comprehensive income in 2023 and
accounted for 35% of the total assets at the end of 2023.
Non-current liabilities increased by 2.2 times, whereas current liabilities decreased by 3 times, mainly due to the reclassification
of a EUR 200 million congestion management revenue from a current portion to non-current.
Cash flows, EUR million
2023
2022
Change
CFO
58.9
-52.6
111.5
CFI
-51.6
82.7
-134.3
CFF
-7.1
-31.4
24.3
Increase/decrease in cash
and cash equivalents
0.1
-1.3
1.5
CFO
In 2023, cash from operating activities (CFO) totalled
EUR 58.9 million. Compared to 2022, CFO increased
by EUR 111.5 million, mainly due to the difference in
gross revenue (EUR 121 million).
413
265
239
300
139
Assets Equity and liabilities
Balance sheet structure
EUR million
Current liabilities
Non-current
liabilities
Equity
Current assets
Non-current assets
ANNUAL REPORT
(All amounts are in EUR thousands unless otherwise stated)
27
CFI
In 2023, cash flows from investing activities (CFI) amounted
to EUR (-51.6) million. Compared to 2022, CFI was negative
mainly due to increased acquisitions of property, plant and
equipment and intangible assets (a EUR 63 million increase)
and a EUR 56.4 million decrease in subsidies received.
CFF
In 2023, cash from financing activities (CFF) totalled
EUR (-7.1) million. Compared to 2022, CFF were less
negative due to fewer loans repaid in 2023 (EUR -
19.1 million) and the non-payment of dividends (in
2022 EUR 5 million).
Free Cash Flows, EUR million
2023
2022
Change
Change, %
CFO
58.9
-52.6
111.5
-211.8%
CFI
-51.6
82.7
-134.3
-162.4%
Change in provided loans
-65.4
188.4
-253.8
-134.7%
FCF
-58.2
218.5
-276.7
-126.6%
The Company’s net cash flows (excluding cash flows from financing activities and from loans granted by the Company and their
repayments, i.e. free cash flow (FCF)) were negative due to the increased investments and totalled EUR (-58.2) million in 2023.
Congestion management revenue received during 2023 amounted to EUR 108.5 million. In 2023 it have been used as follows:
EUR 3.2 million to guarantee the availability of allocated capacities, EUR 15.2 million to finance investments, and EUR 142.3
million to reduce transmission tariff. Accumulated congestion management revenue balance amounted to EUR 297.9 million as
at 31 December 2023, of which EUR 130.7 million were temporarily used for the financing of the Company’s activities and EUR
167.2 million were linked to the EPSO-G Group account.
6.4. Five-year summary
Key financial indicators
2023
2022
2021
2020
2019
Change in
2023-2022
Change, %
Revenue
EUR
million
369.8
420.4
270.9
208.4
183.9
-50.5
-12.0%
EBITDA
EUR
million
78.3
-36.5
46.2
51.8
22.3
114.8
n/a
EBITDA margin
%
21.2%
-8.7%
17.1%
24.8%
12.1%
n/a
n/a
EBIT
EUR
million
36,6
-57,5
24,8
31,0
1,9
94,1
n/a
EBIT margin
%
9,9%
-13,7%
9,2%
14,9%
1,0%
n/a
n/a
Net profit
EUR
million
48.4
-49.5
20.0
26.6
3.0
97.9
n/a
Net profit margin
%
13.1%
-11.8%
7.4%
12.8%
1.6%
n/a
n/a
ROE
%
23.9%
-25.5%
9.1%
12.9%
1.5%
n/a
n/a
ROA
%
6.9%
-8.2%
4.4%
6.7%
0.8%
n/a
n/a
Shareholders’ equity / Assets
%
35.2%
23.2%
45.2%
52.6%
52.0%
12 pp
51.6%
Net financial debt
EUR
million
39.2
45.6
68.5
84.7
99.1
-6.4
-14.1%
Net financial debt/EBITDA
times
0.5
-1.2
1.5
1.6
4.4
1.8
n/a
Investments
EUR
million
153.5
56.2
52.0
54.3
45.7
97.3
173.1%
Basic earnings per share (EPS)
EUR
0.096
-0.098
0.040
0.053
0.006
0.194
n/a
Total assets
EUR
million
677.4
718.5
489.8
414.4
376.2
-41.1
-5.7%
Equity
EUR
million
238.7
167.0
221.5
218.0
195.6
71.7
42.9%
Liquidity ratio
times
1.91
0.81
1.01
0.59
0.46
1.10
135.4%
Assets turnover ratio
times
0.53
0.70
0.60
0.53
0.50
-0.2
-23.8%
Adjusted indicators
Adjusted EBITDA
EUR
million
37.3
34.6
39.8
32.5
n/a
2.7
7.8%
Adjusted EBITDA margin
%
10.1%
8.2%
14.7%
15.6%
n/a
1.9 pp
23.2%
Adjusted net profit
EUR
million
22.0
13.8
16.4
13.5
n/a
8.2
59.5%
Adjusted net profit margin
%
6.0%
3.3%
6.1%
6.5%
n/a
2.7 pp
82.8%
Adjusted ROE
%
10.9%
7.1%
7.5%
6.5%
n/a
3.8 pp
54.1%
Net financial debt/adj. EBITDA
times
1.1
1.3
1.7
2.6
n/a
-0.3
-20.3%
ANNUAL REPORT
(All amounts are in EUR thousands unless otherwise stated)
28
7. COMPANY TARGETS AND THEIR IMPLEMENTATION
The implementation of the Strategy is measured through the implementation of the Company's 3-year business plan and the
Company's annual objectives, which prioritise measures in line with the priorities identified in the Company's Strategy.
The evaluation of the achievement of the objectives is carried out by the Company's Board of Directors and the CEO reports to
the Board of Directors on the achievement of the objectives. The financial and non-financial performance targets set for the
Company are identical to those set for the CEO of Litgrid. The assessment of the achievement of the objectives determines the
variable remuneration of all employees and the CEO.
Achievement of the 2023 targets is 76%, approved by the Board in the Board meeting on 29
th
Feb 2024.
ANNUAL REPORT
(All amounts are in EUR thousands unless otherwise stated)
29
8. INFORMATION ON THE SHARE CAPITAL AND THE
SHAREHOLDERS AND THEIR RIGHTS
Since 22
nd
December 2010, Litgrid’s shares are traded on the Secondary List on the NASDAQ OMX Vilnius exchange, ISIN
code of securities: LT0000128415.
During the reporting period Litgrid neither acquired nor disposed of its own shares.
The share capital of Litgrid amounts to EUR 146,256,100.2, and it is divided into 504,331,380 ordinary registered shares with
the nominal value of EUR 0.29 each.
EPSO-G UAB (Gedimino pr. 20, LT-01103 Vilnius, company code 302826889), a company wholly owned by the Ministry of
Energy of the Republic of Lithuania, controls 97.5% of Litgrid ’s shares. EPSO-G UAB possesses a decisive vote in making
decisions at the general meeting of shareholders.
The Company has not received any information on mutual agreements between the shareholders due to which restrictions on
transfer of securities and/or voting rights may be imposed. There are no restrictions regarding voting rights at the Company.
SEB Bankas AB was the provider of accounting and related services for Litgrid ’s securities from september 15th 2020.
Data on trading in Litgrid securities on the regulated markets:
Indicator
2020
2021
2022
2023
Opening price, EUR
0,59
0.58
0.805
0.702
Highest price, EUR
0.63
0.89
0.805
0.78
Lowest price, EUR
0.49
0.575
0.63
0.65
Closing price, EUR
0.585
0.795
0.7
0.685
Turnover, units
680 371
894 468
435 981
386 009
Turnover, EUR million
0.39
0.67
0.33
0.27
Capitalisation, EUR million
259.51
400.94
353.03
345.47
8.1. Turnover and prices of Litgrid’s shares during the reporting period, in EUR:
https://nasdaqbaltic.com/statistics/lt/instrument/LT0000128415/trading
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(All amounts are in EUR thousands unless otherwise stated)
30
8.2 Benchmark of LGD1L,OMX Baltic Benchmark GI (OMXBBGI) and OMX Vilnius (OMXV)
8.3. Dividends
18 August 2017 The Board of Litgrid has adopted a decision to apply the dividend policy of UAB EPSO-G Group, approved by
the decision of the Board of Directors of UAB EPSO-G on 14 July 2017 (renewed 7
th
February 2020), to Litgrid in full. EPSO-G's
Dividend Policy regulates the procedure for setting, paying and declaring dividends for all the companies in the group, sets clear
guidelines for the expected return on equity and investment for existing and potential shareholders, while ensuring sustainable
long-term growth of corporate value, timely implementation of nationally important strategic projects, and purposefully building
trust in the entire group of energy transmission and exchange companies.
in 2023 April 11 during the ordinary general meeting of shareholders of Litgrid it was decided not to pay dividends.
9. Governance report
The Company, together with the parent company EPSO-G UAB and other legal entities directly or indirectly controlled by the
parent company form the group of companies. 97.5% of shares in the Company are held by EPSO-G, and the remaining 2.5%
by minority shareholders. The Republic of Lithuania, holding 100% of shares in EPSO-G UAB is the shareholder of the
company, the rights and obligations of which are implemented by the Ministry of Energy of the Republic of Lithuania.
The Company’s issued share capital amounts to EUR 146,256,100.20 and is divided into 504,331,380 units of ordinary
registered shares with the 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.
9.1 The Company’s management bodies
The Company’s management bodies are set out in the Articles of Association and comprise the General Meeting of
Shareholders, the Board and the Company’s director.
EPSO-G UAB (the Company’s parent) has the Remuneration and Nomination Committee and the Audit Committee, which act
as the Remuneration and Nomination Committee the Audit Committee of the Group as a whole, inter alia, by performing the
functions of the Remuneration and Nomination Committee and the Audit Committee of the Company. Information on the
Remuneration and Nomination Committee and the Audit Committee is available on website of EPSO-G UAB (the Company’s
parent) at www.epsog.lt. Information on the committees is also disclosed in the annual reports of EPSO-G UAB.
Litgrid’s management and organisational structure ensures optimal organisation, accountability, process efficiency and
responsibility.
ANNUAL REPORT
(All amounts are in EUR thousands unless otherwise stated)
31
9.2. Management principles
In 2023, the corporate governance of the EPSO-G Group’s was carried out in accordance with the new version of the
Guidelines on Corporate Governance of EPSO-G Group approved by the Ministry of Energy of the Republic of Lithuania, the
sole shareholder of EPSO-G, on 29 December 2022. The Guidelines establish uniform principles of corporate governance to be
applied to the entire EPSO-G Group of companies and prescribe the purpose of the group of companies, its operational
objectives, corporate governance organisation model, governance structure, as well as the system for accountability,
supervision and control of operations.
The updated version of the Guidelines established 7 main principles of the corporate governance:
The principle of establishing assumptions for effective corporate management, which aims to ensure that the
management of the Group and the necessary decisions are made efficiently;
The principle of proportionality, which aims to ensure that management methods applied by EPSO-G UAB are
proportionate, i.e. do not create an unnecessary administrative burden;
The principle of realization of shareholders’ rights, which aims to create conditions for the proper realization of rights
and legitimate interests of all shareholders;
The principle of inclusiveness of all interested parties, which recognizes the rights and expectations of interested
parties;
The principle of transparency, which aims to ensure that the Group’s activities are organized transparently, with proper
disclosure of essential information;
The principle of responsibility and accountability of management bodies, which aims to ensure that management
bodies perform their functions in a proper and timely manner, actively exercise their rights and properly fulfil their
duties;
The principle of integrity, which aims to ensure both vertical and horizontal integrity.
The EPSO-G Group draws on good governance practices set out in the Good Governance Recommendations published by the
Organisation for Economic Co-operation and Development (OECD), the Nasdaq Vilnius Recommendations, and other
internationally recognised standards and good governance recommendations, with the overarching aim of ensuring that state-
owned companies are governed in a transparent and effective manner.
9.3 Articles of association
The Articles of Association of Litgrid are amended in accordance with the procedure set out in the Law on Companies of the
Republic of Lithuania, according to which amendments to the Company’s Articles of Association must be approved by a
qualified majority vote that must be not less than 2/3 of all the votes carried by the shares held by the shareholders attending
the meeting. During the reporting period, the Company’s Articles of Association were revised 1 time. On 11 April 2023, the new
wording of Litgrid’s Articles of Association was approved by the decision of the General Meeting of Shareholders and registered
in the Register of Legal Entities on 20 April 2023. The main changes to the Articles of Association involve:
ANNUAL REPORT
(All amounts are in EUR thousands unless otherwise stated)
32
establishing a direct applicability of the group level documents approved by the Board of the parent’s EPSO-G and
EPSO-G director; The Company has the power to decide not to apply, or to apply with exceptions, the group level
documents subject to the agreement of the Company’s Board or, respectively, the Company’s director, after having
informed EPSO-G UAB in advance of the envisaged exceptions;
increasing the transaction threshold (from EUR 15 million to EUR 30 million) above which the approval of the
Company’s General Meeting of Shareholders is required;
the Board will no longer approve the plan of measures for the implementation of audit recommendations. The approval
of these plans falls under the Company director’s competence, while the Board of Directors is provided with the power
to analyse and evaluate their implementation;
refining the transactions subject to the Company’s Board decisions;
refining the Company Board’s competence to approve the Company’s key regulatory documents;
establishing the Board’s competence to vote in the General Meeting of Shareholders of both, subsidiaries and
associates. The Company’s Board is entitled to delegate this function through its decision;
setting out the provisions for ensuring business continuity in the absence of the Board;
Chief Executive Officer is referred to as a Manager in the Articles of Association;
establishing the representation of companies by the Manager in the Group-wide committees.
The Company’s Articles of Association are available on its website atwww.litgrid.eu.
9.4 General Meeting of Shareholders
The General Meeting of Shareholders is the supreme body of the Company. The competence of the General Meeting of
Shareholders, the rights of shareholders and their exercise are provided for in the Law on Companies of the Republic of
Lithuania, while additional competence is provided for in the Articles of Association.
The additional competence of the General Meeting of Shareholders is the following:
Appointment and removal of Board members, fixing the remuneration of Board members, conclusion of contracts with
Board members and their standard terms and conditions;
Suspension or non-expulsion 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 the Articles of Association;
Approval of the decisions of the Board, as provided for in the Articles of Association.
Based on data as at 31 December 2023, over 5,800 natural and legal persons were shareholders of the Company, including
one shareholder holding more than 2% of shares in the Company. EPSO-G UAB, a parent company, is a majority shareholder
holding 97.5% of shares in the Company.
Each shareholder registered in the Company’s register of shareholders by the record date (the fifth business day prior to the
General Meeting of Shareholders) is entitled to attend the General Meeting of Shareholders and to exercise their right to
participate in the adoption of decisions on matters within the competence of the General Meeting of Shareholders. Notices of
convening of the General Meeting of Shareholders, as well as all necessary information, annexes to the matters to be discussed
at the meeting and the decisions of the General Meeting of Shareholders are published on the Company’s website. Notices of
meetings are also published through the Information System of Nasdaq Vilnius.
During the reporting period, three General Meetings of Shareholders were convened and the following decisions were taken:
Date
Key decisions
11/04/2023
● Approval of Litgrid AB financial statements of 2022
● Approval of Litgrid AB profit (loss) distribution of 2022
● Approval of Litgrid AB remuneration report of 2022
● Approval of the new wording of Litgrid AB Articles of Association
12/06/2023
● Election of Andrius Šemeškevičius as the independent Board member until the end of the
term of office of the Company’s Board
30/08/2023
● Election of UAB PricewaterhouseCoopers as the audit company that will perform the audit
of the financial statements of Litgrid AB prepared in accordance with the International
Financial Reporting Standards adopted in the European Union for the period of 2023-2025
9.5 The Board
The Board is a collegial management body of the Company. The competence of the Board, the decision-making procedure and
the procedure for election and removal of members shall be established by laws and the Articles of Association.
Under the current version of the Articles of Association, the Board shall consist of five members. The members of the Board
shall be elected by the Meeting for a term of office of four years and shall be accountable to the Board.
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
ANNUAL REPORT
(All amounts are in EUR thousands unless otherwise stated)
33
case may not serve as a member of the Board for more than 10 consecutive years. Members of the Board are elected in
accordance with the Resolution No 631 of the Government of the Republic of Lithuania of 17 June 2015 on the Approval of 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.
The Articles of Association require to ensure that the Board is composed of at least 2 (two) independent members, whose
independence shall be determined by reference to the independence criteria set out in the Law on the Management, Use and
Disposal of State and Municipal Assets of the Republic of Lithuania. When forming the Board, it must be ensured that at least 3
(three) members of the Board have no employment relationship with the Company and, when possible, that employees of the
Company are not appointed to the Board.
The Board elects the Chairperson of the Board from among its members. The Chairperson of the Board is elected from among
the Board members nominated by the Parent Company. In its activities, the Board follows the laws, the Company’s the Articles
of Association, the decisions of the General Meeting of Shareholders and the Rules of Procedure of the Board.
The competence of the Board is not different from the competence of the board established in the Law on Companies, except
for the additional competence provided for in the Articles of Association.
The Company’s Board reserves the competence to:
approve the Company’s business strategy (including long-term and short-term, financial and non-financial targets
and/or performance indicators);
approve the Company’s budget;
approve the Company’s annual performance objectives.
take decisions on the Company’s significant transactions in an amount exceeding EUR 3 million (three million euros),
and approves material terms a condition of such transactions;
take decisions on the prices of electricity transmission and other state-regulated services and the procedure for their
application;
take decisions on the 10 (ten) year plan for the development of the Company’s electricity transmission network;
take decisions on the commencement of a new activity of the Company or on the discontinuation of a specific ongoing
activity;
take decisions relating to the exercise of the Company’s rights as a shareholder at General Meetings of subsidiaries
and associates;
perform supervisory functions as provided for in the Law on Companies of the Republic of Lithuania;
take other decisions within the competence of the Board as provided for in the Articles of Association and the Law on
Companies of the Republic of Lithuania.
The term of office of the current Board will end on 20/04/2024.
CVs of the members of the Board and the Company’s manager (information are available on website at www.litgrid.eu).
9.6 The composition of the Board:
During the reporting period, the Board of Litgrid consisted of the following members:
Board member
Position
Term of
office
Other positions
Education
Tomas
Varneckas
Member,
Chairman of the
Board
(elected chairman
of the board since
29/12/2022)
From
20/04/2022
Head of Infrastructure
and Project
Management at
EPSO-G Group
Vilnius Tech, Bachelor in
Environmental
Engineering, Master in
Engineering IT
Mindaugas
Keizeris
Member
From
22/12/2022
Manager of EPSO-G
UAB
Vilnius University, Master
in International Business;
Baltic Institute of Corporate
Governance, the Board
member education
program
Gediminas
Karalius
Member
From
20/04/2022
Senior Advisor of
Energy Security Group
at the Ministry of
Energy of the Republic
of Lithuania
Mykolas Romeris
University, Bachelor in
Law and Management,
Master in EU Law
ISM University of
Management and
Economics, Master in
Business Administration
ANNUAL REPORT
(All amounts are in EUR thousands unless otherwise stated)
34
Domas
Sidaravičius
Independent
member of the
Board
From
29/07/2016
(also from
20/04/2020)
CEO at Tuvlita UAB
Vilnius University,
Bachelor in Business
Administration and
Management, Master in
International Trade
Andrius
Šemeškevičius
Independent
member of the
Board
From
12/06/2023
CTO at Telia Lietuva
AB
Vilnius Tech, bachelor
and Master in
Engineering IT
None of the Board members hold shares in Litgrid.
Tomas Varneckas
Chairman of the Board
Head of Infrastructure and Project Management at EPSO-G UAB
(company code 302826889, Gedimino avenue. 20, 01103 Vilnius).
Mr. Varneckas does not hold any shares in Litgrid.
Mindaugas Keizeris
Board member
CEO at EPSO-G UAB (company code 302826889, Gedimino ave. 20,
01103 Vilnius).
Mr. Keizeris does not hold any shares in Litgrid.
Gediminas Karalius
Board member
Senior Advisor of Energy Security Group at the Ministry of Energy of the
Republic of Lithuania
Mr. Karalius does not hold any shares in Litgrid.
Domas Sidaravičius
Independent member of the Board
Other positions: Strategy and Development Director at Tuvlita UAB
(company code 1105840917, Lentvario st. 7A, LT-02300, Vilnius).
Mr. Sidaravičius does not hold any shares in Litgrid.
ANNUAL REPORT
(All amounts are in EUR thousands unless otherwise stated)
35
Andrius Šemeškevičius
Independent member of the Board
Term of office started on 12/06/2023
Other positions: CTO at Telia Lietuva AB (company code 121215434,
Saltoniškių st. 7A, LT-08105 Vilnius)
Mr. Šemeškevičius does not hold any shares in Litgrid.
9.7 Board activities and performance assessment
In line with the guidelines for the annual performance assessment of the Group's collegiate bodies approved by EPSO-G’s
Remuneration and Nomination Committee, Litgrid’s Board of Directors completed its performance assessment for 2023 at the
beginning of 2024.
In the self-evaluation session of the Board's activities in 2022. February 29 areas of activity to be improved were identified and
improvement actions in 2024 were agreed upon. in the field of strategic planning and strategy implementation control.
In accordance with the Guidelines for the annual performance assessment of the Group's collegiate bodies, the overall
assessment of the performance of all the Group's collegiate bodies shall be summarised by the Remuneration and Nomination
Committee of the EPSO-G and submitted to the Board of Directors together with a report.
In 2023, 18 meetings of the Board were held in which 6 decisions were adopted by a written vote.
Participation statistics of board meetings in 2023:
Attended
Did not attend
Attendance of the meetings of the Board of Litgrid and decisions taken:
No
Meeting date
Tomas
Varneckas
Mindaugas
Keizeris
Gediminas
Karalius
Domas
Sidaravičius
Andrius
Šemeškevičius
1.
Jan 10
(not ordinary)
Not yet elected
2.
Jan 20
Not yet elected
3.
Feb 24
Not yet elected
4.
17 March
(not ordinary)
Not yet elected
5.
23 March
Not yet elected
6.
27 April
Not yet elected
7.
19 May
Not yet elected
8.
16 June
(not ordinary)
9.
30 June
10.
July 26
11.
July 31
(not ordinary)
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(All amounts are in EUR thousands unless otherwise stated)
36
No
Meeting date
Tomas
Varneckas
Mindaugas
Keizeris
Gediminas
Karalius
Domas
Sidaravičius
Andrius
Šemeškevičius
12.
Aug 8
(not ordinary)
13.
21 September
14.
Oct 5
(not ordinary)
15.
Oct 20
16.
Nov 14
(not ordinary)
17.
Nov 30
18.
Dec 22
The Board plans and executes its activities in accordance with the Board’s annual activity plan. On 15 December 2022, the
Board approved the Board’s Action Plan for 2023, which was duly implemented in 2023.
Key matters discussed and decisions made by the Litgrid’s Board in 2023:
January
● Approval of Litgrid’s strategy, action plan for 2030
● Approval of Litgrid’s goals for 2023 identical to those of the manager
● Approval of Litgrid’s budget for 2023
● Consent to the generation of fixed assets by concluding the contract with group of suppliers for the design and contract
works of cabling and installation of a fibre optic cable in the 110 kV double-circuit OL Šiauliai-Gubernija II, Šiauliai-
Meškuičiai section between Šiauliai TP and Zokniai TP, and approval of the material conditions of the contract for the
design and contract works.
February
● Approval of the implementation of the Company’s goals for 2022
● Independence assessment of the independent board members
● Approval of the updated list of the Company’s compliance priority areas
● Adoption of the decision to sign the Group’s compliance management policy
● Consent to the amendments to the material special terms of the Loan and Borrowing Agreement between Litgrid and
UAB EPSO-G
● Amendments to the Project Management Internal Audit Recommendations
● The Board’s performance assessment session, during which a plan for improvement of the Board’s performance in
2023 was drawn up
March
● Approval of the Report on the implementation of the Litgrid’s 2030 Strategy in 2022
● Approval of the Litgrid’s Annual Report for 2023 and the Litgrid’s Remuneration Report for 2023
● Adoption of the decisions to approve the Company’s Annual Report for 2023, Remuneration Report (part of the Annual
Report), approval of the Company’s Financial Statements for 2023 and the profit/loss appropriation draft, adoption of
the decision to convene Litgrid’s General Meeting of Shareholders
● Approval of updates to Litgrid’s list of risks and management measures plan for 2023
● Consent to the acquisition of contract works for more than EUR 3 million through the conclusion of a contract with
Tetas UAB for the operation of 110-330 kV overhead lines in the Western Region, and approval of the material terms
of the contract
● Consent to the acquisition of contract works for more than EUR 3 million through the conclusion of the contracts with
Tetas UAB for the operation of 110-330 kV transformer sub-stations in the Northern Region and 110-400 kV
transformer sub-stations in the Southern Region, and approval of the material terms of the contracts
● Approval of the action plan to address risks identified in the transmission network surveillance audit
April
● Consent to the generation of fixed assets by concluding the contract with group of suppliers for the design and contract
works of construction of the 110/10 kV Dirvupiai power transformer and 110 kV switchboard, and approval of the
material conditions of the contract for the design and contract works.
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(All amounts are in EUR thousands unless otherwise stated)
37
● Adoption of the decisions on voting in the General Meeting of Shareholders of Litgrid’s associate Baltic RCC OÜ
(approval of the annual financial statement and the profit appropriation for 2022)
● Adoption of the decision on a one-off annual variable remuneration of the Company’s Manager for 2022
May
● Determination of the annual remuneration for Litgrid’s Manager
● Adoption of the decision on convening the Extraordinary General Meeting of Shareholders to elect the member of the
Board
● Approval of the standard material terms of the contract for design and construction works
June
● Consent to the changes to the 330/110/10 kV Jonava TS reconstruction design and construction works contract
● Independence assessment of the newly elected independent board member
● Consent to the proposal to repeal the methodology for the determination and allocation of interconnection capacity with
third parties
● Adoption of the decisions on voting in the General Meeting of Shareholders of Litgrid’s associate Baltic RCC OÜ
● Adoption of the decision on the conclusion of the Management Holding Services Agreement with EPSO-G UAB, and
approval of material contract terms
● Approval of the updated list of staff positions and the list (map) of senior and middle management job levels
● Approval of Litgrid’s list of risks and management measures plan for 2023
July
● Consent to the agreement on the amendment of the contract for the construction of the 330 kV overhead line Kruonio
HAE-Bitėnai
● Consent to the conclusion of the contract for the operation of 110-330 kV overhead lines in the Northern Region, and
approval of the material terms of the contract
● Consent to the conclusion of the agreement with Augstsprieguma tīkls AS and Elering AS for the early synchronization
of the electricity system of the Baltic countries in February 2025, and approval of the material terms of the agreement
August
● Initiation of 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)
● Consent to the conclusion of the contract with Eltirema UAB for the operation of 110-330 kV overhead lines in the
Eastern Region and 110-400 kV overhead lines in the Southern Region
September
● Consideration of the skill matrix of the newly elected Litgrid’s Board members
October
● Adoption of the decisions on voting in the General Meeting of Shareholders of Litgrid’s associate Baltic RCC OÜ
(regarding amendments of the articles of association, amendments of the share register, amendment of the
shareholders’ agreement, and election of an audit firm)
● Consent to the agreement on amendments of the contract for the design, production and installation of new
synchronous condensers in the Lithuanian electricity system
● Proposal on the submission to the National Energy Regulatory Council (NERC) of the differentiated prices for electricity
transmission services for 2024, calculated on the basis of the transmission service price cap and the component for the
acquisition of ancillary services approved by NERC, and procedure for their application
November
● Consent to Litgrid’s, the Lithuanian electricity transmission system operator’s, updated draft strategy 2030 and its
submission to the Public Enterprise Management Coordination Centre for review
● Approval of the Company’s updated organisation structure (Stage I) and the list of staff positions
December
● Approval of the Company’s updated organisation structure (Stage II) and the list of staff positions
● Approval of Litgrid’s plan of risk management measures for 2024
● Consent to the conclusion of the contracts with Ignitis Gamyba AB and Kauno Termofikacijos Elektrinė UAB for the
electricity generating facilities availability service, and approval of the material terms of the contracts
9.8. Areas of Manager’s activities
The Manager is the sole governing body of the Company. The Company manager’s competence does not differ from the
competence of the head of the company established by the Law on Companies of the Republic of Lithuania, except for the
additional competence provided for in the Articles of Association. The Manager reserves the competence to:
● organise and control day-to-day activities of the Company, take decisions on activities of the Company;
● ensure implementation of the strategy of the Company, implementation of resolutions of the Meeting and the Board in
the Company;
● enter into transactions on behalf of the Company in accordance with the procedures established by the Board;
● etc.
The manager's remuneration is determined in accordance with the policy Remuneration of the Manager and Board Members.
ANNUAL REPORT
(All amounts are in EUR thousands unless otherwise stated)
38
Rokas Masiulis
CEO
Other positions: Independent Board Member at Connect Pay UAB
(company code 304696889, Algirdo st. 48, LT-03218 Vilnius).
Mr. Masiulis does not hold any shares in Litgrid.
9.9.Governance and control
The requirements for the governance of the Company are set forth by the Lithuanian laws on the governance of state-owned or
state-controlled companies, insofar as they apply to the EPSO-G Group companies, and the Governance Code, insofar as the
Company’s Articles of Association do not state otherwise.
In accordance with the Integrated Planning and Monitoring Policy of the EPSO-G Group of Companies, which was approved at
the meeting of the Board of the Company No 12 held on 19 May 2017 and which is directly applied at the Company in its
entirety, the Company is preparing the strategy of the Company for a period of 5–10 years. The period of the strategy must
coincide with the period of the parent company’s strategy. The prepared strategy of the Company currently covers the period of
10 years up to 2031. The implementation of the strategic objectives set out in the strategy of the Company is ensured by the
Company’s performance, control, and risk management systems. The strategy of the Company is approved, and its
implementation is controlled by the Board. A monthly strategy implementation supervision system is introduced at the Company
and is linked with the Company’s administrative staff remuneration system.
The Company’s activities of the transmission system operator are regulated by the national regulatory authority, i.e. the National
Energy Regulatory Council (hereinafter the “Council”). Within its competence, the Council performs the functions of the state
regulation in the electricity sector in the Republic of Lithuania, by ensuring, inter alia, the supervision of and control over the
performance of regulated activities in the energy sector, as well as the proper implementation of the rights and duties of
electricity undertakings and consumers.
The strategy and operational plan of the Company are implemented by and the activities of the Company’s administrative staff
are organised by the Company’s manager. The Company’s administrative management personnel consists of the Manager, the
Head of Finance Department, the Head of System Department, the Head of Transmission Network Department, the Head of
Strategic Infrastructure Department, the Head of Strategy Department, and the Head of ITT and the Head of Administration
Department. The composition of the Company’s management is disclosed on the Company’s website.
Corporate governance accommodates the principles of good governance practice. In its activities, the Company is guided by the
EPSO-G Group’s policies which are made available on the Company’s website.
The internal control systems of the Company are supported by the organisational structure, management culture and
implemented good governance practices, as well as process management which is currently being implemented. It should be
noted that the supervisory functions are carried out by the Board of EPSO-G UAB, meanwhile recommendations, proposals and
conclusions on matters which are key to the Company’s activities are provided by the Group’s Remuneration and Nomination
Committee and the Audit Committee. The internal control system is initiated by the Company’s Board and implemented by the
administrative staff, assisted by the Audit Committee of EPSO-G UAB, the external independent audit, and divisions supporting
the principal activity. The procedures and policies effective at the Company ensure the reliability of accounting and financial
reporting, the compliance of the Company’s activities with legal acts, operational efficiency, and achievement of operational
objectives.
During the reporting period, the corporate governance of the EPSO-G Group’s was carried out in accordance with the new
version of the Guidelines on Corporate Governance of EPSO-G Group approved on 29 December 2022 by the Ministry of
Energy of the Republic of Lithuania, the sole shareholder of EPSO-G. The Guidelines establish uniform principles of corporate
governance to be applied to the entire EPSO-G Group of companies and prescribe the purpose of the group of companies, its
operational objectives, corporate governance organisation model, governance structure, as well as the system for
accountability, supervision and control of operations.
10. REMUNERATION REPORT
A team of employees of the highest competence helps the company to successfully achieve its goals. It consists of 418 specialists, 95
percent of whom has a higher education. The increase in the number of employees was caused by the acceleration of Synchronization,
the development of renewable energy and the concentration of critically important competences. Additional forces are assigned to
strategic goals in the field of digitization.
We are guided by the following values in our activities: professionalism, cooperation, progress. By implementing the strategic and
business goals set by the shareholder, we aim to attract and retain competent, responsible, value-driven professionals who achieve the
intended result in their fields.
ANNUAL REPORT
(All amounts are in EUR thousands unless otherwise stated)
39
We constantly encourage employees to improve and raise their qualifications, to develop professional (functional) and general (based on
values) competencies, and we encourage managers to improve their leadership competencies. We set strategic goals for employees
and evaluate their achievement. We enable all employees to propose and implement innovations in their activities - from innovative work
methods and tools that facilitate daily operational processes - to breakthrough innovations that determine new directions of activity.
We operate efficiently, ensure optimal operating costs and investments based on the best possible cost-benefit ratio, and responsibly
manage the salary budget. We pay employees performance-based wages and encourage achievement of goals that require additional
effort.
10.1. Remuneration of collegial management bodies
The description of the payment procedure for remuneration to members of the collegial bodies of state-owned enterprises and
municipally-owned enterprises, approved in 2015 October 14 By the resolution of the Government of the Republic of Lithuania
no. 1092 (the latest amendments were adopted on August 3, 2023), the sole shareholder of the parent company UAB "EPSO-
G" - Ministry of Energy of the Republic of Lithuania. October 21 the updated guidelines for determining the Remuneration for
activities in the bodies of companies of the EPSO-G and EPSO-G group of companies (hereinafter referred to as the
Remuneration Guidelines), which are published on the website of UAB EPSO-G at www.epsog.lt, have been approved. The
company is also guided by 2022. July 11 the manager and board remuneration policy approved by the general shareholders'
meeting of Litgrid has been updated, which is published publicly on the company's website.
The currently valid version of the Remuneration Guidelines establishes that remuneration for activities in collegial bodies of
group companies can be paid to such members who meet at least one of the conditions specified below and payment of
remuneration to these members is not prohibited by the legal acts in force in the Republic of Lithuania:
for independent members, determining independence in accordance with applicable normative legal acts and internal
documents
for members who are civil servants.
Remuneration for work on the board is not paid to employees of UAB EPSO-G group companies and/or employees of
shareholders of group companies.
Position
Mėnesinio atlygio dydis
Chairman of the board
1/3 CEO average remuneration *
Board member
1/4 CEO remuneration
Board member (civil servant))
1/5 CEO remuneration **
* CEO average remuneration - the average monthly salary of the manager of Litgrid.
** in the event that a board member (civil servant) goes and performs activities in the collegial body of another state-owned company/state-owned
company and/or municipal company/municipally-owned company, he is paid 1/8 of the average monthly salary of the company manager.
No other bonuses, royalties or other benefits were paid to the members of the Board.
Fixed and variable remuneration for the Chief Executive Officer is determined by the Board of Directors, and for the most senior
executives by the Chief Executive Officer, in accordance with a remuneration policy approved by the Board. The variable
remuneration is paid once a year to the CEO and the senior management after the Board has approved the achievement of the
company's objectives.
The variable part of the remuneration for the board members is not determined, so the ratio between the variable and fixed part:
100 percent fixed part.
On 22
nd
of 2022 December By the decision of the general meeting of shareholders of Litgrid, the following fixed monthly
remuneration amounts (excluding payable taxes) were established, which apply from 2023 January 1st:
Position
Monthly fixed amount (Eur)
Chairman of the board (independent
3 136
Board member (independent)
2 352
Board member (civil servant if does not undertake individual business)
1 881
Board member (civil servant idf undertakes individual business or job as board
member in another state company)
1 176
ANNUAL REPORT
(All amounts are in EUR thousands unless otherwise stated)
40
5 year remuneration statistics for Litgrid Board:
2023
2022
2021.
2020
2019
Domas Sidaravičius
28 224
17 107
16 800
16 800
8 820
Tomas Varneckas
-
-
-
-
-
Mindaugas Keizeris
-
-
-
-
-
Artūras Vilimas
-
22 370
21 000
14 197
-
Andrius Šemeškevičius
15 602
-
-
-
-
Gediminas Karalius
22 572
607
-
-
-
Total
66 398
40 084
37 800
37 414
18 307
No other bonuses, allowances or other benefits were paid to the members of the board.
The fixed and variable remuneration of the company's manager is determined by the board, for top-level managers - by the
company's manager, in accordance with the remuneration policy approved by the board. The variable part of the remuneration
is paid to the manager and management once a year, after the board approves the implementation of the company's goals,
The ratio of men and women in the 2023 Board was: 100 percent. men.
Selection and equality policies apply to the election of the company's manager, members of the management and supervisory
bodies. The purpose of the EPSO-G selection policy is to establish common principles and practices for the selection of the
group of companies in order to transparently select the best candidates who meet the necessary qualifications, skills,
experience and values for collegial bodies, management and staff positions at all levels, who would effectively contribute to the
individual group achievement of company and company group goals. The equal opportunities policy defines the most important
principles that are applied in the companies of the EPSO-G group, in order to ensure that the principles of equal opportunities
and non-discrimination are observed in all areas of labor relations.
Litgrid's goal is to create an advanced organizational culture that adheres to the principles of sustainability. The elements of this
culture are inseparable: caring for the well-being of employees, development, fostering a safe work culture, equal opportunities,
creating open and mutually trusting relationships with local communities and ensuring customer satisfaction with the services
provided.
The company aims to become an organization that the majority of suppliers, producers, consumers, employees, communities
and representatives of other interested parties would consider as an organization that adheres to the principles of sustainability.
"Litgrid" follows the Employee remuneration, performance evaluation and education policy valid in the "EPSO-G" group of
companies, the main principles of which are:
Create motivating incentives and prerequisites to encourage employees to achieve better performance, to contribute
more actively to the achievement of the Company's and Group's goals, and to perform more than the formal
performance of duties;
Encourage employees to create innovative, non-standard solutions and improve operations;
To ensure equivalent payment for equivalent work in terms of responsibility, competencies and contribution to the
result;
Attract and retain qualified employees.
The principles of remuneration policy are the same for managers and employees.
The remuneration fund is approved by the company boards. The Remuneration and Nomination Committee monitors
the balance between control of payroll costs and incentives for employees performing their duties appropriately.
The remuneration of EPSO-G managers and employees consists of two parts - a monthly remuneration and a financial
incentive.
The monthly remuneration depends on the level of the employee's position and competences, the financial promotion
depends on the achievement of the annual goals of the relevant Group company and on the individual evaluation of the
employee's performance.
The financial incentive is not paid to the employee in case the performance does not meet the expectations according
to the established evaluation criteria.
The amount of the financial incentive is estimated in the company's budget and accounted for in the financial result,
which is audited and published publicly.
The financial promotion of the company's manager depends on the result of the company's annual goals, which are
related to the implementation of the company's strategy and are published publicly on the company's website.
The severance pay of managers and employees does not exceed the amount determined by the legal acts of the
Republic of Lithuania.
It is envisaged that a bonus may be awarded for results of special importance.
The relevant board of the group company must be informed about the planned financial incentives and bonuses at its
next meeting.
Prior agreements on the amounts of severance payments, except for company managers, whose working conditions
are determined by the board, are not concluded.
Severance pay is paid to employees in accordance with the procedure established by the Labor Code and employment
contracts.
The remuneration policy does not provide for any remuneration that gives the manager, collegial body member or
employee the right to shares, stock options or the right to receive remuneration based on changes in the share price or
other financial instruments.
ANNUAL REPORT
(All amounts are in EUR thousands unless otherwise stated)
41
Based on these principles, the company's reward system is focused on a set of financial and non-financial reward elements.
The elements of the remuneration package are the fixed part of the remuneration (i.e. monthly salary), financial incentives
(remuneration paid at the initiative and discretion of the company, depending on the results achieved by the company and the
performance evaluation results of the employee(s), one-time bonuses, fringe benefits and emotional rewards. Emotional reward
is a non-financial component of the total reward, which enriches the well-being of employees and encourages employee effort,
involvement in the company's activities and loyalty.
Additional benefits provided to employees are provided to everyone, they are described in the "Litgrid" Collective Agreement
and other internal documents of the Company.
On December 31
st
Litgrid had 410 employees.
Remuneration of employees in five years:
3
Average remuneration in 2019-2023, Eur
2023
2022
2021
2020
2019
CEO
13471
11885
9403
13 729
12 980
Top management
9910
8732
8957
8 697
8 560
Middle management
6214
5143
4778
4 482
4 326
Experts and specialists
3884
3269
3041
2 792
2 556
In total
4367
3680
3421
3 167
2 972
Employee remuneration by group, ratio between men and women in 2022-2023:
Below are the data on the staff remuneration (incl. variable component, pre-tax) for 2021-2023.
Year
Employee remuneration
Average
remuneration
Average monthly remuneration by age
Average remuneration by position
<30 years
30-50 years
50+ years
Top
Management
Middle and
First-Line
Managers
Professionals
2021
3420
2420
3332
3589
8206
4517
2886
2022
3680
2657
3631
4062
8859
5133
3217
2023
4367
3028
4384
4838
10983
6212
3877
Remuneration by category of
employees
Remuneration by gender
Average fixed remuneration (excl. variable component)
Men
Womens
Rate M/V
2022
2023
2022
2023
2022
2023
CEO
9 583
10 796
-
-
-
-
Top management
7 209
8 124
-
-
-
-
Middle and first line management
4 514
5 515
4 469
5 302
1:0,99
1:0,96
Specialistsi
2 954
3 485
2 776
3 191
1:0,94
1:0,92
total
3 317
3 893
3 051
3 462
1:0,92
1:0,89
Average fixed remuneration by gender
compared to local minimum wage
1:0,22
1:0,22
1:0,24
1:0,24
ANNUAL REPORT
(All amounts are in EUR thousands unless otherwise stated)
42
Average salary in 2022-2023 was increasing. in 2022 it was 7.6 percent. higher than in 2021, and in 2023 - 18.7 percent higher
than in 2022
From 2023 the reward system changed - for all employees, a variable part of the reward was added to the main part of the
reward, depending on the results of individual performance evaluation. This is what led to a significantly higher wage increase in
2023.
The maximum variable financial incentive that can be allocated to the head of the company can be up to 30% of the fixed part of
the annual remuneration. The specific amount of the incentive for the head of the Company is determined by the Board of the
Company taking into account the fulfillment of the company's goals
10.2 Formulation and monitoring of remuneration and nomination policies
The company's board is responsible for formulating and supervising the implementation of the group's remuneration and award
policy. In order to ensure proper Remuneration Policy formulation, monitoring and payroll management, EPSO-G has
established and operates a three-member Remuneration and Nomination Committee, the majority of which are independent
members.
In carrying out this function, the EPSO-G Remuneration and Nomination Committee shall:
• in the cases provided for in the company's statutes or at the request of the bodies of the company or Group companies,
provides them with recommendations regarding the appointment of members of collegial bodies and the conditions of contracts
with them, including regarding the amount of remuneration for these persons in accordance with the provisions of the
Remuneration Guidelines;
• provides recommendations on the appointment of managers of Group companies, typical forms of employment contracts for
managers and conditions of contracts with appointed managers, including remuneration and/or the range of the remuneration
amount;
• evaluates the structure, size, composition and activities of the management bodies of the Group companies at least once a
year, can assess the skills, knowledge, and experience of individual members of the management body, and provides
recommendations for improving performance;
• provides recommendations regarding the remuneration structure, amount of remuneration, main performance evaluation
criteria and remuneration review for the Group company managers in implementing the Group's remuneration, performance
evaluation and training policy;
• can make recommendations regarding the implementation of the Group's remuneration policy and recommend the necessary
measures for the implementation of the remuneration policy;
• provides recommendations regarding the implementation of the Group's top-level managers' and board members'
remuneration policy, including the transparency of the remuneration system;
• assesses the size and structure of the remuneration of the members of the Group's collegial management bodies, supervises
the implementation of the remuneration guidelines;
• at the request of the meeting, may make recommendations on remuneration guidelines;
• provides recommendations on the system of rotation of managers and critical positions of Group companies;
• provides recommendations on the system of strengthening equal opportunities, inclusion and diversity in the Group;
• The bodies of the group companies have the right to apply to the ASK, requesting recommendations and conclusions on the
specific issues referred to by them, if these issues fall within the competence of the RNC.
11. SPECIAL OBLIGATIONS
There are no special obligations for Litgrid.
ANNUAL REPORT
(All amounts are in EUR thousands unless otherwise stated)
43
12. SIGNIFICANT EVENTS DURING THE REPORTING PERIOD
As the Company is executing its duties in accordance with the applicable laws regulating the securities market, it publishes
information on significant events and other regulated information on the EU-wide basis. This information is available on the
website of the Company (www.litgrid.eu) and on the website of NASDAQ Vilnius stock exchange (www.nasdaqbaltic.com).
Summary of Litgrid operations and achievements during 2023
The Company publishes material events and other regulated information on a European Union-wide basis in order to comply
with its obligations under applicable securities legislation. This published information is available on the Company's website
(www.litgrid.eu) and on the website of the NASDAQ Vilnius Stock Exchange (www.nasdaqbaltic.com).
Summary of Litgrid key activities and achievements in 2023
January
5 January 2023 Litgrid received confirmation that the Government of the Kingdom of Sweden has granted permission for the
construction of Harmony Link, Lithuania's offshore link to Poland, in its exclusive economic zone.
19 January 2023 Litgrid dispatched a 330/110/10 kV autotransformer to Ukraine on 20/20/20, which will help secure the
electricity supply to Russia through the targeted destruction of Ukraine's energy infrastructure. The transformer, weighing almost
200 tonnes, was loaded onto a flatbed semi-trailer at the Šiauliai transformer substation and prepared for its journey to Ukraine.
February
2 February 2023 Litgrid, Lithuania's electricity transmission system operator, starts upgrading the equipment at the Šiauliai
transformer substation and will soon install a temporary interconnector. These works are important to ensure the continuity of
synchronisation with the continental European grid and the reliability of the electricity transmission network.
15 February 2023 Litgrid has started the reconstruction of the switchgear of the 330 kV Bitėnai transformer substation in
western Lithuania. The work, which is important for synchronisation with continental Europe, will strengthen the reliability and
security of the country's electricity transmission network.
22 February 2023 Litgrid will be the first in the Baltics to test virtual variable capacity technology. The innovative system, which
measures and predicts the temperature of overhead lines, is expected to allow more electricity to be transmitted along the same
lines. This would allow renewable power plants to operate more without generation constraints.
March
8 March 2023 Litgrid, Lithuania's electricity transmission system operator, has started construction of one of the most important
projects of the year - the installation of a synchronous compensator in Telšiai. The synchronous compensators will strengthen
the reliability of the grid and contribute to the development of renewable energy sources, and will help ensure autonomous
frequency management after synchronisation with continental Europe.
16 March 2023 Litgrid has installed new pylons on more than 80 km of 330 kV transmission lines under construction in western
Lithuania. This future transmission highway is important for strengthening the reliability of the country's grid and preparing for
synchronisation with continental European networks.
Following the approval of a new grid connection procedure on 20 March 2023, Litgrid, the Lithuanian electricity transmission
system operator, is seeing a huge increase in activity from renewable energy developers. In the first three days of the call, 61
applications for connection of solar, wind and storage plants with a total permitted generation capacity of 7,500 MW were
received.
23 March 2023 Litgrid has facilitated the launch of independent demand aggregators connecting electricity consumers, and is
the first company to do so to launch its services. Demand aggregators bring together a group of consumers who can use less
electricity when needed. In this way, consumers participate in the balance between production and consumption in the electricity
system and can reduce their energy costs.
29 March 2023 Litgrid has prepared a design proposal for the reconstruction of the 330 kV switchyard at the Kruonis
Hydroelectric Power Plant (HPP). The renovation of this substation will be one of the largest reconstruction projects initiated by
Litgrid in recent years to ensure the reliability of power supply in preparation for the expansion of Kruonis HPP and its
synchronisation with the Continental European grid.
April
5 April 2023 Litgrid started construction of the Alytus synchronous compensator project. The installation of synchronous
compensators is one of the most important works in preparation for the synchronisation with the continental European grids.
ANNUAL REPORT
(All amounts are in EUR thousands unless otherwise stated)
44
These installations will strengthen the reliability of the electricity grid and contribute to the development of renewable energy
sources, and will help ensure autonomous frequency control after synchronisation with continental Europe.
22 April 2023 Litgrid has successfully completed an isolated operation test. For the first time, Lithuania's electricity system was
disconnected from the Russian-controlled IPS/UPS system and operated fully autonomously.
During the test, on Saturday from 11 am to 9 pm, the connections to the IPS/UPS system - Latvia, Belarus and Kaliningrad
Oblast - were disconnected from the Lithuanian electricity system, which operated in power island mode. Electricity was
supplied by power plants in Lithuania, as well as DC connections to Poland and Sweden. For the first time in the history of an
independent country, the balance and frequency of the electricity system was managed solely by Litgrid dispatchers.
On 24 April 2023, the joint project steering committee of the Lithuanian and Polish TSOs Litgrid and PSE decided not to
increase the Harmony Link budget. If the bids submitted exceed the investment, the procurement of the cable will be re-
tendered and trade with Poland will continue via LitPol Link until the end of the project.
May
4 May 2023 Litgrid has shipped three power transformers to Lithuania. They are needed to connect three synchronous
compensators to the transmission grid, which will strengthen the reliability of the grid and contribute to the development of
renewable energies, and after synchronisation will allow for autonomous frequency management.
12 May 2023 Litgrid has made public its capacity reservation register, based on requests from developers of solar and wind
power plants and storage facilities to connect them to the transmission grid.
18 May 2023 Litgrid switches on 88 km of 330 kV transmission lines in western Lithuania. The reconstruction transformed the
single-circuit Grobinė (Latvia)-Klaipėda and Jurbarkas-Bitėnai transmission lines into double-circuit lines, thus increasing the
electricity capacity and strengthening the reliability of the grid.
June
12 June 2023 The Extraordinary General Meeting of Shareholders of Litgrid, the Lithuanian electricity transmission system
operator, appoints Andrius Šemeškevičius as a new independent member of the Management Board. Mr Šemeškevičius is
Chief Technology Officer of Telia Lietuva.
14 June 2023 Litgrid starts construction of a 330 kV substation in Darbėnai, Kretinga district. The substation, which is
considered to be the future energy hub of Western Lithuania, will increase Lithuania's energy security, commercial trading
opportunities and significantly contribute to the growth of renewable electricity generation.
.
21 June 2023 "Litgrid has started the reconstruction of the 330 kV substation of the Kruonis Hydroelectric Power Plant (HPP).
The upgrade of one of the country's most important distribution substations is aimed at ensuring the reliability of power supply in
preparation for the development of the Kruonis HPP and its synchronisation with the Continental European grid.
20 June 2023 Litgrid, the Lithuanian electricity transmission system operator, buys physical smart sensors from Heimdall Power
AS of Norway. This innovation will be used to monitor the condition of overhead lines and the indicators that determine their
capacity. The sensors are expected to increase the capacity of the lines, which will facilitate the ability of renewable energy
plants to generate more electricity without constraints. The new physical sensors installed on the overhead lines will measure
weather conditions, temperature of the line wires, current, the strength and frequency of vibrations, and the deflection of the
wire. The innovation will be deployed on the LitPol Link international interconnector with Poland in Alytus and on the 110 kV
Palanga-Vejas 1 overhead line in the Klaipėda region.
23 June 2023 Litgrid has evaluated new applications from developers of solar and wind power plants and storage facilities to
connect to the transmission grid. The 35 approved applications reserve 2,945 MW of capacity for renewable energy projects.
27 June 2023 Litgrid will install noise barriers to reduce noise from the autotransformers at the Alytus transformer substation. A
design and project supervision service contract has been signed for the installation of noise barriers at the 330/110/10 kV Alytus
transformer substation. This is the second phase of the ongoing project "Installation of noise attenuation measures at the Alytus
330/400 kV power substation.
July
On July 3
rd
2023 Litgrid completed one of the most important projects in 2023. of projects in Southern Lithuania - after the
reconstruction, the 61 km long 330 kV electricity transmission line from Elektrėnai to Alytus was switched on. The renewed line
will provide reliability, stability and security to the electrical energy system, it is important for the implementation of
synchronization with the networks of continental Europe.
On July 28 2023 the company begins the construction of the 330 kV Vilnius-Neris electricity transmission line. The new 81 km
long overhead line will increase the stability of the electricity network in the region and will create conditions for the further
development of the city and the district. The construction of the Vilnius-Neris power line is underway in preparation for
synchronization with the grids of continental Europe. During the construction of the Vilnius-Neris electricity transmission line, a
new 58 km long line will be built from the Neris transformer substation in Nemenčinė to a point in the Marijampolis ward, where
ANNUAL REPORT
(All amounts are in EUR thousands unless otherwise stated)
45
it will connect with the existing Vilnius-Molodečno line. Also, the 23 km long section of the Vilnius-Molodečno overhead line from
the junction point to the Vilnius transformer substation in Trakių Vokė, Vilnius city's Panerių ward, will also be reconstructed in
the existing engineering corridor.
August
On 2023 August 2
nd
Litgrid, AST and Elering, operators of the electricity transmission system of Lithuania, Latvia and Estonia,
have signed an agreement on a new synchronization date. According to the agreement, disconnection from the Russian-
controlled system and connection to continental European networks will take place in 2025. February. The agreement also
provides that the Baltic countries will jointly refuse to extend the BRELL contract concluded with Russian and Belarusian
operators in 2024. in the summer, half a year before synchronization.
On August 8 2023 "Litgrid" completed the reconstruction of the 330 kV electricity transmission line Grobinė-Klaipėda in Kretinga
district, which is important for synchronization. The Grobinė–Klaipėda line, which was switched on in the spring, changed from a
single-circuit line to a double-circuit during the reconstruction, thus increasing the electricity throughput and strengthening the
reliability of the network.
September
On September 5
th
2023 another aid package for Litgrid has arrived in war-torn Ukraine, which will help rebuild the country's
energy infrastructure. The package consisted of an autotransformer and other electrical network equipment sent at the
beginning of the year.
On September 27, 2023 Litgrid started installation of synchronous compensators in Telšiai and Alytus substations. The largest
components of these devices are already installed in their dedicated structures, on prepared foundations. Synchronous
compensators will increase the reliability of the system, their installation is one of the most important projects in preparation for
synchronization with continental European networks
October
On 2023 October 20 Litgrid, the operator of the Lithuanian electricity transmission network system, has installed the software of
the Automatic Generation Management System. This is one of the most important projects to prepare for synchronization with
continental European networks. This software will contribute to ensuring the stability of the country's electricity system and will
open up additional opportunities for market participants to earn by providing balancing services.
November
On November 13, 2023 Lithuanian and Polish electricity transmission system operators Litgrid and PSE considered various
alternatives for the planned new electricity connection between Lithuania and Poland.
Due to a significant increase in costs and orders for cable and converter stations exceeding production capacity, in 2023 In
April, the public procurement of the planned high-voltage direct current connection "Harmony Link" was terminated. Immediately
after this decision, the Polish and Lithuanian transmission system operators started the process of preparing for new tenders, at
the same time considering various alternatives that could reduce costs and be implemented in the shortest possible time.
One of the alternatives considered by transmission system operators was an overland cable. According to the initial
assessment, the alternative would allow to reduce the project budget and to implement it faster.
On 2023 November 29 The Gdańsk branch of the Polish Energy Institute, together with the Baltic and Polish electricity
transmission operators Litgrid, AST, Elering and PSE, completed studies to assess the technical possibilities for earlier
synchronization with continental European networks. The results of the studies show that synchronization in February 2025 is
safe.
The Gdańsk branch of the Polish Energy Institute, together with the Baltic and Polish electricity transmission operators Litgrid,
AST, Elering and PSE, completed studies to assess the technical possibilities for earlier synchronization with continental
European networks. The study results show that synchronization in February 2025 is safe and technically possible.
December
On December 18
th
, 2023, the group of energy transmission and exchange companies EPSO-G has announced the selection for
the board of Litgrid.
ANNUAL REPORT
(All amounts are in EUR thousands unless otherwise stated)
46
13. MATERIAL EVENTS IN 2023
(https://nasdaqbaltic.com/statistics/lt/news?num=100&page=1&issuer=LGD&filter=1 )
EVENTS
02.03
LITGRID AB information regarding the publication of interim information and the 2023 investor calendar
02.06
LITGRID AB 2022 12-month unaudited condensed financial statements of the Company
02.17
Regarding the opinion of the Audit Committee
03.17
Correction: LITGRID AB information regarding the publication of interim information and the 2023 investor
calendar
03.17
LITGRID AB announces the 2022 audited financial statements and annual report of the Company
03.17
The ordinary general meeting of shareholders of LITGRID AB is called
03.21
Correction: LITGRID AB announces in 2022 audited financial statements and annual report of the
Company
04.11
Decisions made at the ordinary general meeting of shareholders of LITGRID AB
04.24
Regarding the purchase of the Harmony Link connector cable installation
05.05
LITGRID 2023 3-month performance results
05.19
An extraordinary general meeting of shareholders of LITGRID AB is called
06.12
Decisions made at the extraordinary general meeting of shareholders of LITGRID AB
07.31
Correction: LITGRID AB information regarding the publication of interim information and the 2023 investor
calendar
08.08
Notice on the convening of the extraordinary general meeting of shareholders of LITGRID AB
08.21
Notice of litigation
08.25
LITGRID AB announces the results of the first half of 2023
08.29
Correction: LITGRID AB announces the results of the first half of 2023
08.30
Decisions made at the extraordinary general meeting of shareholders of LITGRID AB
10.02
The State Energy Regulatory Council approved the upper limit of the price of electricity transmission
service for the year 2024
10.05
LITGRID AB informs about the initiated arbitration process
11.06
LITGRID AB announces the results of the nine months of 2023
14. SIGNIFICANT EVENTS AFTER THE REPORTING PERIOD
3 February 2023 Litgrid, the Lithuanian electricity transmission system operator, has published an update of its strategy until
2030. In addition to the objectives set out above, it focuses on meeting the expectations of renewable energy generators,
reducing greenhouse gas emissions and improving customer satisfaction.
The strategy, adopted in 2021 and updated in 2023, maintains the objectives of strategic synchronisation, implementation of
offshore wind projects, data openness and financial sustainability.
15. TRANSPARENCY REPORT
Litgrid complies with the Business Transparency and Communication Policy of the EPSO-G UAB Group (approved by the Board
of Litgrid AB on 23 October 2017 in its entirety), which considers in detail the requirements set forth in the Transparency
Guidelines and defines their applicability to the companies of the EPSO-G group.
The implementation of the Transparency Guidelines is largely ensured by LitgriD AB through disclosure of information in the
annual report and on the official website of the Company and through notices on the NASDAQ stock exchange, where
information is disclosed in the format that is acceptable and comprehensible to the stakeholders.
Article 3 of Resolution No 1052 of 14 July 2010 of the Government of the Republic of Lithuania On the approval of the
Description of Guidelines for Ensuring the Transparency of State-owned Enterprises (the Transparency Guidelines) stipulates
that a state-owned enterprise (the “SOE”) complies with the provisions of the Corporate Governance Guidelines for the
ANNUAL REPORT
(All amounts are in EUR thousands unless otherwise stated)
47
Companies Listed on Nasdaq Vilnius AB that are related to public disclosure of information.
Structured information on implementation of the Transparency Guidelines is presented below:
The following information must be published/other requirements must be implemented on the official website of Litgrid AB
www.litgrid.eu:
Company’s name, code, registered address, and a register in
which data on the Company is compiled and stored
Implemented
Legal form, in case Litgrid AB is restructured, reorganised (the
way of reorganisation is to be indicated), under liquidation, in
the process of bankruptcy or bankrupt
Not applicable
Information on the authority representing the State, i.e. the
Ministry of Energy, and link to its official website
Implemented
Goals, vision and mission of the activities
Implemented
Structure
Implemented
Data on the chief executive officer*
Implemented
Data on the chairperson and members of the board*
Implemented
Data on the chairperson and members of the supervisory
board*
Not applicable
Names of the committees, data on their chairpersons and
members*
Not applicable
Company’s name, code, registered address, and a register in
which data on the Company is compiled and stored
Implemented
Legal form, in case Litgrid AB is restructured, reorganised (the
way of reorganisation is to be indicated), under liquidation, in
the process of bankruptcy or bankrupt
Not applicable
Information on the authority representing the State, i.e. the
Ministry of Energy, and link to its official website
Implemented
Goals, vision and mission of the activities
Implemented
Structure
Implemented
Data on the chief executive officer*
Implemented
Data on the chairperson and members of the board*
Implemented
Data on the chairperson and members of the supervisory
board*
Not applicable
Names of the committees, data on their chairpersons and
members*
Not applicable
The following data must be provided: name, surname, start date of the term of office, other executive positions in other legal
entities, education, qualification, and professional experience; indication of whether a member of a collegial body has been
elected or appointed as an independent member.
Sum of the nominal values (in euros and cents) of shares and
interest (in percentage) held by the State in the share capital
of Litgrid AB under the title of ownership
Implemented
Information on initiatives and measures of social responsibility,
significant ongoing or planned investment projects
Implemented
If Litgrid AB 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
Implemented
A set of Litgrid AB annual financial statements, Litgrid AB
annual report, as well as an auditor’s report on Litgrid AB
annual financial statements must be placed on Litgrid AB
official website within 10 working days from the date of
approval of the set of annual financial statements
Implemented
The sets of Litgrid AB interim financial statements and Litgrid
AB interim reports must be placed on the official website not
later than within 2 months after the end of the reporting period
Implemented
The following documents must be provided/other requirements must be implemented on the official website of Litgrid AB
www.litgrid.eu:
Articles of Association of Litgrid AB
Implemented
Operational strategy or its summary in cases when the
operational strategy contains confidential information or
information that is treated as a commercial (industrial) secret
Implemented
Remuneration policy that covers determination of
remuneration for CEO and members of the collegial bodies
and the committees of Litgrid AB
Implemented
ANNUAL REPORT
(All amounts are in EUR thousands unless otherwise stated)
48
Annual and interim reports of Litgrid AB
Implemented
Data disclosure is performed in accordance with the
requirements of Lithuanian legal acts and good practice
Implemented
The sets of annual and interim financial statements for at least
5 years and the auditor’s reports on the annual financial
statements
Implemented
The above-mentioned documents must be provided in a PDF
format with a technical possibility to be printed out
Implemented
The following information must be provided/other requirements must be implemented in the sets of financial statements:
Litgrid AB keeps its accounting records in a way that ensures
preparation of the financial statements in accordance with the
International Accounting Standards
Implemented
Litgrid AB prepares a set of financial statements for the period
of 6 months
Implemented
In addition to the annual report, Litgrid AB prepares an
interim report for the period 6 months
Implemented
In addition to the content requirements set in the Law on Financial Reporting by Undertakings of the Republic of Lithuania, the
following information must be disclosed in the annual report of Litgrid AB
1
:
Brief description of the business model of Litgrid AB
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 Litgrid
Implemented
Results of implementation of the objectives set in the
operational strategy
Implemented
Profitability, liquidity, asset turnover, and debt ratios
Implemented
Implementation of special obligations
Implemented
Implementation of the investment policy, ongoing and planned
investment projects, and investments implemented during the
reporting year
Implemented
Implementation of the risk management policy applied by
Litgrid AB
Implemented
Implementation of the dividend policy
Implemented
Implementation of the remuneration policy
Implemented
Total annual wage bill, average monthly salary by category of
employees and/or business units
Implemented
The SOEs that are not required to prepare the social
responsibility report, are recommended to provide information
related to environmental, social and personnel, human rights,
anti-corruption, and anti-bribery matters in their annual report
or annual activity report
Implemented
The consolidated annual report includes the following
information: structure of the group, name, code and register in
which data on the company is compiled and stored, registered
address of each of the group companies, interest (percentage)
held in the share capital of a subsidiary, financial and non-
financial performance during the financial year
Not applicable
The interim report of Litgrid AB includes the following
information: 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
2
When information is treated as a commercial (industrial) secret or as confidential information of the SOE, the SOE is allowed not to
disclose such information; however, in its annual report the SOE must indicate such non-disclosure and provide the reasons for non-
disclosure.
ANNUAL REPORT
(All amounts are in EUR thousands unless otherwise stated)
49
17 TRANSPARENCY REPORT
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, public limited liability company Litgrid AB (the “Company”) discloses 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 this Code or some of its provisions or recommendations, the specific provisions or recommendations that are not complied
with are indicated and the reasons for such non-compliance are specified.
Free-form summary of the Company’s corporate governance report
Litgrid AB is part of the EPSO-G UAB group of companies. The Company’s corporate governance structure and the governance
model are established by the Company’s Articles of Association, the Corporate Governance Guidelines of the EPSO-G Group of
Companies approved on 29 December 2022 by the Ministry of Energy of the Republic of Lithuania (ME), the sole shareholder of
the parent company EPSO-G UAB, and the Corporate Governance Policy of the EPSO-G Group of Companies. All the above-
mentioned documents are published on the Company’s website and EPSO-G UAB website at www.epsog.lt.
Fig. 1 Main scheme of the implementation of corporate governance at the Group level.
Being part of the Group does not deny the Company’s independence. The Company operates independently aiming to achieve the
objectives set in the Company’s Articles of Association and has the obligation to independently assess whether compliance with the
Group’s corporate governance documents does not harm interests of the Company, its creditors, shareholders or other
stakeholders.
The corporate governance structure established in the Company’s Articles of Association is as follows:
● the General Meeting of Shareholders;
● The Board (five members, two of whom are independent members, the other two members are nominated by the
shareholder EPSO-G UAB, and one member 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 Manager.
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 is also accountable to the Audit Committee, which is also mainly composed of
independent members. The internal audit recommendations are analysed by the Company’s Board.
On the basis of the Risk Management Policy of the EPSO-G UAB Group of Companies, the uniform risk management system of
the Group is implemented at the Company according to the COSO ERM standards applicable in the international practice
setting out risk identification, assessment and management principles and responsibilities. Risk management coordination is
performed at the Group level.
The aim of the Group’s operating policies is to introduce a consistent and effective management system of the organisation
helping employees successfully implement important strategic projects and create value to people and businesses of the
country in a transparent and effective manner.
On the basis of the Compliance Management Policy of the EPSO-G UAB Group of Companies, the uniform compliance
management system of the Group is implemented at the Company. Compliance management coordination is performed at the
Group level.
ANNUAL REPORT
(All amounts are in EUR thousands unless otherwise stated)
50
The policies that are currently effective at the Company are published on the Company’s website at www.litgrid.eu.
Structured table:
PRINCIPLES/RECOMMENDATIONS
YES/NO/
NOT
APPLICABLE
COMMENTARY
1. Principle: General meeting of shareholders, equitable treatment of shareholders, and shareholders’ rights
The corporate governance framework should ensure the equitable treatment of all shareholders. The corporate governance
framework should protect the rights of shareholders.
1.1. All shareholders should be provided with access to the information
and/or documents established in the legal acts on equal terms. All
shareholders should be furnished with equal opportunity to
participate in the decision-making process where significant
corporate matters are discussed.
YES
Pursuant to the Law on
Companies of the Republic
of Lithuania and Chapter X
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 Vilnius stock
exchange in the Lithuanian
and English languages, by
indicating location, date and
time of the meeting.
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 the company’s capital should consist only
of the shares that grant the same rights to voting, ownership,
dividend and other rights to all of their holders.
YES
Articles 13–15 of the
Company’s Articles of the
Association define that all
shares of the Company are
ordinary registered shares
with the nominal value of
EUR 0.29 each. 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
Please see paragraph 1.2.
Chapter IV of the Company’s
Articles of Association also
establishes shareholders’
rights and obligations.
1.4. Exclusive transactions that are particularly important to the
company, such as transfer of all or almost all assets of the
company which in principle would mean the transfer of the
company, should be subject to approval of the general meeting of
shareholders.
YES
Articles 36 and 38 of the
Company’s Articles of
Association specifies the
cases when the Board’s
decision regarding the
transfer of the Company’s
assets is subject to the
approval of the General
Meeting of Shareholders.
ANNUAL REPORT
(All amounts are in EUR thousands unless otherwise stated)
51
PRINCIPLES/RECOMMENDATIONS
YES/NO/
NOT
APPLICABLE
COMMENTARY
1.5. Procedures for convening and conducting a general meeting of
shareholders should provide shareholders with equal opportunities
to participate in the general meeting of shareholders and should
not prejudice the rights and interests of shareholders. The chosen
venue, date and time of the general meeting of shareholders
should not prevent active participation of shareholders at the
general meeting. In the notice of the general meeting of
shareholders being convened, the company should specify the
last day on which the proposed draft decisions should be
submitted at the latest.
YES
The Company convenes the
General 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. Each
time the General Meeting of
Shareholders is convened,
the general shareholder
rights and time limits for their
exercise are published on
the Company’s website,
including the notice on
convening of the General
Meeting of Shareholders.
1.6. With a view to ensure the right of shareholders living abroad to
access the information, it is recommended, where possible, that
documents prepared for the general meeting of shareholders in
advance should be announced publicly not only in Lithuanian
language but also in English and/or other foreign languages in
advance. It is recommended that the minutes of the general
meeting of shareholders after the signing thereof and/or adopted
decisions should be made available publicly not only in Lithuanian
language but also in English and/or other foreign languages. It is
recommended to make this information available on the
Company’s website. Such documents may be published to the
extent that their public disclosure is not detrimental to the
company or the company’s commercial secrets are not revealed.
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 who are entitled to vote should be furnished with the
opportunity to vote at the general meeting of shareholders both in
person and in absentia. Shareholders should not be prevented
from voting in writing in advance by completing the general voting
ballot.
YES
A standard notice on
convening of the General
Meeting of Shareholders
always indicates a possibility
for shareholders to vote in
writing by filling in the
attached form of a voting
ballot or by authorising
another person to represent
a shareholder by proxy.
1.8. With a view to increasing the shareholders’ opportunities to
participate effectively at general meetings of shareholders, it is
recommended that companies should apply modern technologies
on a wider scale and thus provide shareholders with the
conditions to participate and vote in general meetings of
shareholders via electronic means of communication. In such
cases the security of transmitted information must be ensured and
it must be possible to identify the participating and voting person.
NO
Given the challenges 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 that the notice on the draft decisions of the
general meeting of shareholders being convened should specify
YES
A standard notice on
convening of the General
ANNUAL REPORT
(All amounts are in EUR thousands unless otherwise stated)
52
PRINCIPLES/RECOMMENDATIONS
YES/NO/
NOT
APPLICABLE
COMMENTARY
new candidatures of members of the collegial body, their
proposed remuneration and the proposed audit company if these
issues are included into the agenda of the general meeting of
shareholders. Where it is proposed to elect a new member of the
collegial body, it is recommended that the information about
his/her educational background, work experience and other
managerial positions held (or proposed) should be provided.
Meeting of Shareholders
always indicates draft
decisions containing
information required by the
Law on Companies of the
Republic of Lithuania,
including candidatures of
members of new collegial
bodies, their proposed
remuneration, a proposed
audit company and its
proposed remuneration.
Information on the collegial
body member who is
proposed to be elected is not
released publicly, however,
the standard notice on
convening of the General
Meeting of Shareholders
always specifies that the
shareholders may
additionally familiarise with
documents related to the
agenda of the meeting, draft
decisions, a general voting
ballot at the premises of
LITGRID AB at the
registered office during
specifically indicated hours.
1.10. Members of the Company’s collegial management body, heads
of the administration
2
or other competent persons related to the
Company who can provide information related to the agenda of
the general meeting of shareholders should take part in the
general meeting of shareholders. Proposed candidates to member
of the collegial body should also participate in the general meeting
of shareholders in case the election of new members is included
into the agenda of the general meeting of shareholders.
YES/NO
Relevant competent persons
who can provide information
related to the agenda of the
General Meeting of
Shareholders always attend
the General Meeting of
Shareholders. Meanwhile the
proposed candidates to the
members of the collegial
body not always attend the
General Meetings of
Shareholders.
2. Supervisory Board
2.1. Functions and liability of the supervisory board
The supervisory board of the company should ensure representation of the interests of the company and its shareholders,
accountability of this body to the shareholders and objective monitoring of the company’s operations and its management
bodies as well as constantly provide recommendations to the management bodies of the company.
The supervisory board should ensure the integrity and transparency of the company’s financial accounting and control
system.
2.1.1. Members of the supervisory board should act in good faith,
with care and responsibility for the benefit and in the interests
of the company and its shareholders and represent their
interests, having regard to the interests of employees and
public welfare.
Not applicable
The Supervisory Board is not
formed at the Company.
2.1.2. Where decisions of the supervisory board may have a
different effect on the interests of the company’s
shareholders, the supervisory board should treat all
Not applicable
-
2
For the purposes of this Code, heads of the administration are the employees of the company who hold top level management positions.
ANNUAL REPORT
(All amounts are in EUR thousands unless otherwise stated)
53
PRINCIPLES/RECOMMENDATIONS
YES/NO/
NOT
APPLICABLE
COMMENTARY
shareholders impartially and fairly. It should ensure that
shareholders are properly informed about the company’s
strategy, risk management and control, and resolution of
conflicts of interest.
2.1.3. The Supervisory Board should be impartial in passing
decisions that are significant for the company’s operations
and strategy. Members of the Supervisory Board should act
and pass decisions without an external influence from the
persons who elected them.
Not applicable
-
2.1.4. Members of the Supervisory Board should clearly voice their
objections in case they believe that a decision of the
Supervisory Board is against the interests of the Company.
Independent
3
members of the Supervisory Board should: (a)
maintain independence of their analysis and decision-making;
(b) not seek or accept any unjustified privileges that might
compromise their independence.
Not applicable
-
2.1.5. The supervisory board should oversee that the company’s tax
planning strategies are designed and implemented in
accordance with the legal acts in order to avoid faulty practice
that is not related to the long-term interests of the company
and its shareholders, which may give rise to reputational,
legal or other risks.
Not applicable
-
2.1.6. The company should ensure that the supervisory board is
provided with sufficient resources (including financial ones) to
discharge their duties, including the right to obtain all the
necessary information or to seek independent professional
advice from external legal, accounting or other experts on
matters pertaining to the competence of the supervisory
board and its committees.
Not applicable
-
2.2. Formation of the Supervisory Board
The procedure of the formation of the supervisory board should ensure proper resolution of conflicts of interest and effective
and fair corporate governance.
2.2.1. The members of the Supervisory Board elected by the
general meeting of shareholders should collectively ensure
the diversity of qualifications, professional experience and
competences and seek for gender equality. With a view to
maintain a proper balance between the qualifications of the
members of the Supervisory Board, it should be ensured that
members of the Supervisory Board, as a whole, should have
diverse knowledge, opinions and experience to duly perform
their tasks.
Not applicable
-
2.2.2. Members of the Supervisory Board should be appointed for a
specific term, subject to individual re-election for a new term
in office in order to ensure necessary development of
professional experience.
Not applicable
-
2.2.3. Chair of the supervisory board should be a person who’s
current or past positions constituted no obstacle to carry out
impartial activities. A former manager or management board
member of the company should not be immediately appointed
as chair of the supervisory board either. When a company
decides to depart from these recommendations, it should
furnish information on the measures it has taken to ensure
Not applicable
-
3
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
(All amounts are in EUR thousands unless otherwise stated)
54
PRINCIPLES/RECOMMENDATIONS
YES/NO/
NOT
APPLICABLE
COMMENTARY
the impartiality of supervision.
2.2.4. Each member should devote sufficient time and attention to
perform his duties as a member of the supervisory board.
Each member of the Supervisory Board should undertake to
limit his other professional obligations (particularly the
managing positions in other companies) so that they would
not interfere with the proper performance of the duties of a
member of the Supervisory Board. Should a member of the
Supervisory Board attend less than a half of the meetings of
the Supervisory Board throughout the financial year of the
Company, the shareholders of the company should be
notified thereof.
Not applicable
-
2.2.5. When it is proposed to appoint a member of the supervisory
board, it should be announced which members of the
supervisory board are deemed to be independent. The
Supervisory Board may decide that, despite the fact that a
particular member meets all the criteria of independence,
he/she cannot be considered independent due to special
personal or company-related circumstances.
Not applicable
-
2.2.6. The amount of remuneration to members of the supervisory
board for their activity and participation in meetings of the
supervisory board should be approved by the general
meeting of shareholders.
Not applicable
-
2.2.7. Every year the supervisory board should carry out an
assessment of its activities. It should include evaluation of the
structure of the supervisory board, its work organization and
ability to act as a group, evaluation of the competence and
work efficiency of each member of the supervisory board, and
evaluation whether the supervisory board has achieved its
objectives. The supervisory board should, at least once a
year, make public respective information about its internal
structure and working procedures.
Not applicable
-
3. Principle: The Board
3.1. Functions and liability of the management board
The management board should ensure the implementation of the company’s strategy and good corporate governance with
due regard to the interests of its shareholders, employees and other interest groups.
3.1.1. The management board should ensure the implementation of
the company’s strategy approved by the Supervisory Board if
the latter has been formed at the Company. In such cases
where the Supervisory Board is not formed, the Management
Board is also responsible for the approval of the Company’s
strategy.
YES
Article 34 of the Company’s
Articles of Association
defines that the Company’s
Board approves the
Company’s strategy. In
addition, in carrying out its
supervisory function the
Board regularly reviews
reports on the
implementation of the
strategy.
3.1.2. As a collegial management body of the Company, the
Management Board performs the functions assigned to it by
the Law and in the articles of association of the company, and
in such cases where the Supervisory Board is not formed in
the company, it performs inter alia the supervisory functions
established in the Law. By performing the functions assigned
to it, the Management Board should take into account the
YES
Chapter 7.3 of the
Company’s Articles of
Association specifies the
Board’s competence related
to the exercise of oversight
functions.
By performing the functions
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55
PRINCIPLES/RECOMMENDATIONS
YES/NO/
NOT
APPLICABLE
COMMENTARY
needs of the company’s shareholders, employees and other
interest groups by respectively striving to achieve sustainable
business development.
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 Management Board should ensure compliance with the
laws and the internal policy of the company applicable to the
company or a group of companies to which this company
belongs. It should also establish the respective risk
management and control measures aimed at ensuring regular
and direct liability of managers.
YES
Article 36 paragraph (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, budget, etc.) within
the Company.
3.1.4. Moreover, the management board should ensure that the
measures included into the OECD Good Practice Guidance
4
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 applies the
following various documents
in its activities that ensure
implementation of the
highest level internal control,
ethics and compliance
management tools:
- a centralized Group-wide
internal audit function;
- the Group-wide Audit
Committee mainly
composed of
independent members
to whom internal audit
function is also
accountable;
The Company applies the
Code of Conduct and the
Anti-Corruption Policy of the
EPSO-G UAB Group of
Companies, the Sponsorship
and Charity Policy of the
EPSO-G UAB Group of
Companies, the Policy of
Management of Interests of
the EPSO-G UAB Group of
Companies, the Risk
Management Policy of the
EPSO-G UAB Group of
Companies, the
Transparency and
Communication Policy of the
EPSO-G UAB Group of
4
Link to the OECD Good Practice Guidance on Internal Controls, Ethics and Compliance: https://www.oecd.org/daf/anti-bribery/44884389.pdf
ANNUAL REPORT
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56
PRINCIPLES/RECOMMENDATIONS
YES/NO/
NOT
APPLICABLE
COMMENTARY
Companies, the Compliance
Management Policy of the
EPSO-G UAB Group of
Companies, etc.
3.1.5. When appointing the manager of the company, the
Management Board should take into account the appropriate
balance between the candidate’s qualifications, experience
and competence.
YES
Article 53 of the Company’s
Articles of Association
establishes that the
Company’s manager is
appointed by the Board
taking into account the
recommendations of the
Remuneration and
Nomination Committee.
Article 55 of the Company’s
Articles of Association
defines that in assessment of
suitability of the candidate for
the position of the manager,
the Board shall consider
his/her compliance with the
requirements specified by
these Articles of Association
and the legal acts, and
therefore may require that
the candidate submit
documents supporting this
compliance and/or contact
competent authorities for
obtaining necessary
information about the
candidate.
3.2. Formation of the Management Board
3.2.1. The members of the Management Board elected by the
supervisory board or, if the supervisory board is not formed,
by the general meeting of shareholders should collectively
ensure the required diversity of qualifications, professional
experience and competences and seek for gender equality.
With a view to maintain a proper balance in terms of the
current qualifications possessed by the members of the
Management Board, it should be ensured that the members
of the management board would have, as a whole, diverse
knowledge, opinions and experience to duly perform their
tasks.
YES
Members of the Board are
elected in accordance with
the Resolution No 631 of the
Government of the Republic
of Lithuania of 17 June 2015
on the Approval of 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. Article 27 of the
Company’s Articles of
Association provide that the
election of the members of
the Board shall ensure that
the Board is composed of at
least 2 (two) independent
members, whose
independence shall be
determined by reference to
the legal requirements; shall
ensure that more than half of
the Board members have no
employment relationship with
the Company; and shall
endeavour to ensure that the
Board members have
competences taking into
account the areas of
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57
PRINCIPLES/RECOMMENDATIONS
YES/NO/
NOT
APPLICABLE
COMMENTARY
responsibility and functions
of the Board.
The Board members carry
out their performance
assessment on annual basis.
The Group’s Remuneration
and Nomination Committee
also assesses the
performance of the Board
annually and makes
generalised
recommendations for
improving the performance
of the Group’s collegial
bodies.
3.2.2. Names and surnames of the candidates to become members
of the Management Board, information on their educational
background, qualifications, professional experience, current
positions, other important professional obligations and
potential conflicts of interest should be disclosed without
violating the requirements of the legal acts regulating the
handling of personal data at the meeting of the Supervisory
Board in which the Management Board or individual members
of the Management Board are elected. In the event that the
Supervisory Board is not formed, the information specified in
this paragraph should be submitted to the general meeting of
shareholders. The Management Board should, on yearly
basis, collect data provided in this paragraph on its members
and disclose it in the Company’s annual report.
YES
The indicated information is
made public and updated on
the Company’s website.
3.2.3. All new members of the Management Board should be
familiarized with their duties and the structure and operations
of the company.
YES
The members of the Board
are introduced to the
structure and activities of the
Company during the first
sitting. The key corporate
documents of the Company
are shared.
3.2.4. Members of the Management Board should be appointed for
a specific term, subject to individual re-election for a new term
in office in order to ensure necessary development of
professional experience and sufficiently frequent
reconfirmation of their status.
YES
Article 26 of the Company’s
Articles of the Association
defines that the Board is a
collegial management body
of the Company consisting of
five members. The Board
members are elected for a
term of four years by the
General Meeting of
Shareholders, for which the
Board is accountable, taking
into account
recommendations of the
Remuneration and
Nomination Committee. 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. Chair of the Management Board should be a person who’s
YES
Article 28 of the Company’s
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58
current or past positions constitute no obstacle to carry out
impartial activity. Where the supervisory board is not formed,
the former manager of the company should not be
immediately appointed as chair of the management board.
When a company decides to depart from these
recommendations, it should furnish information on the
measures it has taken to ensure the impartiality of
supervision.
Articles of Association
provides the criteria
according to which a person
cannot be elected as a
member of the Board.
Article 46 of the Company’s
Articles of Association
provides that the chairperson
of the Board 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
perform his duties as a member of the Management Board.
Should a member of the Management Board attend less than
a half of the meetings of the Management Board throughout
the financial year of the company, the Supervisory Board of
the company or, if the Supervisory Board is not formed at the
company, the General Meeting Of Shareholders should be
notified thereof.
YES
Members of the Company’s
Board shall actively
participate in the Board
meetings. The Company’s
minutes record the
attendance and voting of the
Board members during a
decision-making process.
As provided for in Article 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. In the event that the Management Board is elected in the
cases established by the Law where the Supervisory Board is
not formed at the company, and some of its members will be
independent
5
, it should be announced which members of the
management board are deemed as independent. The
Management Board may decide that, despite the fact that a
particular member meets all the criteria of independence
established by the Law, he/she cannot be considered
independent due to special personal or company-related
circumstances.
YES
The Company’s website and
the annual report contain
information about the
members of the Company’s
Board specifying the
independent members.
At each Board meeting, the
Board members are required
to declare potential conflicts
of interest related to the
agenda items.
3.2.8. The General Meeting of Shareholders of the Company should
approve the amount of remuneration to the members of the
Management Board for their activity and participation in the
meetings of the management board.
YES
Article 25 of the Company’s
Articles of Association
provides that 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.
5
For the purposes of this Code, the criteria of independence of members of the board are interpreted as the criteria of unrelated parties defined
in Article 33(7) of the Law on Companies of the Republic of Lithuania.
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59
3.2.9. The members of the Management Board should act in good
faith, with care and responsibility for the benefit and the
interests of the Company and its shareholders with due
regard to other stakeholders. When adopting decisions, they
should not act in their personal interest; they should be
subject to no-compete agreements and they should not use
the business information or opportunities related to the
Company’s operations in violation of the Company’s interests.
YES
For the purpose of
monitoring the absence of
conflicts of interest of the
members of the Company’s
Board, the members of the
Board update their
declarations of interests on
annual basis, and the
independence assessment
process of independent
board members is carried
out.
In addition, Article 31 of the
Company’s Articles of
Association stipulates that
the Board members may
have another job or occupy
another 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
conformity with restrictions
set by Article 28 of the
Articles of Association), as
well as in legal entities,
where the Company or the
parent company acts as a
participant, only by providing
a prior notice to the
Company’s Board.
The Company implements
the EPSO-G Group’s Policy
of Management of Interests.
The Board members have
signed commitments to
protect confidential
information.
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 evaluation of the
structure of the Management Board, its work organization and
ability to act as a group, evaluation of the competence and
work efficiency of each member of the Management Board,
and evaluation whether the Management Board has achieved
its objectives. The Management Board should, at least once a
year, make public respective information about its internal
structure and working procedures in observance of the legal
acts regulating the processing of personal data.
YES
The Board carries out an
assessment of its activities
every year and prepares a
performance improvement
plan on its basis.
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
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60
Information about the
Board’s performance
assessment is disclosed in
the Company’s annual
report.
4. Principle: Rules of procedure of the Supervisory Board and the Management Board of the Company
The rules of procedure of the Supervisory Board, if it is formed at the Company, and of the Management Board should
ensure efficient operation and decision-making of these bodies and promote active cooperation between the Company’s
management bodies.
4.1. The Management Board and the Supervisory Board, if the latter is
formed at the Company, should act in close cooperation in order
to attain benefit for the Company and its shareholders. Good
corporate governance requires an open discussion between the
Management Board and the Supervisory Board. The management
board should regularly and, where necessary, immediately inform
the supervisory board about any matters significant for the
company that are related to planning, business development, risk
management and control, and compliance with the obligations at
the company. The management board should inform the
supervisory board about any derogations in its business
development from the previously formulated plans and objectives
by specifying the reasons for this.
Not
applicable
The Supervisory Board is not
formed at the Company.
4.2. It is recommended that meetings of the Company’s collegial
bodies should be held at the respective intervals, according to the
pre-approved schedule. Each company is free to decide how often
meetings of the collegial bodies should be convened but it is
recommended that these meetings should be convened at such
intervals that uninterruptable resolution of essential corporate
governance issues would be ensured. Meetings of the Company’s
collegial bodies should be convened at least once per quarter.
YES
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 of
each year, the Company’s
Board approves the
schedule for the next year
meetings and the activity
plan (preliminary questions
for a respective meeting of
the Board).
4.3. Members of a collegial body should be notified of the meeting
being convened in advance so that they would have sufficient time
for proper preparation for the issues to be considered at the
meeting and a fruitful discussion could be held and appropriate
decisions could be adopted. Along with the notice of the meeting
being convened all materials relevant to the issues on the agenda
of the meeting should be submitted to the members of the
collegial body. The agenda of the meeting should not be changed
or supplemented during the meeting, unless all members of the
collegial body present at the meeting agree with such change or
supplement to the agenda, or certain issues that are important to
the Company require immediate resolution.
YES
The 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.
According to the Regulations
of the Board, the material is
submitted to the Board five
working days before the date
of the ordinary meeting.
The Board follows the
recommendation to amend
the agenda.
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61
4.4. In order to coordinate the activities of the company’s collegial
bodies and ensure effective decision-making process, the chairs
of the company’s collegial supervision and management bodies
should mutually agree on the dates and agendas of the meetings
and close cooperate in resolving other matters related to
corporate governance. Meetings of the company’s supervisory
board should be open to members of the management board,
particularly in such cases where issues concerning the removal of
the management board members, their responsibility or
remuneration are discussed.
Not
applicable
The Supervisory Board is not
formed at the Company.
5. Principle: Nomination, remuneration and audit committees
5.1. Purpose and formation of committees
The committees formed at the Company should increase the work efficiency of the supervisory board or, where the
supervisory board is not formed, of the Management Board which performs the supervisory functions by ensuring that
decisions are based on due consideration and help organise its work in such a way that the decisions it takes would be free
of material conflicts of interest.
Committees should exercise independent judgement and integrity when performing their functions and provide the collegial
body with recommendations concerning the decisions of the collegial body. However, the final decision should be adopted by
the collegial body.
5.1.1. Taking due account of the company-related circumstances
and the chosen corporate governance structure, the
Supervisory Board of the Company or, in cases where the
Supervisory Board is not formed, the Management Board
which performs the supervisory functions, establishes
committees. It is recommended that the collegial body should
form the nomination, remuneration and audit committees
6
.
YES
The Company has the
Remuneration and
Nomination Committee
formed by the Board of
EPSO-G UAB acting in
accordance with the
regulations approved by the
body that forms it; and the
Audit Committee operating at
the Group level formed by
the sole shareholder EPSO-
G UAB and acting in
accordance with the
regulations approved by the
body that forms it.
Given that the issues of
remuneration and
nomination are closely
related and experts with the
same qualifications are
required to deal with these
issues, it was decided to
form a single Remuneration
and Nomination Committee.
5.1.2. Companies may decide to set up less than three committees.
In such case companies should explain in detail why they
have chosen the alternative approach, and how the chosen
approach corresponds with the objectives set for the three
different committees.
YES
5.1.3. In the cases established by the legal acts the functions
assigned to the committees formed at companies may be
performed by the collegial body itself. In such case the
provisions of this Code pertaining to the committees
(particularly those related to their role, operation and
transparency) should apply, where relevant, to the collegial
body as a whole.
Not
applicable
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
YES
Chapters 7.7, 7.8 and 7.9 of
the Articles of Association of
EPSO-G UAB regulate the
formation of the committees
6
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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62
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.
within the EPSO-G Group of
companies and the areas of
their competence.
The aforementioned Articles
of Association stipulate that
the Remuneration and
Nomination Committee and
the Audit Committee shall
consist of not less than three
members.
It is ensured that 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 is
appointed to each of the
committees as independent
member, i.e. on the basis of
competence and through an
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 inform the collegial body about their
activities and performance on a regular basis. The authority of
each committee defining its role and specifying its rights and
duties should be made public at least once a year (as part of
the information disclosed by the company on its governance
structure and practice on an annual basis). In compliance with
the legal acts regulating the processing of personal data,
companies should also include in their annual reports the
statements of the existing committees on their composition,
the number of meetings and attendance over the year as well
as the main directions of their activities and performance.
YES
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 published on
the EPSO-G website.
Information about the
composition, activities of the
committees and other
information is presented in
the consolidated Group’s
annual report.
5.1.6. With a view to ensure the independence and impartiality of
the committees, the members of the collegial body who are
not members of the committees should normally have a right
to participate in the meetings of the committee only if invited
YES
The Regulations of the
Committees provide for the
right of the members of the
Committees to invite, at their
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63
by the committee. A committee may invite or request that
certain employees of the company or experts would
participate in the meeting. Chair of each committee should
have the possibility to maintain direct communication with the
shareholders. Cases where such practice is to be applied
should be specified in the rules regulating the activities of the
committee.
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.
5.2.1. The key functions of the nomination committee should be the
following:
(1) to select candidates to fill vacancies in the membership of supervisory
and management bodies and the administration and recommend the
collegial body to approve them. The Nomination Committee should
evaluate the balance of skills, knowledge and experience in the
management body, prepare a description of the functions and capabilities
required to assume a particular position and assess the time commitment
expected;
(2) 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:
– assists in carrying out the
selections of candidates to
the members of the bodies in
all companies of the Group;
– makes recommendations
to the companies of the
Group with regarding the
nomination of the members
of the management bodies
(including sole management
bodies), entry into contracts
with them and setting
remuneration;
– makes recommendations
on the Group’s corporate
governance documents
relating to the selection,
appointment and
determination of
independence criteria for the
governing bodies, senior
management;
– makes recommendations
on the system for succession
of managers and critical
positions;
– makes recommendations
on the system of equal
opportunities, inclusion and
diversity promotion within the
Group;
- etc.
5.2.2. When dealing with issues related to members of the collegial
body who have employment relationships with the company
YES
The Regulations establish
that the right of initiative to
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64
and the heads of the administration, the manager of the
company should be consulted by granting him/her the right to
submit proposals to the Nomination Committee.
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, this provision is
not practically relevant, as
employees of the Company
are not included in the
composition of the Board.
5.3. Remuneration committee.
5.3.1. The main functions of the Remuneration Committee should
be as follows:
(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 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 conditions which would allow the
company to recover the amounts or suspend the payments by specifying
the circumstances under which it would be expedient to do so;
(2) submit to the collegial body proposals regarding individual remuneration
for members of the collegial bodies and the heads of the administration in
order to ensure that they would be consistent with the company’s
remuneration policy and the evaluation of the performance of the persons
concerned;
(3) review, on a regular basis, the remuneration policy and its
implementation.
YES
The Group has one
Remuneration and
Nomination Committee.
Please see par. 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
7
.
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:
- 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
5.4.2. All members of the committee should be provided with
detailed information on specific issues of the company’s
accounting system, finances and operations. The heads of
the company’s administration should inform the audit
committee about the methods of accounting for significant
and unusual transactions where the accounting may be
subject to different approaches.
7
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.
ANNUAL REPORT
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65
business processes;
- control of provision of
non-audit services by the
auditor and/or audit firm of
the companies of the Group;
- ensuring the functioning
of the complaints system and
complaints handling;
evaluation of transactions
with related parties.
5.4.3. The Audit Committee should decide whether the participation
of the chair of the management board, the manager of the
Company, the chief finance officer (or senior employees
responsible for finance and accounting), the internal and
external auditors in its meetings is required (and, if required,
when). The committee should be entitled, when needed, to
meet the relevant persons without members of the
management bodies present.
YES
The Regulations of the Audit
Committee stipulate that the
members of the Committee,
at their own discretion, may
invite to their meetings the
members of the bodies of the
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 about the work program
of external auditors and should receive from the audit firm a
report describing all relationships between the independent
audit firm and the Company and its Group.
YES
The Audit Committee is
regularly, at least quarterly,
informed about the internal
audit reports and at least
once every six months, with
the internal audit plan and it
may provide
recommendations with
regard to them to the boards
of the companies of the
EPSO-G Group.
The Audit Committee
organises meetings with the
external auditors to discuss
the auditors’ work program
and uncertainties arising
during the audit, and after
the performance of the
external audit, their
conclusions and
recommendations are
discussed with the external
auditors. Each year, before
the start of annual audits, the
audit firm submits its
declaration of independence
to the Audit Committee and
to the companies.
5.4.5. The Audit Committee should examine whether the Company
complies with the applicable provisions regulating the
employee’s 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
YES
The Regulations of the Audit
Committee stipulate that the
Audit Committee ensures the
effective functioning of the
complaints system and the
proportionate and
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investigation of such issues and appropriate follow-up
actions.
independent investigation of
submitted complaints. In the
implementation of this
function, the Chairperson of
the Audit Committee is
immediately informed about
significant complaints
received. In addition, the
Audit Committee is regularly
reported on all complaints
received by the companies
of the EPSO-G Group, their
investigation and decisions
made on the basis of the
findings of investigations
carried out.
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 performance 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 shall submit
a quarterly activity report to
the Board.
In addition, it shall submit a
consolidated annual activity
report to the Ordinary
General Meeting of
Shareholders and to the
Board of EPSO-G UAB.
6. Principle: Prevention and disclosure of conflicts of interest
The Corporate Governance Framework should encourage members of the company’s supervisory and management bodies
to avoid conflicts of interest and ensure a transparent and effective mechanism of disclosure of conflicts of interest related to
members of the supervisory and management bodies.
The Corporate Governance Framework should recognize the rights of stakeholders as established by law and encourage
active co-operation between companies and stakeholders in creating the company value, jobs and financial sustainability. In
the context of this principle the concept “stakeholders” includes investors, employees, creditors, suppliers, clients, local
community and other persons having certain interests in the company concerned.
6.1. Any member of the company’s supervisory and management body
should avoid a situation where his/her personal interests are or
may be in conflict with the company’s interests. In case such a
situation did occur, a member of the company’s supervisory or
management body should, within a reasonable period of time,
notify other members of the same body or the body of the
Company which elected him/her or the company’s shareholders of
such situation of a conflict of interest, indicate the nature of
interests and, where possible, their value.
YES
This obligation is set out in
Articles 56-57 of the
Company’s Articles of
Association, the regulations
of the management bodies
and the EPSO-G Group’s
policy of management of
interests.
Article 30 of the Company’s
Articles of Association
stipulates that upon
emergence of new
circumstances, which may
lead to a conflict of interests
of a member of the Board,
the member of the Board
must notify the Board of such
new circumstances without
any undue delay.
7. Principle: Remuneration policy of the company
The remuneration policy and the procedure for review and disclosure of such policy established at the company should
prevent potential conflicts of interest and abuse in determining remuneration of members of the collegial bodies and heads of
the administration, in addition it should ensure the publicity and transparency of the company’s remuneration policy and its
long-term strategy.
7.1. The company should approve and post the remuneration policy on
the website of the company; such policy should be reviewed on a
regular basis and be consistent with the company’s long-term
YES
The Company applies the
Guidelines for Determining
the Remuneration for
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67
strategy.
Activities in the Management
Bodies of EPSO-G UAB and
EPSO-G Group of
Companies, which are
approved by the sole
shareholder of EPSO-G UAB
and available in a public
domain.
The Company is also guided
by Litgrid’s CEO and the
Board Remuneration Policy
approved by the General
Meeting of Shareholders,
which is made public.
The company applies the
Remuneration, Performance
Assessment and
Development Policy of the
EPSO-G Group which is
made 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
All possible forms of
remuneration for collegiate
bodies and employees are
set out in the Guidelines for
determining remuneration for
activities in the corporate
bodies of EPSO-G UAB and
EPSO-G Group and in the
Remuneration, Performance
Assessment and
Development Policy of the
EPSO-G Group. Both
documents are made public.
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
Activities in the Management
Bodies of EPSO-G UAB and
EPSO-G Group of
Companies that regulate a
fixed remuneration for
members of the collegial
bodies. The members of the
Board do not receive
remuneration based on the
Company’s performance.
7.4. The remuneration policy should provide sufficient information on
the policy regarding termination payments. Termination payments
should not exceed a fixed amount or a fixed number of annual
wages and in general should not be higher than the non-variable
component of remuneration for two years or the equivalent
thereof. Termination payments should not be paid if the contract is
terminated due to inadequate performance.
YES/NO
The Remuneration,
Performance Assessment
and Development Policy of
the EPSO-G Group of
companies stipulates that
there are no pre- agreed
severance payments in the
group companies (except for
the companies’ managers,
whose terms of employment
are determined by the
Board). The amounts of
benefits related to the
termination of employment
relationships are determined
by taking into account the
mandatory minimum
amounts of such benefits
established by the norms of
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68
labour law, except for
exceptional cases when
there are objective reasons
for the agreement on the
other benefits. The relevant
Board of the Group company
shall be informed of the
disbursement of such
(higher) benefits and the
grounds for their payment at
its forthcoming 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.
Where remuneration is based on the award of shares, shares
should not be vested at least for three years after the award
thereof. After vesting, members of the collegial bodies and heads
of the administration should retain a certain number of shares until
the end of their term in office, subject to the need to compensate
for any costs related to the acquisition of shares.
Not
applicable
The financial incentive
scheme is not 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 contain a review of how the
remuneration policy was implemented during the previous
financial year. The information of such nature should not include
any details having a commercial value. Particular attention should
be paid on the major changes in the company’s remuneration
policy, compared to the previous financial year.
YES
General information on the
implementation of the
Company's remuneration
policy and the average
remuneration levels of
individual groups of
employees are disclosed in
the Company’s Annual
Report, which is published
on the Company’s website.
According to Article 25(5) of
the Law of Energy of the
Republic of Lithuania, the
Company discloses
remuneration established to
the members of the
Company’s management
bodies and other benefits
related to the functions of the
members of the
management bodies.
Information on the
remuneration of the Board
members is disclosed in the
Company’s annual report.
Information on remuneration
of employees is published on
the Company’s website on a
quarterly basis.
7.7. It is recommended that the remuneration policy or any major
change of the policy should be included on the agenda of the
General Meeting of Shareholders. The schemes under which
members and employees of a collegial body receive remuneration
in shares or share options should be approved by the General
Meeting of Shareholders.
YES
The remuneration of the
members of the Company’s
Board is determined by the
General Meeting of
Shareholders of the
Company.
Such schemes are not
applied at the Company.
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69
8. Principle: Role of stakeholders in corporate governance
The corporate governance framework should recognize the rights of stakeholders entrenched in the laws or mutual
agreements and encourage active cooperation between companies and stakeholders in creating the company value, jobs
and financial sustainability. In the context of this principle the concept “stakeholders” includes investors, employees, creditors,
suppliers, clients, local community and other persons having certain interests in the company concerned.
8.1. The Corporate Governance Framework should ensure that the
rights and lawful 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.
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
authorized capital, involvement of creditors in corporate
governance in the cases of the company’s insolvency, etc.
YES
The Company shall consult,
negotiate and confer with the
Company’s employee
representatives on the
Company’s business
processes. According to the
Company’s collective
agreement signed with the
representatives of the
employees of the Company,
the Company provides
information to the
representatives of trade
unions about the expected
changes in the Company,
the Company’s financial
situation, etc.
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 given
access to the necessary
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.
NO
The Trust Line contacts are
published on the Company’s
website for interested parties
to report breaches of
occupational health and
safety and environmental
regulations, ethics, working
practices and anti-corruption
policies.
The Audit Committee
operating at the level of the
EPSO-G Group of
companies ensures the
functioning of the system of
lodging complaints and their
handling.
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9. Principle: Disclosure of information
The Corporate Governance Framework should ensure the timely and accurate disclosure of all material corporate issues,
including the financial situation, operations and governance of the Company.
9.1. In accordance with the company’s procedure on confidential information and commercial secrets and the legal acts
regulating the processing of personal data, the information publicly disclosed by the company should include but not
be limited to the following:
9.1.1. The financial and operating results of the company;
YES
The Company complies with
the Transparency and
Communication Policy of the
EPSO-G Group, which is
disclosed in the Company’s
interim and annual reports
available on its website.
9.1.2. objectives and non-financial information of the company;
YES
9.1.3. persons holding a stake in the company or controlling it
directly and/or indirectly and/or together with related persons
as well as the structure of the group of companies and their
relationships by specifying the final beneficiary;
YES
9.1.4. members of the company’s supervisory and management
bodies who are deemed independent, the manager of the
company, the shares or votes held by them at the company,
participation in corporate governance of other companies,
their competence and remuneration;
YES
9.1.5. reports of the existing committees on their composition,
number of meetings and attendance of members during the
last year as well as the main directions and results of their
activities;
YES
9.1.6. potential key risk factors, the company’s risk management
and supervision policy;
YES
9.1.7. related-party transactions;
YES
9.1.8. main issues related to employees and other stakeholders (for
instance, human resource policy, participation of employees
in corporate governance, award of the company’s shares or
share options as incentives, relationships with creditors,
suppliers, local community, etc.);
YES
9.1.9. structure and strategy of corporate governance;
YES
9.1.10. initiatives and measures of social responsibility policy and
anti-corruption fight, significant current or planned investment
projects. This list should be considered as a minimum list and
companies are encouraged not to limit themselves to
disclosing the information contained in this list. This principle
of the Code does not relieve the Company of the obligation to
disclose information prescribed by law.
YES
9.2. When disclosing the information specified in paragraph 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.
9.3. When disclosing the information specified in paragraph 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
This information is disclosed
in the Company’s annual
report and on the Company’s
website.
9.4. 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
YES
The Company discloses the
information via the
information disclosure
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disclosed to all parties concerned at the same time.
system used by the
NASDAQ Vilnius stock
exchange in the Lithuanian
and English languages
simultaneously. The
Company publishes
information prior to or after a
trading session at NASDAQ
Vilnius stock exchange and
presents it at the same time
to all markets in which the
Company’s securities are
traded. The Company does
not disclose the information
likely to impact the price of
the issued by it securities in
its comments, interviews or
otherwise by the time such
information is announced via
the information system of the
Stock Exchange.
10. Principle: 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 condition and financial 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 independent auditor is
appointed by the General
Meeting of Shareholders.
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
is actively involved in the
selection process of an
auditor. The Audit
Committee provides a
recommendation to the
Company’s Board on the
auditor’s nomination. The
final decision is taken by the
General Meeting of
Shareholders, which is
convened and submitted
draft decisions by the Board.
10.3. It is recommended that the company should disclose to its
shareholders the level of fees paid to the firm of auditors for non-
audit services rendered to the company. This information should
also be made available to the company's Supervisory Council, if
the company does not have a Supervisory Council, to the
company’s Board when considering which audit company to
propose to the General Meeting of Shareholders.
YES
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 provision of non-audit
services is supervised by the
Audit Committee operating at
the Group level, which, as
mentioned in paragraph 10.2,
is actively involved in the
selection process of an
auditor. Therefore, the Audit
Committee, when submitting a
recommendation to the Board
on the auditor, has all the
necessary information on the
auditors.
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Sustainability report
2023
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73
Table of Contents
Sustainability in the Company:
- About the Sustainability Report
- Sustainability Principles and Commitments
- Sustainability in Long-Term Strategy
- Sustainability Management
- Risk Management Framework
- Stakeholder Engagement
- Materiality Assessment of Sustainability Topics
- Materiality Matrix and Key Sustainability Topics
- Sustainable Development Goals
Environmental:
- Environmental Sustainability
- Energy Consumption
- Interaction with Water
- Biodiversity
- Climate Impact and GHG Emissions
- Waste Management
- Supplier Environmental Assessment
- Facilitating the Growth of RES
Social:
- Social Sustainability
- Market Presence
- Employment
- Labour Management Relations
- Occupational Safety and Health
- Training and Education
- Diversity and Inclusion.
- Non-Discrimination
- Freedom of Association and Collective Bargaining
- Employee Well-being and Job Satisfaction
- Local Communities
- Supplier Social Assessment and Human Rights in Supply Chain
- Customer Satisfaction
- Socioeconomic Compliance
Economic (Management):
- Sustainable Investment
- Infrastructure Development
- Strategic Partnership
- Compliance management
- Data Protection and Privacy
- Anti-Corruption and Anti-Competitive Behaviour
- Digital Technologies
- Innovations
Index:
- Taxonomy Disclosures
- GRI index table
- UN Global Compact
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SUSTAINABILITY IN THE COMPANY
- About the Sustainability Report
- Sustainability Principles and Commitments
- Sustainability in Long-Term Strategy
- Sustainability Management
- Risk Management Framework
- Stakeholder Engagement
- Materiality Assessment of Sustainability Topics
- Materiality Matrix and Key Sustainability Topics
- Sustainable Development Goals
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About the Sustainability Report
Basis information and the scope of reporting.
In preparing the annual Sustainability Report (hereinafter the “Report”), LITGRID AB (hereinafter the “Company”, “Litgrid”) has
followed the recommendations of the Global Reporting Initiative (GRI), which help to assess the Company’s performance in
terms of relevant economic, environmental, employee, human rights, market and public relations indicators, the Law on
Corporate Reporting of the Republic of Lithuania and the European Union’s Non-Financial Information Disclosure Directive, and
the recommendations of the Bank of Lithuania and the Public Enterprise Management Coordination Centre.
This report is available on the Company’s and NASDAQ Stock Exchange’s websites and is accessible to all stakeholders:
shareholders, business partners, investors, employees and their trade union, media representatives, social partners, citizens
and local communities, and other relevant organisations. Last year’s Report is available on the Company’s website at
https://www.litgrid.eu/index.php/apie-litgrid/darni-veikla/468
This report presents Litgrid’s work and achievements in the field of sustainable development in 2023.
The Report 2023 presents sustainability results alongside the previous year’s results, allowing their comparison and disclosure
of changes that have occurred. Litgrid’s Sustainability Reports have been prepared from 2021.
Information on the sustainability in the EPSO-G Group companies is disclosed in EPSO-G’s Sustainability Report.
It should be noted Lithuanian words darnumas and tvarumas are used interchangeably in the Lithuanian version of the
Sustainability Report.
Given stakeholders’ expectations, the scope of disclosures has been expanded compared to the previous year’s Report, with
amendments made to certain data disclosed in previous periods to reflect changes in calculation methodology or new
information. The content of the Sustainability Report shall include the most recent information available at the time of
publication. The Sustainability Report is unaudited.
The Sustainability Report describes our efforts and commitments in implementing the Sustainable Development Goals and the
United Nations Global Compact guidelines. The Report complies with the Lithuanian requirements for social responsibility
reports and Guidelines on Non-Financial Reporting of the European Commission. The described activities and progress made
relate to the environmental, social and governance (ESG) areas.
For questions or comments and suggestions on how to improve the Sustainability Report, please contact
viktorija.sidaraviciene@litgrid.eu
This report is unaudited and is available in both Lithuanian and English.
Information on the operating model
Litgrid is the electricity transmission system operator in Lithuanian. The Company is responsible for maintaining the balance of
electricity consumed and generated in the Lithuanian electricity system and for reliable transmission of electricity, carries out
strategic electricity projects in Lithuania, and bases its vision and strategic operational guidelines on the long-term goals set out
in the National Energy Independence Strategy (hereinafter “NENS”).
Litgrid, as the electricity transmission system operator, plays a key role in ensuring Lithuania's smooth and reliable transition to
a RES-intensive energy system, enabling the decarbonisation of the sector, initiating system interconnection projects and
facilitating the exchange of climate neutral energy.
Litgrid aims to achieve the transformation of the energy sector by striking a balanced balance between environmental, social
and economic objectives.
Detailed information on activities, services, environment, regulatory environment, objectives and strategy is provided in the
Annual Report.
Sustainability Principles and Commitments
We see sustainability as the impact of our activities on nature, people and the economy. Identifying our sustainability impact and
managing the related risks is critical to the long-term success of our business.
Litgrid plays an important role in ensuring Lithuania's smooth and reliable transition to an energy system integrating large
amounts of renewable energy sources (RES). Litgrid aims to achieve the transformation of the electricity sector by striking a
sustainable balance between environmental, social and economic objectives.
GRI 2-25
GRI 2-3
GRI 2-4
GRI 2-1
GRI 2-2
GR I2-23
GRI 2-24
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Litgrid aims to achieve the transformation of the electricity sector by striking a sustainable balance between environmental,
social and economic objectives.
All companies in the EPSO-G Group strive to integrate sustainability principles into their operations and processes. Litgrid also
aims to contribute directly to the 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 main thrusts of sustainable development stem from the activities defined in the Group's long-term strategy to 2030.
The main thrusts of sustainable development stem from the activities defined in the Group's long-term strategy to 2030.
• ENVIRONMENTAL– the empowerment of climate-neutral energy by reducing the environmental impact of activities;
• SOCIAL – building a progressive, sustainable organisation;
• GOVERNANCE – transparent management and development of the company.
In our daily operations we are committed to sustainable and responsible business principles:
• Strike for a balance between the environmental, social and economic aspects of our activities to create a long-term
value, which is also evident from our performance, through comprehensive and sustainable efforts.
• Take into account the expectations of all stakeholders and to engage with them in a transparent and fair way when
making decisions on the development of the Company.
• Contribute to the United Nations Sustainable Development Goals.
• Contribute to the European Green Deal and the Paris Climate Agreement, and to commit to becoming a climate-neutral
market player by 2050.
• Promote and employ in its operations the United Nations Global Compact principles on human rights, labour,
environment and anti-corruption.
• Carry out environmental, social and economic due diligence.
• Set the sustainability targets based on the precautionary principle, i.e. using the best scientific advice on the
environment available at the time.
The Company’s current provisions and policies are available on its website at https://www.litgrid.eu/index.php/apie-
litgrid/valdymas/veiklos-politikos/3807.
Sustainability in Long-Term Strategy
A client-focused organisation and a centre of competences for the energy sector, state-of-the-art technological and digital
solutions, sustainable energy development that will double the current generation volume of electricity, and opportunities for
market participants to exchange electricity freely at a competitive price. These are the goals set out in the Litgrid’s strategy that
was approved by the Company’s Board in January 2023. The strategy establishes the Litgrid’s long-term vision of becoming one
of the smartest electricity transmission system operators in Europe.
Litgrid plans to expand its activities by focusing on several priority areas. One of the most important priorities is the fight against
climate change through the development and adaptation of the transmission system for electricity generation from renewable
energy sources and the reduction of the impact of Litgrid’s own infrastructure on the environment.
Litgrid: cooperation, progress and professionalism
Litgrid mission – to enable sustainable and efficient electricity exchange.
Litgrid’s vision – to become one of the smartest electricity transmission system operators in Europe
For more information on the Company’s strategy, see the Annual Report on p. 12.
GRI 2-23
GRI 2-24
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Sustainability management
Litgrid’s strategy 2030 is updated on annual basis to ensure the successful, sustainable and focused operations of our
organisation, taking into account the internal and external factors affecting the Company’s activities and changes in EPSO-G
strategy. In accordance with the deadlines and oversight principles for the strategy development set out in the Integrated
Planning and Monitoring Policy of the Group, the changes in Litgrid’s strategy 2030 are directly communicated to the Board
members, who approve the Company’s business strategy (including sustainable long-term and short-term, financial and non-
financial targets and/or performance indicators) in accordance with Clause 34 of the Articles of Association of the Company
(registered on 20 April 2023).
At EPSO-G Group companies, sustainability principles are integrated into business processes, and the management of
sustainability areas by competency covers all levels.
The Group Sustainability Development Manager is responsible for monitoring and coordinating the achievement of the Group's
sustainability objectives. Meanwhile, within the Group companies, the relevant environmental, social and governance objectives
are delegated to individual functional units within the EPSO-G Group companies (e.g. environmental, occupational safety,
human resources, risk and compliance management, etc.) according to their respective competences. Litgrid has employees
responsible for ensuring equal opportunities within the company, as well as a self-initiated Equal Opportunities Embassy, which
organises training and activities for employees. Responsibility for implementing sustainability in daily operations and
sustainability reporting is assigned to the Head of Efficiency, who is directly attached to the manager of the Company and, an
annual basis, reports to the Board on her duties, and will report to the Executive Board.
Litgrid has policies that cover environmental, social and governance management.
Litgrid sees sustainable development as an integral and inseparable part of its operations. The Company follows the following
policies:
- Corporate Governance Policy. Its purpose is to ensure good corporate governance practices within the group by
establishing uniform corporate governance principles across the group and ensuring interaction between the parent
company and other group companies.
- Sustainability Policy. The Sustainability Policy defines the key directions and principles for the development of
sustainability to guide the development of the Group’s corporate activities and to create a progressive organisational
culture. The implementation of this Policy is the responsibility of the Group's Chief Executive Officers and the
Sustainability Functional Area Mentors.
- Occupational Safety and Health Policy. This Policy defines the general principles of occupational safety and health
and the main guidelines for its implementation. The aim of the Policy is to ensure the health of employees in the
workplace and to create a healthy, safe and productive working environment.
- Equal opportunities policy. The Equal Opportunities Policy defines the key principles that are applied in the Group's
companies to ensure that the principles of equal opportunities and non-discrimination are respected in all areas of the
employment relationship. The implementation of the provisions of the Equal Opportunities Policy is the responsibility of
the managers of each Group company.
- Environmental Policy. This policy defines the key environmental principles that are applied in the Group to reduce the
environmental impact of its activities and to establish a culture based on the principles of sustainable development
within the Group and its environment.
- Transparency and Communication Policy. Its aim is to facilitate more effective communication with each other and
with external stakeholders: the public, shareholders, market regulators, etc.
- Anti-Corruption Policy. Its objective is to set out the main principles and requirements for the prevention of corruption
within the Group and the guidelines for ensuring compliance with these principles and requirements, the
implementation of which creates the preconditions and conditions for the implementation of the highest standards of
transparent business conduct.
- Remuneration, performance appraisal and development policies. The aim is to establish clear and transparent
principles and a reward system for the Group's employees, based on which payroll costs can be managed effectively
and employees can be motivated to achieve the objectives set for the organisation.
- Accounting policy. Its purpose is to ensure that stakeholders are able to assess the performance and prospects of
group companies and to make appropriate economic decisions.
- Dividend policy. Its objective is to set clear benchmarks for the expected return on equity and investment for existing
and potential shareholders, while ensuring sustainable long-term growth in corporate value, the timely implementation
of nationally important strategic projects, and thus consistently building confidence in the entire group of transmission
and exchange companies.
- Interest management policy. The objective is to establish a unified and best practice interest management system
within the Group, which will ensure objective and impartial decision-making within the Group companies, as well as
create an environment that is not conducive to corruption and enhance confidence in the Group companies.
- Policy for the development and exploitation of technological assets. The objective is to consistently apply cost-
benefit principles to the management and development of electricity infrastructure, to introduce advanced technologies,
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and to manage and develop the transmission infrastructure in a socially responsible manner, taking into account
occupational health and safety and environmental requirements.
- Support policy. The aim is to ensure that the support provided is publicly available and does not lead the public to
question its appropriateness or the transparency of the allocation process.
- Codes of ethics and supplier codes of conduct. Their purpose is to establish uniform general guidelines for
behaviour in dealing and cooperating with internal and external stakeholders: service users, contractors, business
partners, shareholders, state and municipal authorities, the public, etc. The provisions of the Code are based not only
on the employer's duty, but also on the employee's personal understanding that good behaviour enhances the
reputation and value of the company, as well as the Group as a whole, and reduces the likelihood of reputational risk.
The provisions of the Code are directly derived from the Group's values, leadership principles and complement the
related operational policies.
- Personal Data Protection Policy. The aim is to set the principles on the protection of personal data processed, and to
define key measures for personal data protection management and responsibilities for data protection management.
- Compliance Management Policy. The aim is to define the principles of compliance management, to establish the
compliance management processes, and to clarify the roles and responsibilities of individuals in the compliance
management system.
- Risk Management Policy. The aim is to define the key risk management principles and responsibilities for Litgrid to
ensure a unified corporate risk management process based on common principles.
- Other sustainability-related policies.
Litgrid undertakes to review environmental, socio-economic impacts and sustainability priority topics on a regular basis, but at
least once every two years, together with the Group companies, through a materiality analysis, ensuring stakeholder
involvement. The Group companies report annually on the implementation of their sustainability activities through separate
public sustainability reports. The double materiality assessment is scheduled for 2024.
Long-term sustainability objectives are integrated into the operational strategy approved by the Board until 2030.
Future plans involve further improvement of the Board and management’s knowledge in sustainable development. Staff
sustainability training is planned to be conducted 2024.
Litgrid conducts an annual employee engagement survey, which helps to assess the overall performance of the organisation
through employee engagement, cooperation, interpersonal relationships, organisational governance, communication, strategy
understanding, etc. From 2022, it also includes sustainability matters.
The following are the engagement survey questions and results related to sustainability.
Year
Questions
Number of employees
who responded “Yes”
2022
I see the Company as a sustainable organisation
83 %
2023
I see the organisation as committed to the principles of sustainable
development (environmental, social and good governance practices)
81,14%
2023
The organisation provides sufficient knowledge and information on the
sustainability practices being implemented
68,77%
For more information on the organizational structure and management, see the Annual Report on p, 32
Risk management Framework
Litgrid understands risk management as a structured approach to uncertainties management by methodologically evaluating
risk effect and probability, and by applying the proper measures of management.
Litgrid is guided by the EPSO-G Group Risk Management Policy and Risk Management Methodology. These
documents embed a uniform risk management system that is based on common principles and meeting good practice
according to COSO ERM (Committee of Sponsoring Organisations of the Treadway Commission Enterprise Risk Management)
methodology applicable in the international practice.
The Risk Management Policy defines the key risk management principles and responsibilities for Litgrid to ensure a unified
corporate risk management process based on common principles.
The risk management process comprises the following stages:
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• Environment understanding. 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.
• Risk assessment. 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.
• Developing a Plan on risk Management Measures. The Company develops a Plan on Risk Management Measures for
risks exceeding risk appetite.
• 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. The monitoring
results are communicated to the Company’s manager, the Executive Board, the Board, EPSO-G’s Audit Committee, in
accordance with the remit of each of them.
• 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.
Each year, Litgrid identifies, assesses operational risks, sets risk monitoring indicators and provides risk management
measures.
In 2023, as every year, the Board of Litgrid approved the List of Risks and the Plan on Risk Management Measures.
For comparison, 58, 48 and 50 key risks were identified in 2021, 2022 and 2023, respectively.
On a quarterly basis, EPSO-G’s Audit Committee, Litgrid’s Board and the Litgrid’s Executive Board assess changes in the key
risk indicators and the effectiveness of risk management, and make recommendations, based on the approved List of Risks and
the Plan on Risk Management Measures.
It should be noted that information related to risks, risk indicators and risk management reports is regarded as confidential, and
therefore this report contains statistics and general information related to risks.
Sustainability risk management
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: environmental impact
reduction (environmental criterion), occupational safety and health, employee turnover (social criterion), physical protection,
cybersecurity, anti-corruption, personal data protection, financial management (governance criterion).
In 2023, the need to add the sustainability-related risks to the Company’s List of Risks was identified. Notably, Litgrid’s Board
approved the Company’s List of Risks and the Plan on Risk Management Measures in 2024, which, in addition to the above,
also includes the risks directly related to sustainability, such as the risk of not ensuring the reliability of the reported ESG data
and the risk of not reaching the GHG emission reduction target.
The Company, being aware of the importance of the sustainability-related risks for the achievement of the sustainability
objectives, pays particular attention to the management of these risks.
As mentioned under “Risk Management Framework”, sustainability-related risks are monitored and reported at defined
periodicity. If risk indicators are exceeded, additional risk management measures are approved, the risk levels are reviewed and
information is analysed. The results of the monitoring of the implementation of the identified risks and the risk management
plan are regularly communicated to EPSO-G’s Audit Committee, Litgrid’s Board and Litgrid’s executive Board, in accordance
with the remit of each of them.
In designing and implementing sustainable development actions, Litgrid seeks the full involvement of stakeholders and
promotes transparent and fair cooperation with consumers, producers and suppliers, the public, the owner, employees, the
media and other interested parties.
Stakeholder engagement
In designing and implementing sustainable development actions, Litgrid seeks the full involvement of stakeholders and
promotes transparent and fair cooperation with consumers, producers and suppliers, the public, the owner, employees, the
media and other interested parties.
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Stakeholder
Our commitment
How we cooperate
Customers
• Build professional and trusted
partnerships for mutual benefit.
• Group companies initiate and organize timely
information events for their clients, taking into
account the complexity of their services and
economic expectations.
Employees
• Work in a targeted way to ensure
that the uniform corporate culture
and remuneration policies
promote employee engagement
and motivation in the achievement
of the objectives of the strategy;
• Develop services and/or solutions to meet customer
needs.
Shareholders
• Ensure that the Group’s employees
are sufficiently and timely
informed about the Group’s
values, objectives, activities and
developments.
• We conduct employee engagement surveys and
adjust action plans accordingly;
Group companies
• Ensure sustainable management,
growth and long-term benefits;
• We follow the same reward and social responsibility
policies for employees;
Foreign partners -
energy transmission
and biofuel
exchange operators
• Provide relevant, fair and timely
information to enable
shareholders to assess the Group’s
performance and prospects and to
make appropriate decisions;
• We hold at least quarterly meetings between
managers and employees to discuss issues of
importance to employees.
State
representatives
• Ensure effective feedback.
• We improve the methods and content of internal
communication.
National regulator
• Create value through meaningful
management solutions
• We hold regular meetings to discuss topical issues;
Contractors
• Ensure the sustainable
management of the Group, its
growth and long-term benefits;
• At least quarterly, we report on our financial and
non-financial performance against the objectives set
out in the “Shareholder Expectations Letter”.
Suppliers of services
and goods
• Ensure the combination of
mutually beneficial agreements
and actions in the implementation
of strategic projects.
• We ensure the communication of the most
important news from the Group's companies on a
Group-wide basis in the Daily News column
published every working day.
Non-governmental
organizations (NGOs)
• Provide relevant information in a
clear and accessible format to
provide a reliable basis for
assessing the Company’s activities,
the results achieved and benefits
to society.
We are members of the governing bodies of group
companies;
Trade Unions
• Ensure consistent compliance with
legal requirements;
• We apply the functional leadership operating model.
General public and
• Establish a culture of open and
• We develop and implement uniform operational
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media
transparent dialogue with the
regulator.
policies across the Group, enabling us to coordinate
our actions in implementing good governance
practices.
Local communities
• Work with professional and ethical
contractors.
• We aim to establish and regularly maintain a
business-like relationship based on mutual trust;
Materiality Matrix and Key Sustainability Topics
Environmental protection themes:
1. Reducing environmental impacts and GHG emissions in operations - reducing environmental impacts (air, water, soil
quality), pollution and GHG emissions (CO
2
, CH
4
, SF
6
, etc.) in the company's operations.
2. Biodiversity and ecosystem conservation - protection of terrestrial and aquatic wildlife, natural vegetation and habitats
of high ecological value in the course of operations.
3. Sustainable and efficient use of resources in the company's operations - use of green energy in the company's
operations, efficient use of water and other resources.
4. Waste minimisation, responsible segregation and management - minimising the amount of waste generated by the
activities, ensuring safe and proper management of hazardous and non-hazardous waste.
5. Facilitating the growth of RES - ensuring efficient grid connection of renewable energy producers, smooth operation of
the Energy Guarantee System.
6. Adapting energy systems to decarbonisation - adapting the transmission grid to reliably transport new and increased
volumes of renewable energy sources.
SOCIAL TOPICS:
1. Ensuring human rights and equal opportunities for employees - Ensuring human rights, creating a culture based on
equal opportunities and non-discrimination within the Company.
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2. Ensuring the professional development of employees - providing professional and personal development opportunities
for employees, actively developing the necessary competences.
3. Employee well-being and job satisfaction - creating an environment that enhances employee well-being and
satisfaction and ensures work-life balance.
4. Occupational health and safety - ensuring that the Company’s and its contractors' employees comply with safety
requirements when carrying out their work, and actively ensuring the good health of employees.
5. 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.
6. Customer satisfaction - quality of customer service, improvement of customer-oriented services.
7. Social action, volunteering and social partnerships - promotion of volunteering, educational activities and targeted
cooperation with NGOs, academia and government.
VGOVERNANCE SUSTAINABILITY TOPICS:
1. Transmission network reliability and security - ensuring the safe, reliable and efficient operation of energy transmission
systems.
2. Transparent governance and creating an anti-corruption environment - following standards of transparency and
business ethics, not tolerating corruption and actively combating all forms of corruption.
3. Cybersecurity and data protection - Ensuring the security of critical data, building a cyber-attack-resistant IT
infrastructure and creating an organisational culture.
4. Sustainable value for the economy and financial return for the State - Achieving financial return targets set by
shareholders, ensuring return on investment, economic and social returns.
5. Innovation, research, digitalisation - Creating an organisational culture that fosters innovation and ensuring adequate
funding for innovation.
6. Sustainable supply chain management - 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
recognised environmental, anti-corruption and social standards.
The principles for management of all material sustainability topics are described in accordance with GRI 3-3 in the chapters of
this Report, arranged by the topic.
The sustainability objectives have been set by assessing the main environmental, social and economic impacts of the Group’s
businesses, as well as the actions set out in the Group’s long-term business strategy, the implementation of which will help to
ensure the transformation of the energy sector and the transition to climate-neutral energy. The EPSO-G Group’s long-term
sustainability targets for 2030, of which the Company is a part, include the following indicators:
TOPIC
Objectives and indicators
Environmental area
• Reduction of operational GHG emissions by 2/3 (compared to 2019)
• 0 significant environmental incidents in operations
• Enabling conditions for connecting green energy producers to infrastructure
Social area
• 0 cases of human rights violations or discrimination
• 0 serious or fatal accidents
• Customer satisfaction - at least 80 according to the GCSI methodology
Environmental area
• 0 cases of corruption
• VCC Good Governance Index - A+
• 100% of public procurement is green
• Reliable and safe operation of electricity and gas transmission systems
• Sustainability criteria integrated into supplier requirements
Litgrid is meeting its sustainability targets, i.e. reduced its GHG emissions by -7.28% in 2023 compared to the base year (2019),
and there were no environmental, corruption, human rights violation incidents, including discrimination, in 2023. 2023 was a
historic year for green energy in Lithuania. For the first time, the share of electricity generated by renewable energy plants
accounts for around 67% of the total electricity generated in the country.
Sustainable development goals
After having identified the main areas of impact of our activities, we have analysed and selected those Sustainable
Development Goals (SDGs), to which we can make the most significant contribution in each area. Further in this report, in
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addition to the descriptions of our sustainability topics, we outline which Sustainable Development Goals we support. The
sustainable development goals (SDGs) are a new, universal set of targets that set the direction for global economic, social and
environmental development to 2030
Litgrid supports five Sustainable Development Goals.
We facilitate the connection of renewable energy producers to electricity transmission
infrastructure.
We maintain the system of the renewable energy guarantee of origin.
We apply not only qualitative criteria, but also fairness and sustainability criteria to our partners.
We ensure responsible waste sorting and management in the Company.
We use green criteria in public procurement
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.
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.
.
We ensure reliable and safe operation of electricity transmission systems.
We aim to adapt the Company’s organisational structure and incentive system to promote
innovation.
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Environmental
- Environmental Sustainability
- Energy Consumption
- Interaction with Water
- Biodiversity
- Climate Impact and GHG Emissions
- Waste Management
- Supplier Environmental Assessment
- Facilitating the Growth of RES
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Environmental Sustainability
In the environmental field, Litgrid’s main objective is to enable climate-neutral energy and to reduce environmental impacts and
greenhouse gas emissions from its operations. In the environmental policy approved by Litgrid’s Board of Directors, the
company has committed itself to monitoring the environmental impact of its operations, and to introducing state-of-the-art
technologies and measures to reduce significant environmental impacts. When operating, expanding or modernising the
infrastructure of energy systems, the company undertook to ensure the protection of biodiversity, and to implement
environmental management systems in its operations and to ensure that these systems comply with the requirements set.
All EPSO-G Group companies have a goal of zero tolerance to environmental pollution and zero environmental incidents. Litgrid
also aims to hold contractors and other business partners accountable for the environmental impacts of their activities and to
seek to reduce them. The Company also takes a precautionary approach by carrying out environmental impact assessment
procedures, either in accordance with legal requirements or on its own initiative, before undertaking projects that may have a
significant impact on the environment, biodiversity or society.
The implementation of the environmental policy is the responsibility of the environmental staff, who ensure that environmental
aspects are identified in a timely manner, environmental objectives are set, plans are developed, tasks are set to improve the
environmental status and sufficient resources are allocated to their implementation, results are monitored periodically, and the
processes, technologies and working methods used are audited. The implementation of the policy is the responsibility of the
Group’s corporate managers and environmental functionaries.
In 2022, the Public Health Safety Control Division of the Alytus Department of the National Public Health Centre (NPHC)
inspected a residential area in the vicinity of the LitPol Link and Alytus TP and identified that the noise exceeds standard levels
(48 dBA). Following the inspection, NVSC requested to implement noise abatement measures. The installation of noise barriers
is scheduled for 2025.
During 2023, no breaches of environmental legislation were recorded and no fines were imposed. Nor were there any significant
environmental incidents reported during the year under review, either by the Company’s employees or by contractors.
Energy consumption
Litgrid strives to create an organisational culture based on the philosophy of conservation of nature and other resources. In the
Group’s environmental policy, the companies are committed to using certified green electricity in their administrative activities, to
expanding the use of RES sources to meet the technological energy needs of the transmission network infrastructure, to
prioritising and expanding the use of clean transport, and to consistently reducing the use of polluting fuels and energy
efficiency measures.
Litgrid has already started installing solar power plants in transformer substations under reconstruction. The energy they
generate will be used in the transformer substations themselves. In 2023, 21 transformer substations under reconstruction were
equipped with solar power plants. The energy generated by the installed solar plants will be sufficient to fully or partially meet
the needs of the transformer substations, depending on the solar irradiation, and will increase the reliability of the power supply.
The installed capacity of the solar power plants is expected to reach up to 15 kW in each of the transformer substations.
The Lithuanian electricity transmission system operator has renewed its car fleet, replacing its predominantly internal
combustion cars with electric and hybrid vehicles. Employees will move to 72 electric and rechargeable hybrid cars. This
decision is one of the steps towards the Company’s commitment to reduce its greenhouse gas emissions by two-thirds by 2030.
Litgrid leases 28 electric cars and 44 plug-in hybrids. Until 2022, 99% of the Company’s car fleet comprised vehicles powered
by internal combustion engines. In 2023, the renewed fleet includes 11% of such cars
2021
2022
2023
Number of internal combustion engine vehicles
67
72
9
Number of electric cars
0
0
29
Number of plug-in hybrids
0
0
46
Total number
67*
72*
84*
* The number of cars varies during the year.
The use of electric vehicles reduces the Company’s CO
2
emissions by an average of 102 tonnes per year. The switch to less
polluting vehicles will result in about 30 thousand litres less fuel consumption per year than would be required to maintain the
same fleet of internal combustion engine vehicles.
In 2021, the fleet consisted only of internal combustion engine vehicles. The fleet was smaller than in 2022 or 2023.
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From 2022, the fleet is being renewed, with a focus on electric or hybrid cars, and installation of charging points.
At the end of 2023, 8 direct current and 36 alternating current charging points were operational. They were equipped with a total
of 79 charging connectors. Electric cars and plug-in hybrids can be charged at our facilities in Vilnius, Panevėžys, Utena,
Šiauliai, Kaunas, Alytus, Telšiai and Klaipėda.
A head office in Vilnius has both district heating and geothermal heating (electricity). In the heating substation, electricity is
consumed by geothermal heat pump, circulator pumps, drives, heater elements, three-way valves, pressure regulators. In
Kaunas, a combined heating solution is used: electric radiators and air conditioners, with computers and lighting also added to
the electricity consumption.
From 1 July to 31 December 2022, the electricity consumption in office premises was 442 084 kWh, backed by the renewable
energy guarantee of origin. Litgrid’s office buildings are located at K.G.E. Manerheimo st. 8, Vilnius, and at Pastotės st. 9,
Kaunas district.
Electricity consumption in 2023 backed by the renewable energy guarantees of origin: Litgrid’s office building at K.G.E.
Manerheimo st. 8, Vilnius – 847,323 MWh, and office building at Pastotės st. 9, Kaunas district – 92,750 MWh.
Network losses are mainly driven by its operational status. During periods with a high number of disconnections (e.g. due to
reconstruction), network losses increase.
Year
Fuel for vehicles
Fuel for
production -
generators
Cooling
Electricity
production
Electricity consumption
Heating
Diesel fuel
Petrol
Diesel fuel
Quantity of
refrigerant
used
Type of
cooling
reagents
Solar power
plants
Green
electricit
y
Electricity for
own needs
Technologic
al losses
Vilniaus
Šilumos
Tinklai from
networks
L
L
L
KG
MWH
MWH
MWH
MWH
MWH
2021
42171,28
55945,78
1360
n.d.
n.d.
0
0
32508837
318 893, 972
n.d.
2022
45368,1
78664,1
2197
0
0
0
442,084
32 349, 703
346 478,214
185,84
2023
42330
81449
1219
2
R410A
20,183
940,073
33 459,379
336 441,979
178,185
In 2022, Litgrid launched installation of solar panels on the roofs of transformer substations.
The following facilities were equipped with the solar panels:
• Aleksoto TP;
• Paberžės TP;
• Švenčionių TP;
• Priekulės TP;
• Markučių TP;
• Plastmasės TP;
• Cukrus TP.
In 2023, these solar power plants produced a total of 20,183 kWh of electricity. These projects have not been complete yet,
therefore, a higher energy production from renewable sources is expected in the future.
Interaction with water
Litgrid’s main water consumption comes from boreholes. The Company’s water consumption is limited to domestic use and the
refill of firefighting tanks. In 2021-2023, water consumption remained constant.
Tanks are not equipped with individual water metering devices (their water is not discharged into the wastewater system),
therefore the quantity of water used to refill tanks is an approximate number.
All of the wastewater produced by Litgrid is treated, with the volume remaining constant.
Year
WATER USAGE
WASTEWATER DISCHARGE
Minicipal water
supply ,
m
3
Boreholes,
m
3
Total , m
3
Untreated,
discharged to
third party m
3
Treated
discharged, m
3
Total , m
3
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2023
220
4870
5090
220
3123
3343
2022
280
4898
5178
280
2713
2993
2021
n.d.
3256
3256
n.d.
3256
3256
Biodiversity
Litgrid is committed to protecting biodiversity when operating, expanding or upgrading the infrastructure of energy systems by
carrying out biodiversity monitoring where necessary and, in the event of unavoidable objective circumstances, by planning and
implementing the necessary mitigation or compensation measures. Based on the data of 2022, a situation analysis was made
by estimating that more than 606 km of the Company’s overhead transmission lines and about 21 km of cable lines pass
through protected areas.
Litgrid applies bird protection measures for the infrastructure it manages. The aim is to reduce the mortality of migratory birds, to
improve the environmental conditions for migratory birds by monitoring bird fatalities near the HV transmission network and to
respond accordingly. In 2022, special bird guards have been installed on the 110 kV overhead line pylons to prevent birds from
gliding over the insulators with “fork” type devices, and the top insulators in the festoons have been replaced with larger
diameter ones. These measures reduce the possibility of short-circuiting when large birds (white storks) land, thus reducing
mortality.
During the bird nesting season, Litgrid takes measures to minimise interference during maintenance and construction works and
to delay the cleaning of the lines. Due to the disturbance of birds during the breeding season, the execution of line clearing
works shall be restricted from 1 May to 31 July, and this shall be responsibly assessed prior to the scheduling of project works.
Litgrid takes a precautionary approach by carrying out environmental impact assessments when undertaking significant
development projects.
After carrying out EIA procedures and consulting ornithologists, the Company equips power lines with the bird flight diverters to
prevent birds from flying into power lines and to increase the visibility of wires to them.
Environmental monitoring is carried out in the post-construction period of 3 years to identify the impact of the transmission lines
on bird mortality due to collision with the transmission line wires.
During the reconstruction of the 330 kV power transmission line from the Lithuanian power plant to Vilnius, environmental
impact monitoring was carried out, consisting of monitoring of environmental components, i.e. birds and natural habitats.
In 2023, two dead birds were found: a Eurasian blackcap at the end of September, and a Common buzzard at the end of April.
No birds were found dead during the bird monitoring in the spring of 2022. During the autumn survey, the remains of a bird’s
feathers were found on the Asakiai-Veličkava transmission line. The body of the bird was not found and the cause of death
cannot be determined.
In 2021, no birds were found dead.
In 2023, the projected vegetation cover in the study area ranged from 85 to 90-95%. 24 taxons were identified.
In 2022, the projected vegetation cover in the damaged areas was 80-95%.
There are no extant habitats in the immediate vicinity that meet the criteria for EU habitat of conservation concern 6270*
“Species-rich grassland and grazed grassland”.
In 2021, the fields that were not under cereal crops had a projected vegetation cover of 0-30%.
The construction of the 110 kV Pagėgiai-Bitėnai transmission line. The monitoring programme covers the following
environmental components: soil (only in 2021), landscape (only in 2021), wildlife (birds).
In 2023, as in 2022, no bird contacts with wires were observed. Although studies have shown that predators can carry off dead
birds before the bird-watcher finds them, there are usually still feathers at the place of the bird’s death, which can be used to
identify the species of the birds killed. No such places where birds were killed were identified during the monitoring, although
there was a good chance of spotting them.
Monitoring included domestic cats, foxes, martens and ravens. The latter animals were constantly checking the monitored
areas, leaving a small opportunity to find a killed bird. The likelihood of finding killed birds is reduced by the presence of crop
fields under power lines, therefore, to avoid conflicts with crop owners, the crops in the monitored area were inspected by
optical means and by taking photos, which were subsequently analysed to obtain evidence of the actual bird mortality.
In 2021, the observed sites were undergoing normal renaturalisation. The landscape monitoring in 2021 concluded that the
analysis site is too small to have a visual impact on the skyline. Monitoring the visual impact of the overhead power line on the
landscape is a completely redundant activity with no added value.
GRI 304-3
GRI 304-4
GRI 304-1
GRI 304-2
ANNUAL REPORT
(All amounts are in EUR thousands unless otherwise stated)
88
During the reconstruction, when replacing existing or constructing new pylons, the soil recovery monitoring will be carried out in
certain areas after the EIA procedures, where appropriate in line with the legislation. However, after the monitoring, the degree
of soil compaction is good and vegetation regains the standard lever of cover, as the same topsoil is returned for use to a
specific area. No protected plant species were recorded.
There are no direct negative impacts on species listed in the Red Data Book of Lithuania, therefore no specific environmental
monitoring is carried out for this purpose.
Positive impact
Although the environmental project “Installation of the bird protection measures on the high voltage electricity transmission grid
in Lithuania” has been completed for a few years now, the Company continues to carry out environmental campaigns and care
for Lithuania’s birds.
The condition of nesting boxes installed in 2015-2018 was inspected in 2021. It was found that out of 580 nesting boxes, 28 needed
to be replaced due to their poor condition, and 3 boxes were lost. As a result, in 2021-2022, in cooperation with the Lithuanian
Ornithological Society, new nesting boxes were ordered and installed on the pylons. In 2023, we bought additional 40 nesting boxes for
kestrels listed in the Red Data Book of Lithuania.
These nesting boxes designed for kestrels are installed on the pylons, and repaired or replaced as needed, thus contributing to
the enhancement of the population of kestrels.
Climate Impact and GHG Emissions
Climate change is one of the greatest human challenges of this century and requires the involvement of both the public and
private sectors and everyone to limit the average increase in the Earth's temperature to 1.5 degrees Celsius.
The energy sector is top-priority sector for climate policy. Litgrid, as an electricity transmission company, plays an important role
in ensuring a smooth and reliable electricity supply in Lithuania. This includes integration of renewable sources into the energy
system. Although energy is the engine of the economy, the transmission activities account for a significant share of GHG
emissions.
The calculation of Litgrid’s greenhouse gas (GHG) emissions is based on the GHG Protocol Corporate Accounting and
Reporting Standard, the generally accepted international methodology.
GHG emissions are classified into three scopes: direct (Scope 1), indirect (Scope 2) and other sources (Scope 3).
Topic
Source/Category
2019
2020
2021.
2022.
2023.
Scope 1
emissions (tCO
2
e)
Total Scope 1 emissions
757,4
389,3
660,7
813,6
596,0
Scope 2
emissions (tCO
2
e)
Total Scope 2 emissions -
location-based method*
59 562,6
91 705,6
76 788,5
90 089,1
88 162,9
Total Scope 2 emissions -
market-based method*
220 873,1
200 301,2
194 329,9
209 261,0
204 506,1
Scope 1 and 2
emissions (tCO
2
e)
Total Scope 1 and 2 emissions
(tCO
2
e)
221 630,4
200 690,5
194 990,5
210 074,5
205 102,1
Scope 1 and 2
emissions (tCO
2
e)
Decrease compared to base
year, %
0 – base yeari
-9%
-12%
-5%
-7%
Scope 3
emissions (tCO
2
e)
Total Scope 3 emissions
0,0
0,0
0,0
34 688,5
59 857,6
Total emissions - location-based method* (tCO
2
e)
92 094,9
77 449,2
125 591,1
148 616,6
Viso emisijų - rinkos metodu**
(angl. market- based method), (tCO
2
e)
221 630,4
200 690,5
194 990,5
244 763,0
264 959,8
* Emissions are calculated using the location-based method based on the level of GHG emissions intensity specific to the country's (Lithuania's)
electricity grid, which is directly related to the sources of generation and their relative weight in the country's electricity grid.
** For the market-based calculation of emissions, Litgrid and the EPSO-G Group have chosen to use the derived emission factors calculated by
“One Click LCA” - Life Cycle Metrics software using the IPCC Emission Factor Database (EFDB) and the AIB reports. The “market -based
method” emission factors were provided to the Group by independent third-party consultants licensed to use the One Click LCA software. The
same factors have been used for all reporting years presented in the table as updated factor values have not yet been calculated.
*** Litgrid and the EPSO-G Group have chosen to calculate Scope 2 emissions using a local based method, using emission factors based on
data published by the Association of Issuing bodies (AIB).
GRI305-3
GRI305-5
GRI 305-1
GRI 305-2
ANNUAL REPORT
(All amounts are in EUR thousands unless otherwise stated)
89
The Company’s GHG emissions are decreasing: a 7% decrease in emissions achieved in 2023 compared to a base year of
2019
In 2023, Scope 1 emissions decreased due to a lower SF
6
leaks, influenced by the quality facility maintenance and the
installation of new SF
6
-free circuit breakers.
In 2023, Scope 2 comprised the largest portion of GHG emissions (as every year) due to losses in the electricity transmission
network. These losses are due to disconnections and reconstruction works on the network, as well as due to fuel costs for
transport. Scope 2 GHG emissions also decrease in 2023 due to a reduction in losses (compared to the base year).
In 2023, Litgrid together with EPSO-G conducted inventory of Litgrid’s Scope 3 GHG emissions in 2022-2023. The inventory of
Scope 3 GHG emissions covered 7 categories of emission sources, i.e. purchased goods and services, non-current assets, fuel
extraction and transport, vehicle emissions, waste generation and disposal, business travel, employee commuting. In Litgrid’s
operations, non-current assets, fuel extraction and transport are the largest sources of Scope 3 emissions.
In 2022, Litgrid prepared a plan of emission reduction measures until 2030 based on the GHG inventory data. The main
measures focus on the most GHG-emitting sources in the operations and include investments in the development of RES
production for own use and the use of green energy, as well as the electrification of the vehicle fleet and removal of SF
6
circuit
breakers.
Waste Management
Litgrid’s activities are guided by the principles of pollution prevention and aim to reduce the
amount of waste generated in its operations and to ensure safe and responsible waste
management.
Significant amounts of waste are generated during the construction, reconstruction or repair of
electricity transmission networks. In its administrative activities, the company sorts household,
glass, paper and plastic waste, with special bins for sorting; separate bins in offices have been
eliminated.
The Company contracts with specialised companies for the safe treatment and disposal of waste
generated by its production activities. In 2023, waste volumes decreased.
Waste management
Litgrid’s activities are guided by the principles of pollution prevention and aim to reduce the amount of waste generated in its
operations and to ensure safe and responsible waste management.
Significant amounts of waste are generated during the construction, reconstruction or repair of electricity transmission networks.
In its administrative activities, the company sorts household, glass, paper and plastic waste, with special bins for sorting;
separate bins in offices have been eliminated.
The Company contracts with specialised companies for the safe treatment and disposal of waste generated by its production
activities. In 2023, waste volumes decreased.
.
Metai
Hazadous waste, t
Non hazadous waste, t
Total , t
2023
132,925
1311,404
1444,329
2022
136,622
2113,722
2250,344
2021
175,25
2693,3141
2868,564
2020
202,54
1043,54
1246,08
The table shows only the waste generated and transferred by the Company to waste management facilities. The tables exclude
demolition waste (e.g. scrap concrete, glass, ceramics, miscellaneous equipment and other waste) transferred by contractors to
waste management facilities during operation or reconstruction, as this type of waste is accounted for by the contractors and fall
outside from Litgrid’s total waste accounting. Construction and demolition waste (metals) with a positive market value is
included in the Company’s total waste accounting and thereby in the following tables.
Most of the Company’s waste is generated during the reconstruction of substations, switchgears and overhead lines:
GRI 306-1
GRI 306-2
GRI 306-3
GRI 306-4
GRI 306-5
ANNUAL REPORT
(All amounts are in EUR thousands unless otherwise stated)
90
In 2021, 93% of the total waste transferred by the Company consisted of construction and demolition waste and 100% of
miscellaneous metals (metal structures, equipment and wiring).
96% of hazardous waste consists of insulating oils and hazardous components removed from discarded equipment generated
during the reconstruction of substations. Other hazardous waste of greater importance in terms of volume was various batteries
accounting up to 4% of total hazardous waste.
In 2022, 98% of the total waste transferred by the Company consisted of construction and demolition waste and 99% of
miscellaneous metals (metal structures, equipment and wiring). More than 99% of hazardous waste consists of insulating oils
and hazardous components removed from discarded equipment generated during the reconstruction of substations. The
quantities of other hazardous waste were relatively insignificant.
In 2023, 90% of the total waste transferred by the Company consisted of construction and demolition waste and 100% of
miscellaneous metals (metal structures, equipment and wiring). 97% of hazardous waste consists of insulating oils and
hazardous components removed from discarded equipment generated during the reconstruction of substations. Other
hazardous waste of greater importance in terms of volume was large office equipment (printing, copying machines, etc.)
accounting up to 2% and miscellaneous batteries accounting up to 1% of total hazardous waste.
The annual volume of waste generated by the Company depends on the scope of reconstruction and renovation works carried
out in a given year, and can therefore vary considerably from one year to the next. Waste from other than reconstruction and
repair activities accounts for a very small proportion of the total annual volume of waste, therefore their change has no impact
on the overall statistics..
Year
Waste transferred for recycling, t
Waste transported for disposal, t
2021
2628
1,262
2022
2113
1,318
2023
1311
1,003
Litgrid consistently checks suppliers for environmental compliance. Number of cases of non-compliance detected during
suppliers’ environmental inspections, preventive actions taken
Year
Number of non-compliances
Warnings issued
Significant non compliances
2023.
7
0
0
2022
6
2
0
2021.
5
0
0
2020.
n.d.
n.d.
No verification of contractor’s
compliance with environmental
requirements
Although the number of recorded non-compliances increased in 2023, there were no warnings
issued or significant non-compliances recorded.
In 2023, the Company’s operations complied with environmental requirements and the Company
received no penalties in 2023.
.
Supplier Environmental Assessment
The Company’s updated procurement policy also integrates green procurement criteria. The Company aims to reduce its
environmental impact and is therefore committed to prioritising green procurement, in line with the Green Procurement
GRI 308-1
GRI308-2
ANNUAL REPORT
(All amounts are in EUR thousands unless otherwise stated)
91
Objectives set out in the Resolution of the Government of the Republic of Lithuania on the Establishment and Implementation of
Green Procurement Objectives, and is committed to achieving the following:
- At least 50% of green procurement in 2022 (75% achieved).
- At least 100% green procurements every year from 2023 (98% implementation rate of contracts awarded by the
Company in 2023, including procurements initiated in 2022. From 2023, implementation rate of contracts initiated and
awarded by the Company is 100%.
The Company awarded contracts for a total amount of EUR 68,034 thousand (excl. VAT) in 2023, where environmental
requirements were imposed on suppliers.
Litgrid applies the following environmental criteria:
- Procurement of works - a universally applicable ISO14001 standard;
- Procurement of goods - (notwithstanding the application of minimum environmental criteria) requirements for
packaging recyclability and the use of recycled materials in manufacturing, longer warranty periods, off-peak delivery.
- Procurement of services - design services are also subject to ISO14001 standard. The procurement of services related
to a source of pollution, e.g. rental of buses and coaches with driver, is subject to the requirements for the application
of the Euro5/6 standards; the procurement of event organisation services is subject to the requirements for waste
sorting, recycling of packaging. However, we usually procure services of intangible nature, and therefore we take
advantage of the requirement exemption.
The largest contracts by value subject to environmental requirements: construction of the 110/10 kV Dirvupiai TL of 110 KV
power transformer (EUR 11,079 thousand excl. VAT); cabling and installation of a fibre optic cable in the 110 kV double-circuit
UL Šiauliai-Gubernija II, Šiauliai-Meškuičiai section between Šiauliai TP and Zokniai TL (EUR 6,960 thousand excl. VAT);
operation of 110-400 kV transformer sub-stations in Litgrid’s Southern Region (EUR 5,000 thousand excl. VAT); operation of
110-330 kV overhead lines in Litgrid’s Western Region (EUR 4,700 thousand excl. VAT); operation of 110-330 kV transformer
sub-stations in Litgrid’s Northern Region (EUR 4,000 thousand excl. VAT).
Facilitating the Growth of RES
Well-developed electricity grids within the country, ensuring reliable and secure operation of the transmission system, as well as
well-developed infrastructural links with neighbouring countries, provide favourable conditions for increasing electricity
transmission flows, thus developing a liquid regional market and creating an attractive infrastructure for investment in energy
production. By exploiting these opportunities, the company aims to create the preconditions for a more efficient use of the
available capacity of the electricity transmission system.
Litgrid, the electricity transmission system operator, has set a target to ensure that there are 0 cases of restriction of RES-
generated electricity supply to the transmission grid each year due to breaches of the legislation and/or the terms of the
connection agreements. In 2022, Litgrid’s target was 0 cases.
The year 2023 was marked by important regulatory developments. Litgrid was instrumental in delivering the following
innovations of particular importance to the network:
- enabled for connecting up to 3 times larger generation capacities to the transmission network, with up to 100% solar,
100% wind and 100% storage in a single network capacity area;
- allowing to avoid “hard limits” (e.g. for commercial solar projects of 2 GW) by ensuring the network security by other
means. Additional benefits for those investing in electricity storage are created, leading to an increased interest in new
storage projects. As a result of these changes, at the end of 2023 we had a record number of projects under
development, with letters of intent for the development of 4,083 MW solar, 2,815 MW wind, and 283 MW storage
onshore projects. Additional 1,400 MW are earmarked for offshore wind farms, of which 700 MW we have already
awarded in 2023 after the first tender.
2023 was a historic year for green energy in Lithuania. For the first time, the share of electricity generated by renewable energy
plants accounts for around 67% of the total electricity generated in the country. In 2022, 60% of the country’s electricity (2021:
48%) was generated by renewable energy plants.
The increase in the number of renewable power plants connected to the transmission and distribution grids has led to a
significant increase in the amount of electricity. Compared to 2022, electricity production in Lithuania’s wind farms increased by
67% (2021: 11%) and in solar farms by 131% (2021: 74%). The latter is due to the rapid addition of new prosumers.
Based on Litgrid’s data, the permitted generation capacity of solar power plants connected to
Lithuania’s electricity transmission and distribution networks increased by 538 MW (from 570 MW
to 1,108 MW) in 2023, while the permitted generation capacity of wind power plants increased by
265 MW (from 963 MW to 1,228 MW). The total generation capacity from solar and wind
resources increased by 803 MW, from 1,533 MW to 2,336 MW. The capacity of other renewable
energy sources (biomass/biofuels/hydropower) increased by 98 MW (from 99 MW to 197 MW).
The total change for all types of renewable energy was 901 MW (from 1,632 MW to 2,533 MW).
ANNUAL REPORT
(All amounts are in EUR thousands unless otherwise stated)
92
SOCIAL
- Social Sustainability
- Market Presence
- Employment
- Labour Management Relations
- Occupational Safety and Health
- Training and Education
- Diversity and Inclusion.
- Non-Discrimination
- Freedom of Association and Collective Bargaining
- Employee Well-being and Job Satisfaction
- Local Communities
- Supplier Social Assessment and Human Rights in Supply Chain
- Customer Satisfaction
- Socioeconomic Compliance
ANNUAL REPORT
(All amounts are in EUR thousands unless otherwise stated)
93
Social Sustainability
Litgrid’s social ambition is to create a progressive, sustainable culture. Inherent elements of this culture include: caring for the
well-being and development of employees, fostering a culture of safe work, promoting equal opportunities, building 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.
Market Presence
Employee remuneration by group, ratio between men and women in 2022-2023:
No information was collected for 2021. As from next year, this information will be collected in a systematic and comprehensive
manner.
Below are the data on the staff remuneration (incl. variable component, pre-tax) for 2021-2023.
Year
Employee remuneration
Average
remunerati
on
Vidutinis mėnesio atlygis pagal amžių
Vidutinis atlygis pagal pozicijas
Upto 30
years
30-50 yeras
50+
Top level
Mid and first
line
managers
Proffesional
2021
3420
2420
3332
3589
8206
4517
2886
2022
3680
2657
3631
4062
8859
5133
3217
2023
4367
3028
4384
4838
10983
6212
3877
Remuneration by category of employees
Remuneration by gender
Average fixed remuneration (excl. variable component)
Men
Women
Men
2022
2023
2022
2023
2022
2023
CEO
9 583
10 796
-
-
-
-
Top Management
7 209
8 124
-
-
-
-
Middle and First-Line Managers
4 514
5 515
4 469
5 302
1:0,99
1:0,96
Professionals
2 954
3 485
2 776
3 191
1:0,94
1:0,92
Total
3 317
3 893
3 051
3 462
1:0,92
1:0,89
Average fixed remuneration by
gender compared to local minimum
wage
1:0,22
1:0,22
1:0,24
1:0,24
GRI 202-1
ANNUAL REPORT
(All amounts are in EUR thousands unless otherwise stated)
94
Year
Employee remuneration
Average
remuneration
Average monthly by age
Average remuneration
<30 years
30-50 years
50+ years
Top
Management
Middle and
First-Line
Managers
Professionals
2021
3420
2021
3420
2021
3420
2021
3420
2022
3680
2022
3680
2022
3680
2022
3680
2023
4367
2023
4367
2023
4367
2023
4367
* It must be noted that the average monthly remuneration of a female top manager in 2021, which is higher than that of top male
management in 2021, for several reasons: 1. The turnover of male top managers in 2021, several highly-paid positions were
vacant during the year; 2. One top manager joined the Company in 2021 and the average remuneration for 2021 excluded
variable remuneration component, since it was included in 2022.
Year
Men’s remuneration
Average
remuneration
Average monthly by age
Average remuneration
<30 years
30-50 years
50+ years
Top
Management
Middle and
First-Line
Managers
Professionals
2021
3368
2021
3368
2021
3368
2021
3368
2022
3736
2022
3736
2022
3736
2022
3736
2023
4459
2023
4459
2023
4459
2023
4459
Average remuneration grew in 2022-2023. In 2022, it was 7.6% higher than in 2021, and, in 2023, 18.7% higher than in 2022.
From 2023, the remuneration system has changed, with a maximum variable component added to the basic fixed remuneration
for all employees, based on individual performance appraisals. This is what led to a significantly higher increase in remuneration
in 2023.
The average monthly remuneration of all employees by age also increases in 2022-2023.
In 2022, the largest increase in average monthly remuneration was for employees aged 50 and over (13.2%, compared with
increases of 9% and 9.8% for other age groups).
In 2023, the largest increase in average monthly remuneration was for employees aged 30 to 50 (20.7%), 19.1% for employees
aged 50 and over, and 14% for employees aged under 30. The smallest change was recorded for employees aged under 30,
those in associate professional position, building up required know-how, knowledge and expertise, learning and improving in
their positions.
Average remuneration by statistical category (position) in 2022 compared to 2021 shows the highest increase for middle-level
and first-line managers (13.6%), followed by 11.5% for professionals and 8% for top managers.
In 2023, compared to 2022, the largest increase was for top managers (24%), while the increase for middle and first-line
managers, and professionals was rather similar (20-21%). The significant increase in remuneration is associated with the said
changes in the remuneration system.
Litgrid is guided by the Employee Remuneration, Performance Review and Training Policy of the EPSO-G Group companies.
Key principles of the Policy are the following:
- Create motivating incentives and prerequisites to encourage employees to achieve better performance results, to
contribute more actively to the achievement of the goals of the Company and the Group, and beyond the formal
performance of duties.
- Encourage employees to develop innovative, out-of-the-box solutions, and to improve performance.
- Ensure equal payment for work equivalent in terms of responsibility, competencies and contribution to the result.
- Attract and retain qualified employees.
ANNUAL REPORT
(All amounts are in EUR thousands unless otherwise stated)
95
In line with those principles, the Company’s remuneration system focuses on a combination of financial and non-financial
remuneration elements. The remuneration package consists of the fixed component (i.e. monthly remuneration), financial
incentive (remuneration paid at the Company’s initiative and discretion based on organizational and employee(s) performance
assessment), one-off bonuses, additional benefits and emotional rewards. Emotional rewards are a non-financial component of
total remuneration that improve employees’ well-being and encourage employee effort, engagement and loyalty.
Additional benefits are available to all employees, and they are defined in Litgrid’s collective agreement and other internal
documents.
Average remuneration in 2022 compared to 2021 increased slightly more for men than for women: by 11% and 7%,
respectively. On the contrary, in 2023 compared to 2022, the average remuneration increased by 19% for men and a slightly
higher, i.e. 21%, for women. Consequently, the difference in remuneration growth between the genders disappears during the
year, resulting in similar wage growth for both genders over the period 2022-2023.
Considering the average monthly remuneration by age group it is evident that the remuneration is higher for women aged 30-50
and 50 and over, whereas for men, the best paid age group is those aged 50 and over.
Comparing average monthly remuneration in each gender-age group shows that between 2021 and 2023, men in all age groups
received higher monthly remuneration than women in the same age groups. This may be due to the higher number of male
managers (managers’ remuneration is higher, which increases the average for men compared to women), and the top
managers from 2021 to 2023 were men, with the exception of one female top manager in 2021.
In 2022 compared to 2021, women’s average monthly remuneration rise by 7-9% across different age groups, with the highest
rise (9%) in the 50 and over age group, while men’s average monthly earnings rise by 9-14%, with the highest rise (14%) in the
50 and over age group.
In 2023 compared to 2022, women’s average monthly remuneration rise by 18-24% across different age groups, with the
highest rise (24%) in the 50 and over age group, while men’s average monthly earnings rise by 15-21%, with the highest rise
(21%) in the 30-50 age group. The pay gap is associated with a higher number of men in managerial positions in an
organisation.
Looking at average monthly remuneration by position, remuneration paid to men is relatively higher than those of women in the
same positions, i.e. for middle and first-line managers compared to male managers in the same position, the pay gap was
around EUR 110 in 2021 and 2023, and EUR 320 in 2022. Again, the gap arises as a consequence of the relatively higher
number of male managers than female managers, and male managers are more likely to be in upper-middle management,
where the remuneration is also higher.
The gap is somewhat larger for professionals: In 2021, female professionals earned EUR 250 less than male professionals, and
EUR 355 less in 2022 and EUR 313 less in 2023. The gap might stem from the fact that women in the Company tend to be in
administrative roles, while men are mainly in engineering and IT roles. Women in engineering and IT roles represent a small
minority.
Employment
55 new employees were hired in 2021, 90 in 2022 and 85 in 2023. In 2023, voluntary staff turnover was 12.4% (8% in 2022; and
9% in 2021). The table below shows the number and distribution of employees by age/gender group.
Year
Number of Staff
at the beginning
of the year
Number of Staff
at the end of
the year
Average
number of staff
Full-time equivalent at
the end of the year
Number of staff
under fixed-
term contracts
Number of part-
time staff
2021
306
335
320
333.8
2
3
2022
335
391
369
388.3
3
7
2023
391
418
407
415.6
6
5
Information on the Remuneration, Performance Assessment and Training Policy, remuneration paid and the Company’s
objectives is available on Litgrid’s website.
Full-time and part-time employees are subject to equal benefits and allowances, i.e. they are treated equally.
GRI401-3
GRI 401-1
GRI 401-2
ANNUAL REPORT
(All amounts are in EUR thousands unless otherwise stated)
96
Male employees
Year
N
u
m
be
r
of
m
en
num
ber
of
men
FTE
(full-time
equivale
nt)
Aver
age
num
ber
of
men
Men
on
patern
ity
leave
(long-
term)
Men
return
ed
from
patern
ity
leave
(long-
term)
Men
under
fixed-
term
contrac
ts
Me
n
un
der
a
par
t-
tim
e
em
plo
ym
ent
co
ntr
act
Men working
at the end of
the year
Men employed
Men
resigned/dismi
ssed
Men 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
22
9
255
253.5
242
1
0
2
1
36
158
61
14
27
3
7
9
2
25
132
58
2022
25
5
297
293.8
281
0
1
1
5
33
199
65
15
44
4
3
14
4
18
160
61
2023
29
7
307
305
302
0
0
2
4
37
203
67
18
28
3
6
26
6
22
182
65
The predominant type of contract is open-ended, but, where appropriate, fixed-term contracts are
also used (e.g. to cover an employee on parental leave or for project work). The type of
employment contract is identified without discrimination in terms of gender, age or any other
personal aspects, and it is up to the agreement and needs of the Company and/or the
employees.
The number of employees grows each year.
In 2021-2023, the majority of employees were men (73%).
In 2021-2023, the majority of working men and women were in the 30-50 age group, with the
trend for the other age groups remaining stable.
The trend towards an increasing percentage of female employed is encouraging: while 20% of all employed in 2021 were
women, in 2022 this figure had already reached 30%, and in 2023 it was 42%.
The largest number of employees resigned in 2021-2023 were in the 30-50 age group.
Employees are entitled to guarantees under the Labour Code of the Republic of Lithuania: additional days off for raising
children, parental leave and paternity leave. During parental leave, employees have access to health insurance and benefits,
receive communication and are invited to the Company’s events and initiatives for employees and children.
Increasing number of employees of the Company increases, the number of employees on parental leave tends to increase: 1
woman and 1 man were on parental leave in 2021, 3 women in 2022 and 5 women in 2023.
Remuneration of an employee on parental leave is subject to review before his/her return to bring it into line with that of others
in the same position, thus maintaining fair pay for all.
In 2021 and 2023, all employees returned from parental leave to continue working at the Company, with one female employee
transferring from leave to EPSO-G.
Female employees
Year
Nu
mb
er
of
wo
me
n
Num
ber
of
wom
en
FTE
(full-
time
equiv
alent)
Average
number
of
women
Wome
n on
mater
nity
leave
Wome
n
returne
d from
matern
ity
leave
Women
under
fixed-
term
contract
s
Wom
en
under
a
part-
time
empl
oyme
nt
contr
act
Women
working at
the end of
the year
Women
employed
Women
resigned/dis
missed
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
77
80
80.3
78
1
1
0
2
5
59
16
2
9
0
2
6
0
3
50
16
2022
80
94
94.5
88
3
1
2
2
7
70
17
4
23
0
2
9
2
3
48
17
2023
94
111
110.6
104
5
1
4
1
11
82
18
6
27
3
2
15
3
5
61
16
ANNUAL REPORT
(All amounts are in EUR thousands unless otherwise stated)
97
Labour Management Relations
The Company has a collective agreement with the trade union for electricity transmission network workers, which is effective
until 18 February 2026. The agreement applies to all employees of the Company. The Company’s Board determines terms and
conditions of employment of the Company’s manager.
The collective agreement has been concluded with a view to reaching a long-term collective agreement between the team of
employees, their representatives and the Company, confirming the existence of a high-level, harmonious and balanced
relationship; to regulate labour relations which are import to the parties and which cannot be regulated without a collective
agreement; to establish additional rights and obligations of the parties; to agree on a system of additional benefits for the
Company’s employees which allows for a fair and efficient allocation of the limited resources available to the Company for these
purposes, in addition to those laid down in the law, ensuring socially responsible and market-competitive working conditions,
employee engagement, guarantees and the implementation of the company's strategy.
The collective agreement sets the time available for information, consultation, notice and negotiation. The time limits for
consultations are applied in accordance with the provisions of the Labour Code of the Republic of Lithuania, but can be shorter
if the parties so agree. Collective agreement can be terminated by giving three-month written notice, and immediately initiating
negotiations for a new collective agreement.
Occupational Safety and Health
In 2021, the Occupational Safety and Health Policy, approved by the EPSO-G Board of Directors and applicable to all Group
companies, sets out the aim of ensuring safe and healthy working conditions for employees in their workplaces, preventing
work-related injuries and occupational diseases, and creating a company-wide culture of fostering a safe and healthy working
environment that commits every employee to strive for and contribute to this.
Occupational risk assessment was carried out in the Company to manage occupational risks. The assessment looked at
physical, ergonomic, biological, chemical and psychosocial risk factors, whereas an accredited laboratory assessed
occupational exposure to noise, vibration, lighting or electromagnetic fields.
The ergonomic risk factors were assessed by looking at employees’ working posture, repetitive motion and other risk factors.
The assessment of psychosocial risk factors identified an acceptable general psychosocial environment in the Company.
Litgrid provides its employees with access to employee health insurance services. Each year, Litgrid’s employees have the
opportunity to get a seasonal flu vaccine at the Company’s expense – more than a third of the Company’s employees are
vaccinated each year. All field workers are vaccinated against tick-borne encephalitis and receive preventive health checks.
The company has an Occupational Safety and Health Committee (OSHC), composed of representatives appointed by the
Company’s employees. The Committee meets to discuss issues on the occupational safety and health. Employees have the
opportunity to consult directly with professionals from the Occupational Safety and Environment Department. All relevant
information is accessible to employees on the intranet and in the document management system.
Litgrid places great emphasis on raising the competence of its employees in occupational safety issues. This includes not only
mandatory briefings for both employees and hired contractors, but also additional training (resuscitation, firefighting),
certification of employees, organising and conducting periodic drills. All heads of departments are trained in occupational safety
and health. Efforts are made to make all training interesting and informative.
Number of workers trained in occupational safety, fire safety, first aid, including certifications:
- 526 employees were trained in 2021, 743 in 2022 and 882 in 2023.
The average number of training hours per worker in 2023 was 2.1 hours.
Litgrid’s Sports and Wellness Embassy, which has been organising the traditional Summer Sports Challenge tournament each
year since 2020, also contributes significantly to the well-being and health of employees. This initiative engages a large part of
the team to be active in the outdoors during the summer by walking, running or cycling.
GRI 402-1
GRI403-1
GRI403-2
GRI403-3
GRI403-4
GRI403-5
GRI403-6
GRI403-9
GRI403-10
GRI403-7
GRI403-8
ANNUAL REPORT
(All amounts are in EUR thousands unless otherwise stated)
98
In 2023, more than 150 employees took part in the tournament, and running enthusiasts took part in the Vilnius Half Marathon,
the Vilnius Marathon and the Christmas Run. In the autumn, we hiked and did team challenges in the Neris Regional Park, while
the basketball team resumed its training to take part in several energy sector’s basketball tournaments. Furnishing the head
office’s gym with equipment is another fitness project implemented by the Sports Embassy in 2023, providing opportunities for
staff to exercise outside working hours.
Litgrid employees are subject to periodic health checks according to a schedule, they are vaccinated against tick-borne
encephalitis in accordance with the approved list of positions, they have the opportunity to get a flu vaccination if they wish.
To reduce the risk of work-related injuries or illnesses, internal controls are in place to monitor operations and organisational
processes, to identify non-compliance with regulatory requirements, and to develop risk mitigation measures. Given the existing
situation, departmental audits are carried out on annual basis.
In 2023, a comprehensive occupational risk assessment was carried out and a plan on risk management measures was
developed.
The requirements of internal health and safety legislation are brought to the attention of all employees, taking into account their
roles and work to be done.
Employees are trained to use cardiac defibrillators installed in the Company’s buildings.
Firefighting and evacuation drills were held for employees will help to respond promptly and properly in the event of a fire.
Employees performing work of increased risk are trained in specialised companies: 7 employees were trained in 2023, 13 in
2022 and 22 in 2021.
Employees involved in the maintenance, technological control and operation of electrical equipment are certified prior to
commencing work and periodically thereafter, in accordance with the procedure established by the legislation. 89 employees
were certified in 2023, 46 in 2022 and 35 in 2021.
In 2023, the Company certified its occupational safety and health management system to ISO 45001.
The area of certification: the activities of an electricity transmission system operator, balancing of the electricity system, and
maintenance and development of the transmission network. The management system applies to all employees.
One of the most important strengths of Litgrid as a whole is its experienced and competent employees, whose safe working
environment, well-being and health are a prerequisite for the implementation of the strategy and goals.
Litgrid strives to ensure that no serious or fatal accident occurs each year in the course of its operations, either among its
employees or among contractors and subcontractors hired to carry out the work.
Accidents at work in Litgrid until 31 December 2023:
Light
accidents
(number)
Serious
accidents
(number)
Fatal
accidents
(number)
2023
0
0
0
2022
0
0
0
2021
0
0
0
Accidents in Litgrid’s facilities involving employees of contractors, subcontractors.
Light
accidents
(number)
Serious
accidents
(number)
Fatal
accidents
(number)
2023 m.
2
1
0
2022 m.
0
0
0
2021 m.
0
0
0
ANNUAL REPORT
(All amounts are in EUR thousands unless otherwise stated)
99
No work-related health problems or occupational diseases were identified.
Training and Education
The Company continuously encourages and creates opportunities for employees to develop their skills and qualifications.
Average number of training hours per year per employee in structured training and conferences was around 17 hours in 2023,
24 hours in 2022, and 22 hours in 2021.
The aim is to develop employees' professional (functional) and generic (values-based) competences. The ratio of investment in
the different competency areas over the last three years represent around 70% for training in the professional qualification
profile and around 30% for strengthening general, leadership and managerial competences. To support and reinforce the area
of people management, and the quality of management processes, a strong emphasis is placed on the development of
management’s leadership and managerial excellence. In 2021-2023, the management team training encompassed different
topics from (but not limited to) attracting, selecting and adapting team members to emotional intelligence, feedback,
performance management, development and career conversations.
Staff development is based on the 70-20-10 principle, whereby 70% of development, improvement and learning activities take
place through the staff member's work experience, 20% through interaction and collaboration with colleagues and managers
with diverse experiences and competences, and 10% through structured training events.
Staff development activities are planned in relation to strategy, values, performance appraisal, competency model, shift
planning, assessment of professional and technical skills.
The company aims to provide its employees with opportunities to learn and develop, to broaden their knowledge and horizons,
and to participate as effectively as possible in the implementation of Litgrid’s strategic goals. All employees are given the
opportunity to acquire or update the knowledge and skills necessary to perform their direct work. Both the individual employee
and the organisation are committed to the development of competences relevant to the employee and the organisation's
activities, and the development system includes not only formal training, but other forms of development and learning.
The Company does not organise centralised large-scale retraining programmes, as recruits employees on a targeted basis
according to the company's needs and functions. In cases of internal career progression, change in responsibilities or
recruitment of a less experienced professional, where there is a need to acquire additional competences, an employee, together
with his/her line manager, prepares an individual learning plan, encompassing different growth measures. A training programme
is organised to strengthen management skills for employees promoted from professional to managerial positions, which
includes matters on changes in responsibilities and adaptation to the new position.
Based on the Company’s competency model, we focus on strengthening general, managerial and leadership competencies,
and periodic assessments of these competencies allow us to monitor our progress for both employees and managers. In key
areas of the Company’s operations, we assess not only current professional competences, but also future functional
competences that will be required for the company's long-term operations. Engineering employees participate in refresher
training and acquire the necessary knowledge and skills related to energy engineering, equipment and technologies used in the
company's operations. Project management training helps grow our team of project managers.
The programme for preparation for the project management professional certification was implemented in 2023. Particular
attention is devoted to training in digitisation, analytics and programming tools. The Company periodically develops the digital
literacy of all its employees, both internally and through external consultants. Various educational events held comprise topics of
equal opportunities and inclusion, individual efficiency, health and well-being, and social responsibility.
The performance and career progression of all the Company's employees is regularly reviewed at least once a year. Employee
performance is evaluated on different dimensions and at different intervals, depending on the nature of the employee's activities
and responsibilities. An annual performance appraisal, which takes place once a year, in which the employee and the manager
discuss and evaluate the achievement of the employee's annual objectives and competences, and the manager determines the
overall result of the performance appraisal. Project-based performance appraisal, which assesses the results achieved by staff
members in projects or phases of projects, based on established indicators.
All employees (100%) are subject to regular performance and career development reviews.
Diversity and inclusion
At the end of 2023, the majority of employees were men (73%), and women accounted for one quarter (27%). A similar situation
has existed in the Company for a number of years due to the stereotypes in society where energy and engineering is
considered a masculine profession. The Company contributes to efforts to change this stereotype by taking part in various
projects and by communicating on social networks and media that this profession is well suited for both men and women. In all
of the Company’s job advertisements we have added feminine wording to attract the best candidates. On the Company’s
intranet, we share across the entire organization the stories and interviews of the Company’s women who have become
leaders, celebrating their achievements within the Company and encouraging others to follow suit.
GRI 404-3
GRI 404-1
GRI 404-2
GRI 405-1
GRI 405-2
ANNUAL REPORT
(All amounts are in EUR thousands unless otherwise stated)
100
In 2022, the Company adopted its priorities and indicators for equal opportunities, and set the goal to measure the gender
balance in certain positions: to improve or at least maintain the same proportion of women in IT, engineering and managerial
roles.
In 2022 and 2023, the share of women in IT positions and managerial positions remained the same (14% of women and 86% of
men in IT positions and 23% of women managers and 77% of men managers), while in engineering positions the share of
women increased from 11% to 12%.
Priorities of equal
opportunities
KPIs of priorities of
equal opportunities
Indicator achieved in
2022
Indicator achieved in
2023
Improving gender balance in
IT positions
Number of women (%, share
of women) in IT positions
14%
14%
Improving gender balance in
engineering positions
Number of women (%, share
of women) in engineering
positions
11%
12%
Improving gender balance in
managerial positions
Number of women (%, share
of women) in managerial
positions
23%
23%
From an age perspective, the Company has employees of all ages. The majority of male and female employees are in the 30-50
age group (68% of all the Company’s employees, or 74% of all women and 66% of all men). 16% of all employees are men
aged 50 and more, compared to 4% women in this category. 8% of all employees are men aged under 30, compared to 2%
women in this category.
Litgrid’s Board is a collegial management body of the Company, consisting of five members. The Board members are elected
for a term of four years by the General Meeting of Shareholders, taking into account recommendations of the Remuneration and
Nomination Committee.
EPSO-G (a group of energy transmission and exchange companies) has announced about the election of candidates to the
position of Board members of Litgrid. Civil servants and EPSO-G nominees must apply by 8 January of the following year, and
candidates for independent board members by 31 January of the following year. Litgrid’s Board consists of five members, is
elected for a four-year term. The term of office of the current Board will end in April 2024.
Effective corporate governance of Litgrid relies on efficient organizational structure and a competent management team with
extensive expertise in business and the energy sector. Rokas Masiulis, CEO, Donatas Matelionis, the Head of System
Department, Vidmantas Grušas, the Head of Transmission Network Department, Liutauras Varanavičius, the Head of Strategic
Infrastructure Department, Mindaugas Ivanavičius, Deputy Head of Strategic Infrastructure Department, Mindaugas Ivanavičius,
the Head of Synchronisation Project Implementation Centre, Ignas Junevičius, the Head of Renewable Energy Resource
Centre, Vytautas Tauras, the Head of Finance Department, Apolinaras Škikūnas, the Head of ITT and the Head of
Administration Department.
In 2022, the overall men/women wage ratio was 1:0.92; and 1:0.89 in 2023.
For more information on labour relations, see topics “Market Presence” and “Employment”.
Non-Discrimination
The Company’s strategy sets a target of 0 justified cases of discrimination from 2023. There were no justified cases of
discrimination recorded by Litgrid in 2021-2023.
Priorities of equal opportunities
KPIs of priorities of
equal opportunities
2021
2022
2023
Discrimination prevention
0 justified cases of discrimination
(disability, sex, age, etc.)
0
0
0
Litgrid prohibits any form of discrimination and does not tolerate psychological violence, bullying or abuse of position. Group
companies respect and protect the rights of every employee, treat them with respect and fairness, provide safe working
conditions that meet their needs, promote their personal and professional development, and do not discriminate against
employees in any form.
GRI 406-1
ANNUAL REPORT
(All amounts are in EUR thousands unless otherwise stated)
101
Odeta Zubrienė, the Head of People and Culture, is responsible for the implementation of the provisions of the Equal
Opportunities Policy in Litgrid.
"Litgrid has in force since October 2022 the Description of Procedures for the Prevention of Discrimination, Violence and/or
Harassment and Sexual Harassment, which sets out the main principles of the prevention of discrimination, violence and/or
harassment and sexual harassment in the Company and the procedures for their implementation.
An Employee who wishes to make a formal report of discrimination, violence and/or harassment or sexual harassment, or any
employee who observes or receives information about possible discrimination, violence and/or harassment or sexual
harassment, may make a report in the following ways:
1. To a dedicated email address - pranesk@epsog.lt;
2. By completing the online reporting form on the website https://pranesk.epsog.lt;
3. By sending the information by post to the Company's registered office;
4. Directly to the employee directly responsible for equal opportunities or, in his/her absence, to a substitute employee.
The Company shall allow the person to submit the report both anonymously, in particular in cases where the identification of the
person is not necessary for the investigation of the report (e.g., reporting harassment of another person by specifying the person
who has been harassed or assaulted and the alleged violator of the present schedule of procedure), and by disclosing his/her
identity.
All reports received shall be recorded and must be investigated. The internal investigation shall be carried out within the shortest
possible time, but not more than 30 calendar days from the date of receipt of the report, with the possibility of an extension of
another 30 calendar days. The findings of the internal investigation committee, as approved by the internal investigation
committee, shall be submitted to the company's head of management, who shall decide whether to open an investigation into
the breach of labour law or to take other measures, if necessary. The persons concerned (the victim and the complainant) shall
be informed in writing of the conclusion. Depending on the nature of the breach, the employee may be subject to disciplinary
action for breach of his/her duties.
As part of the efforts to train staff to recognise discrimination, in 2022, all employees were provided with the training on equal
opportunities and prevention of discrimination, on psychological violence and prevention measures; management was provided
with the training on recruitment process and equal opportunities, and the memo was drawn up for managers regarding
in/appropriate questions during job interviews. Employees are constantly reminded of the prohibited grounds for discrimination,
as set out in Article 26 of the Labour Code of the Republic of Lithuania and the Company’s Description of Equal Opportunities
Procedure.
From 2024, all existing and new staff will be required to undergo 1.5-hour e-learning on psychological violence.
The Company’s strategy sets a target of 0 justified cases of discrimination from 2023.
There were no justified cases of discrimination recorded by Litgrid in 2021-2023.
For the second year in a row, the engagement survey asks employees their perception of the Company’s commitment to equal
opportunities and non-discrimination.
The Company is succeeding in creating a climate of tolerance, non-discrimination and equal opportunities, as this was identified
by 90.5% of all our colleagues in the engagement survey in 2022. In 2023, 90.29% of our colleagues who took part in the survey
supported this statement.
Priorities of equal opportunities
KPIs of priorities of
equal opportunities
2022
2023
Employees see Litgrid as an equal
opportunities employer
According to employees, Litgrid
ensures equal opportunities (% of
employees)
90.5
90.29
For several years, the Company has an Equality Embassy, a voluntary group of employees, aimed at encouraging, supporting
and, through its activities and initiatives, making Litgrid a great and safe place for everyone to work.
In 2023, rounds of discussions were held for meaningful conversations about the principles of equality and diversity culture. The
aim of these workshops was to clarify and identify agreements reached by Litgrid team on the internal communication and
cooperation culture.
We celebrate important dates dedicated to equal opportunities and human rights. November is dedicated to equal opportunities,
with initiatives, training and articles on this topic.
Every year on 10 December, the Company commemorates International Human Rights Day by organising a training session or
issuing an educational article on the intranet, or by engaging in other activities to remind people of their inherent rights and the
fight for them.
ANNUAL REPORT
(All amounts are in EUR thousands unless otherwise stated)
102
In 2023, Litgrid was awarded with the highest rating from the Office of the Equal Opportunities Ombudsman – three equal
opportunity wings out of a possible three.
They were awarded to the Company for the following:
- endorsing the Equal Opportunities Policy and the procedures for its implementation;
- a transparent and publicly accessible remuneration system for employees;
- setting the priorities for equal opportunities;
- introducing a procedure for reporting discrimination;
- making public appearance as an equal opportunities employer, by indicating this commitment in job advertisements
and by actively communicating its equal opportunities initiatives to the public;
- an impartial grievance mechanism, integrating equal opportunities into the Company’s code of conduct;
- involving managers and employees in equal opportunities initiatives through training and educational events, and
consultations with employees and managers in the development of internal policies on equal opportunities.
The “three wings” award highlights the organisation’s efforts in creating and actively promoting an equal opportunities culture
(the organisation had to meet 12 criteria that measure the organisation’s commitment to equal opportunities).
The Company in its activities adheres to universally accepted human rights principles and supports the United Nations Global
Compact principles on labour and human rights. The principles on human rights are defined in the Company’s or EPSO-G’s
Code of Conduct and the Supplier Code of Conduct.
We have a zero-tolerance approach to discrimination in the work environment, or harassment based on age, race, gender,
sexual orientation or identity, disability, or any other personal characteristic not directly related to the job. There were no cases
of discrimination in the Company during the reporting period.
Equal opportunities measure
2022
2023
Provide training to ensure equality and diversity within the
organisation
Implemented
Implemented
The organisation has set priorities and indicators for equal
opportunities
Set for 2022-2025, indicators are monitored
Implemented ≥ 3 internal initiatives per year on equality and
diversity
Implemented 5 internal
initiatives
Implemented 5 internal
initiatives
The highest rating (not less than Equal Opportunity Wings) was
awarded by the Office of the Equal Opportunities in 2023.
-
3 Equal Opportunity
Wings
Demonstrate leadership in equal opportunities through selected
actions
Implemented
Implemented
Freedom of Association and Collective Bargaining
Litgrid has a trade union and a collective agreement, which sets out working, remuneration, social, economic and professional
conditions and guarantees that are not regulated by law or other normative legal acts. The collective agreement provides
employees with additional financial guarantees (benefits in the event of accidents, sickness, death of relatives, support for new-
born or adopted (taken from foster care) child, support for raising three or more children or a child with disabilities, for single
parenting, additional days of leave (for new-born or adopted (taken from foster care) child, death of a relative, etc.), and other
guarantees.
Unionised workers and the proportion of workers covered by a collective agreement:
Profesinei sąjungai priklausantys darbuotojai
Darbuotojų dalis, kuriems taikoma kolektyvinė sutartis
110
100%
GRI407-1
GRI 407-1
ANNUAL REPORT
(All amounts are in EUR thousands unless otherwise stated)
103
Employee Well-being and Job Satisfaction
Litgrid is building an open, progressive and sustainable organisation, where professional partnership between employer and
employees prevails, each employee has opportunities for self-development, grows with the organisation and is able to take
responsibility for his/her own decisions.
Litgrid is guided by the Employee Remuneration, Performance Review and Training Policy of the EPSO-G Group companies.
Key principles of the Policy are the following:
- Create motivating incentives and prerequisites to encourage employees to achieve better performance results, to
contribute more actively to the achievement of the goals of the Company and the Group, and beyond the formal
performance of duties.
- Encourage employees to develop innovative, out-of-the-box solutions, and to improve performance.
- Ensure equal payment for work equivalent in terms of responsibility, competencies and contribution to the result.
- Attract and retain qualified employees.
In line with those principles, the Company’s remuneration system focuses on a combination of financial and non-financial
remuneration elements. The remuneration package consists of the fixed component (i.e. monthly remuneration), financial
incentive (remuneration paid at the Company’s initiative and discretion based on organizational and employee(s) performance
assessment), one-off bonuses, additional benefits and emotional rewards. Emotional reward is a component of total
remuneration that is difficult to measure in monetary terms but improves employees’ well-being and encourage employee effort,
engagement and loyalty.
Components of an emotional reward at Litgrid comprise:
- Meaningful company performance, stability and a sense of security;
- A professional team and a working environment that promotes efficiency;
- A values-based organisational culture;
- Interesting, challenging work content, international projects and unique experiences;
- Recognition, growth, and career opportunities.
These measures contribute to the well-being of employees and the development of the Company’s culture, maintain
organisational integrity, ensure equal opportunities, and transparent and objective appraisal of employee performance.
The Company measures emotional well-being. In 2020, with the onset of the Covid pandemic and the shift towards working
from home, it was important to learn about the team’s well-being and what could be improved through the Company's initiative.
A survey carried out that year showed that employees feel good, with 79% of the employees rated their well-being and
emotional state as good.
In 2022, the Company set target indicators and priorities for equal opportunities, aiming to improve this indicator every year.
The emotional well-being indicator was 82% in 2022, and 83% in 2023.
Priorities of equal
opportunities
KPIs of priorities of
equal opportunities
2020
2021
2022
2023
Team emotional well-being
measurement
Team emotional well-being
pulse (employee tolerable
emotional state, %)
79%
Not
measured
82%
83%
The Company committed to maximising the involvement and favourable working conditions for remote employees, e.g., efforts
are made to replicate, to the greatest extent possible, all ongoing initiatives in Vilnius in remote units, or to find an alternative.
Local Communities
The Company places great emphasis on engaging with the communities where it has ongoing activities, plans to carry out or
carrying out works that affect the environment and quality of life of residents.
In the districts where works are scheduled, visits of the Litgrid’s representatives to municipal offices are planned in advance,
municipal administrations, mayors, and elders are provided with the plans and deadlines for the works, as well as the contact
details in case of any inconvenience to the residents. In 2023, the districts of Joniškis, Kretinga, Vilnius and Šilutė were visited.
Once works are commenced, Litgrid contractors inform local communities in advance about projects in their neighbourhood.
During the implementation of the projects, the timing of works is coordinated with the residents. The aim is to minimise
inconvenience to residents throughout the project.
GRI 413-1
GRI 413-2
ANNUAL REPORT
(All amounts are in EUR thousands unless otherwise stated)
104
In areas where operating equipment cause noise, Litgrid carries out noise measurements, participates in meetings with
residents and resolves any issues that arise. In 2023, an installation of a noise barrier was initiated in the Alytus district near the
LitPol Link substation operated by Litgrid.
Contributing to causes that are important to society or the local community, the company continued to encourage voluntary,
unpaid involvement of employees in charitable activities in 2023. Employee volunteering is encouraged and is allocated 1 day
per year in accordance with the collective agreement applicable to all employees.
The Company organised a traditional forest planting event, employees volunteered in the initiatives of the Food Bank, and
volunteers from Litgrid organised the accommodation and integration of the families of Ukrainian electricity transmission system
employees in Lithuania.
In 2023, Litgrid organised a traditional forest planting event where, together with Litgrid colleagues, the families of the
employees of the Ukrainian electricity transmission system company Ukrenergo planted a forest under the auspices of the
company. Since the beginning of the war, Litgrid has organised the accommodation of 100 people in Vilnius, helping them to
integrate and deal with the daily challenges of moving to another country.
Following a request for assistance from the Ukrainian electricity transmission system operator, the Lithuanian Electricity
Transmission System Operator provided support for equipment for the restoration of the electricity grid in Ukraine: it shipped
110-330 kV primary equipment, current and combined transformers, insulators, current transformers and splitters, and a
330/110 kV autotransformer. The equipment available in Lithuania is technologically suitable for the reconstruction of the
Ukrainian grid, making Lithuania one of the most important suppliers of equipment to the war-torn country.
Supplier Social Assessment and Human Rights in Supply Chain
In 2023, the EPSO-G Group Executives’ Committee set a target for at least 5% of THE Group companies’ purchases to include
social criteria.
In 2023, Litgrid incorporated social criteria into its procurement procedures, in line with the objectives set by the EPSO-G Group
Executive Committee. To achieve this 5% target, the following actions were taken:
- Integration of social criteria:
- new material from the Public Procurement Service (PPS) on social criteria was analysed, structured and narrowed
down by preparing the Socially Responsible Procurement Toolkit, a summary document.
- The Socially Responsible Procurement Tool was shared with employees of the Group’s companies and additionally
uploaded to intranet.
- Training on the application of social criteria was recorded on the basis of the PPS material. The training was shared
with employees of Group companies. This material will ensure deeper employee understanding and will assist in
application and development of social criteria in future procurement.
Future plans involve further increase in the application of social criteria, to improve measurement tools and to encourage
suppliers to adhere to high standards of social responsibility.
Litgrid is committed to reducing negative social impacts in the supply chain.
Actions taken in 2023 include:
- Screening of suppliers: As part of a rigorous supplier screening process, all potential suppliers were screened for their
past activities, including unfair competition, fraudulent misrepresentation, professional misconduct, and breaches of
financial reporting and auditing laws.
- Informing suppliers: Suppliers were informed about Litgrid’s expectations regarding social criteria and compliance with
legislation. Litgrid understands that integrating social responsibility into the supply chain is a process that requires
continuous attention and improvement. The Company is committed to further intensify its efforts in this area and
reinforce action plans to ensure a positive impact throughout the supply chain.
The Company’s procurement is primarily based on transparency, ethical behaviour, equity, promotion of competition and
proportionality, enhancing transparency in procurement processes and strengthening anti-corruption measures.
The implementation of the ESG policy will not have a significant impact on the financial indicators, as under Lithuanian
regulation all reasonable costs of the Company’s regulated activities are reimbursed through the revenue from regulated
activities.
GRI414-1
GRI 414-2
GRI408-1
GRI407-1
GRI409-1
ANNUAL REPORT
(All amounts are in EUR thousands unless otherwise stated)
105
The Company has not identified any supplier companies or activities in its supply chain exposed to forced or compulsory labour,
child labour and/or hazardous labour of young workers. The Company has also not identified any cases of violation of
employees’ rights to freedom of association or collective bargaining in suppliers’ companies.
Litgrid aims to actively contribute to the implementation of the human rights and equal opportunities goals of the United Nations
2030 Agenda for Sustainable Development and the equal opportunities obligations set out in national laws.
Customer Satisfaction
One of Litgrid’s key objectives is to increase customer orientation in order to create a customer-oriented organisation. Group-
wide customer satisfaction surveys based on GCSI and NPS methodologies were conducted for the first time in 2021 (carried
out on regular basis since 2021) and, over the last few years, have exceeded a score of 80. This score places it among the
market leaders, which are companies with a GCSI score above 80.
The GCSI index consists of a score from 0 to 100, calculated by assessing three criteria: overall satisfaction with the company,
its compliance with expectations and its comparison with an imaginary ideal company. The survey confirmed that customer
satisfaction with Litgrid’s services remains relatively high:
Litgrid
GSCI results
KPI
2021
79
-
2022
84
≥80%
2023
81
≥80%
In 2023, a separate GCSI survey was carried out for the first time with a new group of customers, RES developers. The overall
GCSI score was 57. The survey was aimed at identifying specific needs of this group of customers and tailoring actions to meet
those needs best.
Socioeconomic Compliance
„ Litgrid was not involved in legal proceedings with natural persons from 01/01/2021 to 31/12/2023.
Almost in all the proceeding from 2021 to 2023, Litgrid acted as a defendant, and initiated only 1 legal proceeding, which
resulted in a settlement agreement in 2023.
In 2021, 15 cases were heard, of which: 6 were dismissed, 3 were left unexamined, 2 ended in a settlement agreement, 1 case
found Litgrid’s failure to conclude a public procurement contract to be unlawful, 2 were terminated by dismissal of the action, 1
was upheld, and Litgrid was obliged to pay EUR 7,000.57 and 5% interest.
In 2022, 8 cases were heard, of which: 1 ended in a settlement agreement, 6 were dismissed, and 1 was upheld, and Litgrid was
obliged to pay damages of EUR 672,878.32.
In 2023, 8 cases were heard, of which: 5 were dismissed, 1 was terminated by dismissal of the action, and 2 ended in a
settlement agreement (in one legal proceeding Litgrid was a plaintiff).
GRI419-1
ANNUAL REPORT
(All amounts are in EUR thousands unless otherwise stated)
106
Economic (management)
- Sustainable Investment
- Infrastructure Development
- Strategic Partnership
- Compliance Management
- Data Protection and Privacy
- Anti-Corruption and Anti-Competitive Behaviour
- Digital Technologies
- Innovations
ANNUAL REPORT
(All amounts are in EUR thousands unless otherwise stated)
107
Sustainable investment
The strategy, which was renewed in 2023, maintains the focus on the implementation of strategic synchronisation projects that
will ensure successful synchronisation with continental European networks. In 2023, the isolated operation of the Lithuanian
electricity system was successfully tested, and an agreement was reached at technical and political level on synchronisation
with continental Europe in February 2025.
Transforming the energy system requires strong collaboration, therefore we set the goal to become a customer-focused
organisation developing innovative and flexible services in line with the customer expectations. Therefore, review of customer
journeys, a system of continuous feedback and tracking of key indicators will keep us informed of our progress in meeting
customers’ needs at all times. Customer satisfaction rating remains stable, keeping us among the companies of the leading
standard (GCSI was 84 in 2022, and 81 in 2023).
As part of our digital transformation, we aim to open up data for faster and smarter solutions, delivering sustainable shareholder
value. In 2022, the technological solution of the data exchange platform ESB (Enterprise Service Bus) was deployed to increase
the maturity of data management, and therefore the level of data management and openness is increasing.
We have a strong focus on innovation. We are tracking our indicator of the implementation of breakthrough innovation, and
have already implemented 8 breakthrough innovations since 2021. One of which is the “Variable Line Capacity” pilot project,
implemented in 2022, which has facilitated the application of smart technologies in the electricity transmission network, and is
currently being further developed for practical application.
In our 2023 long-term strategy, we clearly identified areas for sustainable development in the organisation, strategic goals,
indicators and actions for achieving these goals. In 2022, we developed our environmental impact reduction plan for 2030 and
integrated related actions into Litgrid’s Operational Plan for 2023-2025 and Procurement Plan for 2023.
To ensure the lowest prices for consumers, we use every opportunity to attract support from EU Structural Funds and CEF
programmes for investment projects. EUR 8.1 million from the EU Structural Funds and EUR 7.7 million from the CEF were
obtained to finance the investments in 2022, while EUR 5.2 million and EUR 8.3 million, respectively, will be obtained in 2023
Investment portfolio approved in 2021
Investment portfolio approved in 2022
Investment portfolio approved in 2023
Category
Number of
investments
Estimated
amount
(EUR
thousand)
Actual
amount
(EUR
thousand)
Number of
investments
Estimated
amount
(EUR
thousand)
Actual
amount
(EUR
thousand)
Number of
investments
Estimated
amount
(EUR
thousand)
Actual
amount
(EUR
thousand)
Number of
investments
Suma
(tūkst.
Eur)
Strategic national
projects
12
36 981
33 438
11
71 260
22 605
13
89 796
105 467
13
125 528
New construction
1
44
44
1
2 156
500
2
1 460
645
5
580
ITT projects:
Technology
Management
Network, Physical and
Information Security,
Information Systems
Development
(intangible assets)
18
1 215
1 350
17
3 581
1 841
31
2 747
907
34
11 815
ENU initiative.
Connection of
producers to 110/330
kV TL, connection of
consumers to 110 kV
TL, reconstruction of
TL for ESO, Cabling
or replacement of OL
13
1 558
939
6
1 011
646
31
3 342
3 253
65
10 422
Major overhauls.
Replacement of 330
kV and 110 kV wires
and poles in 330 kV
ETL, and 110 kV
PPAs, purchase of
non-mountable
equipment and
supplies
26
5 238
3 713
27
8 159
3 314
66
13 886
7 540
108
17 778
Network restoration
and modernisation.
Restoration and
modernisation of 110
kV ETL.
5
160
0
6
1 591
1 293
9
5 379
Network restoration
and modernisation.
Restoration and
modernisation of 110
kV ETL. Southern
11
2 552
1 146
14
2 802
1 961
15
7 533
5 468
18
12 196
ANNUAL REPORT
(All amounts are in EUR thousands unless otherwise stated)
108
Infrastructure Development. Economic Performance (directly related to the performance)
In 2021-2023, the number of Litgrid’s investments increased due to new investments in the main overhauls and electricity
network user (ENU) initiatives leading to a significant increase in the number of investments from 123 units to 212 (72%)..
Investment plans have also evolved, increasing from EUR 63.97 million in 2021 to EUR 157.02 million in 2023.
Strategic national projects (synchronisation programme) and projects in the category of network restoration and modernisation
investments constitute a significant part of investments.
Once implemented, these projects will benefit the community and the Company by significantly increasing the reliability of the
network, reducing electricity losses and thereby financial losses.
In 2023, Litgrid generated revenues of EUR 369.8 million. EUR 40.3 million was allocated to
direct expenses, of which EUR 17.6 million were payroll expenses, EUR 9.4 million the repair and
maintenance of the electricity network, EUR 5.1 million national taxes (including fee payable to the
National Energy Regulatory Board), and the remaining amount was allocated to other operating
costs.
Litgrid is a monopolist which is regulated by the state authorities and which all the expenses
necessary for its regulated activities are covered, including the climate change risks. The
Company has no influence over these expenses. A climate risk assessment was carried out in
Litgrid, findings of which showed that the exposure of Litgrid’s operations to climate risks is very
low.
In this context, we consider that the Company will not be exposed to climate-related financial risks.
In 2023, income tax incentive for investments was introduced in line with legislative requirements.
For more information on the Company’s financial data, see the Annual Report on p. 32
Region
Network restoration
and modernisation.
Restoration and
modernisation of 110
kV ETL. Eastern
Region
14
3 780
2 556
15
5 667
4 017
13
7 186
6 206
17
5 919
Network restoration
and modernisation.
Restoration and
modernisation of 110
kV ETL. Northern
Region
6
1 562
1 169
6
1 843
561
9
750
1 299
12
6 900
Network restoration
and modernisation.
Restoration and
modernisation of 110
kV ETL. Western
Region
8
2 184
1 173
7
1 011
1 089
10
2 635
3 739
11
5 806
Network restoration
and modernisation.
Restoration and
modernisation of 330
kV ETL.
2
3 607
2 369
5
8 300
14 257
5
2 364
2 265
10
4 231
Network restoration
and modernisation.
Restoration and
modernisation of 330
kV TL.
7
4 801
4 000
4
2 732
4 342
5
22 639
22 391
6
19 056
Network restoration
and modernisation.
Technological
protection and control
equipment
3
223
23
2
106
4 342
5
954
65
7
1 384
Research and
innovations
2
231
82
1
214
814
1
142
70
13
557
Grand Total
123
63 976
52 005
121
109 004
60 291
212
157 024
160 608
328
227 551
GRI 203-1
GRI201-1
GRI201-4
GRI201-2
GRI 201-3
ANNUAL REPORT
(All amounts are in EUR thousands unless otherwise stated)
109
Strategic Partnership
We understand that some of our strategic sustainability goals will only be achieved through cooperation with partners, sharing of
experience and learning from others. Our long-term strategy provides for investments in effective energy-related solutions for
implementation of which we are going to join efforts with other energy sector companies, collaborate with energy experts and
other partners We will work together to find common solutions for development and improvement of activities and for transition
to renewable energy systems which is beneficial both to our partners and the society. In development of strategic partnership,
we are guided by the good practices of the country, the region and the neighbouring states: in the future, we plan to assess the
quality of our business partners.
Litgrid actively shares its experience with foreign colleagues not only through associations or working groups, but also through
initiatives of bilateral cooperation with other European and global energy experts. In 2021-2023, we teamed up with colleagues
from the US, Japan, Denmark, Belgium, Germany, Ireland, Spain, the Netherlands and other countries, on topics such as
sustainability, the integration of renewable energies, and offshore wind development.
In 2021 and 2022, we were working with TEPCO, the Tokyo Transmission System Operator, on two studies for onshore and
offshore RES integration.
In 2023, we completed a smart grid pilot project with our Slovenian colleagues.
Since 2021, together with our German colleagues, we have been analysing the need for interconnections in the region, and in
2023 we initiated a project to analyse the concept of the Energy Hub, assessing different possible scenarios for grid
development. The analysis is scheduled to be completed in Q1 2024.
ENTSO-E
The Company actively participates in the activities of ENTSO-E which represents 40 electricity transmission system operators
from 36 countries.
The Company’s representatives are involved, as permanent members, in the activities of ENTSO-E’s committees and work
groups that at the expert level implement joint projects ensuring smooth operation of the European transmission network,
prepare and examine legal acts, methodologies and other documents regulating the operation of the electricity system that are
relevant to the EU Member States and establish uniform operation conditions and rules for the European TSOs.
Participation in the activities of ENTSO-E strengthens cooperation with other European transmission network operators and it’s
crucial for Litgrid not only in implementing one of the priority tasks of the Lithuanian energy sector, i.e. integration into the
synchronous zone of continental Europe, but also in developing the offshore grid for electricity transmission in a sustainable and
integrated manner and ensuring effective implementation of the European offshore wind strategy.
In the ENTSO-E format, we are actively involved in the preparation of the European 10-year network development plan (TYNDP
2022 and 2024), the regional long-term adequacy assessment (ERAA 2021, 2022, 2023), the seasonal network adequacy
assessment reports, the electricity market design changes, the drafting and updating of the network codes, and other topics.
BEMIP (Baltic energy market interconnection plan)
The objective of the BEMIP is to create operational and integrated electricity and gas markets, ensure necessary energy
infrastructure aiming to create a competitive, sustainable, safe electricity market in the Baltic Sea region.
Electricity-related commitments of Lithuania to BEMIP are implemented by Litgrid through the implementation of the projects
ensuring integration to the synchronous zone of continental Europe and performance of preparatory works for offshore wind
development in Lithuania.
In 2021-2023, we participated in the development of the List of projects of common interest (PCI) list, provided information on
the Baltic Synchronisation Project and ensured its inclusion in the list.
We have also been involved in the activities of the BEMIP Offshore Wind Working Group (WG), monitoring the regional
processes of offshore wind development.
Steering Committee for the Baltic Sea Transmission System Development
In 2020, the Company together with other six transmission system operators of the Baltic Sea region signed the cooperation
memorandum on offshore wind energy development in the region. Within the framework of cooperation the Steering Committee
for the Baltic Sea Transmission System Development was established which, with the help of the target working groups, will
focus on assurance of adequacy of the electricity transmission system of the Baltic Sea region, integrity of the development of
the onshore and offshore grid for electricity transmission, and will aim to develop common principles for the planning of the Baltic
Sea network and to conduct studies allowing to form a common vision for offshore wind network development in the region
ANNUAL REPORT
(All amounts are in EUR thousands unless otherwise stated)
110
The Baltic Offshore Grid Initiative (BOGI) is one of the working groups under the auspices of this Committee. In 2023, it was
responsible for the preparation of the Baltic Offshore Network Development Plan (BONDP). Litgrid representatives strongly
engaged in the working group, provided data on national offshore wind projects and related issues, and contributed to the
preparation of joint development scenarios for 2040 and 2050.
The Company’s interests are also represented at the following associations:
- Polish-Lithuanian Chamber of Commerce
- CIGRE
- Lithuania’s National Energy Association (Lith. NLEA)
- EnergyTech group
As a member of the above-mentioned associations Litgrid maintains closer cooperation with the regional and national partners,
ensures the representation of the Company’s interests, more effective implementation of the strategic projects and
communication with the related parties and stakeholders on issues relevant to the Company.
The National Lithuanian Energy Association’s dedicated working group has started to develop a concept for an offshore energy
hub in 2023. Together with other organisations of the association, we are evaluating the alternatives of the Energy Hub and
looking for the most favourable development scenario for Lithuania.
We are also contributing to the development of the innovation ecosystem. In early 2022, we opened the 1MW Battery Energy
Storage System (BESS) innovation platform to the public. The aim of the platform is to enable science, business, manufacturers
and the market as a whole to benefit from the 1MW BEKS by testing innovative ideas that bring benefits to both Litgrid and the
stakeholder. We have created an open and transparent model for the use of the 1 MW battery for new, innovative projects.
During 2022, we initiated the following projects, which were successfully completed in 2023 (study reports are available on
Litgrid’s website):
- Collaboration with KTU to model and demonstrate a hybrid thermal storage system with BEKS;
- Cooperation with Ignitis Gamyba to study the technical feasibility of frequency balancing of the Kaunas HPP;
- Collaboration with Green Genius to investigate the performance of the BEKS under simulated electricity market
conditions and to assess the technical feasibility of the BEKS working in conjunction with a RES source.
Litgrid cooperates with higher education institutions. In 2022, Litgrid participated in the Career Days, where a representative of
the company gave a presentation on the transformation taking place in the energy sector, future plans and trends to which
Litgrid contributes. Other colleagues shared their career experiences with the students, presenting their job positions and
inviting them to do internships. Group-wide, academic institutions were given the opportunity to receive support for student
incentive scholarships. Litgrid has signed a support agreement with Kaunas Technical University, whose first and second year
students will be granted incentive scholarships until 2025 according to an agreed and approved methodology and selection
criteria. In 2022, 7 students received incentive scholarships, in 2023, 17 students. Last year, special attention was paid to
sharing know-how on energy topics, and Litgrid employees travelled to universities by teleconference and contact to lecture on
topics relevant to their studies and complementing them with practical examples.
Litgrid welcomes motivated trainees who want to gain knowledge and learn from professionals in their field. In 2022, a
comprehensive internship programme has been developed, allowing students to learn not only about the operations of the unit
where they are interning, but also to get to know, see and perform real tasks in other Litgrid's core business units. In 2022, the
company had 11 such young professionals, in 2023, 13.
Compliance management
Litgrid 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 and the Group’s
Compliance Management Methodology. Compliance is based on the Three Lines Principle and principle governing the use 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 Litgrid and/or the Group.
In 2023, the following Litgrid’s priority areas were approved: procurement, ensuring requirements for independence and
separation of activities, information to be made publicly available by the transmission system operator, personal data protection,
anti-corruption and integration of renewable energy sources. These areas have been identified by assessing the potential risk
exposure, the multitude of legal requirements and the Company’s objectives.
GRI 206-1
GRI 2-27
ANNUAL REPORT
(All amounts are in EUR thousands unless otherwise stated)
111
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 (personal data
protection, anti-corruption, information security, civil protection, cybersecurity, etc.) 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.
In 2023, no significant non-compliance with laws was identified. During the reporting period, the Company did not pay any
penalties for non-compliances identified both for 2023 and for previous periods, i.e. 2022 and 2021. As shown below, the
dynamics of material non-compliance is consistent across the Company, with no material non-compliance recorded.
2021
2022
2023
Number of significant non-compliance events
0
0
0
Number of fines imposed for non-compliance
0
0
0
Number of non-pecuniary sanctions imposed for non-compliance
0
0
0
Amount of fines paid for non-compliance (identified during the reporting
period)
0
0
0
Amount of fines paid for non-compliance (identified during the previous
reporting period)
0
0
0
Data Protection and Privacy
Client privacy
In ensuring the protection of personal data, Litgrid is guided by the Group’s Personal Data Protection Policy and Litgrid’s
Description of the Personal Data Processing and Protection Procedure outlining the basic requirements for the processing of
personal data. 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, Litgrid 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.
From 2021 to 2023, no any personal data breaches were identified in the Company. Minor personal data-related incidents were
recorded, but did not qualify as personal data breaches.
Key Personal Data Protection Indicators
2021
2022
2023
Number of significant personal data breaches identified
0
0
0
Complaints from other organisations/authorities
0
0
0
Anti-Corruption and Anti-Competitive Behaviour
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:
GRI 418-1
GRI 205-3
GRI 205-1
GRI 205-2
ANNUAL REPORT
(All amounts are in EUR thousands unless otherwise stated)
112
- 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.
In 2023, 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 in the Group companies may vary depending on the context of the operations and the
corruption risk. The Company also approved the Corruption Prevention Plan (CPP) for 2023, which aims to consistently and
efficiently improve the company's transparency system, to ensure the implementation of prevention and control measures and
the continuity of the existing ones, by positively influencing the company's most sensitive areas of activity and by increasing the
transparency of the company. Each measure in the Action Plan is evaluated according to a set of evaluation criteria and an
outcome.
The Company’s key documents on anti-corruption activities are published and made available to all stakeholders and
organisations on our website.
Key anti-corruption indicators for 2023 are disclosed below.
Indicator
Number
Description
(if any)
Indicator
0
-
Cases of corruption identified
0
-
Staff members sanctioned and dismissed for corruption
0
-
Corruption-related cases filed against the Company/employees
0
-
Corruption risk assessment and management
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 Company identified the following corruption-related risks that could have an impact on the Company’s reputation or
financial position:
- conflicts of private interests;
- recruitment of persons who do not meet the requirements of the Law on the Prevention of Corruption and the Law on
the Protection of Objects Critical for National Security;
- abuse of office or underperformance.
These risks are monitored and managed at defined periodicity, using measures provided for in the Group’s Anti-Corruption
Policy and the Group’s Policy of Management of Interests of Members of Collegial and Supervisory Bodies and Employees.
Training and communication
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 Special Investigation Service of the Republic
of Lithuania delivered the lecture on anti-corruption lecture, including the corruption risks in public procurement. The lecture was
attended by 43% of the total number of the Company’s employees. The Company’s employees also participated in a non-
traditional training, a lecture on modern corruption. Training on corruption prevention is organised for new colleagues who have
ANNUAL REPORT
(All amounts are in EUR thousands unless otherwise stated)
113
joined the Company. They also improve their knowledge through internal Company and STT e-learning. Employees also
participate in the STT Transparency Academy events (mentoring, etc.).
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, these internal documents were made available to all (100%) employees
of the Company, of which 16% were management. All (100%) of the Board members were also communicated on key anti-
corruption legislation. In 2023, the Board members did not attend anti-corruption trainings, however, in 2024, the EPSO-G
Group is planning to launch a corruption prevention training platform, therefore, it is expected to extend training to the members
of the management bodies.
Employee and contractor surveys
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. 218 employees participated in
the survey (52%). (219 employees in 2022; 178 employees in 2021). The survey shows that 98% of employees have not
encountered any forms corruption in their work in the last 3 years (99% in 2022 98% in 2021), and 94% of them know whom to
contact if encounter corruption (95% in 2022, 91% in 2021).
Also in 2023, a contractor satisfaction survey was carried asking for their views on the Company and joint cooperation. 25% of
the invited contractors took part in the survey. The survey showed that, of all the respondents, none of the contractors
encountered or were aware of cases of corruption in the Company.
The trend in the survey results shows that the anti-corruption objectives are being implemented purposefully.
Helpline
The Company also has the Helpline, where employees and other stakeholders can directly or anonymously report, without fear
of negative consequences, potential violations, unethical or unfair behaviour.
Information on infringements can be submitted via the following helpline channels:
In 2023, the Helpline received total of 99 reports, i.e. the highest number of reports in several years. (28 reports in 2022; 13
reports in 2021). However, it should be noted that only 2 of them were due to potential illegal actions (the verification of the
information in the report showed that the claims made were unsubstantiated, and no internal investigations were launched),
while all the others were of a promotional nature, and therefore no further action was taken.
Gift policy
At the Company, we do not tolerate any gifts given in connection with employment or position, except for gifts permitted under
the EPSO-G Group’s Anti-corruption Policy. Employees are prohibited from accepting any gifts of money, gift vouchers or
alcoholic beverages, including gifts of low value, if the circumstances in which they are given or accepted could lead to a
misunderstanding or contradiction and create the appearance of a conflict of interest.
Employee and partner screening
To ensure that the Company employs only persons of impeccable repute, the measures provided for in the Laws on the
Prevention of Corruption of the Republic of Lithuania and on the Protection of Objects Important to the National Security of the
Republic of Lithuania are implemented to ensure the reliability of personnel (lists of positions for which applicants are screened
in accordance with the procedure laid down by law have been approved and made publicly available on the Company’s external
website; the responsible authorities have been contacted for each position (contacted in respect of 91 person).
The Company also carries out supplier (contractor) employee’s screening procedures as required by law. In all cases, when
new contracts are concluded, persons are screened for compliance with the requirements of the Law on International Sanctions
of the Republic of Lithuania and the Law of the Republic of Lithuania on the restrictive measures in connection with military
aggression against Ukraine, by checking a person’s profile in various public registers (151 companies were screened).
It should be noted that all (100%) of the Company’s suppliers/contractors are committed to our Supplier Code of Conduct.
Management of interests
Email:
pranesk@litgrid.eu
Send by mail
(the Company’s
address)
Fill in form online
https://www.litgrid.eu/index.php/apie-
litgrid/pasitikejimo-linija/32290
Provide information to the
Head of Information
Security and Prevention and
prevention personnel
ANNUAL REPORT
(All amounts are in EUR thousands unless otherwise stated)
114
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 (by performing content analysis of
declarations of private interests), and provides department managers and employees with the preliminary recommendations. In
addition, from 2021, periodic preventive checks are carried out of declarations of private interests submitted through PINREG to
assess whether the provisions of the Law on the Harmonisation of Public and Private Interests of the Republic of Lithuania are
being properly implemented (no breaches identified). 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 avoid situations where their private interests are, or may be, in conflict (conflict of interest), and, if
conflict, they recuse themselves. Conflicts of interest between staff members are reported to the parties concerned: the line
manager and the head of department. Conflicts of interest arising for the Company’s management and members of the
collegiate bodies are disclosed to the Group’s senior management.
Key conflicts of interest management indicators of 2023:
Indicator
Number
Description (if
any)
Ratio of employees declaring their interests to the total number of employees for
which the declaration of interests is mandatory
100%
-
Number of incidents when decisions were adopted due to conflict of interest
0
-
Digital Technologies
The digitisation of our operations is one of our sustainability priorities to ensure a reliable and secure service delivery. We have
dedicated teams to manage and implement digital technology deployment projects. By digitising and automating processes,
these teams reduce the likelihood of human error and ensure efficient use of energy resources: equipment is always running at
optimal capacity, its condition is monitored, and repairs and maintenance are planned to a high standard. Successful
digitalisation of operations depends not only on our strategic decisions, but also on the other players in the value chain, on
financing, on creating the adequate business environment.
Our key objectives in digitisation of operations are as follows:
- Targeted improvements in the reliability and quality of electricity transmission.
- Increase the level of digital maturity.
- Create data-driven ecosystem.
- We aim to become the partner of choice for business in open data, flexible services and reliable infrastructure, thereby
increasing transparency and openness to the public.
- Improve the IT infrastructure reliability and security.
- Build a customer-oriented organisation and enhance cooperation with partners, and focus on consumer expectations
and deliver innovative services.
- Demonstrate socially responsible conduct, ensure safety and mitigate the impact of our operations on the environment.
Changes in 2023:
- We undated the Company’s digital transformation indicators.
- We carried out inventory of the information systems and infrastructure in operation and prepared plans for the
development of IT architecture components.
- We introduced automatic generation management and upgraded the entire dispatching control system and
infrastructure.
- We made changes in the HVDC control systems by upgrading the hardware and virtualising the control systems.
- We upgraded the integration platform and closed security gaps.
- We introduced Self-Service Analytics across the Company.
ANNUAL REPORT
(All amounts are in EUR thousands unless otherwise stated)
115
- We opened the first datasets on data.gov.lt and Litgrid AB website.
- The first automation solutions were implemented (e.g. automation of PSE forecasts, automation of the solution for
connection conditions, automation of e-gift and prize registers, etc.).
- We implemented a project to improve the security of data centres.
- We created data exchange map.
- We conducted pilot projects to assess the operational suitability of cloud services.
- We implemented changes to the organisation’s printing solution and upgraded the equipment.
- We upgraded employee’s computer workstations.
Digital innovation projects carried out in 2023:
- Implementation of a centralised IED (Intelligent Electronic Device) database with a suite of advanced applications
- A centralised IED database with a suite of advanced applications and a data collection platform is being deployed in
the pilot transformer substations to analyse critical events at facilities, and to provide operational and condition
information, and to ensure storage and control.
The innovation enables:
1. Improving the reliability of the transmission network.
2. Reducing the number of interruptions of electricity transmission services.
3. Reducing the cost and time involved in identifying the cause of failures.
4. Reducing the cost and time to put underground line back into service.
Digitisation of RAA telecommand transmission between substations
The aim of the project is to test the exchange of RAA telecommands between substations using IEC61850 protocol GOOSE
messages.
The project allows the elimination of intermediate telecommand transmission equipment and the electrical circuits and contacts
used in telecommand transmission. Telecommands are transmitted using IEC61850 protocol. This increases reliability of
telecommand transmission, reduces equipment footprint and improves management of telecommand transmission.
Innovations
The Lithuania energy system transformation to 2050
EPSO-G together with experts from international consultancy DNV have developed
Lithuania Energy Vision to 2050. Through cooperation with Lithuanian industry, energy
companies and experts, scenarios have developed that open up opportunities for
Lithuania to become the hub of next-generation industrial development and a climate-
neutral country by 2050. Lithuania would switch from fossil fuels to electricity from
renewable energy sources (RES), generate electricity for domestic needs, to produce
hydrogen, and export not only energy, but also higher-value sustainable products.
Lithuania's energy vision would guide the implementation of energy projects and the
development of strategic partnerships, creating a basis for the integration of different
sectors. The Vision will also be used as a basis for the update of the National Energy
Independence Strategy (NEIS).
Experts of EPSO-G, Litgrid and Amber Grid are involved in the development of LT100
modelling study.
The LT100 project is a follow-up on the Lithuanian Energy Vision 2050, which includes
comprehensive assessment of Lithuania’s energy sector, with the aim of presenting
proposals for Lithuania to become a completely self-sufficient in electricity generation and
to achieve that 100% of Lithuania’s electricity consumption is generated from renewable
energy sources (RES).
The first interim results of the Lithuanian energy system modelling study are expected to
be submitted in early 2024, on the basis of which the proposals for updating the NENS will
be assessed.
Demonstration of the synergy between electric and thermal accumulators
ANNUAL REPORT
(All amounts are in EUR thousands unless otherwise stated)
116
Litgrid, jointly with Kaunas University of Technology (KTU), carried out unique tests
on a 1 megawatt (MW) experimental battery and smart energy system with a
thermal accumulator. These hybrid system tests are important for the development
of the energy system flexibility and RES integration solutions through coupling of
power and heat sectors (Power to Heat, P2H). Five demonstrations involved testing
of the following:
- efficient consumption of surplus electricity generated by solar plant;
- system economic efficiency measurement using electricity price
forecasting;
- system’s power balance management by stabilising the power system
frequency;
- provision of balancing services where the system is used as a power
source for manual frequency restoration reserve (mFRR);
- provision of a new flexibility service (congestion management) through
geographically distant elements of the system.
Variable line capacity pilot project
Litgrid tested artificial intelligence and sensor technologies that can contribute to the
successful operation of renewable energy plants. Special devices were installed on
overhead lines to measure weather conditions, and an innovative model was used to
assess current and to predict potential line capacity. Test results show that using this
technology, transmission line throughput has increased by an average of 52% compared to
the established design.
Dynamic Line Rating (DLR) is promising for creating more favourable conditions for
renewable energy power plants to generate more electricity without restrictions.
New physical sensors mounted on overhead power lines supports measured weather
conditions, line temperature, current, vibration strength and frequency, and allowed to test
the conductor deflection. The innovation was implemented on 110 kV overhead
transmission line Palanga–Vėjas 1 in Klaipėda district. Additionally, an innovative
permeability assessment model was developed for the 330kV Kaunas–Šiauliai overhead
line.
A study on the operation of a battery energy storage system under simulated electricity market
conditions and a technical assessment of its operation in combination with renewable energy
source
Litgrid together with Green Genius, a renewable energy company, completed testing of the first
1 MW battery connected to the electricity transmission network in the Baltic States. Findings
show that energy storage has great potential to contribute to the development of renewable
energy sources (RES).
The 1 MW battery with 1 MWh capacity can not only store and instantly supply energy to the
network, but also contribute to the management of frequency and other system parameters.
In cooperation with Green Genius, the battery was tested under different scenarios: it was
loaded and unloaded according to a pre-planned schedule to simulate its operation in the Day-
ahead and Intraday markets of the Nord Pool. The battery was also tested to see how it can
complement solar and wind power in different operation modes of RES plants and the battery,
and to find the most efficient model of interaction.
The tests provided insights into how batteries will enable RES plants to meet network requirements, as energy storage systems
greatly extend the RES plant management potential.
.
GRI LIST
Taxonomy disclosure
Compliance with the EU Taxonomy Regulation related to Litgrid’s eligible economic activities is disclosed in the consolidated
annual report of EPSO-G
iNDICATOR
Topic
Pagei
2-1
About the sustainability report
77
ANNUAL REPORT
(All amounts are in EUR thousands unless otherwise stated)
117
2-2
About the sustainability report
77
2-3
About the sustainability report
77
2-4
About the sustainability report
77
2-5
About the sustainability report
77
2-23
Principles and obligations of sustainability, Implementation of
sustainability in a long-term strategy
80
2-24
Principles and obligations of sustainability, Implementation of
sustainability in a long-term strategy
77
2-12
Sustainability management
78
2-9
Sustainability management
78
2-10
Sustainability management
78
2-11
Sustainability management
78
2-29
Stakeholder engagement
82
3-1
Significance matrix and key themes of coherence
84
3-2
Significance matrix and key themes of coherence
84
3-3
Significance matrix and key themes of coherence
84
302-1
Energy consumption
89
302-2
Energy consumption
89
303-1
Company and water
91
304-1
Biodiversity
91
304-2
Biodiversity
91
304-3
Biodiversity
91
304-4
Biodiversity
91
305-1
Impact on climate change and GHG emissions
92
305-2
Impact on climate change and GHG emissions
92
305-3
Impact on climate change and GHG emissions
92
305-5
Impact on climate change and GHG emissions
92
306-1
Waste management
92
306-2
Waste management
93
306-3
Waste management
93
306-4
Waste management
93
306-5
Waste management
93
308-2
Supplier environment check
95
308-1
Environmental assessment of suppliers
95
202-1
Participation in the labor market
98
401-1
Employment
100
401-2
Employment
100
401-3
Employment
100
402-1
Work relations
102
403-1
Employees safety and Health
102
403-2
Employees safety and Health
102
403-3
Employees safety and Health
102
403-4
Employees safety and Health
102
403-5
Employees safety and Health
102
ANNUAL REPORT
(All amounts are in EUR thousands unless otherwise stated)
118
403-6
Employees safety and Health
102
403-7
Employees safety and Health
102
403-8
Employees safety and Health
102
403-9
Employees safety and Health
102
403-10
Employees safety and Health
102
404-1
Training and education
104
404-2
Local communities
104
404-3
Social assessment of suppliers and human rights in the supply
chain
104
405-1
Social assessment of suppliers and human rights in the supply
chain
105
405-2
Social assessment of suppliers and human rights in the supply
chain
105
406-1
Social assessment of suppliers and human rights in the supply
chain
106
407-1
Social assessment of suppliers and human rights in the supply
chain
108
413-2
Social and economic compliance
109
413-1
Infrastructure development - Economic performance results
(directly related to performance review)
109
414-1
Infrastructure development - Economic performance results
(directly related to performance review)
110
414-2
Infrastructure development - Economic performance results
(directly related to performance review)
110
407-1
Infrastructure development - Economic performance results
(directly related to performance review)
110
409-1
Infrastructure development - Economic performance results
(directly related to performance review)
110
408-1
Compliance Management
110
419-1
Compliance Management
111
203-1
Customer privacy
114
201-1
Anti-corruption and anti-corrupt behavior
114
201-2
Anti-corruption and anti-corrupt behavior
114
201-3
Local communities
114
201-4
Social assessment of suppliers and human rights in the supply
chain
114
206-1
Social assessment of suppliers and human rights in the supply
chain
117
2-27
Social assessment of suppliers and human rights in the supply
chain
117
418-1
Social assessment of suppliers and human rights in the supply
chain
117
205-1
Social assessment of suppliers and human rights in the supply
chain
118
205-2
Social and economic compliance
118
205-3
Anti-corruption and anti-corrupt behavior
118
UN Global Compact
ANNUAL REPORT
(All amounts are in EUR thousands unless otherwise stated)
119
Earlier in this century, the United Nations drafted and published a set of 10 universal principles (the Global Compact) to which
all organisations seeking to conduct their business in a responsible and sustainable manner are invited to voluntarily adhere. In
its activities, the Company supports these principles and promotes their implementation in areas where it can exert influence.
Below is the list of all the principles and pages where our activities, aspirations and initiatives are described in terms of their
implementation are indicated.
.
Global compact
Page in this
report
1
We support and respect internationally recognised human rights.
107; 108
2
We are committed not to be complicit in human rights abuses.
107
108
3
We guarantee freedom of association, including trade union membership, and recognise the right of
workers to collective bargaining.
110
4
We do not use forced or compulsory labour and seek to contribute to its elimination in an
environment where we have influence.
112
5
We do not use child labour and contribute to efforts to eliminate it in an environment where we have
influence.
112
6
We do not discriminate, and we seek to contribute to elimination of occupational discrimination in
an environment where we can have influence.
107; 108
7
We apply preventive measures and follow the precautionary approach in respect of the
environment.
89
8
In our activities, we are environmentally responsible.
89
9
We encourage development and use of environmentally friendly technologies.
115
ANNUAL REPORT
(All amounts are in EUR thousands unless otherwise stated)
120
10
We do not tolerate corruption, and we work against corruption in all its forms, including extortion
and bribery.
120
THE COMPANY’S STATEMENT OF FINANCIAL POSITION
(All amounts are in EUR thousands unless otherwise stated)
Balansas
Notes | At 31 December 2023 | At 31 December 2022 | ||
ASSETS | ||||
Non-current assets | ||||
Intangible assets | 5 | |||
Property, plant and equipment | 6 | |||
Right-of-use assets | 7 | |||
Investments in a joint venture | ||||
Deferred income tax assets | 24 | |||
Total non-current assets | ||||
Current assets | ||||
Inventories | 9 | |||
Prepayments | ||||
Trade receivables under contracts with customers | 10 | |||
Other trade receivables | 11 | |||
Other amounts receivable | 12 | |||
Prepaid income tax | 24 | |||
Loans granted | 13 | |||
Other financial assets | 14 | |||
Cash and cash equivalents | 15 | |||
Total current assets | ||||
TOTAL ASSETS | ||||
EQUITY AND LIABILITIES | ||||
Equity | ||||
Share capital | 16 | |||
Share premium | 16 | |||
Revaluation reserve | 17 | |||
Legal reserve | 17 | |||
Other reserves | 17 | |||
Retained earnings/(deficit) | ( | |||
Total equity | ||||
Liabilities | ||||
Non-current liabilities | ||||
Non-current borrowings | 20 | |||
Lease liabilities | 21 | |||
Congestion management funds | 22 | |||
Provisions | 23 | |||
Other non-current amounts payable and liabilities | ||||
Total non-current liabilities | ||||
Current liabilities | ||||
Current portion of non-current borrowings | 20 | |||
Current borrowings | 20 | |||
Current portion of lease liabilities | 21 | |||
Trade payables | 25 | |||
Current portion of congestion management funds | 22 | |||
Advance amounts received | 26 | |||
Provisions | 23 | |||
Other current amounts payable and liabilities | 27 | |||
Total current liabilities | ||||
Total liabilities | ||||
TOTAL EQUITY AND LIABILITIES |
THE COMPANY’S STATEMENT OF COMPREHENSIVE INCOME
(All amounts are in EUR thousands unless otherwise stated)
Notes | At 31 December 2023 | At 31 December 2022 (reclassification) | ||
Revenue | ||||
Revenue from electricity transmission and related services | 29 | |||
Other income | 30 | |||
Total revenue, other and dividend income | ||||
Operating expenses | ||||
Expenses for purchase of electricity and related services | 31 | ( | ( | |
Wages and salaries and related expenses | ( | ( | ||
Purchases of repair and maintenance services | ( | ( | ||
Reversal of impairment of inventories and amounts receivable | ||||
Other expenses | 32 | ( | ( | |
Total operating expenses | ( | ( | ||
EBITDA | ( | |||
Dividend income | ||||
Depreciation and amortisation | 5,6,7 | ( | ( | |
Revaluation of property, plant and equipment | ( | |||
Impairment and loss on write-off of property, plant and equipment | ( | ( | ||
Operating profit/(loss) (EBIT) | ( | |||
Financial income | ||||
Financial costs | ( | ( | ||
Financial income (costs) net | ( | |||
Profit/(loss) before income tax | ( | |||
Income tax | ||||
Current year income tax income/(expenses) | 24 | |||
Deferred income tax income/(expenses) | 24 | ( | ||
Total income tax | ||||
Profit/(loss) for the period | ( | |||
Other comprehensive income (expenses) that will not be reclassified to profit or loss | ||||
Gain on revaluation of non-current assets | 17 | |||
Deferred tax (expenses) | 17 | ( | ||
Total comprehensive income/(expenses) for the period | ( | |||
Basic and diluted earnings/(deficit) per share (in EUR) | ( |
THE COMPANY’S STATEMENT OF CHANGES IN EQUITY
(All amounts are in EUR thousands unless otherwise stated)
Note | Share capital | Share premium | Legal reserve | Revaluation reserve | Other reserves | Retained earnings/ (deficit) | Total | |
Balance at 1 January 2022 | ||||||||
Comprehensive income/(expenses) for the period | ( | ( | ||||||
Transfer to reserves | 17 | ( | ||||||
Dividends | 18 | ( | ( | |||||
Balance at 31 December 2022 | ( | |||||||
Balance at 1 January 2023 | ( | |||||||
Comprehensive income/(expenses) for the period | ||||||||
Transfer to reserves | 17 | ( | ( | |||||
Dividends | 18 | |||||||
Balance at 31 December 2023 | ||||||||
THE COMPANY’S STATEMENT OF CASH FLOWS
(All amounts are in EUR thousands unless otherwise stated)
Notes | At 31 December 2023 | At 31 December 2022 | ||
Cash flows from operating activities | ||||
Profit/(loss) for the period | ( | |||
Adjustments for non-cash items | ||||
Depreciation and amortisation expenses | 5,6,7 | |||
Revaluation of property, plant and equipment | 6 | |||
Impairment/(reversal of impairment) of inventories and receivables | 9 | ( | ( | |
Loss on disposal of financial assets | ||||
Impairment of property, plant and equipment | 6 | |||
Income tax expenses/(income) | 24 | ( | ( | |
(Gain)/loss on disposal/write-off of property, plant and equipment | ||||
Elimination of results of financing and investing activities | ||||
Interest income | ( | ( | ||
Interest expenses | ||||
Dividend income | ( | |||
Other finance costs/(income) | ( | |||
Changes in working capital | ||||
(Increase)/decrease in trade receivables and other amounts receivable | ( | |||
(Increase)/decrease in inventories, prepayments and other current assets | ( | |||
Increase/(decrease) in amounts payable, grants, deferred revenue and advance amounts received | ( | |||
Congestion management inflows received | 22 | |||
Changes in other financial assets | ( | |||
Income tax (paid) | ( | |||
Net cash inflow/(outflow) from operating activities | ( | |||
Cash flows from investing activities | ||||
(Acquisition) of property, plant and equipment and intangible assets | 35 | ( | ( | |
Grants received | 19 | |||
Loans granted to related parties | 13 | ( | ||
Congestion management inflows received | 22 | |||
Acquisition of a joint venture | ( | |||
Interest received | ||||
Dividends received | ||||
Financial assets acquired | 8 | ( | ||
Financial assets disposed | 8 | |||
Net cash inflow/(outflow) from in investing activities | ( | |||
Cash flows from financing activities | ||||
Repayments of borrowings | 20 | ( | ( | |
Settlement of lease liabilities | 20 | ( | ( | |
Interest paid | 20 | ( | ( | |
Dividends paid | ( | ( | ||
Other cash flows from financing activities | ||||
Net cash (outflow) from financing activities | ( | ( | ||
Increase/(decrease) in cash and cash equivalents | ( | |||
Cash and cash equivalents at the beginning of the period | 15 | |||
Cash and cash equivalents at the end of the period | 15 |
The accompanying notes are an integral part of the financial statements.
NOTES TO THE COMPANY’S FINANCIAL STATEMENTS
(All amounts are in EUR thousands unless otherwise stated)
1.General information
LITGRID AB is an operator of electricity transmission system, operating electricity transmissions in the territory of Lithuania and ensuring stability of operation of the whole electric power system. The Company is also responsible for the integration of the Lithuanian electric power system into the European electricity infrastructure and the single electricity market.
On 27 August 2013, the National Energy Regulatory Council (the “NERC”) granted a licence to the Company to engage in electricity transmission activities for an indefinite term.
The principal objectives of the Company’s activities include ensuring stability and reliability of the electricity system in the territory of the Republic of Lithuania within the areas of its competence, creation of objective and non-discriminatory conditions for the use of the transmission networks, management, use and disposal of electricity transmission system assets and its appurtenances.
As at 31 December 2023, the Company’s authorised share capital amounted to EUR 146,256,100.20 and it was divided into 504,331,380 ordinary registered shares with the nominal value of EUR 0.29 each. All shares are fully paid. Company’s shareholders:
Number of shares held | Number of shares held (%) | |||||||
At 31 December 2023 | At 31 December 2022 | At 31 December 2023 | At 31 December 2022 | |||||
EPSO-G UAB | 491,736,153 | 491,736,153 | 97.5 | 97.5 | ||||
Other shareholders | 12,595,227 | 12,595,227 | 2.5 | 2.5 | ||||
Total | 504,331,380 | 504,331,380 | 100 | 100 | ||||
The ultimate controlling shareholder of EPSO-G UAB (company code 302826889, address: Gedimino pr. 20, Vilnius) is the Ministry of Energy of the Republic of Lithuania .
As from 22 December 2010, the shares of the Company are listed on the additional trading list of NASDAQ OMX Vilnius Stock Exchange, issue ISIN code LT0000128415.
The number of shares held by the Company in the joint venture were as follows:
Company name | Address of the company’s registered office | at 31 December 2023 | at 31 December 2022 | Profile of activities |
Baltic RCC OÜ | Kadaka tee 42, EE- 12915 Tallinn Eesti | 33.33% | 33.33% | Provision of services ensuring safety and reliability of the electricity system and coordination between the transmission network operators of the Baltic region |
As at 31 December 2023, the Company had 410 (31 December 2022: 389) employees.
NOTES TO THE COMPANY’S FINANCIAL STATEMENTS
(All amounts are in EUR thousands unless otherwise stated)
2.Summary of material accounting policies
The material accounting policies adopted in the preparation of the Company’s financial statements for the year ended 31 December 2023 are summarised below.
2.1Basis of preparation
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 meet them.
The 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 losses, and financial assets measured at fair value through other comprehensive income.
Amounts in these financial statements are presented in thousands of euro (EUR), unless otherwise stated.
The statement of cash flows is prepared indirectly.
The Company's financial year coincides with the calendar year.
The Company’s management approved these financial statements on 29 March 2024. The shareholders of the Company have a statutory right to approve or not to approve these financial statements and require that management prepare a new set of financial statements.
Accounting policies adopted 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)
For the year ended 31 December 2023 the Company for the first time have been adopted these IFRS and their amendments and IFRIC:
IFRS 17 Insurance contracts (issued on 18 May 2017 and amended on 1 January 2021 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 Company’s assessment, the adoption of IFRS 17 does not have a significant impact on the Company’s 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 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. The amendment provided illustrative examples of accounting policy information that is likely to be considered material to the entity’s 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 Company’s management reviewed accounting disclosures in the notes to the financial statements for 2023.
b)Standards, amendments and interpretations that have been endorsed by the European Union, but are not yet effective and have not been early adopted by 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 Company’s assessment, the adoption of IFRS 16 will not have a significant impact on the Company’s financial statements.
Classification of liabilities as current or non-current – Amendments to IAS 1 (originally issued on 23 January 2020 and
NOTES TO THE COMPANY’S FINANCIAL STATEMENTS
(All amounts are in EUR thousands unless otherwise stated)
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 12 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.
The Company’s management is currently assessing the impact of these amendments on its financial statements.
2.2Property, plant and equipment and intangible assets
Items of assets with a useful life over one year and the acquisition cost higher than the set minimal capitalisation value for different groups of assets.
All property, plant and equipment is shown at revalued amounts, based on periodic (at least every 5 years) property valuations, less the amounts of accumulated depreciation, recognised grants and impairment losses.
During the revaluation, each object of the asset and the item within that object are evaluated by indicating the remaining useful life established for that item of the asset.
Decreases in the carrying amount arising on the revaluation of property, plant and equipment that offset previous increases of the same asset are charged against the revaluation reserve directly in equity, and all other decreases are recognised in profit or loss. Increases in the carrying amount offset previous decreases of the same asset are recognised in profit or loss. All other increases in the carrying amount 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. After the sale or write-off of a property unit, any balance of the revaluation reserve related to this property is transferred to retained earnings.
Interest on targeted and general loans and other borrowing costs (such as the bank’s administration fee, 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 regarded to be an asset which is developed on the basis of a project the value of which is not less than EUR 1 million and the preparation of which for its intended use or sale takes no less than 12 months. Borrowing costs that are attributable to the acquisition of a qualifying asset are capitalised as part of the cost of that asset. The capitalisation of borrowing costs is started when costs related to the production or acquisition of the qualifying asset are incurred (a prepayment is made or a payment for works is made according to the signed statement on the works carried out and their respective value) and ended when all the activities necessary for the preparation of the qualifying asset for its intended use or sale in the manner intended by management are substantially complete. While determining the amount of borrowing costs eligible for the capitalisation of costs incurred in the acquisition of qualifying assets, the capitalisation rate is applied.
Construction work in progress represents non-current fixed assets under construction. The cost of such assets includes design, construction works, plant and equipment being installed, and other directly attributable costs.
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 “property, plant and equipment”.
Property, plant, and equipment is recorded at acquisition (production) cost, less grants received/receivable for the acquisition of property, property, plant, and equipment. Grants comprise financing from the EU support funds, a portion of congestion management funds designated for the financing of investments, payments for the expenses incurred during the connection of producers to the transmission network and performance of works for the relocation/reconstruction of the transmission network’s installations initiated by customers.
NOTES TO THE COMPANY’S FINANCIAL STATEMENTS
(All amounts are in EUR thousands unless otherwise stated)
Intangible assets
Intangible assets are initially recognised at cost. Intangible assets are recognised only when it is probable that future economic benefits associated with these assets will flow to the Company and the value of assets can be measured reliably. After initial recognition, intangible assets are carried at cost, less accumulated amortisation and accumulated impairment losses, if any.
Depreciation and amortisation
Depreciation of property, plant and equipment and amortisation of intangible assets, except for land, construction work in progress, statutory servitudes and protection zones of the transmission network, is calculated using the straight-line method over estimated useful lives of the asset. The estimated useful lives, residual values and depreciation/amortisation method are reviewed by the Company at each year-end to ensure that they are consistent with the expected pattern of economic benefits from these assets. The effect of changes in estimates, if any, is accounted for on a prospective basis.
Estimated useful lives of property, plant and equipment and intangible assets are as follows:
Categories of property, plant and equipment and intangible assets | Useful lives (in years) |
Buildings | 20 – 75 |
Structures and machinery, whereof | |
- Constructions of transformer substations | 30 |
- Structures, machinery and equipment, whereof: | |
- 400, 330, 110, 35 kV electricity transmission lines | 40 – 55 |
- 400, 330, 110, 35, 6-10 kV switchyard’s electrical installations | 30 – 35 |
- 400, 330, 110, 35, 6-10 kV capacity transformers | 35 |
- electricity and communication devices | 20 – 25 |
- electrical installations, whereof: | 15 – 35 |
- relay security and automation equipment | 15 – 35 |
- technological and dispatch control equipment | 8 |
- other equipment | 5 – 20 |
Other property, plant and equipment, whereof: | |
- computer hardware and communication equipment | 3 – 10 |
- inventory, tools | 4 – 10 |
Intangible assets, whereof: | 3 – 4 |
- statutory servitudes and protection zones of the transmission network | Not subject to amortisation |
Statutory servitudes and protection zones of the transmission network have an indefinite useful life because the right to use the established zones is unlimited in time.
Gain or loss on disposal of non-current assets is calculated as the difference between the proceeds from sale and the book value of the disposed asset and is recognised in the statement of comprehensive income of the reporting year.
Subsequent repair costs incurred when performing major improvements are included in the carrying amount of property, plant and equipment, only when it is probable that future economic benefits associated with these costs will flow to the Company and these costs can be measured reliably. Repair costs for the asset category of overhead lines and cables are accounted for as component of item of assets by estimating the useful life of the new asset. The carrying amount of the replaced part is derecognised. All other repair and maintenance costs are recognised as expenses in the statement of comprehensive income during the financial period in which they are incurred.
2.3Impairment of property, plant and equipment and intangible assets
At each reporting date, the Company reviews the carrying amounts of property, plant and equipment (including right-of-use assets) and intangible assets to determine whether there are any indications that those assets have suffered an impairment loss. If any such indication exists, the recoverable value of the asset is estimated in order to determine the extent of the impairment loss (if any).
The recoverable amount is the higher of the asset’s fair value less costs to sell and value in use. In assessing 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.
NOTES TO THE COMPANY’S FINANCIAL STATEMENTS
(All amounts are in EUR thousands unless otherwise stated)
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying value, the carrying value of the asset (cash-generating unit) is reduced to its recoverable value. 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 value of the asset (cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying value does not exceed the carrying value 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 recognised 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 a revaluation increase (without exceeding the amount of previous impairment).
2.4Inventories
Inventories are initially recorded at acquisition cost. Subsequent to initial recognition, inventories are stated at the lower of cost and net realisable value. Acquisition 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. Cost is determined on the first-in, first-out (FIFO) basis. Net realisable value is the estimated selling price, less the estimated costs of completion and selling expenses.
Inventories required to be stored as a reserve and the management does not expected these inventories to be used over the normal business cycle of the Company or 12 months are classified as non-current assets. Depreciation is calculated for reserve inventories that are classified as non-current assets. The depreciation rate applied reflects an expected useful life of such inventories.
2.5Trade payables and other financial liabilities, borrowings
Financial liabilities, borrowings
Financial liabilities, including borrowings, are recognised initially at fair value, less transaction costs.
In subsequent periods, financial liabilities are measured at amortised cost using the effective interest rate method. Interest expense is recognised using the effective interest rate method as disclosed in paragraph 2.6 of the notes to the financial statements.
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, that financial liability is classified as non-current.
Derecognition of financial liabilities
A financial liability is derecognised when the obligation under the liability is settled, 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 derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts of financial liabilities is recognised in the statement of comprehensive income.
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 not longer than one year; otherwise they are included in non-current liabilities.
2.6Grants
Asset-related grants
The government and the EU grants received in the form of non-current assets or designated for the purchase of non-current are treated as asset-related grants. Public service obligation (“PSO”) service fees allocated to the Company for the preparation and implementation of the strategic projects and a part of congestion management funds, designated to finance investments, are recognised as asset-related grants.
These grants are accounted for by reducing by the carrying amount of respective non-current assets. In the statement of
NOTES TO THE COMPANY’S FINANCIAL STATEMENTS
(All amounts are in EUR thousands unless otherwise stated)
comprehensive income, grants are recognised over the useful life of the asset by reducing depreciation expenses.
Grants received in advance related to the acquisition of non-current assets are stated as non-current liabilities until the moment of acquisition of such assets.
Grants receivable are included in other receivables under the agreements whereby the European Commission commits to finance the strategic projects, and the costs are incurred which are reimbursed in line with terms and condition of financing agreements.
Income-related grants
Grants received as a compensation for expenses or unearned income of the current or previous reporting period, also, all grants, which are not grants related to assets, are defined as grants related to income. Income-related grants are recognised as used in parts to the extent of expenses incurred during the reporting period or unearned income to be compensated by that grant.
Income-related grants are recognised in profit or loss by increasing other income over the period in which the grant is received or when there is reasonable assurance that the grant will be received and that the Company complies with the conditions for the allocation of the grant established in the grant agreement.
2.7Connection of new consumers and producers
The connection of producers is accounted for similarly to the principle applicable to grants by offsetting the acquisition cost of assets created for the connection of the producer against the compensation receivable from the connected producer. In case of relocation works of the electricity transmission network when major improvements are performed and when the assets are created by the Company, the grant principle is applied and the cost of the created assets is offset against the amount of compensations receivable from the customer, and when the assets are created by the customer and transferred to the Company free of charge, the assets received from the third parties are offset against the value of the assets. If the major improvement was not performed during the relocation and the asset was created by the Company, such asset is not recognised, i.e. compensation income from the customer and expenses for the creation of such asset are accounted for. When no major improvement is performed and the asset is created by the customer, the asset received from the customer free of charge is not recognised and accounted for in off-balance sheet accounts.
Revenue received from connection of new consumers is accounted for by the Company over the useful life of the created asset because the connection of a new consumer is related to further consumption and related revenue.
2.8Lease liabilities
Initial measurement of 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.
Lease payments are discounted using the incremental borrowing rate, which is applied when the contractual interest rate is not known. The incremental borrowing rate is determined by the rate at which the Company would be able to borrow funds for the purpose of acquiring certain assets for a respective period.
At the commencement date, lease payments included in the measurement of a lease liability include:
‐fixed lease payments less any lease incentives receivable;
‐variable lease payments that depend on an index or a rate;
‐amounts expected to be payable by the Company under residual value guarantees;
‐the exercise price of the purchase option, if exercise of that option by the Company is reasonably certain;
‐fines for the termination of the lease, if it is assumed that the Company will exercise the option to terminate the lease during the lease term.
Subsequent measurement of lease liability
Subsequent to initial recognition, changes in the value of the Company’s lease liability are reflected by:
‐increasing the value of the liability by the amount of interest charged;
‐reducing the carrying amount by the lease payments made;
‐remeasuring the liability for lease modifications or revised payments.
Remeasurement of lease liability
Subsequent to initial recognition, the lease liability is remeasured to reflect changes in lease payments. The Company treats
NOTES TO THE COMPANY’S FINANCIAL STATEMENTS
(All amounts are in EUR thousands unless otherwise stated)
remeasurements as adjustments to the right-of-use assets. If the carrying amount the right-of-use assets is reduced to zero and the lease liability is reduced as well, the Company recognises any remaining amount of the remeasurement in profit or loss.
2.9Right-of-use assets
Right-of-use assets are assets that the Company has the right to manage during the lease term. As of 1 January 2019, the Company recognises 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 date of a lease agreement, the Company measures right-of-use assets at cost, which consists of:
the amount of the initial measurement of the lease liability;
initial costs incurred directly attributable to the underlying asset;
lease payments known at the commencement date, less any lease incentives received and receivable;
costs to be incurred by the Company in dismantling or removing the underlying asset, restoring the site on which it is located or restoring the underlying asset to the condition required by the terms and conditions of the lease.
The amount of the initial measurement of the lease liability is calculated as the present value of lease payments not paid at the commencement date using the discount rate implicit in the lease.
Subsequent measurement of right-of-use assets
After the initial recognition, the Company applies 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:
Land99 years
Motor vehiclesfrom 2 to 4 years
Buildingsfrom 2 to 3 years
Other property, plant and equipmentfrom 2 to 3 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’s entities exist on the land plots. When assessing the flow generated by the infrastructure assets of the Company’s entities (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.
2.10Provisions
Provisions are recognised only when the Company has a legal obligation or irrevocable commitment as a result of past event, and 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. If the effect of the time value of money is material, the amount of provision is discounted using the effective pre-tax discount rate set based on the interest rates for the period and taking into account specific risks associated with the provision as appropriate. Where discounting is used, the increase in the provision due to the passage of time is recognised as borrowing costs.
2.11Employee benefits
a)Bonus plans
The Company recognises a liability and an expense for bonuses where contractually obliged or where there is a past practice that has created a constructive obligation.
NOTES TO THE COMPANY’S FINANCIAL STATEMENTS
(All amounts are in EUR thousands unless otherwise stated)
b)Pension benefits to employees of retirement age
According to the laws of the Republic of Lithuania and the Collective Agreement effective at LITGRID AB, each employee leaving the Company at the retirement age is entitled to a one-off benefit. 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. At each reporting date, the long-term employee benefit obligation is estimated with reference to actuary valuations using the projected relative unit method. The present value of the defined long-term employee benefit obligation 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.
2.12Congestion management funds
The Company acquires the right to congestion management funds when different electricity market prices occur in Lithuania, Sweden, Poland and Latvia as a result of insufficient capacity of electricity lines. Revenue that was received as a result of price differences at different bidding areas is distributed equally by the power exchange operator (Nord Pool AS) to the transmission system operators of the countries which operate the interconnections.
Regulation (EU) No 2019/943 of the European Parliament and of the Council of 5 June 2019 on conditions for access to the network for cross-border exchanges in electricity stipulates that congestion management funds may be used in the following order of priority:
a)When revenue is used for guaranteeing availability of the allocated capacity of the interconnections, it is recognised as income in the period during which the related expenses are incurred. In case of unplanned disconnection of the electricity interconnection and when the trade in the interconnection’s capacities has already been completed at the electricity exchange (i.e. when they have already been allocated), the operators of the line ensure that the capacities traded are available to the market participants. In such a case, the operators incur costs that arise as a result of the price difference between the price of electricity traded by the operators and the price of balancing and (or) imbalance electricity purchased/sold by the Company.
b)When revenue is used for maintaining or increasing the interconnections’ capacities, congestion management funds is accounted for using the accounting policies applicable to grants, i.e. initially congestion management funds is recognised as liability and recorded by reducing the value of the asset concerned, and subsequently it is recognised by reducing depreciation expenses of the related asset over the useful life of that asset.
c)When revenue is used for reducing the tariff, revenue is recognised as income in the period during which the Company generates lower revenue due to lower tariffs and only in case when revenue cannot be efficiently used for the purposes set out in points a) and/or b). Subject to approval by the regulatory authorities of the Member States concerned, they may be used, up to a maximum amount to be decided by those regulatory authorities, as income to be taken into account by the regulatory authorities when approving the methodology for calculating network tariffs and/or fixing network tariffs.
In the statement of financial position, unused congestion management funds are presented as non-current and current liabilities, given the planned use of congestion management funds to finance investments or to compensate tariff in the following year.
2.13Revenue recognition
The Company’s revenue comprises as follows:
‐Revenue from electricity transmission and related services;
‐Other income.
Revenue is recognised when it is probable that economic benefits associated with a transaction will flow to the Company, and when a reliable estimate of the amount of revenue can be made. Revenue is measured at the fair value of the consideration received or receivable, net of value added tax and discounts.
Revenue from electricity transmission and related
This group of the Company’s revenue comprises revenue from electricity transmission, provision of ancillary services, trade in imbalance and balancing electricity, congestion management revenue, revenue from connection of new consumers, PSO services, congestion management funds used to reduce the tariff and other revenue related to electricity transmission and ancillary services.
Revenue from contracts with customers comprises revenue from electricity transmission, ancillary services, trade in imbalance and balancing electricity and revenue from connection of new consumers, PSO services and other related revenue. The Company recognises revenue from contracts with customers over the reporting period in which the performance obligation is satisfied, i.e. the control of the good is transferred or the service is provided, except for revenue from connection of new consumers which is recognised by the Company over the useful life of the created asset (Note 2.3).
NOTES TO THE COMPANY’S FINANCIAL STATEMENTS
(All amounts are in EUR thousands unless otherwise stated)
When recognising other income related to electricity transmission and ancillary services the Company takes into consideration the terms of contracts signed with customers and all significant facts and circumstances, including the nature, amount, timing and uncertainty relating to cash flows arising from the contract with the customer. The main sale contracts are signed for the term of one year and coincide with the reporting period. All subsequent value adjustments for previous periods are not made, and contract modifications are rare.
Prices of the electricity transmission services are regulated by the Council which establishes the upper limits of the prices for the transmission service. Specific prices and tariffs for the transmission services are established by the Company’s Board within the limits approved by the Council. When establishing prices for the next year, deviations of the current year (the year not yet ended) and deviations of the previous year (the year that already ended) and various forecasts for the upcoming year are assessed, i.e. they increase or decrease the prices for the next year, i.e. the prices are not adjusted retrospectively. All possible price adjustments in the future periods for excess profit/higher loss incurred in the previous/current years are not treated as a variable part of the price under IFRS 15. Such decrease (due to excess profit earned) or increase (due to higher expenses incurred) in future revenue does meet the general accounting criteria for the recognition of liabilities or assets because it depends on the Company’s operations in the future and is treated as the regulated assets or liabilities and therefore, in the opinion of the Company’s management, it does not fall within the scope of IFRS 15.
The Company purchases ancillary services from the producers and later provides this service to the distribution network operators and electricity consumers using the tariff established by the Council. The Company recognises the gross amounts of revenue as it acts as a principal in the provision of ancillary services.
Other income
Interest income is recognised on accrual basis considering the outstanding balance of debt and the applicable interest rate. Interest received is recorded in the statement of cash flows as cash flows from investing activities.
Gain from disposal of property, plant and equipment, lease income, income from default charges and fines collected from the contractors as a result of late fulfilment of works, including property, plant and equipment under construction, are recognised by the Company as other income.
Default charges and fines collected from the contractors as a result of late fulfilment of works are calculated upon the completion of a project or a stage thereof and upon notifying a supplier, and they are offset against the supplier’s debt. In case of a legal dispute over the amount of default charges or fines and when it is more likely than unlikely that the amounts of default charges or fines will be reduced or annulled, provisions are recognised.
Dividend income is recognised when the right to receive payment is established.
2.14Income tax
Income tax expense comprises the current income tax and deferred tax expense (income). Income tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity, in which case income tax is also recognised in other comprehensive income or directly in equity.
Income tax
The income tax expense for the current year is calculated on the current year’s profit before tax, as adjusted for certain non-deductible expenses/non-taxable income.
Tax losses can be carried forward for indefinite period, except for the losses incurred as a result of disposal of securities and/or derivative financial instruments. Such carrying forward is disrupted if the Company changes its activities due to which these losses were incurred except when the Company does not continue its activities due to reasons which do not depend on the Company itself. The losses from disposal of securities and/or derivative financial instruments can be carried forward for 5 consecutive years and only be used to reduce the taxable income earned from the transactions of the same nature. Tax losses carried forward can be used to reduce the taxable income earned during the reporting year by maximum of 70%. In addition, the Company can take over tax losses of the group companies, if the requirements laid down in the Law on Corporate Income Tax are met.
Deferred income tax
Deferred taxes are calculated using the balance sheet liability method. Deferred tax assets and deferred tax liability are recognised for future tax purposes to reflect differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred tax liabilities are recognised on all temporary differences that will increase the taxable profit in future, whereas deferred tax assets are recognised to the extent it is probable that they will reduce the taxable profit in future.
NOTES TO THE COMPANY’S FINANCIAL STATEMENTS
(All amounts are in EUR thousands unless otherwise stated)
Deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting, nor taxable profit or loss.
The Company reviews the carrying amount of a deferred income tax assets at each reporting date and reduces it to the extent that it is no longer probable that sufficient taxable profit will be available to allow the benefit of a part or all of that deferred tax assets to be utilised. Deferred 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 income tax assets and liabilities are offset only where they relate to income taxes assessed by the same fiscal authority or where there is a legally enforceable right to offset current tax assets and current tax liabilities.
Current income tax and deferred income tax
Current income tax and deferred income tax are recognised as income or expenses and included in profit or loss for the reporting period, except for the cases when tax arises from a transaction or event that is recognised directly in equity or in other comprehensive income, in which case taxes are also recorded in equity and in other comprehensive income respectively.
3.Accounting estimates and assumptions
Significant accounting estimates and assumptions
The preparation of financial statements according to International Financial Reporting Standards requires management to make estimates and assumptions that affect the accounting policies applied, the reported amounts of assets, liabilities, income and expenses, and the disclosures of contingencies. Actual results may differ from those estimates. The significant management estimates and assumptions and the main sources for uncertainties used in the preparation of these financial statements that might cause substantial changes in the carrying amounts of the related assets and liabilities in the next financial year are described below:
Valuation of property, plant and equipment
As described in Note 6, the Company revalued its property, plant and equipment as at 31 December 2023. The determination of the assets’ fair value is mainly affected by assumptions used in assessing the transmission service income for the future periods. The assumptions used in determining the fair value of property, plant and equipment are described in more detail in the above-mentioned note.
Depreciation rates of property, plant and equipment
The useful life of property, plant and equipment is determined separately for each item (component) of the asset by estimating future economic benefit in view of the expected period of use in the Company’s activities, the intensity of use, the environment of use, changes in the asset’s original standard performance over its entire useful life, technological and economic progress morally outdating the asset, legal and similar factors restricting the useful life of property, plant and equipment.
Useful lives are reviewed annually to ensure that the depreciation period would correspond to the expected useful life of property, plant and equipment. The effect of changes in estimates, if any, is accounted for on a prospective basis.
Congestion management funds and deferred income tax assets
Based on the accounting policies described in Note 2.12, accounting for congestion management funds depends on the purpose for which revenue is used. These purposes are described in Regulation (EU) No 2019/943 of the European Parliament and of the Council of 5 June 2019 on the internal market for electricity. Pursuant to the Council’s decision, congestion funds balance as at 31 December 2023 will be used to finance the synchronisation projects agreed with the Council.
Deferred tax assets arising from congestion funds received in 2014-2017 and due to taxation with profit tax at the year as they received will be realised over the useful life of the asset acquired using congestion management funds.
In the long term, regulation ensures the Company’s profitability, therefore, in the management’s opinion, deferred income tax assets will be realised in the future by reducing income tax payable.
The congestion management funds received from 2018 are subject to profit tax at the time of use of congestion management funds, so there is no difference between financial and tax accounting.
Amendment to grant recognition
NOTES TO THE COMPANY’S FINANCIAL STATEMENTS
(All amounts are in EUR thousands unless otherwise stated)
In 2023, the Company decided to account for grants relating to assets by deducting the grant from the carrying amount of the related non-current asset, when the costs are incurred which are reimbursed in line with terms and condition of financing agreements, since:
the implementation of synchronisation projects result in increased investments and prepayment of considerable amounts of grants in advance;
the costs incurred but not eligible for reimbursement under the terms of the grant agreement are usually negligible, and the coordination of documents within the deadlines set in the grant agreements is time consuming;
excessive movement is accounted for under the congestion management funds liabilities to give a true view of the acquisition cost of property, plant and equipment.
This amendment does not have a significant impact on the comparative information.
4.Change in presentation in the statement of comprehensive income
In 2023, to provide the users of the EPSO-G group’s consolidated financial statements with the up-to-date information, the Company decided to change the presentation and classification of items in the statement of comprehensive income.
The reason for the changes in the statement of comprehensive income, alternative performance indicators EBITDA and EBIT have been singled out so that the users of the financial statements, including the Company’s management, could see these indicators in the statement of comprehensive income, monitor them and make prompt decisions based on these indicators.
EBITDA is profit before interest, taxes, depreciation and amortisation, loss on revaluation, impairment and write-off of property, plant and equipment, and impairment and write-off of inventories and trade receivables. In management’s assessment, loss on impairment and write-off of inventories and receivables should be excluded from calculations of EBITDA, because they do not arise in the ordinary activities, and are non-recurring and incidental.
The Company provides information about changes in classification and line items in the statement of comprehensive income for the year ended 31 December 2022.
NOTES TO THE COMPANY’S FINANCIAL STATEMENTS
(All amounts are in EUR thousands unless otherwise stated)
At 31 December 2022 (before reclassification) | Reclassification | At 31 December 2022 (after reclassification) | |||
Revenue | |||||
Revenue from electricity transmission and related services | 418,953 | - | 418,953 | ||
Other income | 1,355 | - | 1,355 | ||
Dividend income | 43 | (43) | - | ||
Total revenue, other and dividend income | 420,351 | (43) | 420,308 | ||
Operating expenses | |||||
Purchases of electricity transmission and related services | - | (420,106) | (420,106) | ||
Expenses for imbalance and balancing electricity | (203,588) | 203,588 | - | ||
Expenses for electricity ancillary (system) services | (111,633) | 111,633 | - | ||
Expenses for electricity technological needs | (99,576) | 99,576 | - | ||
Expenses for electricity and related services | (5,309) | 5,309 | - | ||
Depreciation and amortisation | (20,582) | 20,582 | - | ||
Wages and salaries and related expenses | (15,601) | - | (15,601) | ||
Purchases of repair and maintenance services | (8,771) | - | (8,771) | ||
Telecommunications and IT system expenses | (2,214) | 2,214 | - | ||
Transport expenses | (301) | 301 | - | ||
Write-off expenses of property, plant and equipment | (461) | 461 | - | ||
Reversal of impairment of inventories and amounts receivable | 55 | - | 55 | ||
Other expenses | (9,833) | (2,510) | (12,343) | ||
Total operating expenses | (477,814) | 21,048 | (456,766) | ||
EBITDA | (57,463) | 21,005 | (36,458) | ||
Dividend income | - | 43 | 43 | ||
Depreciation and amortisation | - | (20,582) | (20,582) | ||
Assets write-off expenses (reversal) | - | (466) | (466) | ||
Operating profit/(loss) (EBIT) | (57,463) | - | (57,463) | ||
Financial income | 63 | - | 63 | ||
Financial costs | (947) | - | (947) | ||
Other financial income (expenses) in net value | (884) | - | (884) | ||
Profit/(loss) before income tax | (58,347) | - | (58,347) | ||
Income tax | |||||
Current year income tax income/(expenses) | 16,772 | - | 16,772 | ||
Deferred income tax income/(expenses) | (7,909) | - | (7,909) | ||
Total income tax | 8,863 | - | 8,863 | ||
Profit/(loss) for the period | (49,484) | - | (49,484) | ||
Total comprehensive income/(expenses) for the period | (49,484) | - | (49,484) |
NOTES TO THE COMPANY’S FINANCIAL STATEMENTS
(All amounts are in EUR thousands unless otherwise stated)
5.Intangible assets
Patents and licences | Computer software | Other intangible assets | Statutory servitudes and protection zones* | Total | |
At 31 December 2021 | |||||
Acquisition cost | 625 | 7,930 | 342 | 2,486 | 11,383 |
Accumulated amortisation | (564) | (5,772) | (95) | - | (6,431) |
Net book amount | 61 | 2,158 | 247 | 2,486 | 4,952 |
Net book amount at 1 January 2022 | 61 | 2,158 | 247 | 2,486 | 4,952 |
Acquisitions | 86 | 2,546 | - | - | 2,632 |
Write-offs | - | (298) | - | - | (298) |
Reclassification to/from PP&E | - | 89 | - | - | 89 |
Reclassification between categories | 239 | (239) | - | - | - |
Value adjustment due to change in assumptions | - | - | - | (795) | (795) |
Off-set of grants against intangible assets | - | - | - | - | - |
Amortisation charge | (70) | (941) | (85) | - | (1,096) |
Net book amount at 31 December 2022 | 316 | 3,315 | 162 | 1,691 | 5,484 |
At 31 December 2022 | |||||
Acquisition cost | 950 | 10,028 | 342 | 1,691 | 13,011 |
Accumulated amortisation | (634) | (6,713) | (180) | - | (7,527) |
Net book amount | 316 | 3,315 | 162 | 1,691 | 5,484 |
Net book amount at 1 January 2023 | 316 | 3,315 | 162 | 1,691 | 5,484 |
Acquisitions | 7 | 2,251 | - | 176 | 2,434 |
Write-offs | - | - | - | - | - |
Reclassification to/from PP&E | 886 | (816) | - | - | 70 |
Reclassification between categories | - | - | - | - | - |
Value adjustment due to change in assumptions | - | - | - | 201 | 201 |
Off-set of grants against intangible assets | - | (2,415) | - | - | (2,415) |
Amortisation charge | (332) | (425) | (76) | - | (833) |
Net book amount at 31 December 2023 | 877 | 1,910 | 86 | 2,068 | 4,941 |
At 31 December 2023 | |||||
Acquisition cost | 1,785 | 6,633 | 342 | 2,068 | 10,828 |
Accumulated amortisation | (908) | (4,723) | (256) | - | (5,887) |
Net book amount | 877 | 1,910 | 86 | 2,068 | 4,941 |
* Assets related to statutory servitudes amounted to EUR 1,302 thousand as at 31 December 2023 (31 December 2022: EUR 1,100 thousand) and assets related to protection zones amounted to EUR 766 thousand as at 31 December 2023 (31 December 2022: EUR 591 thousand).
NOTES TO THE COMPANY’S FINANCIAL STATEMENTS
(All amounts are in EUR thousands unless otherwise stated)
6.Property, plant, and equipment
Land | Buildings | Structures and machinery | Other property, plant and equipment | Construction work in progress | Total | |
At 31 December 2021 | ||||||
Revaluated acquisition cost | 520 | 20,731 | 333,194 | 15,189 | 25,311 | 394,945 |
Accumulated depreciation | - | (1,572) | (49,466) | (5,623) | - | (56,661) |
Accumulated impairment | - | - | (233) | - | - | (233) |
Net book amount | 520 | 19,159 | 283,495 | 9,566 | 25,311 | 338,051 |
Net book amount at 1 January 2022 | 520 | 19,159 | 283,495 | 9,566 | 25,311 | 338,051 |
Acquisitions | - | - | 1,092 | 804 | 54,318 | 56,214 |
Change in prepayments for PP&E | - | - | - | - | 18,225 | 18,225 |
Revaluation | - | - | - | - | - | - |
Write-offs | - | - | (1,299) | - | - | (1,299) |
Impairment | - | - | - | - | - | - |
Reclassification to inventories | - | - | - | (71) | - | (71) |
Reclassification to intangible assets | - | - | - | - | (89) | (89) |
- | - | - | - | - | - | |
Reclassifications between grant categories | - | - | (4,878) | (465) | 5,343 | - |
Reclassification between categories | - | 656 | 11,782 | 1,091 | (13,529) | - |
Off-set of connection revenue against non-current assets | - | - | (914) | - | (50) | (964) |
Off-set of grants against non-current assets | - | - | - | - | (29,182) | (29,182) |
Depreciation charge | - | (640) | (16,599) | (1,928) | - | (19,167) |
Net book amount at 31 December 2022 | 520 | 19,175 | 272,679 | 8,997 | 60,347 | 361,718 |
At 31 December 2022 | ||||||
Revaluated acquisition cost | 520 | 21,387 | 338,384 | 16,517 | 60,347 | 437,155 |
Accumulated depreciation | - | (2,212) | (65,705) | (7,520) | - | (75,437) |
Net book amount | 520 | 19,175 | 272,679 | 8,997 | 60,347 | 361,718 |
Net book amount at 1 January 2023 | 520 | 19,175 | 272,679 | 8,997 | 60,347 | 361,718 |
Acquisitions | - | 492 | 13,909 | 4,136 | 150,991 | 169,528 |
Change in prepayments for PP&E | - | - | - | - | (6,591) | (6,591) |
Revaluation | - | 543 | 5,245 | 23 | - | 5,811 |
Write-offs | - | - | (95) | 101 | - | 6 |
Impairment | - | - | - | (108) | - | (108) |
Reclassification to inventories | - | - | - | (200) | - | (200) |
Reclassification to intangible assets | - | - | - | - | (70) | (70) |
Reclassification off-set of grants against intangible assets | - | - | - | - | 2,415 | 2,415 |
Reclassifications between grant categories | - | - | (47,175) | (984) | 48,159 | - |
Reclassification between categories | - | 700 | 69,004 | 1,291 | (70,995) | - |
Off-set of connection revenue against non-current assets | - | (492) | (13,886) | (1,078) | (1,417) | (16,873) |
Off-set of grants against non-current assets | - | - | - | - | (102,021) | (102,021) |
Depreciation charge | - | (612) | (15,937) | (1,909) | - | (18,458) |
Net book amount at 31 December 2023 | 520 | 19,806 | 283,744 | 10,269 | 80,818 | 395,157 |
At 31 December 2023 | ||||||
Revaluated acquisition cost | 520 | 19,806 | 283,744 | 10,269 | 80,818 | 395,157 |
Accumulated depreciation | - | - | - | - | - | - |
Net book amount | 520 | 19,806 | 283,744 | 10,269 | 80,818 | 395,157 |
There was no interest capitalised during the year ended 31 December 2023 (during the year ended 31 December 2022, the
NOTES TO THE COMPANY’S FINANCIAL STATEMENTS
(All amounts are in EUR thousands unless otherwise stated)
capitalised income amounted to EUR 36 thousand). During the year ended 31 December 2023, there was no annual interest capitalisation rate (during the year ended 31 December 2022, the annual interest capitalisation rate was 1.46%).
Prepayments for property, plant, equipment (PPE):
2023 | 2022 | |||
Carrying amount at 1 January | 22,772 | 4,547 | ||
Prepayments paid for PPE over the period | 13,803 | 23,056 | ||
Transfer to construction work in progress | (20,358) | (4,831) | ||
Unused advances repaid | (36) | - | ||
Carrying amount at at the end of the period | 16,181 | 22,772 |
As at 31 December 2023, the Company’s commitments for the acquisition of property, plant and equipment to be fulfilled in the upcoming periods amounted to EUR 335,761 thousand (31 December 2022: EUR 417,269 thousand).
The table below presents the net book amounts of the Company’s 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 machinery | Other property, plant and equipment | Construction work in progress | Total | |
At 31 December 2022 | 520 | 19,175 | 272,679 | 8,997 | 37,575 | 338,946 |
At 31 December 2023 | 520 | 18,746 | 257,432 | 10,207 | 64,637 | 351,542 |
Property, plant, and equipment is stated at acquisition cost, less grants received/receivable for the acquisition of property, property, plant, and equipment. Grants comprise financing from the EU support funds, a portion of congestion management funds designated for the financing of investments, payments for the expenses incurred during the connection of producers to the transmission network and performance of works for the relocation/reconstruction of the transmission network’s installations initiated by customers.
Had the value of property, plant and equipment not been reduced by the amount of grants, its carrying amount would have been EUR 458,506 thousand higher as at 31 December 2023 (31 December 2022: EUR 354,323 thousand). The following table shows information on property, plant and equipment, the value of which was reduced by the amount of grants received/receivable:
2023 | 2022 | |||
Carrying amount at 1 January | 354,323 | 334,322 | ||
Acquisitions | 116,479 | 30,146 | ||
Depreciation charge | (11,963) | (9,889) | ||
Write-offs | (333) | (256) | ||
Carrying amount at 31 December | 458,506 | 354,323 |
Revaluation of property, plant and equipment
In 2023, the Company performed the revaluation of its property, plant and equipment using internal resources, without engaging an independent external evaluator. The valuation corresponded to Level 3 of the fair value hierarchy. The Company estimated the fair value of the assets under the income approach, using the discounted cash flows calculation method. The value of assets was determined as the present value of net future cash flows.
The Company performed the last revaluation of its property, plant and equipment as at 31 December 2018 and determined that the fair value of the property, plant and equipment is higher than carrying amount by EUR 5.8 million.
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 | 27,435 | 8,172 | 35,607 |
(Decrease) in net book value as at 31 December 2023 | - | (29,796) | (29,796) |
Total revaluation impact as at 31 December 2023 | 27,435 | (21,624) | 5,811 |
NOTES TO THE COMPANY’S FINANCIAL STATEMENTS
(All amounts are in EUR thousands unless otherwise stated)
The decrease in value was largely determined by the review of the useful life of Alytus back-to-back converter due synchronisation projects and a EUR 21,487 thousand impairment loss recognised for the asset.
The valuation involved the following steps:
(1) The total fair values of the property, plant and equipment was determined using the income method.
(2) Determining the fair value of items of property, plant and equipment:
The regulatory asset base value was estimated using historical costs.
The replacement cost new (RCN) was determined for asset items.
The remaining useful life of the asset components was estimated.
The total fair value was allocated to individual asset components and items.
The Company’s activity is regulated, the property operates as an integral electrical grid. The fair value of the electrical grid is appraised using the income approach, but its assessment excludes all activities related to the transmission network development (i.e. not related to the present assets being assessed), i.e. investments in development projects, connection of new consumers/producers, grants to development projects.
Application of discounted cash flow method
The value of the assets was calculated using the following main assumptions:
The forecast period until 2031.
Additional component has been established for the financing of investments increasing the level of revenue from the regulated activities. Additional component was estimated by the Company in the long-term financial forecasts for 2025-2031 based on a sustainable level of debt (assuming that the average debt to EBITDA ratio over the regulatory period is below but close to 4.5). However, given that the regulatory framework did not define the sustainable level of debt, 86% of the requested additional component has been awarded for 2024, the need for additional component would be lower if actual investments were lower than planned, the amount of undiscounted additional component for 2025-2031 has been decreased in the measurement by 25%.
The updated LRAIC model for the establishment of the regulated asset base and the cost of capital is applied in the regulatory pricing from 2022. The cost of capital comprises depreciation expenses of the regulated assets and return on investments, which is calculated by multiplying the regulated asset base by the rate of return on investments. Over the regulatory period of five years (current regulatory period covers 2022-2026), the cost of assets under optimisation (planned to be restored) is determined using the present (replacement) value and investments in the optimised assets over the regulatory period of five years are consistent with the value of assets being replaced, which is calculated under the LRAIC model. The cost of capital of the assets that are not optimised is determined using the historical value.
The amounts of investments until 2031 are used from the actual ten-year investment plan, which excludes all development investments.
All operating expenses attributable to the regulated activities are compensated through transmission revenue, except for the compensation of remuneration expenses, the compensation assumption of which is 96%. The terminal value was calculated based on the assumption that all the costs incurred by the Company will be compensated with revenue.
The calculation of cash flows for the years 2024-2025 included a difference between the permitted and actual return on transmission activity investments in 2022-2023 (considering the efficient saving of operating expenses that increases the permitted investment return), which is reimbursed to customers through a lower sale price. Additionally, a difference between additional service revenue and income, included in the calculation of cash flows for 2025, is refunded through a higher component of additional services and revenue of the Company.
The rate of return on investments (ROI pre-tax) is equal to 5% for 2024 (equivalent to a 4.25% post-tax) and from 2025 it is the same as the discount rate, i.e. 5.87% (are equal to post-tax WACC 4.99%).
Net cash flows generated from the assets were discounted using the discount rate (WACC post-tax) of 4.99% calculated by the Company.
NOTES TO THE COMPANY’S FINANCIAL STATEMENTS
(All amounts are in EUR thousands unless otherwise stated)
Sensitivity analysis
If the additional component for the financing of investments was not awarded, the value of the assets would be additionally lower by EUR 92.1 million, if the total amount estimated in the Company’s long-term financial forecasts was allocated, the value of the assets would be higher by an additional EUR 30.7 million. The sensitivity of asset valuation to the additional component for the financing of investments, the change in the rate of return on investments and the change in discount rate from 2025 is presented in the tables below:
Additional component for the financing of investments, % of forecast | Change in asset value, EUR million |
0% | -92.1 |
33% | -61.4 |
67% | -30.7 |
100% | 0 |
133% | 30.7 |
Change in rate of investment return from 2025, % | Change in asset value, EUR million |
-0.50% | -15.2 |
-0.25% | -7.6 |
0.00% | 0 |
0.25% | 7.6 |
0.50% | 15.3 |
Change in discount rate (return on investments is recalculated from 2025 accordingly), % | Change in asset value, EUR million |
-1.00% | 1.5 |
-0.50% | 0.7 |
0.00% | 0 |
0.50% | -0.6 |
1.00% | -1.1 |
Application of replacement cost method
The items of property, plant and equipment were allocated to main components of the technological assets: transformer substations, power transmission lines, back-to-back converters, and autotransformers.
Carrying amount of other (unallocated) asset items accounts for only 0.6% of the carrying amount after valuation, therefore the assumption was made that their fair value equals to carrying amount, therefore they were excluded from subsequent stages of measurement. The fair value of construction in progress was also considered equal to carrying amount, because it consisted of recently acquired assets, the value of which approximated current market (fair) value. As at 31 December 2023, EUR 70,391 thousand of property, plant and equipment carrying amount of which is considered equal to its fair value was account for under the line item of acquisition/revaluation amount.
The regulatory asset base value was estimated for each asset component by summing discounted historical cost of capital (depreciation expenses and return on investment for forecast period) and discounted residual value of the asset component at the end of 2031.
A new replacement cost was calculated for each asset component based on the physical parameters of the asset items (autotransformer capacity, number of transformer substation connectors, number of transmission line circuits and type of poles) and the current purchase and LRAIC model rates and statistical indices.
The remaining useful life of the asset components was estimated as follows:
If the asset component is included in a 10-year investment plan, i.e. it is scheduled for reconstruction, the remaining useful life is the period before reconstruction;
If information on the end of useful life/write-down date of the asset component is available, the remaining useful life is the period before the write-down;
If not included in the plan, the remaining useful life is the difference between the asset component’s standard useful life (55 years for lines, 35 years for autotransformers, substations and converters, 60 years for a building) and the functional obsolescence (the period of time from the date of the asset’s entry into operation, after taking into account the reconstruction/replacement of components).
NOTES TO THE COMPANY’S FINANCIAL STATEMENTS
(All amounts are in EUR thousands unless otherwise stated)
The replacement cost of each asset component was calculated as a new replacement cost of the asset component multiplied by the component’s remaining useful life and divided by the component’s standard useful life.
The increase in value of property, plant and equipment estimated using income approach was allocated to the asset items in proportion to replacement costs, ensuring that the value estimated is not lower than the regulated cash flow of the asset component.
Taking into account the ongoing investment programme for synchronisation projects, the Company reviewed the alternative uses of the asset items affected by the synchronisation projects, and the remaining useful life. As a result, a shorter useful life was set for the components of Alytus back-to-back converter, i.e. until 30 June 2025
Based on the estimated remaining useful life, the remaining useful lives of the asset items have been reviewed and updated. The updated useful lives will apply from 1 January 2024.
7.Right-of-use assets
As indicated below, the Company leases land, office premises, motor vehicles and other property, plant and equipment. The lease terms of the lease contracts (except for the lease of land) is 2-4 years. The lease terms of the land lease contracts is 99 years. When recognising right-of-use assets and lease liabilities and determining the lease terms the Company assessed extension and early termination options of the lease contracts. 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.
The Company’s right-of-use assets comprise as follows:
Land | Buildings | Motor vehicles | Other property, plant and equipment | Total | |
At 31 December 2021 | |||||
Acquisition cost | 4,465 | 47 | 720 | 127 | 5,359 |
Accumulated depreciation | (135) | (16) | (572) | (127) | (850) |
Net book amount | 4,330 | 31 | 148 | - | 4,509 |
Net book amount at 1 January 2022 | 4,330 | 31 | 148 | - | 4,509 |
Acquisitions | - | - | 1,402 | - | 1,402 |
Write-offs | - | - | (661) | (127) | (788) |
Depreciation charge | (45) | (16) | (258) | - | (319) |
Depreciation (write-offs) | - | - | 661 | 127 | 788 |
Net book amount at 31 December 2022 | 4,285 | 15 | 1,292 | - | 5,592 |
At 31 December 2022 | |||||
Acquisition cost | 4,465 | 47 | 1,461 | - | 5,973 |
Accumulated depreciation | (180) | (32) | (169) | - | (381) |
Net book amount | 4,285 | 15 | 1,292 | - | 5,592 |
Net book amount at 1 January 2023 | 4,285 | 15 | 1,292 | - | 5,592 |
Acquisitions | - | 70 | 140 | - | 210 |
Write-offs | - | (47) | (59) | - | (106) |
Depreciation charge | (45) | (16) | (385) | - | (446) |
Depreciation (write-offs) | - | 48 | 57 | - | 105 |
Net book amount at 31 December 2023 | 4,240 | 70 | 1,045 | - | 5,355 |
At 31 December 2023 | |||||
Acquisition cost | 4,465 | 70 | 1,542 | - | 6,077 |
Accumulated depreciation | (225) | - | (497) | - | (722) |
Net book amount | 4,240 | 70 | 1,045 | - | 5,355 |
NOTES TO THE COMPANY’S FINANCIAL STATEMENTS
(All amounts are in EUR thousands unless otherwise stated)
8.Financial assets
The Company’s financial assets measured at fair value through comprehensive income comprised shares of TSO Holding AS:
At 31 December 2023 | At 31 December 2022 | |||
Carrying amount at 1 January | - | 781 | ||
Financial assets acquired | - | 13,090 | ||
Financial assets disposed* | - | (13,871) | ||
Change in impairment | - | - | ||
Carrying amount at the end of the period | - | - |
* transfer price EUR 13,786 thousand, and EUR 85 thousand the disposal of the previously held 2% shareholding.
In November 2022, 2% of shares of TSO Holding held by the Company at the beginning of the year and 37.6% of shares additionally acquired by the Company in October 2022 all 39.6% were transferred by the Company to parent company EPSO-G UAB for the same price of the one share. The transactions on additional acquisition and disposal of shares did not affect the Company’s results of operations for 2022, whereas the disposal of the previously held 2% shareholding resulted in a loss of EUR 85 thousand.
Dividends received by the Company from TSO Holding AS in 2022 amounted to EUR 43 thousand.
9.Inventories
At 31 December 2023 | At 31 December 2022 | |||
Materials, spare parts and other inventories | 194 | 166 | ||
Less: impairment | (153) | (163) | ||
Carrying amount at the end of the period | 41 | 3 |
Movements in write-down allowance for inventories in 2023 and 2022 are indicated below:
At 31 December 2023 | At 31 December 2022 | |||
Carrying amount at 1 January | 163 | 173 | ||
Change in impairment | (10) | (10) | ||
Carrying amount at the end of the period | 153 | 163 |
In 2023 and 2022, the Company reversed additional provisions for inventory write-down to net realisable value in relation to inventories stored at the warehouse and not moving or slow-moving inventories and accounted for in operating expenses in the statement of comprehensive income.
The Company’s inventories recognised as expenses in 2023 amounted to EUR 385 thousand (2022: EUR 254 thousand).
10.Trade receivables under contracts with customers
At 31 December 2023 | At 31 December 2022 | |||
Amounts receivable for electricity transmission and related services | 18,082 | 58,414 | ||
Accumulated amounts receivable for electricity services | 547 | 2,666 | ||
Carrying amount at the end of the period | 18,629 | 61,080 |
NOTES TO THE COMPANY’S FINANCIAL STATEMENTS
(All amounts are in EUR thousands unless otherwise stated)
Trade receivables for electricity transmission and related services at 31 December compared to 31 December decreased as the price for ancillary services was 8 times lower and the price for balancing/imbalance services was 4.3 times lower.
The fair value of trade receivables under contracts with customers approximates their carrying amount.
In 2023, the Company did not recognise any expected credit losses related to trade receivables under contracts with customers. There were no amounts past due as at 31 December 2023 and 2022.
11.Trade receivables
At 31 December 2023 | At 31 December 2022 | |||
Amounts receivable for electricity transmission and related services | 49 | 17 | ||
Congestion management funds receivable | 770 | 649 | ||
PSO funds receivable | - | 354 | ||
Accumulated amounts receivable for electricity transmission and related services | 7,408 | 1,477 | ||
Other trade receivables | 56 | 61 | ||
Carrying amount at the end of the period | 8,283 | 2,558 |
The fair value of trade receivables approximates their carrying amount.
Accrued receivables for the services related to electricity transmission consist substantially of the accrued receivables under the Inter-TSO Compensation (ITC) mechanism, which increased due to the significantly higher prices for electricity to compensate for technological losses approved by the Council in 2023.
In 2023, the Company did not recognise any expected credit losses related to trade. At 31 December 2023 there were no amounts past due (at 31 December 2022: there were no).
12.Other trade amounts receivable
At 31 December 2023 | At 31 December 2022 | |||
Grants receivable | 34,006 | 302 | ||
Other amounts receivable | 443 | 613 | ||
VAT receiveble from the budget | 441 | - | ||
Less: impairment of other receivables | (23) | (23) | ||
Carrying amount | 34,867 | 892 |
The fair value of other amounts receivable approximates their carrying amount.
At 31 December 2023 other amounts receivable past due were EUR 23 thousand (at 31 December 2022: EUR 23 thousand). A 100% impairment was formed for them.
13.Loans granted
At 31 December 2023 | At 31 December 2022 | |||
Loan to EPSO-G UAB (under the cashpool agreement) | 166,600 | 232,008 | ||
Interest on loans | 482 | - | ||
Carrying amount | 167,082 | 232,008 |
NOTES TO THE COMPANY’S FINANCIAL STATEMENTS
(All amounts are in EUR thousands unless otherwise stated)
After the issuing of the permission by the NERC, the Company and EPSO-G UAB concluded the group account (cashpool) agreement (with a 0% fixed interest rate) on 26 February 2021. The agreement establishes the possibility to temporarily use free congestion management funds for inter-company lending and borrowing purposes. The agreement was valid until 26 February 2022 and contained two possible extensions of 12 months each.
In 2022, the agreement was extended until 26 February 2023 and a fixed interest rate was applied from 20 December 2022. The agreement was extended on 26 February 2023. Information is provided in Note 40.
Under the group account (cashpool) agreement the Company’s positive funds balance transferred to the disposal of EPSO-G UAB is accounted for as amounts receivable (loans granted) in the statement of financial position and is not included in the line item of cash and cash equivalents.
14.Other financial assets
At 31 December 2023 | At 31 December 2022 | |||
Funds deposited for guarantees | 1,500 | 5,000 | ||
Deposits received | 2,889 | 2,334 | ||
Other financial assets | 55 | 27 | ||
Carrying amount at the end of the period | 4,444 | 7,361 |
The fair value of other financial assets as at 31 December 2023 and 2022 approximated their carrying amount.
15.Cash and cash equivalents
At 31 December 2023 | At 31 December 2022 | |||
Cash at bank | 634 | 499 | ||
Carrying amount at the end of the period | 634 | 499 |
The fair value of cash and cash equivalents is equal to their nominal and carrying amounts.
16.Share capital and share premium
As at 31 December 2023 and 31 December 2022, the Company’s issued capital amounted to EUR 146,256 thousand and it was divided into 504,331,380 units of ordinary registered shares with the nominal value of EUR 0.29 each. All the shares were fully paid.
Share premium represents a difference between the nominal value of shares and consideration received for shares, they were formed in 2010 and amount to EUR 8,579 thousand.
Capital management
Capital consists of the equity capital disclosed in the statement of financial position.
According to the Law on Companies of the Republic of Lithuania, the equity of the Company must account for at least ½ of the amount of the authorised share capital. As at 31 December 2023 and 2022, the Company was in compliance with this requirement. No other external capital requirements have been imposed on the Company. Dividends are allocated pursuant to the approved dividend policy, under which dividends payable are directly linked with the effective use of the company’s equity, i.e. the higher benefits created by the Company for the shareholders are, the larger portion of profit can be allocated by the Company for a further development or implementation of other significant projects.
The Company’s main objectives when managing capital are to safeguard the Company’s ability to continue as a going concern.
NOTES TO THE COMPANY’S FINANCIAL STATEMENTS
(All amounts are in EUR thousands unless otherwise stated)
In order to maintain or change the capital structure, the amount of dividends to be paid to the shareholders may be adjusted, capital may be returned to the shareholders, or new shares may be issued.
17.Legal reserve, revaluation reserve and other reserves
Legal reserve
A legal reserve is a compulsory reserve under the Lithuanian legislation. The legal reserve should not be less than 10 per cent of the authorised share capital and can only be used to cover the Company’s losses only. In 2023, the legal reserve accumulated by the Company did not comply with the requirements of the legal acts of the Republic of Lithuania, as EUR 2,521 thousand was used to cover a loss of EUR 2022 thousand (in 2022, the legal reserve complied with the requirements of the legal acts of the Republic of Lithuania and represent 10% of the issued capital).
Revaluation reserve
Pursuant to Article 39(7) of the Law on Companies of the Republic of Lithuania, “the revaluation reserve shall be the amount of increase (decrease) in the value of tangible fixed assets and financial assets resulting after the revaluation of assets in accordance with applicable financial reporting standards. The revaluation reserve or a portion thereof may be used to increase the capital. No part of the revaluation reserve may be distributed, either directly or indirectly.”
As at 31 December 2023, the Company revalued intangible assets and created revaluation reserve (there was no revaluation in 2022).
At 31 December 2023 | ||
Carrying amount at 1 January | - | |
Revaluation of property, plant and equipment | 27,435 | |
Depreciation of revaluation reserve | - | |
Write-off of property, plant and equipment | - | |
Deferred income tax | (4,115) | |
Carrying amount at the end of the period | 23,320 |
Other reserves
Other reserves are formed based on the decision of shareholders and can be redistributed on the distribution of the next year’s profit.
On 11 April 2023, the Ordinary General Meeting of Shareholders the decision was made to approve the draft profit (loss) distribution and to cover losses by transferring EUR 2,521 thousand from the legal reserve and EUR 46,828 thousand from other reserves, and through reversal of the reserve for support of EUR 135 thousand.
The Ordinary General Meeting of Shareholders of LITGRID AB held on 20 April 2022 approved the proposed profit appropriation and resolved to transfer EUR 14,794 thousand from profit to be appropriated to other reserves and EUR 175 thousand to be appropriated to reserve for support.
18.Dividends
On 11 April 2023, the Ordinary General Meeting of Shareholders of LITGRID AB the decision was made to approve the draft profit (loss) distribution for the year ended 31 December 2022. The dividends have not been declared for 2022, as the Company reported a loss at the end of the year.
On 20 April 2022, the Ordinary General Meeting of Shareholders of LITGRID AB approved the distribution of the Company’s profit (loss) for 2021. EUR 5 044 thousand was allocated to dividends for the year ended 31 December 2021. Dividends per share amounted to EUR 0.01.
At 31 December 2023 | At 31 December 2022 | |||
Dividends per share |
NOTES TO THE COMPANY’S FINANCIAL STATEMENTS
(All amounts are in EUR thousands unless otherwise stated)
19.Grants
The grants at the Company are mainly designated for the acquisition of non-current assets. Movements in grants in 2023 and 2022 were as follows:
Opening balance at 1 January | Note | At 31 December 2023 | At 31 December 2022 | |
Grants receivable | 12 | 302 | 9,900 | |
Grants received in advance (non-current liabilities) | 27 | (32,802) | (1,677) | |
Grants received in advance (current liabilities) | 26 | (34,896) | (9,705) | |
(67,396) | (1,482) | |||
Recognised grants | ||||
Transfer to property, plant and equipment | 6 | 118,894 | 30,146 | |
Grants used for compensation of expenses | - | 8 | ||
118,894 | 30,154 | |||
Grants received | ||||
Grants received in the form of monetary funds (cash flow statement) | 15,727 | 72,086 | ||
Congestion revenue transferred to grants | 22 | 13,457 | 22,992 | |
Grants received during the previous years | (2) | 26 | ||
29,182 | 95,104 | |||
Grants received in the form of assets | 6 | 16,873 | 964 | |
Closing balance at the end of the period | ||||
Grants receivable | 12 | 34,006 | 302 | |
Grants received in advance (non-current liabilities) | 27 | - | (32,802) | |
Grants received in advance (current liabilities) | 26 | (28,563) | (34,896) | |
5,443 | (67,396) |
On the basis of accrual and matching principles, grants are recognised when the Company creates an asset to be used for intended purpose or incurs expenses for which the grant is intended to compensate.
Having assessed the prepayments received, grants are recognised when they are received or receivable for the reimbursement of the costs incurred in the Synchronisation projects (up to 75%) under the instrument Connecting Europe Facility (CEF). Grants are also recognised when they are received or receivable through the European Union Structural Funds for the reimbursement of the eligible costs incurred under the agreed investment projects.
20.Borrowings
The Company’s borrowings comprise as follows:
At 31 December 2023 | At 31 December 2022 | |||
Non-current borrowings | ||||
Bank borrowings | 28,143 | 34,285 | ||
Current borrowings | ||||
Current portion of non-current borrowings | 6,143 | 6,143 | ||
43 | 49 | |||
Total borrowings at the end of the period | 34,329 | 40,477 |
Non-current borrowings grouped by maturity profile:
At 31 December 2023 | At 31 December 2022 | |||
From 1 to 2 years | 6,143 | 6,143 | ||
From 2 to 5 years | 12,000 | 14,142 | ||
After 5 years | 10,000 | 14,000 | ||
Total | 28,143 | 34,285 |
NOTES TO THE COMPANY’S FINANCIAL STATEMENTS
(All amounts are in EUR thousands unless otherwise stated)
As at 31 December 2023 and 2022, no assets were pledged as collateral by the Company.
As at 31 December 2023, the weighted average interest rate on the Company’s borrowings was 0.94% (31 December 2022: 0.94%).
As at 31 December 2023, the outstanding balance of the Company’s borrowings with the fixed interest rate amounted to EUR 34,286 thousand (31 December 2022: EUR 40,428 thousand).
As at 31 December 2023 and 2022, the Company had no unwithdrawn borrowings or overdrafts.
Under the loan agreement signed by the Company with the European Investment Bank, the Company is committed to comply with the net debt to EBITDA ratio, which should not exceed 6.5 and with the interest coverage ratio, which should be above 3, these ratios are calculated two times per year at 31 December and at 30 June.
The outstanding balance of a borrowing, which is subject to this requirement, amounted to EUR 34,286 thousand as at 31 December 2023 (31 December 2022: the outstanding balance of a borrowing, which is subject to this requirement, EUR 40,428 thousand (European Investment Bank). At 31 December 2023, the Company comply with the requirements laid down in the loan agreement. At 31 December 2022, the Company did not comply with the requirements laid down in the loan agreement, however, at the Company’s request European Investment Bank sent a notification in December 2022, whereby it informed that the Bank waives its right to demand that Company repay the loan prior to its maturity.
Reconciliation of net debt balances and cash flows from financing activities in 2023 and 2022:
At 31 December 2023 | At 31 December 2022 | |||
Cash and cash equivalents | 634 | 499 | ||
Non-current borrowings | (28,143) | (34,285) | ||
Lease liabilities | (5,038) | (5,299) | ||
Current portion of non-current borrowings | (6,143) | (6,143) | ||
Interest charged on borrowings | (43) | (49) | ||
Current portion of lease liabilities | (455) | (403) | ||
Net debt | (39,188) | (45,680) | ||
Cash and cash equivalents | 634 | 499 | ||
Borrowings with a fixed interest rate | (39,822) | (46,179) | ||
Borrowings with a variable interest rate | - | - | ||
Net debt | (39,188) | (45,680) |
Cash | Borrowings | Other financing | Leases | Total | |
Net debt at 1 January 2022 | 1,819 | (65,769) | - | (4,594) | (68,544) |
Increase (decrease) in cash and cash equivalents | (1,320) | - | - | - | (1,320) |
New leases | - | - | - | (1,402) | (1,402) |
Write – offs and termination of leases | - | - | - | - | - |
Lease payments | - | - | - | 294 | 294 |
Repayment of a borrowing | - | 25,249 | - | - | 25,249 |
Interest charged | - | (621) | (25) | (68) | (714) |
Interest paid | - | 664 | 25 | 68 | 757 |
Net debt at 31 December 2022 | 499 | (40,477) | - | (5,702) | (45,680) |
Net debt at 1 January 2023 | 499 | (40,477) | - | (5,702) | (45,680) |
Increase (decrease) in cash and cash equivalents | 135 | - | - | - | 135 |
New leases | - | - | - | (210) | (210) |
Write – offs and termination of leases | - | - | - | 2 | 2 |
Lease payments | - | - | - | 417 | 417 |
Repayment of a borrowing | - | 6,142 | - | - | 6,142 |
Interest charged | - | (360) | (52) | (77) | (489) |
Interest paid | - | 366 | 52 | 77 | 495 |
Net debt at 31 December 2023 | 634 | (34,329) | - | (5,493) | (39,188) |
NOTES TO THE COMPANY’S FINANCIAL STATEMENTS
(All amounts are in EUR thousands unless otherwise stated)
21.Lease liabilities
The Company’s lease liabilities and their movements:
At 31 December 2023 | At 31 December 2022 | |||
Carrying amount at the 1 January | 5,702 | 4,594 | ||
Leases | 210 | 1,402 | ||
Terminated contracts | (2) | - | ||
Expenses of interest charged | 77 | 68 | ||
Lease payments (principal and interest) | (494) | (362) | ||
Carrying amount at the end of the period | 5,493 | 5,702 | ||
Non-current lease liabilities | 5,038 | 5,299 | ||
Current lease liabilities | 455 | 403 | ||
Total liabilities | 5,493 | 5,702 |
The Company’s lease liabilities comprise as follows:
At 31 December 2023 | At 31 December 2022 | |||
Current portion | 455 | 403 | ||
Repayment terms of non-current liabilities: | ||||
From 1 to 2 years | 433 | 373 | ||
From 2 to 3 years | 298 | 370 | ||
From 3 to 5 years | 29 | 275 | ||
After 5 years | 4,278 | 4,281 | ||
Total | 5,493 | 5,702 |
The Company’s short-term lease (up to 12 months) and low-value lease (up to EUR 4 thousand) expenses amounted to EUR 175,5 thousand in 2023 (2022: EUR 174,8 thousand).
The Company had no leases with variable payments.
22.Congestion management funds
At 31 December 2023 | At 31 December 2022 | |||
Non-current portion of congestion management funds included in liabilities | 264,173 | 64,095 | ||
Current portion of congestion management funds included in liabilities | 36,901 | 287,400 | ||
Total congestion management funds at the end of the period | 301,074 | 351,495 |
NOTES TO THE COMPANY’S FINANCIAL STATEMENTS
(All amounts are in EUR thousands unless otherwise stated)
At 31 December 2023 | At 31 December 2022 | |||
Congestion management funds at 1 January | 351,495 | 109,087 | ||
Congestion management funds received during the period | 108,527 | 267,296 | ||
Congestion management funds use to finance property, plant and equipment | (13,457) | (22,992) | ||
Congestion management funds recognised as income during the period | (145,491) | (1,896) | ||
Congestion management funds at the end of the period | 301,074 | 351,495 |
Under the NERC’s Resolution No O3E-1330 of 30 September 2022 Regarding Adjustment of the Service Price Cap of Litgrid AB in 2023. In 2023, the transmission tariff was reduced, but the congestion management funds of EUR 35,575 thousand were used to compensate for the loss of revenue on a quarterly basis, for a total of € EUR 142,300 thousand per year. The principles of collection and use of congestion management funds are set out in Note 2.12.
For the purpose of the statement of cash flows, congestion management funds collected in 2023 were presented under operating activities (2022: investing activities), as congestion management funds collected in 2023 were intended to compensate for the loss of operating income due to the reduction of the transmission tariff (congestion management funds collected in 2022 were intended to finance investments).
In April 2023, the EUR 60,590 thousand current portion of congestion management funds was reclassified to non-current portion due to changes related to the Harmony Link project.
The current portion of liabilities is expected to be settled (used) within 12 months.
23.Provisions
Note | At 31 December 2023 | At 31 December 2022 | ||
Provisions for pension benefits to employees | 2.11 | 477 | 654 | |
Provisions for servitude liabilities | 419 | 468 | ||
Provisions for registration of protection zones | 176 | 367 | ||
Provisions for settlement of current liabilities | 1,358 | 100 | ||
Carrying amount | 2,430 | 1,589 | ||
Non-current provisions | 823 | 941 | ||
Current provisions | 1,607 | 648 |
Movements in provisions were as follows:
Provisions for pension benefit obligations to employees | Provisions for servitude liabilities | Provisions for registration of protection zones | Provisions for litigations and claims | Total | |
Carrying amount at 1 January 2022 | 275 | 277 | 1,646 | 661 | 2,859 |
Calculated | - | - | - | 100 | 100 |
Revised estimate | 379 | 260 | (1,055) | - | (416) |
Payments made | - | (69) | (224) | (661) | (954) |
Carrying amount at 31 December 2022 | 654 | 468 | 367 | 100 | 1,589 |
Calculated | - | - | 176 | 1,358 | 1,534 |
Revised estimate | (177) | 201 | - | - | 24 |
Payments made | - | (250) | (367) | (100) | (717) |
Carrying amount at 31 December 2023 | 477 | 419 | 176 | 1,358 | 2,430 |
NOTES TO THE COMPANY’S FINANCIAL STATEMENTS
(All amounts are in EUR thousands unless otherwise stated)
The assumptions applied when calculating provisions for pension benefit obligations to employees were as follows: long-term salary growth rate in 2023 – 3% (2022: 4%), discount rate in 2023 – 1,23% (2022: 0,80%), employee turnover rate in 2023 – 14,5% (2022: 8,7%), benefit rate in 2023 – the amount of 2-4 monthly average salaries (2022: the amount of 2-4 monthly average salaries).
In 2023, the Company revised the provision for servitude liabilities taking into account statistics on payment requests, and recognised a new EUR 176 thousand provision of protection zones for the protection of electronic communications infrastructure (the value was estimated according to purchases effected), and utilised the EUR 367 thousand provision of protection zones recognised for completed works designated for the protection of the electricity transmission network installed on the land plot not owned.
In the light of ongoing litigation, the provision of EUR 1,358 thousand was recognised for litigations/claims as at 31 December 2023 (EUR 100 thousand as at 31 December 2022).
24.Current and deferred income tax
Income tax expenses comprise as follows:
At 31 December 2023 | At 31 December 2022 | |||
Income tax expenses of the current year | - | - | ||
Income tax expenses of the previous year | (7,156) | (16,772) | ||
Deferred income tax income/(benefit) | (207) | (8,275) | ||
Deferred income tax income/(benefit) of the previous year | 55 | 16,184 | ||
Income tax expenses/(benefit) of the current year | (7,308) | (8,863) |
In accordance with tax legislation of the Republic of Lithuania, the Company’s profit (loss) for the twelve-month period ended 2023 was subject to a 15% income tax (2022: 15%).
As at 31 December 2023, the Company’s accrued tax losses and deferred tax asset recognised for such losses amounted to EUR 11,220 thousand and EUR 1,683 thousand, respectively (31 December 2022: EUR 55,374 thousand and EUR 8,306 thousand, respectively).
In 2023, given the response from the State Tax Inspectorate on the eligibility to receive tax incentive in respect of the Company’s investment projects received in November 2022, the Company assessed investment projects implemented in 2019-2023, and, in 2023, revised tax returns for 202-2021 reduced income tax payable by EUR 9,952 thousand, and additionally recognised the deferred tax asset of EUR 3,165 thousand.
For the purpose of calculating income tax for 2023, the taxable profit was reduced by 70% of the tax losses carried forward from 2022, by reducing the deferred tax asset.
Other adjustments
During the revision of the tax returns for the year 2020, the Company also surrendered back a tax loss of EUR 2,533 thousand taken over from EPSO-G UAB and recovered 15% from the repaid amount of EUR 380 thousand.
The movement in deferred income tax assets and liabilities prior to offsetting the balances related to the same fiscal authority was
NOTES TO THE COMPANY’S FINANCIAL STATEMENTS
(All amounts are in EUR thousands unless otherwise stated)
as follows:
Deferred income tax assets | Impairment of revalued property, plant and equipment and financial assets | Impairment of assets | Congestion revenue | Statutory servitudes and protection zones | Tax loss | Unutilised investment relief | Other | Total |
At 1 January 2022 | 1,425 | 138 | 18,611 | 288 | - | - | 677 | 21,139 |
Recognised in profit and loss | (179) | (45) | (16,233) | (163) | 8,305 | - | (51) | (8,366) |
At 31 December 2022 | 1,246 | 93 | 2,378 | 125 | 8,305 | - | 626 | 12,773 |
Recognised in profit and loss | 2,761 | 13 | (58) | (36) | (6,622) | 3,165 | 218 | (559) |
Recognised in profit and loss | - | - | - | - | - | - | - | - |
At 31 December 2023 | 4,007 | 106 | 2,320 | 89 | 1,683 | 3,165 | 844 | 12,214 |
Deferred income tax liabilities | Increase in value of revalued property, plant and equipment and financial assets | Differences in depreciation rates | Tax relief on acquisition of PP&E | Statutory servitudes and protection zones | Effect of capitalisation of interest | Total | ||
At 1 January 2022 | - | (206) | (1,288) | (373) | (278) | - | - | (2,145) |
Recognised in profit and loss | - | 418 | (87) | 119 | 7 | - | - | 457 |
At 31 December 2022 | - | 212 | (1,375) | (254) | (271) | - | - | (1,688) |
Recognised in profit and loss | - | 647 | 112 | (57) | 9 | - | - | 711 |
Recognised in profit and loss | (4,115) | - | - | - | - | - | - | (4,115) |
At 31 December 2023 | (4,115) | 859 | (1,263) | (311) | (262) | - | - | (5,092) |
Deferred income tax assets, net, at 31 December 2022 | 12,773 | |||||||
Deferred income tax assets, net, at 31 December 2023 | 12,214 | |||||||
Deferred income tax liability, net, at 31 December 2022 | (1,688) | |||||||
Deferred income tax liability, net, at 31 December 2023 | (5,092) | |||||||
Deferred income tax, net, at 31 December 2022 | 11,085 | |||||||
Deferred income tax, net, at 31 December 2023 | 7,122 | |||||||
The analysis of movements in deferred income tax assets and liabilities over time is as follows:
At 31 December 2023 | At 31 December 2022 | |||
Deferred income tax assets: | ||||
Deferred income tax assets to be realised after more than 12 months | 6,854 | 4,285 | ||
Deferred income tax assets to be realised within 12 months | 5,360 | 8,488 | ||
Total | 12,214 | 12,773 | ||
Deferred income tax liabilities: | ||||
Deferred income tax liabilities to be settled after more than 12 months | (4,704) | (1,314) | ||
Deferred income tax liabilities to be settled within 12 months | (388) | (374) | ||
Total | (5,092) | (1,688) |
NOTES TO THE COMPANY’S FINANCIAL STATEMENTS
(All amounts are in EUR thousands unless otherwise stated)
The table below presents reconciliation of income tax expenses reported in the statement of comprehensive income to income tax expenses calculated at a statutory income tax rate on profit before income tax:
At 31 December 2023 | At 31 December 2022 | |||
Profit/(loss) before income tax | 41,078 | (58,347) | ||
Income tax calculated at a rate of 15% | 6,162 | (8,752) | ||
Effect of investment incentive | (3,000) | (419) | ||
Effect of investment incentive of prior years | (10,117) | - | ||
Income tax expenses/(benefit) for the previous year | 36 | 41 | ||
Effect of non-allowable deductions and non-taxable income | (389) | 267 | ||
Income tax expenses/(benefit) recognised in profit or loss | (7,308) | (8,863) |
The change in prepaid income tax and repayable income tax was as follows:
At 31 December 2023 | At 31 December 2022 | |||
Amount of prepaid income tax (income tax) as at 1 January | 28,597 | (3,162) | ||
Prepaid income tax | - | 9,938 | ||
(Repayable) income tax paid | (380) | 5,050 | ||
Overpaid income tax due to changes in recognition of congestion management funds | - | 16,212 | ||
Additional overpayment of income tax due to utilised investment incentives of prior periods | 7,137 | 629 | ||
Realised income tax prepaid | (6,420) | (70) | ||
Prepaid income tax at the end of the period | 28,934 | 28,597 |
25.Trade payables
At 31 December 2023 | At 31 December 2022 | |||
Amounts payable for electricity | 26,684 | 53,737 | ||
Amounts payable for repair works, services | 3,190 | 4,900 | ||
Amounts payable for property, plant and equipment | 26,279 | 11,509 | ||
Carrying amount at the end of the period | 56,153 | 70,146 |
In December 2023 compared to December 2022 the debt for electricity decreased by 2 times due to the decrease in exchange electricity price, and increased the debt for property, plant and equipment the projects by 2.3 times due to investment projects of synchronization with the Continental Europe.
The fair value of trade payables approximates their carrying amounts.
26.Advance amounts received
At 31 December 2023 | At 31 December 2022 | |||
Deferred revenue | 2 | 13 | ||
Advance amounts received from new consumers and producers* | 217 | 568 | ||
Grants received in advance | 28,563 | 34,896 | ||
Other advance amounts received | 820 | 29 | ||
Carrying amount | 29,602 | 35,506 |
NOTES TO THE COMPANY’S FINANCIAL STATEMENTS
(All amounts are in EUR thousands unless otherwise stated)
*Advance amounts received from new consumers and producers include advance amounts received from new consumers and producers for connection to electricity networks and for electricity infrastructure relocation services.
27.Other amounts payable
At 31 December 2023 | At 31 December 2022 | |||
Other non-current amounts payable and liabilities | ||||
Advance amounts received from connection of new consumers | 1,595 | 1,115 | ||
Non-current trade payables | - | 32,802 | ||
Deferred revenue | 131 | 321 | ||
Grants received in advance* | 154 | 154 | ||
Carrying amount at the end of period | 1,880 | 34,392 | ||
Other current amounts payable and liabilities | ||||
Non-financial liabilities | ||||
Employment-related liabilities | 379 | 303 | ||
Accrued expenses relating to vacation reserve | 1,758 | 1,442 | ||
VAT payable | - | 4,055 | ||
Real estate tax payable | - | 622 | ||
Total non-financial liabilities | 2,137 | 6,422 | ||
Financial liabilities | ||||
Dividends payable | 496 | 522 | ||
Interest payable * | - | 49 | ||
Accrued other expenses | 1,481 | 2,580 | ||
Deposits received ** | 2,889 | 2,334 | ||
Fee payable to the regulator | 618 | 394 | ||
Other amounts payable and current liabilities | 149 | 6 | ||
Total financial liabilities | 5,633 | 5,885 | ||
Total carrying amount of financial and non-financial liabilities | 7,770 | 12,307 |
* Starting from 2023, loan interest payable is reclassified to short-term loans.
** Deposits received consist of deposits received from customers under imbalance purchase - sale contracts.
The fair value of other amounts payable approximates their carrying amount.
28.Segment information
The Company is engaged in electricity transmission and related services activities and operates as one segment. The Company’s chief operating decision-maker, who is responsible for allocating resources, has been identified as the Board of Directors that makes strategic decisions.
The Board monitors the key performance indicators:
profit before interest, taxes, depreciation (amortisation), loss on impairment and write-off of property, plant and equipment (EBITDA);
net profit;
operating expenses, excluding electricity and related expenses.
These indicators are calculated on the basis of data reported in the financial statements.
NOTES TO THE COMPANY’S FINANCIAL STATEMENTS
(All amounts are in EUR thousands unless otherwise stated)
The Board also monitors adjusted performance indicator – adjusted EBITDA, which is non-IFRS alternative performance measure. Adjustments include temporary regulatory differences resulting from the Council’s decisions. All adjustments may have both positive and negative impact on the reporting period results. In Board’s view, adjusted EBITDA more accurately presents results of the operations and enable a better comparison of the results between the periods as they indicate the amount that was actually earned by the Group in the reporting year.
At 31 December 2023 | At 31 December 2022 | |||
Revenue and other income | 369,838 | 420,308 | ||
Operating expenses, excluding electricity, gas and related expenses, depreciation, write-off and impairment | (40,292) | (36,715) | ||
EBITDA | 78,288 | (36,513) | ||
Adjusted EBITDA | 37,291 | 34,556 | ||
Temporary regulatory differences for previous periods | 23,011 | 19,709 | ||
Temporary regulatory differences for reporting period | (64,008) | 51,360 | ||
Overall effect of management’s adjustments on EBITDA | (40,997) | 71,069 | ||
Result of lost control in subsidiary and revaluation | (29,619) | (12,603) | ||
Depreciation and amortisation | (19,737) | (20,582) | ||
Loss on impairment and write-off of non-current assets | (21,624) | - | ||
Total finance costs, net | 4,434 | (884) | ||
Income tax | 7,308 | 8,863 | ||
Dividend income | - | - | ||
Net profit (loss) | 48,386 | (49,484) | ||
Total assets | 677,417 | 718,545 | ||
Net financial deb | (39,188) | (45,680) | ||
Investments (additions of property, plant and equipment and intangible assets) | (165,371) | (77,071) |
All non-current assets of the Company are allocated in Lithuania where the Company conducts its business activities.
In 2023, revenue from the Lithuanian clients accounted for 84% of the Company’s total revenue (82% in 2022). In 2023 and 2022, the Company’s revenue by geographical location of customers:
At 31 December 2023 | At 31 December 2022 | ||
Lithuania | 306,313 | 344,221 | |
Estonia | 29,534 | 43,862 | |
Sweden | 8,691 | 15,840 | |
Poland | 3,354 | 5,846 | |
Latvia | 2,221 | 1,448 | |
Norway | 4,816 | 7,838 | |
Other countries | 14,909 | 1,253 | |
Total | 369,838 | 420,308 |
The Company’s revenue from the major clients:
Company name | At 31 December 2023 |
Energijos Skirstymo Operatorius AB | 90,767 |
UAB "Ignitis" | 29,812 |
Elering AS | 29,286 |
Company name | At 31 December 2022 |
Energijos Skirstymo Operatorius AB | 200,602 |
Ignitis UAB | 48,486 |
Ignitis Gamyba AB | 27,705 |
NOTES TO THE COMPANY’S FINANCIAL STATEMENTS
(All amounts are in EUR thousands unless otherwise stated)
29.Revenue from electricity transmission and related services
At 31 December 2023 | At 31 December 2022 | |||
Revenue from contracts with customers | ||||
Revenue from electricity transmission and related services | ||||
Electricity transmission services | 64,180 | 72,516 | ||
Trade in balancing/imbalance electricity | 108,264 | 175,145 | ||
Electricity ancillary services | 27,992 | 137,175 | ||
Revenue from other sales of electricity and related services | 5,867 | 2,025 | ||
Total revenue from electricity transmission and related services | 206,303 | 386,861 | ||
Other income from contracts with customers | ||||
Income from administration of guarantees of origin | 78 | 129 | ||
Total other income | 78 | 129 | ||
Total revenue from contracts with customers | 206,381 | 386,990 | ||
Revenue not attributable to contracts with customers | ||||
Services under public service obligation (PSO) scheme* | - | 28,893 | ||
Electricity transmission services (tariff compensation using congestion management funds) | 142,300 | - | ||
Electricity transmission services (recognised as income) | 3,191 | 1,896 | ||
Other electricity-related services | 14,937 | 1,161 | ||
Revenue from connection of producers and relocation of electrical installations | 13 | 13 | ||
Total revenue not attributable to contracts with customers | 160,441 | 31,963 | ||
Total revenue | 366,822 | 418,953 |
All revenues are recognised over – time.
* In 2023, no revenue was generated from PSO services (balancing of electricity produced from renewable energy sources), as the Company no longer provides this service.
30.Other income
At 31 December 2023 | At 31 December 2022 | |||
Income from lease of assets | 551 | 534 | ||
Interest on late payment and default charges | 1609 | 696 | ||
Gain on disposal of assets | 476 | 0 | ||
Other income | 380 | 125 | ||
Total | 3,016 | 1,355 |
NOTES TO THE COMPANY’S FINANCIAL STATEMENTS
(All amounts are in EUR thousands unless otherwise stated)
31.Expenses of purchases of electricity and related services
At 31 December 2023 | At 31 December 2022 | |||
Expenses for purchase of imbalance and balancing electricity | 108,515 | 174,786 | ||
Expenses for purchase of PSO imbalance and balancing electricity | - | 28,802 | ||
Expenses for electricity ancillary services | 98,121 | 111,633 | ||
Expenses for electricity technological needs | 38,273 | 99,576 | ||
Expenses for electricity and related services | 6,349 | 5,309 | ||
Carrying amount at the end of period | 251,258 | 420,106 | ||
32.Other expenses
At 31 December 2023 | At 31 December 2022 | |||
Telecommunications and IT system expenses | (2,465) | (2,214) | ||
Tax expenses | (2,670) | (2,421) | ||
Fee payable to the regulator | (2,473) | (1,578) | ||
Business protection expenses | (870) | (748) | ||
Membership fee | (518) | (436) | ||
Management service cost | (505) | (242) | ||
Business trips | (399) | (260) | ||
Insurance expenses | (445) | (243) | ||
Transport expenses | (303) | (301) | ||
Premise rental expenses | (287) | (354) | ||
Other expenses | (2,302) | (3,546) | ||
Carrying amount at the end of period | (13,237) | (12,343) |
33.Related-party transactions
EPSO-G UAB was the parent company as at 31 December 2023 and 2022. The parent entity of this company was the Republic of Lithuania represented by the Ministry of Energy of the Republic of Lithuania. For the purposes of the related-party disclosure the Republic of Lithuania excludes central and local government authorities. The disclosures comprise transactions with the companies of the EPSO-G UAB group, associates and all entities controlled by or under a significant influence of the state (transactions with these entities are disclosed only if the amount of the transactions exceeds EUR 100 thousand during a calendar year) and with the management, and balances arising from these transactions. The list of entities controlled by or under a significant influence of the state, with which the transactions are disclosed, is presented at address: https://vkc.sipa.lt/apie-imones/vvi-sarasas/.
The Company’s related parties in 2023 and 2022 were as follows:
NOTES TO THE COMPANY’S FINANCIAL STATEMENTS
(All amounts are in EUR thousands unless otherwise stated)
‐The Company’s parent EPSO-G, which is wholly owned by the Ministry of Energy of the Republic of Lithuania:
‐The companies of the EPSO-G UAB group:
‐Amber Grid AB (jointly controlling shareholders);
‐TETAS UAB (jointly controlling shareholders);
‐Energy Cells UAB (jointly controlling shareholders);
‐BALTPOOL UAB (jointly controlling shareholders).
‐The companies of Ignitis Grupė UAB
‐Other state-owned entities:
‐State Enterprise Ignalina Nuclear Power Plant
‐State Enterprise Centre of Registers
‐Other state-owned companies or those under significant influence.
‐Management.
Transactions with related parties are carried out in accordance with the public procurement requirements or the tariffs approved by the legal acts.
The Company’s transactions with the state-owned enterprises mainly comprise sales of electricity transmission, balancing, imbalance and electricity ancillary services, purchase of electricity. EPSO-G UAB provides management services, TETAS UAB provides services under construction contracts.
The Company’s transactions conducted with related parties in 2023 and balances arising from these transactions as at 31 December 2023 were as follows:
Related parties | Amounts receivable and accrued revenue | Amounts payable and accrued expenses | Loans granted | Purchases | Sales | Other sales |
EPSO-G UAB group companies | ||||||
EPSO-G UAB | - | 150 | 167,082 | 505 | - | 4,849 |
TETAS UAB | 279 | 1,526 | - | 9,811 | - | 625 |
BALTPOOL UAB | - | - | - | - | - | - |
ENERGY CELLS UAB | 15 | 861 | - | 2,455 | 535 | - |
State-owned companies | ||||||
Energijos Skirstymo Operatorius AB | 13,765 | 1,145 | - | 1,656 | 90,743 | - |
Ignitis Gamyba AB | 477 | 12,592 | - | 130,303 | 4,082 | - |
Ignitis Grupės Paslaugų Centras UAB | 29 | - | - | - | 285 | - |
Ignitis UAB | 983 | 809 | - | 9,594 | 29,812 | - |
Vilniaus Kogeneracinė Jėgainė UAB | 111 | 100 | - | 616 | 549 | - |
Kauno Kogeneracinė Jėgainė UAB | - | 36 | - | 276 | 79 | - |
Transporto Valdymas UAB | - | - | - | - | - | - |
State Enterprise Lithuanian Road Administration | - | - | - | - | 1,086 | - |
STATE ENTERPRISE IGNALINA NUCLEAR POWER PLANT | 55 | - | - | - | 535 | - |
LTG Infra AB | 37 | 75 | - | - | 295 | - |
State Enterprise Centre of Registers | - | 1 | - | 402 | - | - |
15,751 | 17,295 | 167,082 | 155,618 | 128,001 | 5,474 |
Income from other sales comprised as follows: interest charged to EPSO-G UAB on the loan granted (EUR 4,849 thousand), and interest on late payment and default charges from TETAS UAB (EUR 625 thousand). Property free received from UAB ENERGY CELLS (EUR 3 425 thousand).
The Company’s transactions conducted with related parties in 2022 and balances arising from these transactions as at 31 December 2022 were as follows:
Related parties | Amounts receivable and accrued revenue | Amounts payable and accrued expenses | Loans granted | Purchases | Sales | Other sales |
EPSO-G UAB group companies | ||||||
EPSO-G UAB | 25 | 79 | 232,008 | 242 | - | 13,850 |
TETAS UAB | 365 | 2,046 | - | 9,702 | - | 180 |
BALTPOOL UAB | 354 | - | - | - | 12,279 | - |
UAB ENERGY CELLS | 123 | 48 | - | 38 | 200 | - |
State-owned companies | ||||||
Energijos Skirstymo Operatorius AB | 33,059 | 985 | - | 4,039 | 200,591 | - |
Ignitis Gamyba AB | 3,712 | 25,387 | - | 181,932 | 27,705 | - |
Ignitis Grupės Paslaugų Centras UAB | 27 | - | - | - | 295 | - |
Ignitis UAB | 10,138 | - | - | 11,176 | 48,486 | - |
Vilniaus Kogeneracinė Jėgainė UAB | 8 | 100 | - | 579 | 212 | - |
Kauno Kogeneracinė Jėgainė UAB | - | 81 | - | 771 | 194 | - |
Transporto Valdymas UAB | - | - | - | 123 | - | - |
State Enterprise Lithuanian Road Administration | - | 321 | - | - | - | - |
State Enterprise Ignalina Nuclear Power Plant | 159 | - | - | - | 1,152 | - |
LTG Infra AB | 127 | 15 | - | - | 652 | - |
VĮ Registrų centras | - | 205 | - | 240 | - | - |
48,097 | 29,267 | 232,008 | 208,842 | 291,766 | 14,030 |
NOTES TO THE COMPANY’S FINANCIAL STATEMENTS
(All amounts are in EUR thousands unless otherwise stated)
Income from other sales comprised as follows: sale of shares of TSO Holding AS to EPSO-G UAB (EUR 13,785 thousand); compensation of expenses related to the sale of shares of TSO Holding AS to EPSO-G UAB (EUR 45 thousand); and interest charged to EPSO-G UAB on the loan granted (EUR 20 thousand), and interest on late payment and default charges from TETAS UAB (EUR 180 thousand).
Dividends paid to related parties | 2023 | 2022 | |
EPSO-G UAB | - | 16,129 | |
Total | - | 16,129 |
Payments to key management personnel | At 31 December 2023 | At 31 December 2022 | |
Employment-related payments* | 1,110 | 803 | |
Whereof: Termination benefits* | 3 | - | |
Number of key management personnel (average annual) | 9 | 7 |
* - including social security contributions paid by the employer.
No loans, guarantees or any other benefits were paid or calculated, nor any assets were transferred to the Company’s management in 2023 and 2022.
Key management personnel consists of the Company’s head of administration, chiefs of the departments and centers, and members of the collegial management bodies. In 2023, payments to the members of the collegial management bodies amounted to EUR 66 thousand (2022: EUR 40 thousand).
34.Basic and diluted earnings per share
In 2023 and 2022, the Company’s basic and diluted earnings/(deficit) per share were as follows:
At 31 December 2023 | At 31 December 2022 | ||
Profit/(loss) for the period attributable to the Company’s shareholders (EUR thousands) | 48,386 | (49,484) | |
Weighted average number of shares (units) | 504,331,380 | 504,331,380 | |
Basic and diluted earnings/(deficit) per share (in EUR) | 0.096 | (0.098) |
NOTES TO THE COMPANY’S FINANCIAL STATEMENTS
(All amounts are in EUR thousands unless otherwise stated)
35.Additional information on cash flows
Changes in the Company’s payables for non-current assets amounting to EUR 12,758 thousand in 2023 (2022: EUR 1,964 thousand) and changes in capitalised interest amounting to EUR 0 in 2023 (2022: EUR 36 thousand) were taken into account when calculating cash flows from investing activities.
36.Financial risk factors
The Company is exposed to financial risks in its operations. In managing these risks, the Company seeks to mitigate the effect of factors which could make a negative effect on the financial performance of the Company. Financial risk management is conducted by the Company’s Finance Planning and Analysis Division in accordance with the Treasury and Financial Risk Management Policy of the EPSO-G UAB Group approved by the Board of LITGRID AB which is published on the website of EPSO-G UAB www.epsog.lt.
Financial instruments by category (as per the statement of financial position):
Financial assets | At 31 December 2023 | At 31 December 2022 | ||
Trade receivables under contracts with customers | 18,629 | 61,080 | ||
Trade receivables | 8,283 | 2,558 | ||
Other amounts receivable | 420 | 590 | ||
Loans granted | 167,082 | 232,008 | ||
Other financial assets | 4,444 | 7,361 | ||
Cash and cash equivalents | 634 | 499 | ||
Financial assets measured at amortised cost | 199,492 | 304,096 | ||
Other financial assets | ||||
Financial assets measured at fair value through other comprehensive income | - | - | ||
Total financial assets | 199,492 | 304,096 |
At 31 December 2023 | At 31 December 2022 | |||
Financial liabilities | ||||
Borrowings | 34,329 | 40,428 | ||
Lease liabilities | 5,493 | 5,702 | ||
Trade payables | 58,033 | 70,146 | ||
Dividends payable | 496 | 522 | ||
Accrued other expenses and deferred revenue | 1,481 | 2,580 | ||
Guarantee on the fulfilment of obligations | 3,507 | 2,334 | ||
Total | 103,339 | 121,712 |
Credit risk
As at 31 December 2023 and 31 December 2022, credit risk was related to the following line items:
At 31 December 2023 | At 31 December 2022 | |||
Financial assets, excluding assets measured at fair value through other comprehensive income | 199,492 | 304,096 |
NOTES TO THE COMPANY’S FINANCIAL STATEMENTS
(All amounts are in EUR thousands unless otherwise stated)
The Company has a significant credit risk concentration, because exposure to credit risk is shared among 10 main customers, amounts receivables from which accounted for about 92% of the Company’s total trade and other receivables as at 31 December 2023 (31 December 2022: 95%). As at 31 December 2023, amounts receivable from the major customer, i.e. distribution network operator Energijos Skirstymo Operatorius AB, accounted for 58% of the Company’s total amounts receivable (31 December 2022: 54%).
When entering into imbalance contracts with participants of the electricity market, the Company requires to pay a cash deposit of the established amount ( note 14 and note 27) or to provide a bank guarantee in accordance with terms and conditions set out in the imbalance contract.
The Company holds unused cash and cash equivalents at the banks assigned with a credit rating not lower than AA-. The table below shows the long-term credit ratings of the parent banks of the banks at which the Company holds cash and cash equivalents (Note 15):
Bank 1A+
Bank 2AA-
Bank 3AA-
Bank 2AA-
Bank 3AA-
Trade and other receivables are mainly from the state-owned entities and large manufacturers with no history of significant defaults.
The Company has granted the loan to EPSO-G UAB, which is wholly owned by the state and has a Baa1 investment rating assigned by rating agency Moody’s Investors Service.
Liquidity risk
The main objective of the Company’s liquidity policy is to ensure funding of its operations, i.e. to ensure that the Company will have sufficient cash and/or committed credit facilities and overdrafts to meet its contractual obligations at any time. The liquidity risk is managed by making forecasts of cash flows of the Company.
The Company’s cash flows from operations were negative in 2022, therefore its exposure to liquidity risk became more significant. The Company’s current ratio (total current assets / total current liabilities) and quick ratio ((total current assets – inventories) / total current liabilities) as at 31 December 2023 were 1.91 (31 December 2022: 0.81). As described in Note 2.12, the Company may temporarily use congestion management funds when necessary. The next year’s liquidity will be ensured by the next year’s operating profit and congestion funds received which, when necessary, will be used for the financing of the activities, and by obtaining additional borrowings from financial institutions.
The table below summarise the contractual maturity dates of the Company’s financial liabilities. This information has been prepared based on undiscounted cash flows of financial liabilities based on the earliest date on which the Company can be required to pay. Balances of trade and other amounts payable with repayment terms up to 12 months are equal to their carrying amounts, because the impact of discounting is insignificant.
Up to 3 months | Between 4 months and 1 year | Within the second year | Within third – fifth year | After five years | Total liabilities | |
Balance at 1 January 2022 | ||||||
Trade and other amounts payable | 75,582 | - | - | - | - | 75,582 |
Borrowings | - | 6,509 | 6,452 | 14,756 | 14,267 | 41,984 |
Lease liabilities | 120 | 345 | 442 | 850 | 7,588 | 9,345 |
Balance at 31 December 2022 | 75,702 | 6,854 | 6,894 | 15,606 | 21,855 | 126,911 |
Balance at 1 January 2023 | ||||||
Trade and other amounts payable | 63,517 | - | - | - | - | 63,517 |
Borrowings | - | 6,452 | 6,395 | 12,486 | 10,143 | 35,476 |
Lease liabilities | 128 | 383 | 511 | 548 | 7,549 | 9,119 |
Balance at 31 December 2023 | 63,645 | 6,835 | 6,906 | 13,034 | 17,692 | 108,112 |
NOTES TO THE COMPANY’S FINANCIAL STATEMENTS
(All amounts are in EUR thousands unless otherwise stated)
Market risk
a)Interest rate risk
The Company’s income, expenses and cash flows from operating activities are substantially independent of changes in market interest rates. From November 2022, the Company has non-current borrowings bearing fixed interest rates.
b)Foreign exchange risk
To manage the foreign exchange risk, the Company enters into purchase/sale contracts only in the euros.
37.Fair value of financial assets and financial liabilities
The Company’s principal financial assets and liabilities not carried at fair value are trade and other amounts receivable, cash and cash equivalents, loans, trade and other amounts payable and other financial assets.
The following methods and assumptions are used to estimate the value of each category of financial instruments that are not measured at fair value:
The carrying amount of current trade and other amounts receivable, other financial assets, cash and cash equivalents, loans to the related parties, current trade payables and other amounts payable approximates their fair value (Level 3).
The fair value of non-current borrowings is based on the quoted market price for the same or similar issues or on the current rates available for borrowings with the same maturity profile. The fair value of the Company’s non-current borrowings with fixed interest rates was approximately EUR 5 593 thousand lower than their carrying amount as at 31 December 2023 (31 December 2022: EUR 4,681 thousand).
38.Services provided by the audit firm
The audit firm provided the following audit and non-audit services to the Company. Information on non-audit services is disclosed based on the date of services rendered. Figures in table are in euros.
Type of services | At 31 December 2023 | At 31 December 2022 | |
Audit services | 86,000 | 52,054 | |
Total audit services | 86,000 | 52,054 | |
Assurance and other related services | 14,603 | 14,776 | |
Other services | 3,180 | 3,479 | |
Total non-audit services | 17,783 | 18,255 |
39.Litigations
There is a civil case in the Court based on the Contractor’s action against the Company regarding the increase of contract prices, the award of EUR 2,477 thousand and other Contractor’s claims. The Company contests the claim in full, therefore did not recognise the provision for indemnification obligation. The Court’s decision is expected in May 2024.
In October 2023 the legal proceedings have been initiated at the Arbitration Institute of the SCC against multiple transmission system operators, including LITGRID. The legal proceedings have started due to a fact that the operators in compliance with the international sanctions have stopped payments. Taking into account the rules of the Arbitration Institute of the SCC, more detailed information at this point is considered confidential. The Company did not recognise provisions due to the uncertain outcome of the case.
40.Events after the reporting period
On 23 February 2024 the company extended the borrowing agreement with EPSO-G UAB until 24 May 2024, applying from 1 March 2023 variable interest rate linked to ESTR (euro short-term rate).
_________________
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 LITGRID AB
Report on the audit of the financial statements
Our opinion
In our opinion, the financial statements give a true and fair view of the financial position of
LITGRID AB (the “Company”) as at 31 December 2023 and of the Company’s financial performance
and 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 29 March 2024.
What we have audited
The Company’s financial statements comprise:
● the Company’s statement of financial position as at 31 December 2023;
● the Company’s statement of comprehensive income for the year then ended;
● the Company’s statement of changes in equity for the year then ended;
● the Company’s statement of cash flows for the year then ended; and
● the notes to the 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 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 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 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, in the period from 1 January 2023 to
31 December 2023, are disclosed in note 38 to the financial statements.
Our audit approach
Overview
Materiality
● Overall materiality: EUR 3,500 thousand
Key audit matters
● 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 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.
We tailored the scope of our audit in order to perform sufficient work to enable us to provide an
opinion on the financial statements as a whole, taking into account the structure of the Company, the
accounting processes and controls, and the industry in which the Company operates.
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 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
EUR 3,500 thousand (EUR 2,975 thousand)
How we determined it
1% of average annual revenue for the 3-year period
Rationale for the materiality
benchmark applied
We chose revenue as the benchmark for the Company
because it is the measure against which the performance of
the Company is assessed by the regulatory bodies as well as
external creditors and other stakeholders. The Company’s
results depend on approved tariffs for regulated activities,
therefore the Company‘s profit before tax fluctuate 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 is within the range of acceptable
quantitative materiality thresholds.
We agreed with the Audit Committee that we would report to them misstatements identified during our
audit above EUR 175 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 2.2, 2.3, 3 and 6)
The Company 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 395,157 thousand, being its fair value at
the date of the revaluation, less subsequent
accumulated depreciation and impairment
losses recognized until 31 December 2023.
The Company’s management performed the
PPE revaluation in 2023. The total net
revaluation gain for the Company amounted to
EUR 5,811 thousand, of which the increase of
EUR 27,435 thousand was recognised directly
in equity, and the decrease of EUR 21,624
thousand was recognised in profit or loss.
The valuation of electricity transmission
network 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 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.
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 they are 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
the discount rate, expected capital expenditures,
the additional tariff component to finance
investments and 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, the
discount rate, and the additional tariff component
to finance investments.
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 estimated regulated
cash flows from individual items (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..
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 2.2, 2.3, 3
and 6.
Reporting on other information including the annual report
Management is responsible for the other information. The other information comprises the annual
report, including the corporate governance report and 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 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 annual report, including the corporate governance report and the remuneration
report, we considered whether the annual report, including the corporate governance report and the
remuneration report, includes the disclosures required by 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 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 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 Financial Reporting by
Undertakings.
The Company presented the social responsibility (sustainability) report as a part of the annual report.
In addition, in light of the knowledge and understanding of the Company and its environment obtained
in the course of the audit, we are required to report if we have identified material misstatements in the
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 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 or
to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Company’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 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 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
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.
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 financial statements with the requirements of the
European Single Electronic Reporting Format
We have been engaged based on the amendment to our audit agreement by the management of the
Company to conduct a reasonable assurance engagement for the verification of compliance with the
applicable requirements of the European single electronic reporting format of the Company’s financial
statements, including the annual report, for the year ended 31 December 2023 (the “Single Electronic
Reporting Format of the financial statements”).
Description of a subject matter and applicable criteria
The Single Electronic Reporting Format of the 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 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 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 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 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 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 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 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 financial statements, including the
preparation of the XHTML format and marking up the financial statements;
• verification whether the XHTML format was applied properly;
• evaluating the completeness of marking up the 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 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 financial statements for the year ended
31 December 2023 complies, in all material aspects, with the ESEF Regulation.
Appointment
We were first appointed as auditors of the Company on 24 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
29 March 2024
The auditor's electronic signature is used herein to sign only the Independent Auditor's Report
UAB „PricewaterhouseCoopers“, J. Jasinskio g. 16B, LT-03163 Vilnius, Lietuva
+370 (5) 239 2300, lt_vilnius@pwc.com, www.pwc.lt
Įmonės kodas 111473315, įregistruota LR juridinių asmenų registre
Nepriklausomo auditoriaus išvada
LITGRID AB akcininkams
Išvada dėl finansinių ataskaitų audito
Mūsų nuomonė
Mūsų nuomone, finansinės ataskaitos parodo tikrą ir teisingą LITGRID AB (toliau – Bendrovė) 2023 m.
gruodžio 31 d. finansinės būklės ir tuomet pasibaigusių metų Bendrovės finansinių veiklos rezultatų ir
pinigų srautų vaizdą pagal Tarptautinius finansinės atskaitomybės standartus, patvirtintus taikyti
Europos Sąjungoje.
Mūsų nuomonė atitinka 2024 m. kovo 29 d. papildomą ataskaitą Audito komitetui.
Mūsų audito apimtis
Bendrovės finansines ataskaitas sudaro:
● 2023 m. gruodžio 31 d. Bendrovės finansinės būklės ataskaita;
● tuomet pasibaigusių metų Bendrovės bendrųjų pajamų ataskaita;
● tuomet pasibaigusių metų Bendrovės nuosavo kapitalo pokyčių ataskaita;
● tuomet pasibaigusių metų Bendrovės pinigų srautų ataskaita; ir
● finansinių ataskaitų aiškinamasis raštas, apimantis reikšmingą apskaitos politikos informaciją ir
kitą aiškinamąją informaciją.
Pagrindas nuomonei pareikšti
Auditą atlikome pagal Tarptautinius audito standartus (TAS). Mūsų atsakomybė pagal TAS toliau
aprašyta mūsų išvados pastraipoje „Auditoriaus atsakomybė už finansinių ataskaitų auditą“.
Manome, kad gauti audito įrodymai suteikia pakankamą ir tinkamą pagrindą mūsų audito nuomonei.
Nepriklausomumas
Esame nepriklausomi nuo Bendrovės vadovaujantis Tarptautinių apskaitos specialistų etikos standartų
valdybos parengtu Tarptautiniu apskaitos profesionalų etikos kodeksu (įskaitant Tarptautinius
nepriklausomumo reikalavimus) (toliau – TASESV kodeksas) ir Lietuvos Respublikos finansinių
ataskaitų audito įstatymu, kurie taikytini atliekant finansinių ataskaitų auditą Lietuvos Respublikoje.
Taip pat laikomės kitų TASESV kodekse bei Lietuvos Respublikos finansinių ataskaitų audito įstatyme
numatytų etikos reikalavimų.
Remdamiesi savo žiniomis ir įsitikinimu, pareiškiame, kad ne audito paslaugos, kurias suteikėme
Bendrovei, atitinka Lietuvos Respublikoje taikomus įstatymus ir kitus teisės aktus. Taip pat
pareiškiame, kad nesuteikėme ne audito paslaugų, kurios yra draudžiamos pagal Reglamento (ES)
Nr. 537/2014 5 straipsnio 1 dalį, atsižvelgiant į Reglamento (ES) Nr. 537/2014 išimtis, patvirtintas
Lietuvos Respublikos finansinių ataskaitų audito įstatyme.
Ne audito paslaugos, kurias laikotarpiu nuo 2023 m. sausio 1 d. iki 2023 m. gruodžio 31 d. suteikėme
Bendrovei, atskleistos finansinių ataskaitų aiškinamojo rašto 38 pastaboje.
Mūsų audito metodika
Apžvalga
Reikšmingumo lygis
● Bendras reikšmingumo lygis Bendrovei yra 3 500 tūkst. Eur
Pagrindiniai audito
dalykai
● Ilgalaikis materialusis turtas, apskaitomas perkainota verte
Planuodami auditą nustatėme reikšmingumo lygį ir įvertinome reikšmingo iškraipymo finansinėse
ataskaitose rizikas. Būtent, atsižvelgėme į tas sritis, kuriose vadovybė priėmė subjektyvius
sprendimus: pavyzdžiui, sprendimus dėl reikšmingų apskaitinių įvertinimų, kuriems nustatyti buvo
remtasi prielaidomis ir atsižvelgta į būsimus įvykius, kurie savo prigimtimi yra neapibrėžti. Kaip ir visų
kitų mūsų auditų metu, įvertinome vadovybės vidaus kontrolės procedūrų nesilaikymo riziką, taip pat,
be kitų dalykų, įvertinome, ar buvo tam tikrą tendencingumą patvirtinančių įrodymų, kurie liudytų apie
reikšmingo iškraipymo dėl apgaulės riziką.
Audito apimtį pritaikėme taip, kad mūsų atlikti darbai būtų pakankami, kad galėtume pareikšti savo
nuomonę apie finansines ataskaitas kaip visumą, atsižvelgiant į Bendrovės struktūrą, apskaitos
procesus ir kontroles, taip pat į sektorių, kuriame Bendrovė vykdo savo veiklą.
Reikšmingumo lygis
Mūsų audito apimčiai įtakos turėjo mūsų taikomas reikšmingumo lygis. Audito paskirtis – gauti
pakankamą užtikrinimą dėl to, ar finansinėse ataskaitose nėra reikšmingų iškraipymų. Iškraipymai gali
atsirasti dėl apgaulės ar klaidos. Iškraipymai yra laikomi reikšmingais, jei galima pagrįstai numatyti,
kad kiekvienas atskirai ar visi kartu jie turės įtakos finansinių ataskaitų naudotojų priimamiems
ekonominiams sprendimams remiantis šiomis finansinėmis ataskaitomis.
Remdamiesi savo profesiniu sprendimu nustatėme tam tikras kiekybines ribas reikšmingumo lygiui,
įskaitant bendrą Bendrovės reikšmingumo lygį finansinėms ataskaitoms kaip visumai, kuris pateiktas
lentelėje toliau. Šios kiekybinės ribos kartu su kokybiniais aspektais padėjo mums apibrėžti audito
apimtį bei audito procedūrų pobūdį, atlikimo laiką ir aprėptį, taip pat įvertinti kiekvieno atskirai ir visų
kartu iškraipymų, jei tokių buvo, poveikį finansinėms ataskaitoms kaip visumai.
Bendras reikšmingumo lygis
Bendrovei
3 500 tūkst. Eur (2 975 tūkst. Eur)
Kaip mes jį nustatėme
1% nuo paskutinių trejų metų pajamų vidurkio
Taikyto reikšmingumo lygio
išaiškinimas
Kaip kriterijų reikšmingumo lygiui nustatyti pasirinkome
pajamas, nes tai yra rodiklis, kuriuo remiasi priežiūros
institucijos, išorės kreditoriai ir kitos suinteresuotosios šalys,
norėdami įvertinti Bendrovės veiklos rezultatus. Bendrovės
veiklos rezultatai priklauso nuo patvirtintų reguliuojamos
veiklos tarifų, todėl Bendrovės pelnas prieš apmokestinimą
kasmet itin svyruoja, o jos pajamos yra stabilesnis ir į augimą
orientuotas rodiklis, kurį galima palyginti su kitais rinkos
dalyviais. Kadangi 2021 - 2023 metais pajamos didėjo dėl
elektros kainų pokyčių, kaip kriterijų reikšmingumo lygiui
nustatyti pasirinkome paskutinių trejų metų pajamų vidurkį.
Pasirinkome 1%, kuris yra priimtinose kiekybinio vertinimo
reikšmingumo lygio ribose.
Sutarėme su Audito komitetu, kad informuosime jį apie audito metu nustatytus iškraipymus,
viršijančius 175 tūkst. Eur sumą, taip pat apie iškraipymus, nesiekiančius šios sumos, apie kuriuos,
mūsų nuomone, būtina informuoti dėl kokybinių priežasčių.
Pagrindiniai audito dalykai
Pagrindiniai audito dalykai – tai dalykai, kurie mūsų profesiniu sprendimu buvo svarbiausi atliekant
einamojo laikotarpio finansinių ataskaitų auditą. Šiuos dalykus nagrinėjome atlikdami finansinių
ataskaitų kaip visumos auditą ir formuluodami apie jas savo nuomonę, todėl apie šiuos dalykus mes
nepareiškiame jokios atskiros savo nuomonės.
Pagrindinis audito dalykas
Kaip audito metu nagrinėjome pagrindinį
audito dalyką
Ilgalaikis materialusis turtas, apskaitomas
perkainota verte
(žr.2.2, 2.3, 3 ir 6 pastabas)
Po pirminio pripažinimo Bendrovė taiko
perkainojimo metodą ilgalaikio materialiojo turto
(toliau – IMT) pripažinimui. Bendrovės IMT
balansinė vertė 2023 m. gruodžio 31 d. sudarė
395 157 tūkst. Eur ir atitiko jo tikrąją vertę
perkainojimo dieną, atėmus vėlesnį sukauptą
nusidėvėjimą ir vertės sumažėjimo nuostolius,
pripažintus iki 2023 m. gruodžio 31 d.
2023 m. Bendrovės vadovybė atliko IMT
perkainojimą. Bendrovės grynasis perkainojimo
rezultatas iš viso sudarė 5 811 tūkst. Eur, iš
kurių 27 435 tūkst. Eur padidėjimo suma buvo
pripažinta tiesiogiai nuosavybės dalyje ir
21 624 tūkst. Eur sumažėjimo suma buvo
pripažinta pelno arba nuostolių dalyje.
Elektros perdavimo tinklo turto vertinimas
apėmė šiuos etapus: (i) naujo turto
atkuriamosios vertės (angl. RCN) nustatymą; (ii)
turto fizinio ir funkcinio nusidėvėjimo nustatymą;
(iii) turto ekonominio nusidėvėjimo įvertinimą
(taikant pajamų metodą).
Nustatydama atkuriamąją vertę, vadovybė
atsižvelgė į turtui būdingą dabartinę informaciją,
tokią kaip medžiagų ir darbų kaina arba bendra
rangos darbų sąnaudų suma.
Tuomet buvo nustatytas turto fizinis ir funkcinis
nusidėvėjimas, siekiant įvertinti kiekvieno atskiro
turto vieneto nudėvėtąją atkuriamąją vertę (angl.
DRC).
Mes supratome ir įvertinome vadovybės
politikas, procesus ir kontrolės procedūras,
kuriuos vadovybė taikė nustatydama IMT tikrąją
vertę.
Mes išanalizavome vadovybės taikomą
vertinimo metodologiją ir vadovybės įvertintus
tarifų nustatymą reglamentuojančių teisės aktų
pasikeitimus per 2023 m.
Mes gavome RCN ir DRC apskaičiavimo modelį,
patikrinome modelyje naudojamų duomenų ir
pasirinktų turto vienetų fizinio ir funkcinio
nusidėvėjimo nustatymo pagrįstumą,
palygindami juos su palyginamojo naujo turto
dabartinėmis statybos kainomis ir patikrindami
formules bei duomenis, naudotus RCN ir DRC
vertėms apskaičiuoti.
Mes gavome pinigų srautų modelį, kurį
vadovybė taikė IMT ekonominiam nusidėvėjimui
nustatyti. Mes patikrinome modelį ir įvertinome,
ar matematiniai skaičiavimai jame yra tikslūs ir
ar rezultatai yra tiksliai palyginami su IMT
balansinėmis vertėmis.
Mes išanalizavome vadovybės taikytas
prielaidas, kurios turėjo reikšmingos įtakos
vertinimo rezultatams: reguliuojamo turto grąžos
normą ir diskonto normą, tikėtinas investicijas į
ilgalaikį materialųjį turtą, papildomą kainos
dedamąją investicijų finansavimui ir
reguliuojamo turto vertes. Šias prielaidas
atitinkamai sutikrinome su išoriniais ar
Bendrovės vidaus informacijos šaltiniais.
Mes pasitelkėme savo vidaus vertinimo
ekspertus, kurie padėjo mums įvertinti diskonto
Ekonominis turto nusidėvėjimas buvo nustatytas
taikant pajamų metodą. Remiantis ekonominio
nusidėvėjimo testo rezultatais, turto vertės,
nustatytos taikant DRC metodą, buvo
proporcingai sumažintos, išskyrus turtą, kurio
vertė dėl ekonominio nusidėvėjimo sumos
paskirstymo taptų mažesnė už šio turto įvertintų
reguliuojamų pinigų srautų iš individualių turto
vienetų vertę (toliau – RAB vertė). Buvo laikoma,
kad tokio turto RAB vertė atitinka jo tikrąją vertę.
Sumažėjimo suma, kuri kitu atveju būtų
paskirstyta tokiam turtui, proporcingai buvo
paskirstyta kitam turtui.
Galiausiai vadovybė palygino individualių turto
vienetų ankstesnes balansines vertes su
perkainotomis vertėmis, nustatytomis taikant
pirmiau aprašytą metodą, ir apskaičiavo
perkainojimo pelną ar nuostolius, pripažįstamus
atitinkamai pelno ir nuostolių dalyje arba kitų
bendrųjų pajamų dalyje.
Pagrindinį dėmesį šiai sričiai skyrėme dėl IMT
likučio reikšmingumo konsoliduotojoje finansinės
būklės ataskaitoje ir dėl to, kad vadovybės
atliekamas IMT vertinimas yra sritis, kuri apima
reikšmingus vadovybės sprendimus.
normą bei atlikti bendrą vertinimo modelio
kūrimo metodologijos vertinimą.
Mes taip pat įvertinome pinigų srautų modelio
jautrumą grąžos normos, diskonto normos ir
papildomos kainos dedamosios investicijų
finansavimui pokyčiams.
Be to, mes patikrinome tikrosios vertės perviršio
arba sumažėjimo paskirstymą individualiems
turto vienetams, remiantis ekonominio
nusidėvėjimo principais, ir pasirinktiems turto
vienetams atlikome išsamų tikrosios vertės
paskirstymo testą.
Taip pat mes įvertinome, ar buvo
tendencingumų nustatant tikrąją vertę.
Mes įvertinome 2.2, 2,3, 3 ir 6 pastabose
atskleistos informacijos pakankamumą
Išvada apie kitą informaciją, įskaitant metinį pranešimą
Už kitą informaciją yra atsakinga vadovybė. Kita informacija apima metinį pranešimą, įskaitant
bendrovių valdymo ataskaitą, atlygio ataskaitą ir socialinės atasakomybės (darnumo) ataskaitą (tačiau
neapima finansinių ataskaitų ir mūsų auditoriaus išvados apie šias ataskaitas).
Mūsų nuomonė apie finansines ataskaitas neapima kitos informacijos, įskaitant metinį pranešimą.
Mums atliekant finansinių ataskaitų auditą mūsų atsakomybė – perskaityti pirmiau minėtą kitą
informaciją ir įvertinti, ar yra reikšmingas nesuderinamumas tarp kitos informacijos ir finansinių
ataskaitų ar per auditą mūsų įgytų žinių ir ar kitaip nepaaiškėja, kad šioje kitoje informacijoje yra
reikšmingų iškraipymų.
Metinio pranešimo, įskaitant bendrovių valdymo ataskaitą ir atlygio ataskaitą, atžvilgiu mes įvertinome,
ar metiniame pranešime, įskaitant bendrovių valdymo ataskaitą ir atlygio ataskaitą, pateikta Lietuvos
Respublikos įmonių atskaitomybės įstatyme numatyta informacija.
Remiantis audito metu atliktu darbu, mūsų nuomone:
● finansinių metų, už kuriuos parengtos finansinės ataskaitos, metiniame pranešime pateikta
informacija, įskaitant bendrovių valdymo ataskaitą ir atlygio ataskaitą, atitinka duomenis, pateiktus
finansinėse ataskaitose; ir
● metinis pranešimas, įskaitant bendrovių valdymo ataskaitą ir atlygio ataskaitą, yra parengtas
laikantis Lietuvos Respublikos įmonių atskaitomybės įstatymo reikalavimų.
Bendrovė pateikė socialinės atsakomybės (darnumo) ataskaitą, kuri yra sudėtinė metinio pranešimo
dalis.
Be to, privalome informuoti, ar, atsižvelgiant į audito metu gautą informaciją ir įgytą supratimą apie
Bendrovę bei jos aplinką, nustatėme reikšmingų iškraipymų metiniame pranešime, kurį gavome iki
šios auditoriaus išvados išleidimo dienos. Šiuo atžvilgiu nėra nieko, apie ką turėtume informuoti.
Vadovybės ir už valdymą atsakingų asmenų atsakomybė už finansines ataskaitas
Vadovybė yra atsakinga už finansinių ataskaitų, kurios parodo tikrą ir teisingą vaizdą pagal
Tarptautinius finansinės atskaitomybės standartus, patvirtintus taikyti Europos Sąjungoje, parengimą
bei už tokią vidaus kontrolės sistemą, kuri, vadovybės nuomone, yra būtina finansinių ataskaitų
parengimui be reikšmingų iškraipymų, galinčių atsirasti dėl apgaulės ar klaidos.
Rengdama finansines ataskaitas vadovybė privalo įvertinti Bendrovės gebėjimą toliau tęsti veiklą ir
atitinkamai atskleisti dalykus, susijusius su veiklos tęstinumu ir veiklos tęstinumo apskaitos principo
taikymu, išskyrus tuos atvejus, kai vadovybė ketina likviduoti Bendrovę ar nutraukti jos veiklą arba yra
priversta tai padaryti, neturėdama jokios kitos realios alternatyvos.
Už valdymą atsakingi asmenys privalo prižiūrėti Bendrovės finansinių ataskaitų rengimo procesą.
Auditoriaus atsakomybė už finansinių ataskaitų auditą
Mūsų tikslas – gauti pakankamą užtikrinimą dėl to, ar finansinės ataskaitos kaip visuma nėra
reikšmingai iškraipytos dėl apgaulės ar klaidos, ir parengti auditoriaus išvadą, kurioje pateikiama mūsų
nuomonė. Pakankamas užtikrinimas – tai aukšto lygio užtikrinimas, tačiau jis nėra garantija, kad
auditas, atliktas pagal TAS, visada atskleis reikšmingą iškraipymą, jei toks yra. Iškraipymai, galintys
atsirasti dėl apgaulės ar klaidos, laikomi reikšmingais, jei galima pagrįstai numatyti, kad kiekvienas
atskirai ar visi kartu jie gali turėti įtakos finansinių ataskaitų naudotojų ekonominiams sprendimams,
priimamiems remiantis šiomis finansinėmis ataskaitomis.
Atlikdami auditą pagal TAS, viso audito metu priimame profesinius sprendimus ir vadovaujamės
profesinio skepticizmo principu. Taip pat:
● nustatome ir įvertiname finansinių ataskaitų reikšmingo iškraipymo dėl apgaulės ar klaidos rizikas,
suplanuojame ir atliekame procedūras kaip atsaką į tokias rizikas ir surenkame audito įrodymus,
kurie suteikia pakankamą ir tinkamą pagrindą mūsų audito nuomonei. Reikšmingo iškraipymo dėl
apgaulės neaptikimo rizika yra didesnė nei reikšmingo iškraipymo dėl klaidos neaptikimo rizika,
nes apgaule gali būti sukčiavimas, klastojimas, tyčinis praleidimas, klaidingas aiškinimas arba
vidaus kontrolių nepaisymas;
● išsiaiškiname su auditu susijusią vidaus kontrolę, kad galėtume parengti esant konkrečioms
aplinkybėms tinkamas audito procedūras, tačiau ne tam, kad galėtume pareikšti nuomonę apie
Bendrovės vidaus kontrolės efektyvumą;
● įvertiname taikomų apskaitos principų tinkamumą bei vadovybės naudojamų apskaitinių įvertinimų
ir susijusių atskleidimų pagrįstumą;
● padarome išvadą dėl vadovybės taikomo veiklos tęstinumo apskaitos principo tinkamumo ir dėl to,
ar, remiantis surinktais audito įrodymais, egzistuoja reikšmingas neapibrėžtumas, susijęs su
įvykiais ar sąlygomis, dėl kurių gali kilti reikšmingų abejonių dėl Bendrovės gebėjimo tęsti veiklą.
Jeigu padarome išvadą, kad toks reikšmingas neapibrėžtumas egzistuoja, auditoriaus išvadoje
privalome atkreipti dėmesį į susijusius atskleidimus finansinėse ataskaitose arba, jei tokių
atskleidimų nepakanka, privalome modifikuoti savo nuomonę. Mūsų išvados pagrįstos audito
įrodymais, surinktais iki auditoriaus išvados išleidimo dienos. Tačiau būsimi įvykiai ar sąlygos gali
lemti, kad Bendrovė negalės toliau tęsti savo veiklos;
● įvertiname bendrą finansinių ataskaitų pateikimą, struktūrą ir turinį, įskaitant atskleidimus, ir tai, ar
finansinėse ataskaitose pagrindžiantys sandoriai bei įvykiai pateikti taip, kad atitiktų teisingo
pateikimo koncepciją.
Mes, be kitų dalykų, informuojame už valdymą atsakingus asmenis apie planuojamą audito apimtį,
audito atlikimo laiką ir reikšmingus pastebėjimus audito metu, įskaitant visus svarbius vidaus kontrolės
trūkumus, kuriuos nustatome audito metu.
Be to, už valdymą atsakingiems asmenims patvirtiname, kad laikėmės visų svarbių etikos reikalavimų
dėl nepriklausomumo, taip pat informavome juos apie visus ryšius ir kitus dalykus, kurie galėtų būti
pagrįstai vertinami kaip turintys įtakos mūsų nepriklausomumui ir, jei reikia, apie veiksmus, kurių
ėmėmės siekdami pašalinti grėsmes, ir taikytas apsaugos priemones.
Iš visų dalykų, apie kuriuos informavome už valdymą atsakingus asmenis, išskyrėme tuos, kurie buvo
svarbiausi atliekant einamojo laikotarpio finansinių ataskaitų auditą ir kurie dėl to laikomi pagrindiniais
audito dalykais. Šiuos dalykus aprašome savo auditoriaus išvadoje, nebent pagal įstatymą ar kitą
teisės aktą būtų draudžiama juos viešai atskleisti arba, labai retomis aplinkybėmis, nustatome, kad
dalykas neturėtų būti pateikiamas mūsų išvadoje dėl to, kad galime pagrįstai tikėtis, jog neigiamos
tokio atskleidimo pasekmės nusvers visuomenės gaunamą naudą.
Išvada dėl kitų teisinių ir priežiūros reikalavimų
Išvada dėl finansinių ataskaitų formato atitikties Europos vieno elektroninio ataskaitų teikimo
formato reikalavimams
Vadovaujantis mūsų audito sutarties pakeitimu, Bendrovės vadovybė pasamdė mus atlikti pakankamo
užtikrinimo užduotį, siekiant patvirtinti, kad finansinės ataskaitos, įskaitant metinį pranešimą, už
2023 m. gruodžio 31 d. pasibaigusius metus atitinka nustatytus Europos vieno elektroninio ataskaitų
teikimo formato reikalavimus (toliau – Finansinių ataskaitų vienas elektroninio ataskaitų teikimo
formatas).
Dalyko ir taikomų kriterijų aprašymas
Bendrovės vadovybė pritaikė Finansinių ataskaitų vieną elektroninio ataskaitų teikimo formatą,
siekdama vykdyti 2018 m. gruodžio 17 d. Komisijos deleguotojo reglamento (ES) 2019/815, kuriuo
Europos Parlamento ir Tarybos direktyva 2004/109 / EB papildoma techniniais reguliavimo
standartais, kuriais nustatomas vienas elektroninio ataskaitų teikimo formatas (toliau – ESEF
reglamentas), 3 ir 4 str. reikalavimus. Finansinių ataskaitų vienam elektroninio ataskaitų teikimo
formatui nustatyti reikalavimai yra numatyti ESEF reglamente.
Remiantis pirmiau sakinyje minėtais reikalavimais yra taikomas Finansinių ataskaitų vienas
elektroninio ataskaitų teikimo formatas ir, mūsų nuomone, jie yra tinkami kriterijai pakankamo
užtikrinimo išvadai pateikti.
Vadovybės ir už valdymą atsakingų asmenų atsakomybė
Bendrovės vadovybė yra atsakinga už Finansinių ataskaitų vieno elektroninio ataskaitų teikimo
formato taikymą laikantis ESEF reglamento reikalavimų.
Ši atsakomybė apima tinkamo ženklinimo iXBRL kalba pasirinkimą ir taikymą naudojant ESEF
taksonomiją bei parengimą, įgyvendinimą ir palaikymą tokių vidaus kontrolės procedūrų, kurios
svarbios Finansinių ataskaitų vieno elektroninio ataskaitų teikimo formato parengimui be reikšmingų
ESEF reglamento neatitikimų.
Už valdymą atsakingi asmenys yra atsakingi už finansinės atskaitomybės priežiūros procesą, kuris
taip pat turi būti suprantamas, kaip finansinių ataskaitų parengimas pagal formatą, pritaikytą
vadovaujantis ESEF reglamentu.
Mūsų atsakomybė
Mūsų atsakomybė buvo pateikti pakankamo užtikrinimo išvadą, ar Finansinių ataskaitų vienas
elektroninio ataskaitų teikimo formatas visais reikšmingais atžvilgiais atitinka ESEF reglamentą.
Užduotį atlikome vadovaudamiesi 3000-uoju Tarptautiniu užtikrinimo užduočių standartu
(persvarstytu) „Užtikrinimo užduotys, išskyrus istorinės finansinės informacijos auditus ir peržvalgas“
(toliau – 3000-asis TUUS (P). Šis standartas reikalauja, kad laikytumėmės etikos reikalavimų,
suplanuotume ir atliktume procedūras, kurių pagalba gautume pakankamą užtikrinimą, ar Finansinių
ataskaitų vienas elektroninio ataskaitų teikimo formatas visais reikšmingais atžvilgiais atitinka
nustatytus reikalavimus.
Pakankamas užtikrinimas suteikia aukštą užtikrinimo lygį, tačiau negarantuoja, kad pagal 3000-ąjį
TUUS (P) atliktos paslaugos visais atvejais leis nustatyti esamą reikšmingą iškraipymą (reikšmingą
neatitikimą reikalavimams).
Atliktų darbų santrauka
Mūsų suplanuotų ir atliktų procedūrų tikslas – gauti pakankamą užtikrinimą, kad Finansinių ataskaitų
vienas elektroninio ataskaitų teikimo formatas visais reikšmingais atžvilgiais parengtas laikantis
nustatytų reikalavimų ir kad toks parengimas buvo be reikšmingų klaidų ar reikšmingos informacijos
nepateikimo. Mūsų atliktos procedūros apėmė:
• supratimą apie vidaus kontrolės sistemą ir procesus, kurie svarbūs Finansinių ataskaitų vieno
elektroninio ataskaitų teikimo formato taikymui, įskaitant XHTML formato parengimą bei finansinių
ataskaitų ženklinimą;
• patikrinimą, ar XHTML formatas buvo taikytas tinkamai;
• įvertinimą, ar finansinių ataskaitų ženklinimas naudojant iXBRL ženklinimo kalbą yra pilnas,
atsižvelgiant į vieno elektroninio ataskaitų teikimo formato taikymo reikalavimus, aprašytus ESEF
reglamente;
• įvertinimą, ar Bendrovė tinkamai naudoja XBRL ženklinimą, pasirinktą iš ESEF taksonomijos, ir ar
tinkamai sukuria plėtinių ženklinimą, kai ESEF taksonomijoje nėra identifikuojamas tinkamas
elementas; ir
• įvertinimą, ar plėtinių elementai yra tinkamai susieti su ESEF taksonomija.
Manome, kad mūsų gauti įrodymai sudaro pakankamą ir tinkamą pagrindą mūsų išvadai pareikšti.
Išvada
Mūsų nuomone, Finansinių ataskaitų vienas elektroninio ataskaitų teikimo formatas už 2023 m.
gruodžio 31 d. pasibaigusius metus visais reikšmingais atžvilgiais atitinka ESEF reglamentą.
Paskyrimas
Bendrovės auditoriais pirmą kartą buvome paskirti 2015 m. balandžio 24 d. ir visas nenutrūkstamo
užduoties vykdymo laikotarpis 2015-2017 m. auditui sudarė trejus metus. Po dvejų metų pertraukos
mūsų paskyrimas buvo pratęstas 2020-2022 m. auditui, o 2023 m. rugpjūčio 30 d. mūsų paskyrimas
buvo vėl pratęstas 2023 m. auditui, taigi visas užduoties vykdymo laikotarpis apėmė septynerius
metus, iš kurių ketveri metai sudarė naujausią nenutrūkstamo užduoties vykdymo laikotarpį.
Audito, kurį atlikus išleista ši nepriklausomo auditoriaus išvada, pagrindinė užduoties partnerė yra
Rasa Radzevičienė.
UAB „PricewaterhouseCoopers“ vardu
Rasa Radzevičienė
Partnerė
Auditoriaus pažymėjimo Nr.000377
Vilnius, Lietuvos Respublika
2024 m. kovo 29 d.
Elektroniniu auditoriaus parašu pasirašoma tik Nepriklausomo auditoriaus išvada.