AB KN ENERGIES

CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS

PREPARED IN ACCORDANCE WITH INTERNATIONAL

FINANCIAL REPORTING STANDARDS AS ADOPTED BY THE

EUROPEAN UNION AND CONSOLIDATED ANNUAL REPORT

FOR THE FINANCIAL YEAR ENDING ON 31 DECEMBER 2023

 
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CONTENT        
AB KN ENERGIES FINANCIAL STATEMENTS 
     STATEMENT OF FINANCIAL POSITION .............................................................................................................................................................................................. 5 
     STATEMENT OF COMPREHENSIVE INCOME .................................................................................................................................................................................... 7 
     STATEMENT OF CHANGES IN EQUITY ............................................................................................................................................................................................... 8 
     CASH FLOW STATEMENT ........................................................................................................................................................................................................................ 9 
     EXPLANATORY NOTES TO FINANCIAL STATEMENTS ............................................................................................................................................................... 10 
     CONFIRMATION OF RESPONSIBLE PERSONS .............................................................................................................................................................................. 54 
AB KN ENERGIES CONSOLIDATED ANNUAL REPORT 
     GENERAL INFORMATION ABOUT THE GROUP AND THE COMPANY ................................................................................................................................ 57 
     A FOREWORD OF THE CEO ................................................................................................................................................................................................................. 61 
     INFORMATION ABOUT THE GROUP AND THE COMPANY AND ITS ACTIVITIES ........................................................................................................... 63 
     LIQUID ENERGY TERMINALS ............................................................................................................................................................................................................... 64 
     LNG ................................................................................................................................................................................................................................................................ 66 
     NEW ENERGIES ......................................................................................................................................................................................................................................... 72 
     THE CORPORATE STRATEGY ............................................................................................................................................................................................................... 73 
     SIGNIFICANT EVENTS OF THE REPORTING PERIOD .................................................................................................................................................................. 77 
     SIGNIFICANT EVENTS OCCURRED AFTER THE END OF THE REPORTING PERIOD ........................................................................................................ 78 
     BUSINESS ENVIRONMENT AND MARKET ...................................................................................................................................................................................... 79 
     FINANCIAL RESULTS OF GROUP’S ACTIVITY ................................................................................................................................................................................ 84 
     CONSOLIDATION ..................................................................................................................................................................................................................................... 85 
     FINANCIAL RESULTS OF THE GROUP’S AND THE COMPANY’S ACTIVITY ........................................................................................................................ 86 
     INVESTMENTS ........................................................................................................................................................................................................................................... 98 
     ACTIVITY PLANS AND FORECASTS ................................................................................................................................................................................................... 99 
     INFORMATION ABOUT THE SHAREHOLDERS AND SHARES OF THE COMPANY ........................................................................................................ 100 
     INFORMATION ABOUT THE EMPLOYEES OF THE GROUP .................................................................................................................................................... 105 
     RISK FACTORS AND RISK MANAGEMENT ................................................................................................................................................................................... 111 
     OTHER INFORMATION ........................................................................................................................................................................................................................ 116 
REPORT ON REMUNERATION 
     REMUNERATION .................................................................................................................................................................................................................................... 118 
GOVERNANCE REPORT 
     AB KN ENERGIES GOVERNANCE REPORT INFORMATION .................................................................................................................................................... 124 
     MANAGEMENT OF THE COMPANY ................................................................................................................................................................................................ 124 
     OTHER GOVERNANCE INFORMATION ......................................................................................................................................................................................... 134 
     INFORMATION ON COMPLIANCE WITH TRANSPARENCY GUIDELINES ......................................................................................................................... 135 
     AB KN ENERGIES COMPLIANCE WITH THE CORPORATE GOVERNANCE CODE .......................................................................................................... 137 
SUSTAINABILITY (CORPORATE SOCIAL RESPONSIBILITY) REPORT 
     GENERAL INFORMATION ................................................................................................................................................................................................................... 153 
     HIGHLIGHTS 2023 .................................................................................................................................................................................................................................. 155 
     SUSTAINABILITY MANAGEMENT ..................................................................................................................................................................................................... 158 
     ENVIRONMENTAL IMPACT AND PROTECTION ON ENVIRONMENT ................................................................................................................................ 165 
     SOCIAL IMPACT ...................................................................................................................................................................................................................................... 176 
     GOVERNANCE ......................................................................................................................................................................................................................................... 194 
ABBREVIATIONS 

AB KN ENERGIES

FINANCIAL STATEMENTS

2023

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AB KN ENERGIES CONSOLIDATED AND SEPARATE

FINANCIAL STATEMENTS 2023

AB KN ENERGIES FINANCIAL STATEMENTS

STATEMENT OF FINANCIAL POSITION .............................................................................................................................................................................................. 5

STATEMENT OF COMPREHENSIVE INCOME .................................................................................................................................................................................... 7

STATEMENT OF CHANGES IN EQUITY ............................................................................................................................................................................................... 8

CASH FLOW STATEMENT ........................................................................................................................................................................................................................ 9

EXPLANATORY NOTES TO FINANCIAL STATEMENTS ............................................................................................................................................................... 10

CONFIRMATION OF RESPONSIBLE PERSONS .............................................................................................................................................................................. 54

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AB KN ENERGIES CONSOLIDATED AND SEPARATE

FINANCIAL STATEMENTS 2023

STATEMENT OF FINANCIAL POSITION

Notes

			Group		Company
		31-12-2023	31-12-2022	31-12-2023	31-12-2022
ASSETS
Non-current assets
Intangible assets		643	793	545	645
Property, plant and equipment	3	140,709	145,800	140,623	145,683
Right-of-use assets	3	314,927	328,515	314,908	328,495
Other financial assets		-	575	-	465
Investment in subsidiaries	5	-	-	4,578	4,578
Investment in associates		207	261	207	261
Deferred tax asset	21	2,832	5,106	2,832	5,106
Total non-current assets		459,318	481,050	463,693	485,233
Current assets
Inventories	6	1,608	2,120	1,608	2,120
Trade receivables and other receivables	7	13,807	14,741	12,862	13,972
Contract assets	8	556	328	556	328
Other financial assets	9	61,286	3,271	56,786	3,271
Cash and cash equivalents	10	19,535	72,423	17,405	66,848
Total current assets		96,792	92,883	89,217	86,539
Total assets		556,110	573,933	552,910	571,772

(Cont’d on the next page)

Explanatory notes are an integral part of these financial statements.

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AB KN ENERGIES CONSOLIDATED AND SEPARATE

FINANCIAL STATEMENTS 2023

STATEMENT OF FINANCIAL POSITION (CONT’D)

Notes

			Group		Company
		31-12-2023	31-12-2022	31-12-2023	31-12-2022
EQUITY AND LIABILITIES
Equity
Share capital	11	110,315	110,315	110,315	110,315
Share premium		4,002	4,002	4,002	4,002
Reserves		22,979	29,633	22,979	29,633
Foreign currency translation reserve		194	131	-	-
Retained earnings		14,721	(4,981)	12,192	(6,654)
Total equity		152,211	139,100	149,488	137,296
Non-current amounts payable and liabilities
Non-current employee benefits	12	694	569	694	569
Loans	13	158,827	137,451	158,827	137,451
Deferred government grants	2.21	5,115	5,468	5,115	5,468
Lease liabilities	13	24,459	220,122	24,450	220,108
Total non-current amounts payable and liabilities		189,095	363,610	189,086	363,596
Current amounts payable and liabilities
Current employee benefits	12	122	62	122	62
Loans	13	5,556	5,689	5,556	5,689
Lease liabilities	13	188,707	46,126	188,697	46,118
Trade payables and other liabilities	14	5,435	5,871	5,144	5,721
Payroll related liabilities	15	3,568	3,437	3,401	3,252
Provisions	16	7,363	5,663	7,363	5,663
Contract liabilities	25	4,053	4,375	4,053	4,375
Total current amounts payable and liabilities		214,804	71,223	214,336	70,880
Total equity and liabilities		556,110	573,933	552,910	571,772

Explanatory notes are an integral part of these financial statements.

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AB KN ENERGIES CONSOLIDATED AND SEPARATE

FINANCIAL STATEMENTS 2023

STATEMENT OF COMPREHENSIVE INCOME

Notes

		Group		Company
		2023	2022	2023	2022
Revenue from contracts with customers	17	83,525	77,818	80,356	74,722
Cost of sales	18	(60,024)	(57,703)	(58,949)	(56,706)
Gross profit (loss)		23,501	20,115	21,407	18,016
Operating expenses	19	(10,963)	(8,432)	(10,057)	(7,526)
Other income and (expenses)		164	510	164	510
Profit (loss) from operating activities		12,702	12,193	11,514	11,000
Income from financial activities	20	9,141	1,221	8,959	1,058
Expenses from financial activities	20	(5,964)	(20,347)	(5,890)	(20,327)
Share of the associate‘s profit or (loss)		93	33	93	33
Profit (loss) before tax		15,972	(6,900)	14,676	(8,236)
Income tax (expenses)	21	(2,746)	996	(2,306)	1,504
Profit (loss) for the year		13,226	(5,904)	12,370	(6,732)
Other comprehensive income
Actuarial gain (loss)		(210)	92	(210)	92
Exchange differences on translation of foreign operations		63	213	-	-
Related taxes		32	(14)	32	(14)
Total other comprehensive income		(115)	291	(178)	78
Total comprehensive income (loss), net of tax		13,111	(5,613)	12,192	(6,654)
Profit attributable to:
The shareholders of the Company		13,226	(5,904)	12,370	(6,732)
Non-controlling interests		-	-	-	-
Total comprehensive income (loss)
attributable to:
The shareholders of the Company		13,111	(5,613)	12,192	(6,654)
Non-controlling interests		-	-	-	-
Basic and diluted earnings (losses), in EUR	22	0.04	(0.02)	-	-

Explanatory notes are an integral part of these financial statements.

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AB KN ENERGIES CONSOLIDATED AND SEPARATE

FINANCIAL STATEMENTS 2023

STATEMENT OF CHANGES IN EQUITY

GROUP

	Share	Share	Legal	Reserve for	Other	Foreign	Retained	Total
	capital	premium	reserve	own shares	reserves	currency	earnings
						translation
						reserve
Balance as at 31 December 2021	110,315	4,002	11,051	15,929	67,624	(82)	(64,126)	144,713
Net profit (loss) for the year	-	-	-	-	-	-	(5,904)	(5,904)
Other comprehensive income (loss)	-	-	-	-	-	213	78	291
Total comprehensive income (loss)	-	-	-	-	-	213	(5,826)	(5,613)
Transfer between reserves	-	-	-	-	(64,971)	-	64,971	-
Balance as at 31 December 2022	110,315	4,002	11,051	15,929	2,653	131	(4,981)	139,100
Net profit (loss) for the year	-	-	-	-	-	-	13,226	13,226
Other comprehensive income (loss)	-	-	-	-	-	63	(178)	(115)
Total comprehensive income (loss)	-	-	-	-	-	63	13,048	13,111
Transfer between reserves	-	-	-	(4,001)	(2,653)	-	6,654	-
Balance as at 31 December 2023	110,315	4,002	11,051	11,928	-	194	14,721	152,211

COMPANY

capital

premium

Legal reserve

Reserve for

own shares

Other

reserves

Retained

earnings

Total

Balance as at 31 December 2021

110,315

4,002

11,051

15,929

67,624

(64,971)

143,950

Net profit (loss) for the year

(6,732)

Other comprehensive income (loss)

Total comprehensive income (loss)

(6,654)

Transfer between reserves

(64,971)

64,971

Balance as at 31 December 2022

110,315

4,002

11,051

15,929

2,653

(6,654)

137,296

Net profit (loss) for the year

12,370

Other comprehensive income (loss)

(178)

Total comprehensive income (loss)

12,192

Transfer between reserves

(4,001)

(2,653)

6,654

Balance as at 31 December 2023

110,315

4,002

11,051

11,928

12,192

149,488

Explanatory notes are an integral part of these financial statements.

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AB KN ENERGIES CONSOLIDATED AND SEPARATE

FINANCIAL STATEMENTS 2023

CASH FLOW STATEMENT

		Group		Company
	Notes	31-12-2023	31-12-2022	31-12-2023	31-12-2022
Cash flows from operating activities
Net profit (loss)		13,226	(5,904)	12,370	(6,732)
Adjustments for non-cash items:
Depreciation and amortization	3	23,041	22,664	22,937	22,566
Change in vacation reserve	15	107	(49)	114	(44)
Change in provisions	16	1,700	2,067	1,700	2,067
Contract assets	8	(119)	175	(229)	285
Income tax expenses	21	2,746	(996)	2,306	(1,504)
Share of (profit) or loss of equity-accounted investees		(93)	(33)	(93)	(33)
Interest income	20	(1,514)	(31)	(1,344)	(31)
Interest expenses	20	5,784	2,796	5,781	2,796
Currency impact from lease liabilities	20	(7,368)	17,380	(7,368)	17,380
Other non-cash adjustments		1,662	1,415	1,541	1,145
		39,172	39,484	37,715	37,895
Changes in working capital
(Increase) decrease in inventories	6	420	101	420	100
Decrease (increase) in trade and other accounts
receivable	7	2,006	(2,607)	1,925	(3,127)
Increase (decrease) in trade and other payables	14	(657)	7,130	(407)	7,590
Increase (decrease) in contract liabilities	25	(322)	537	(322)	537
Increase (decrease) in payroll related liabilities	15	(1,551)	(797)	(1,482)	(781)
		39,068	43,848	37,849	42,214
Cash collateral recovery	9	2,500	-	2,500	-
Cash collateral (payment)	9	(2,550)	-	(2,550)	-
Income tax (paid)		(236)	(359)	-	-
Interest received		412	31	313	31
Net cash flows from (used in) operating activities		39,194	43,520	38,112	42,245
Cash flows from investing activities
(Acquisition) of property, plant, equipment and intangible assets	3	(3,974)	(4,823)	(3,952)	(4,761)
Income from sales of non-current assets		67	186	67	186
Short term deposits (placed)/received	9	(57,500)	-	(53,000)	-
(Acquisition) of other investments		(2)	(2)	(2)	(2)
Dividends received		150	-	150	-
Grants, subsidies received	2.21	-	89	-	89
Net cash flows from (used in) investing activities		(61,259)	(4,550)	(56,737)	(4,488)
Cash flows from financing activities
Loans received	13	26,829	26,829	26,829	26,829
Loans paid	13	(5,445)	(3,901)	(5,445)	(3,901)
Interest and fee related to loans (paid)	13	(3,990)	(759)	(3,990)	(759)
Guarantee fees (paid)	13	(144)	(606)	(144)	(606)
Lease liabilities (paid)	13	(46,487)	(47,901)	(46,482)	(47,895)
Interest on leasing liabilities paid	13	(1,586)	(1,726)	(1,586)	(1,725)
Net cash flows from (used in) financing activities		(30,823)	(28,064)	(30,818)	(28,057)
Net increase (decrease) in cash flows		(52,888)	10,906	(49,443)	9,700
Cash and cash equivalents on 1 January	10	72,423	61,517	66,848	57,148
Cash and cash equivalents on 31 December	10	19,535	72,423	17,405	66,848

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AB KN ENERGIES CONSOLIDATED AND SEPARATE

FINANCIAL STATEMENTS 2023

EXPLANATORY NOTES TO FINANCIAL STATEMENTS

1 GENERAL INFORMATION

AB KN Energies (hereinafter “the Parent Company” or “the Company”), formerly known as AB Klaipėdos nafta, is a public limited liability

company registered in the Republic of Lithuania. The address of its registered office is as follows: Burių str. 19, 92276 Klaipėda, Lithuania.

These consolidated financial statements comprise the Company and its subsidiaries (together referred to as “the Group”).

The subsidiaries are these:

• UAB KN Global Terminals, a subsidiary (hereinafter “the subsidiary UAB KN Global Terminals”), formerly known as UAB SGD Logistika. The address

is as follows: Burių g. 19, 92276 Klaipėda, Lithuania.

• UAB SGD terminalas, a subsidiary (hereinafter “the subsidiary UAB SGD terminalas”). The address is as follows: Burių g. 19, 92276 Klaipėda,

Lithuania.

• UAB SGD SPB, a subsidiary of UAB KN Global Terminals (hereinafter “the subsidiary UAB SGD SPB”). The address is as follows: Burių g. 19, 92276

Klaipėda, Lithuania.

• KN Acu Servicos de Terminal de GNL LTDA (hereinafter “the subsidiary KN Acu Servicos de Terminal de GNL LTDA”). The address is as follows:

F66 Fazenda Saco Dantas s/n, Distrito Industrial, Area 1 and Area 2, 28200-000 São João da Barra, State of Rio de Janeiro

The associates are these:

• Sarmatia Sp. z o.o. – as at 31 December 2023 and 2022 the Group and the Company owns 1% of the authorised capital of the international

pipeline company. As a result of associate financial performance 100% impairment for investment to Sarmatia Sp. z o.o was accounted for as at

31 December 2023 and 2022. The Group and the Company is entitled to appoint one of five board members to the management of Sarmatia

Sp. z o.o., thus it can have significant influence. Therefore, this investment was classified as an associate and measured using the equity method.

The unaudited equity of the associate as at 31 December 2023 amounts to EUR 43 thousand (EUR (5) thousand as at 31 December 2022).

• BALTPOOL UAB – as at 31 December 2023 and 2022 the Group and the Company owns 33% of BALTPOOL UAB shares and their voting rights

at the General Meeting of the Shareholders of BALTPOOL UAB. The unaudited equity of the associate as at 31 December 2023 is

EUR 614 thousand (EUR 784 thousand as at 31 December 2022).

The main activities of the Group and the Company include operation of liquid energy products terminal, transshipment services and other

related services, as well as operation of the liquefied natural gas terminal (hereinafter referred to as “LNGT”) primarily dedicated to accept

and store liquefied natural gas. Activity also includes regassification of LNG for gas supply into Gas Grid.

National Energy Regulatory Council (hereinafter referred to as “NERC”) issued Natural Gas Regasification License to the Company on

27 November 2014.

As at 31 December 2023 and 31 December 2022 authorised capital was equal to EUR 110,315,009.65, divided into 380,396,585 units of

shares, each carrying one vote.

During the years 2023 and 2022, the Company did not acquire any of its own shares.

The Company’s shares are listed on the Baltic Main List on the NASDAQ Vilnius Stock Exchange (ISIN code LT0000111650, abbreviation

KNF1L).

As at 31 December 2023 and 31 December 2022 the shareholders of the Company were:

	Number of	31 December 2023	Number of	31 December 2022
	shares held	Part of ownership	shares held	Part of ownership
State of Lithuania represented by the Ministry of	(thousand)	(%)	(thousand)	(%)
Energy (Gedimino av. 38/2, Vilnius, 302308327)	275,687	72.47	275,687	72.47
UAB koncernas Achemos grupė (Vykinto st. 14, Vilnius, 156673480)	39,663	10.43	39,663	10.43
Other (less than 5% each)	65,047	17.10	65,047	17.10
Total	380,397	100.00	380,397	100.00

The average number of employees of the Group in 2023 was 358 (360 in 2022).

The average number of employees of the Company in 2023 was 329 (328 in 2022).

The financial statements of the Group and the Company are presented in Euro and all values are rounded to the nearest thousand (EUR

000), except when otherwise indicated.

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AB KN ENERGIES CONSOLIDATED AND SEPARATE

FINANCIAL STATEMENTS 2023

2 ACCOUNTING PRINCIPLES

The financial statements of the Group and the Company have been prepared on a historical cost basis unless otherwise stated in the

accounting policies provided below.

The financial year of the Group and the Company coincides with the calendar year.

The numbers in tables may not coincide due to rounding of specific amounts to EUR thousand. However, these rounding differences are

not material to the financial statements.

2.1. Basis for preparation of the financial statements

Statement of compliance

Annual financial statements of the Group and the Company have been prepared in accordance with the International Financial Reporting

Standards (IFRS) as adopted by the European Union (hereinafter the EU). They were authorized for issuance by the management on 15

March 2024 and are subject to the approval of the shareholders. The shareholders of the Company have the power to reject these financial

statements and request for the new ones to be prepared.

IFRSs and their interpretations, as announced and adopted by the European Union, are effective for the current reporting period.

A number of new standards (or interpretations) are effective as of 1 January 2023; however, the effect of these standards or interpretations

on the Group’s and Company’s financial statements is not significant.

Standards and Interpretations in issue not yet adopted

At the date of authorisation of these financial statements the following standards, amendments to existing standards and interpretations

were issued, however the Group and the Company does not plan to adopt these standards early.

▪ Non-current Liabilities with Covenants and Classification of Liabilities as Current or Non-current (Amendments to IAS 1);

▪ Lease Liability in a Sale and Leaseback (Amendments to IFRS 16);

▪ Supplier Finance Arrangements – Amendments to IAS 7 and IFRS 7.

The Group and the Company has elected not to adopt these standards, revisions and interpretations. The Group and the Company

anticipates that the adoption of these standards, revisions and interpretations will have no material impact on the financial statements of

the Group and the Company in the period of initial application.

2.2. Foreign currency

Functional currency

The amounts shown in these consolidated and separate financial statements are measured and presented in local currency, euro (EUR),

which is the functional currency of the Group and the Company.

The Group and the Company have opted to use the Euro (EUR) as their functional currency, taking into account the composition of revenue,

costs, equity, and debt instruments. Although lease liabilities are denominated in US dollars, a significant portion of revenues and costs

are in EUR. The pricing and costs of most of the Group's and the Company's products and services are influenced by competitive factors

within Lithuania and other Eurozone countries. Furthermore, the equity of the Company is denominated in EUR.

Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the

transactions. Any foreign exchange gains or losses arising from the settlement of these transactions and from the conversion of monetary

assets and liabilities denominated in foreign currencies, utilizing the exchange rate available at the reporting date, are recognized in the

statement of profit or loss and comprehensive income as finance income or expenses.

Non-monetary assets and liabilities, which are measured in terms of historical cost in a foreign currency, are converted using the exchange

rate available at the date of the transaction.

Group companies

Upon consolidation, the assets and liabilities of foreign operations are translated into euros using the exchange rate prevailing at the

reporting date, while their statements of profit or loss and comprehensive income are translated at average exchange rates observed

during the reporting period. Any exchange differences arising from translation for consolidation are recognized in other comprehensive

income. When a foreign operation is disposed of, the portion of other comprehensive income related to that specific foreign operation is

reclassified to profit or loss and comprehensive income.

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AB KN ENERGIES CONSOLIDATED AND SEPARATE

FINANCIAL STATEMENTS 2023

2 ACCOUNTING PRINCIPLES (CONT’D)

2.3. Going concern

Group’s current liabilities exceeded current assets by EUR 118,012 thousand as at 31 December 2023 (Company’s: EUR 125,119 thousand).

The management of the Group and the Company reevaluated the going concern assumptions during the preparation of the Group’s and

the Company’s Consolidated financial statements for the current reporting period. The increase in short-term liabilities was primarily driven

by the obligation to acquire the FSRU by the end of 2024. The loan agreement for up to 160 million EUR dedicated to FSRU acquisition

was signed with NIB in 2020 (used amount EUR 0). The guarantee for the loan has been granted by the State of Lithuania.

Additionally, a detailed analysis of liquidity and capital, including current credit facilities available and their contractual and expected

maturities, was conducted. It was concluded that the management has sufficient basis to believe in the Company’s and Group's ability to

continue operating in the next reporting period, especially with the anticipated resolution of the liquidity issue following the acquisition

of the FSRU and the support from the Government of the Republic of Lithuania as a guarantor of the loan.

2.4. Basis for consolidation

Subsidiaries are fully consolidated from the date of acquisition, which is the date when the Company or the Group obtains control, and

they continue to be consolidated until the date when such control ceases. The financial statements of the subsidiaries are prepared for the

same reporting period as the parent company, using consistent accounting policies. All intra-group balances, transactions, unrealized

gains and losses resulting from intra-group transactions, and dividends are eliminated in full.

Total comprehensive income within a subsidiary is attributed to the non-controlling interest, even if doing so results in a deficit balance.

A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction.

If the Group loses control over a subsidiary, it:

▪ Derecognises the assets (including goodwill) and liabilities of the subsidiary;

▪ Derecognises the carrying amount of any non-controlling interest;

▪ Derecognises the cumulative translation differences, recorded in equity;

▪ Recognises the fair value of the consideration received;

▪ Recognises the fair value of any investment retained;

▪ Recognises any surplus or deficit in profit or loss;

▪ Reclassifies the parent’s share of components previously recognised in other comprehensive income to profit or loss or retained earnings, as

appropriate.

Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the sum of the

consideration transferred, measured at fair value on the acquisition date, and the amount of any non-controlling interest in the acquiree.

In each business combination, the acquirer measures the non-controlling interest in the acquiree either at fair value or at the proportionate

share of the acquiree's identifiable net assets. Acquisition costs incurred are expensed and included in administrative expenses.

If the business combination is achieved in stages, the acquisition date fair value of the acquirer’s previously held equity interest in the

acquiree is remeasured to fair value at the acquisition date through profit or loss. Any contingent consideration to be transferred by the

acquirer will be recognised at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration,

which is deemed to be an asset or liability, will be recognised in accordance with IFRS 9 either in profit or loss or as a change to other

comprehensive income. If the contingent consideration is classified as equity, it should not be remeasured until it is finally settled within

equity.

Goodwill is initially measured at cost being the excess of the aggregate of the consideration transferred and the amount recognised for

non-controlling interest over the net identifiable assets acquired and liabilities assumed. If this consideration is lower than the fair value

of the net assets of the subsidiary acquired, the difference is recognised in profit or loss. After initial recognition, goodwill is measured at

cost less any accumulated impairment losses.

2.5. Operating segments

Operating segment is a separated business constituent part, the business risks and profitability of which differ from other business

constituent parts. Chief executive officer of the Group is responsible for making strategic decisions for distribution of the Company’s

resources and evaluation of activity’s results of the segments.

The management of the Group has identified the following segments in accordance with the new Group strategy (Note 4):

• LET – Liquid energy terminals in Klaipėda and Subačius providing liquid energy products transshipment, long-term storage for

such products and other related services;

• LNG business that includes LNGT and comLNG segments:

o LNGT – LNG terminal in Klaipėda which receives, and stores liquefied natural gas, regasifies and supplies it to Gas Main pipeline;

o comLNG – LNG commercial activities – includes LNG reloading station and execution of other global LNG projects;

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AB KN ENERGIES CONSOLIDATED AND SEPARATE

FINANCIAL STATEMENTS 2023

2 ACCOUNTING PRINCIPLES (CONT’D)

2.6. Investment in subsidiaries and associates

Investments in subsidiaries are carried at cost, less impairment in separate financial statements of the Company. The Company determines

at each reporting date whether there is any objective evidence that the investment in the subsidiary is impaired. If this is the case the

Company calculates the amount of impairment as the difference between the recoverable amount of the subsidiary and it’s carrying value

and recognises the amount in the profit (loss) in the statement of comprehensive income.

The Group and the Company accounts for investments in associates using the equity method. An associate is an entity in which the Group

and the Company has significant influence, but no control over the financial and operating policies. Significant influence is presumed to

exist when the Group and the Company holds between 20% and 50% of the voting rights of another company.

Under the equity method the investment in the associate is carried in the Statement of Financial position at cost plus post-acquisition

changes in the Group’s and the Company’s share of the associate’s net assets. Goodwill relating to the associate is included in the carrying

amount of the investment and is neither amortised nor individually tested for impairment.

The share of profit (loss) of an associate is shown on the face of the statement of comprehensive income (loss).

The financial statements of the associate are prepared for the same reporting period as the Group and the Company. Where necessary,

adjustments are made to bring the accounting policies in line with those of the Group and the Company. After application of the equity

method the Group and the Company determines whether it is necessary to recognise an additional impairment loss on the investment in

associate. The Group and Company determines at each reporting date whether there is any objective evidence that the investment in the

associate is impaired. If this is the case the Group and the Company calculates the amount of impairment as the difference between the

recoverable amount of the associate and its carrying value and recognises the amount in the caption “Share of the associate‘s profit or

(loss)” in the statement of comprehensive income.

Unrealized gains arising from transactions with equity accounted investees are eliminated against the investment to the extent of the

Group’s and the Company’s interest to investee. Unrealized losses are eliminated the same way as unrealized gains, but only to the extent

that there is no evidence of impairment.

2.7. Intangible assets

Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried

at cost less any accumulated amortization and any accumulated impairment losses. The useful lives of intangible assets are assessed to be

either finite or indefinite. The Group and the Company did not have assets with indefinite useful lives (as at 31 December 2023 and 31

December 2022). Intangible assets with finite lives are amortized over the useful economic lives of 3-15 years and assessed for impairment

whenever there is an indication that the intangible asset may be impaired. Amortisation periods and methods for intangible assets with

finite useful lives are reviewed at least at each financial year-end. Calculation of amortization is discontinued as at the first day of the next

month after the disposal of asset or when the whole acquisition cost is expensed or reclassified as a part of another asset.

Costs associated with maintaining computer software programs are recorded as an expense as incurred.

2.8. Property, plant and equipment

Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses. The initial cost of property, plant

and equipment comprises its purchase price, including non-refundable purchase taxes, capitalised borrowing costs and any directly

attributable costs of bringing the asset to its working condition and location for its intended use. Expenditures incurred after property,

plant and equipment have been put into operation, such as repair and maintenance costs, are normally charged to profit or loss in the

period the costs are incurred.

Where parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major

components) of property, plant and equipment.

The useful lives, residual values and depreciation method are reviewed periodically to ensure that the period of depreciation and other

estimates including borrowing costs are consistent with the expected pattern of economic benefits from items of property, plant and

equipment. In case external and (or) internal impairment indications exist at the date of the statement of financial position, the Group and

the Company perform detailed impairment testing in order to ensure that property, plant and equipment are accounted for at value not

higher than their recoverable amount.

Construction-in-progress is stated at cost. This includes the cost of construction, plant and equipment and other directly attributable costs

including borrowing cost. Construction-in-progress is not depreciated until the relevant assets are completed and available for their

intended use. The Group and the Company determine at each reporting date whether there is any objective evidence that the construction-

in-progress is impaired. The Group and the Company calculate the amount of impairment for suspended construction-in-progress.

When property, plant and equipment are retired or otherwise disposed, the cost and related depreciation are removed from the financial

statements and any related gains or losses are included in the statement of comprehensive income. Gains and losses on

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AB KN ENERGIES CONSOLIDATED AND SEPARATE

FINANCIAL STATEMENTS 2023

2 ACCOUNTING PRINCIPLES (CONT’D)

2.8. Property, plant and equipment (cont’d)

disposal of property, plant and equipment are determined as a difference between proceeds and the carrying amount of the property,

plant and equipment disposed and recorded in profit (loss).

Subsequent repair costs are included in the asset’s carrying amount, only when it is probable that future economic benefits associated

with the item will flow to the Group and the Company and the cost of the item can be measured reliably. The carrying amount of the

replaced part is derecognised. All other repair and maintenance costs are charged to profit or loss during the financial period in which

they are incurred. The estimated useful life (in years) of different groups of property, plant and equipment is as follows:

Group and Company

Description	Estimated useful life
Property, plant and equipment
Buildings and structures	10-60
Machinery, plant and equipment	5-55
Other non-current assets	4-15

2.9. Financial instruments

Financial instruments – initial recognition and subsequent measurement

A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another

entity.

i) financial assets

Initial recognition and measurement

The Group and the Company qualify financial assets to one of the following categories:

a measured at amortised cost;

b measured at fair value through other comprehensive income (FVOCI) – debt instruments;

c measured at fair value through other comprehensive income (FVOCI) – equity instruments;

d measured at fair value through profit or loss (FVTPL).

The classification of financial assets at initial recognition depends on the financial asset’s contractual cash flow characteristics and the

Group’s and the Company’s business model for managing them. Except for trade receivables that do not contain a significant financing

component, the Group and the Company initially measures a financial asset at its fair value plus, in the case of a financial asset not at fair

value through profit or loss, transaction costs. Trade receivables that do not contain a significant financing component are measured at

the transaction price determined under IFRS 15.

For a financial asset to be classified and measured at amortised cost or fair value through OCI, it needs to give rise to cash flows that are

‘solely payments of principal and interest (SPPI)’ on the principal amount outstanding. This assessment is referred to as the SPPI test and

is performed at an instrument level.

The Group’s and the Company’s business model for managing financial assets refers to how the Company manages its financial assets to

generate cash flows. The business model determines whether cash flows will result from collecting contractual cash flows, selling the

financial assets, or both.

A regular way purchases or sales of financial assets are recognised on the trade date, i.e., the date that the Company commits to purchase

or sell the asset.

Subsequent measurement

After initial recognition, the Group and the Company measures a financial asset at:

Amortised cost;

Fair value through OCI with recycling of cumulative gains and losses upon derecognition (debt instruments). The Company did not have such items as

at 31 December 2023 and 2022;

Fair value through OCI with no recycling of cumulative gains and losses upon derecognition (equity instruments). The Company did not have such items

as at 31 December 2023 and 2022;

Fair value through profit or loss. The Company did not have such items as at 31 December 2023 and 2022.

Financial assets at amortised cost (debt instruments)

This category is the most relevant to the Group and the Company. The Group’s and the Company’s financial assets at amortised cost

includes trade, other current and non-current receivables and contract assets. The Group and the Company measures financial assets at

amortised cost if both of the following conditions are met and is not designated as of FVTPL:

The financial asset is held within a business model with the objective to hold financial assets to collect contractual cash flows; and

The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal

amount outstanding.

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AB KN ENERGIES CONSOLIDATED AND SEPARATE

FINANCIAL STATEMENTS 2023

2 ACCOUNTING PRINCIPLES (CONT’D)

2.9. Financial instruments (cont’d)

Financial assets at amortised cost are subsequently measured using the effective interest (EIR) method and are subject to impairment.

Gains and losses are recognised in the statement of comprehensive income when the asset is derecognised, modified or impaired.

Impairment of financial assets

Further disclosures relating to impairment of financial assets are also provided in the following notes:

Trade receivables and contract assets (Note 7 and Note 8).

The Group and the Company performs the assessment for all debt instruments on an individual basis. The management considers a

financial asset in default (credit impaired) when contractual payments are long overdue due or when indications exist that the debtors or

a group of debtors are experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability

that they will enter bankruptcy or other financial reorganisation and where observable data indicate that there is a measurable decrease

in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults. The lifetime expected

credit losses of loans receivable and trade receivables is recognised in profit or loss through the contrary account of doubtful receivables

A financial asset is written off when there is no reasonable expectation of recovering the contractual cash flows.

ii) financial liabilities

Initial recognition and measurement

Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss (FVTPL) or at amortised costs.

Financial liability is classified as of FVTPL if it is classified as held-for-trading, it is a derivative or it is designated as such on initial recognition.

Financial liabilities at FVTPL are measured at fair value and net gains and losses, including any interest expense, are recognised in profit or

loss. Other financial liabilities are subsequently measured at amortised cost using the effective interest method. Interest expense and

foreign exchange gains and losses are recognised in profit or loss in the statement of other comprehensive income.

The Group’s and the Company’s financial liabilities include trade and other payables, loans and borrowings including bank overdrafts and

finance lease liabilities, as well as derivative financials instruments.

iii) Offsetting of financial instruments

Financial assets and financial liabilities are offset and the net amount is reported in the statement of financial position if there is a currently

enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, i.e. to realize the assets and

settle the liabilities simultaneously.

iv) Derivative financial instruments and hedge accounting

The Group and the Company holds derivative financial instruments to hedge its foreign currency risk exposures. Embedded derivatives are

separated from the host contract and accounted for separately if the host contract is not a financial asset and certain criteria are met.

Derivatives are initially measured at fair value. Subsequent to initial recognition, derivatives are measured at fair value, and changes therein

are generally recognised in profit or loss in the statement of other comprehensive income.

2.10. Derecognition of financial instruments

Derecognition of financial assets

A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognised (i.e.,

removed from the Group’s and the Company’s statement of financial position) when:

i) The contractual rights to receive cash flows from the asset have expired; or

ii) The Group and the Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to

pay the received cash flows in full without material delay to a third party under a ‘pass-through’ arrangement; and either (a)

the Group/Company has transferred substantially all the risks and rewards of the asset, or (b) the Group/Company has

neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

When the Group and the Company has transferred its rights to receive cash flows from an asset or has entered into a pass-through

arrangement, it evaluates if, and to what extent, it has retained the risks and rewards of ownership. When it has neither transferred nor

retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the Group and the Company

continues to recognise the transferred asset to the extent of its continuing involvement. In that case, the Group and the Company also

recognises an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and

obligations that the Company has retained.

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AB KN ENERGIES CONSOLIDATED AND SEPARATE

FINANCIAL STATEMENTS 2023

2 ACCOUNTING PRINCIPLES (CONT’D)

2.10. Derecognition of financial instruments (cont’d)

Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying

amount of the asset and the maximum amount of consideration that the Group and the Company could be required to repay (amount of

the guarantee).

Derecognition of financial liabilities

A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expired. When an existing financial

liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially

modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability at

fair value, and the difference in the respective carrying amounts is recognised in the statement of comprehensive income.

2.11. Employee benefits

Social security contributions

The Group and the Company pays social security contributions to the State Social Security Fund (hereinafter the Fund) on behalf of its

employees based on the legally defined contribution plan in accordance with the local legal requirements. A defined contribution plan is

a plan under which the Group and the Company pays fixed contributions into the Fund and will have no legal or constructive obligations

to pay further contributions if the Fund does not hold sufficient assets to pay all employees benefits related to employee service in the

current and prior period. The social security contributions are recognised as an expense on an accrual basis and are included within staff

costs.

Non-current employee benefits

The past service costs are recognised as an expense on a straight-line basis over the average period until the benefits become vested. Any

gains or losses appearing as a result of curtailment and/or settlement are recognised in the statement of comprehensive income as

incurred. The past service costs are recognized in the statement of comprehensive income as incurred.

The above-mentioned employee benefit obligation is calculated based on actuarial assumptions, using the projected unit credit method.

Obligation is recognized in the statement of financial position and reflects the present value of these benefits on the preparation date of

the statement of financial position. Present value of the non-current obligation to employees is determined by discounting estimated

future cash flows using the discount rate which reflects the interest rate of the Government bonds of the same currency and similar maturity

as the employment benefits. Actuarial gains and losses are recognized in the statement of other comprehensive income as incurred.

2.12. Inventories

Inventories are stated at the lower of cost and net realisable value. Net realizable value is estimated taking the selling price in the ordinary

course of business, less the costs of completion, marketing and distribution. The cost of inventories consists of purchase price, transport,

and other costs directly attributable to the cost of inventories. The costs of inventories are determined by the first-in, first-out (FIFO)

method.

2.13. Cash and cash equivalents

Cash includes cash in bank accounts. Cash equivalents are short-term, highly liquid investments that are readily convertible to known

amounts of cash with original maturities of three months or less and that are subject to an insignificant risk of change in value (Note 10).

For the purposes of the cash flow statement, cash and cash equivalents comprise cash, deposits held at call with banks, and other short-

term highly liquid investments with maturities of less than three months.

2.14. Short term deposits

Short term deposits include short-term bank deposits at the commercial banks with maturity of more than 3 months. Initially short-term

bank deposits are recognised at cost. Subsequently short-term deposits are stated at acquisition cost less any allowance for impairment.

2.15. Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period

of time to get ready for its intended use or sale are capitalised as part of the cost of the asset. All other borrowing costs are expensed in

the period in which they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing

of funds.

The borrowing costs, which represent a part of the cost price of a qualifying asset, the Group and the Company begins to capitalize from

the start of construction. Capitalization start is considered to be the day when the company meets the following conditions for

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AB KN ENERGIES CONSOLIDATED AND SEPARATE

FINANCIAL STATEMENTS 2023

2 ACCOUNTING PRINCIPLES (CONT’D)

2.15. Borrowing costs (cont’d)

the first time: incurs costs in respect of the asset, incurs borrowing costs, carries out activities required to prepare the asset for its intended

use or sale.

The Group and the Company discontinues the capitalization of borrowing costs when virtually all the activities necessary to prepare a

qualifying asset for its intended use or sale have been completed. Commonly, an asset is prepared for its intended use or sale when its

physical construction has been completed, even if the routine administrative work is still carried out. Although small changes are still

possible, such as finishing of the asset in accordance with the instructions of a purchaser or user, it indicates that, essentially, all the

activities have already been completed.

During the year 2023 and 2022 the Group and the Company did not capitalize borrowing costs due to the reason that all outstanding

borrowings were related to assets which were not qualifying for borrowing costs capitalization in accordance with IAS 23.

2.16. Lease

At inception of contract, a Group and the Company assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease

if the contract conveys the right to control the use if an identified asset for a period in exchange in consideration.

The Group and the Company as a lessee

At commencement or on modification of a contract that contains a lease component the Group and the Company allocates the

consideration in the contract to each lease component on the basis of its relative stand-alone prices.

The Group and the Company recognises a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset

is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before

the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or

to restore the underlying asset or the site on which it is located, less any lease incentives received.

The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the end of the lease

term, unless the lease transfers ownership of the underlying asset to the Group and the Company by the end of the lease term or the cost

of the right-of-use asset reflects that the Group and the Company will exercise a purchase option. In that case the right-of-use asset will

be depreciated over the useful life of the underlying asset, which is determined on the same basis as those of property and equipment. In

addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease

liability.

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted

using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Group‘s and the Company’s incremental

borrowing rate. Generally, the Group and the Company uses its incremental borrowing rate as the discount rate.

The Group and the Company determines its incremental borrowing rate by obtaining interest rates from various external financing sources

and makes certain adjustments to reflect the terms of the lease and type of the asset leased.

Lease payments included in the measurement of the lease liability comprise the following:

- Fixed payments, including in-substance fixed payments;

- Variable lease payments that depend on an index or a rate, initially measured using the index or rate as of the commencement date;

- Amounts expected to be paya

- ble under a residual value guarantee; and

- The exercise price under a purchase option that the Group and the Company is reasonably certain to exercise, lease payments in an optional renewal

period if the Group and the Company is reasonably certain to exercise an extension option, and penalties for early termination of a lease unless the

Group and the Company is reasonably certain not to terminate early.

The lease liability is measured at amortised cost using the effective interest method. It is remeasured when there is a change in the future

lease payments arising from a change in an index or rate, if there is a change in the Group‘s and the Company’s estimate of

the amount expected to be payable under a residual value guarantee, if the Group and the Company’s changes its assessment of whether

it will exercise a purchase, extension or termination option or if there is a revised in-substance fixed lease payment.

When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset

or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.

The Group and the Company presents right-of-use assets that do not meet the definition of investment property in `Right-of-use assets’

and lease liabilities in `lease liabilities` in the statement of financial position.

Short-term leases and leases of low-value assets

The Group and the Company has elected not to recognise right-of-use assets and lease liabilities for leases of low-value assets and short-

term leases, including IT equipment. The Group and the Company recognises the lease payments associated with the leases as an expense

on a straight-line basis over the lease term.

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AB KN ENERGIES CONSOLIDATED AND SEPARATE

FINANCIAL STATEMENTS 2023

2 ACCOUNTING PRINCIPLES (CONT’D)

2.16. Lease (cont’d)

The Group and the Company as a lessor

At inception or on modification of a contract that contains a lease component, the Group and the Company allocates the consideration in

the contract to each lease component based on their relative stand-alone prices.

When the Group and the Company acts as a lessor, it determines at lease inception whether each lease is a finance lease or an operating

lease.

To classify each lease, the Group and the Company makes an overall assessment of whether the lease transfers substantially all the risks

and rewards incidental to ownership of the underlying asset. If this is the case, then the lease is a finance lease; if not, then it is an operating

lease.

As part of this assessment, the Group and the Company considers certain indicators such as whether the lease is for a major part of the

economic life of the asset.

When the Group and the Company is an intermediate lessor, it accounts for its interests in the head lease and the sub-lease separately. It

assesses the lease classification of a sub-lease with reference to the right-of-use asset arising from the head lease, not with reference to

the underlying asset. If a head lease is a short-term lease to which the Group and the Company applies the exemption described above,

then it classifies the sub-lease as an operating lease.

If an arrangement contains lease and non-lease components, then the Group and the Company applies IFRS 15 to allocate the

consideration in the contract.

2.17. Income tax

Current income tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or

paid to the taxation authorities, also including adjustments in respect of prior years. The tax rates used to compute the amount are those

that are enacted by the date of the Statement of Financial position.

Income tax charge is based on profit for the year and considers deferred taxation. Income tax is calculated based on the Lithuanian tax

legislation.

The standard corporate income tax rate in the Republic of Lithuania is 15% as at 31 December 2023 and 31 December 2022. The Group’s

subsidiary KN Açu Serviços de Terminal de GNL Ltda applies Brazilian Tax System and subsidiary´s administration has elected the Real

Profit Regime that is calculated on quarterly basis. The official rates are 25% for Income tax and 9% Social Contribution on Net Profit.

As to Law on Corporate Income Tax of the Republic of Lithuania starting from 1 January 2014 deductible tax losses carried forward can be

used to reduce the taxable income earned during the reporting year by maximum 70%. Tax losses can be carried forward for indefinite

period, except for the losses incurred as a result of disposal of securities and/or derivative financial instruments. Such carrying forward is

disrupted if the Group and the Company stops its activities due to which these losses were incurred except when the Group and 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.

Deferred income tax is recognized in respect to temporary differences between the carrying amounts of assets and liabilities for

financial reporting purposes and the amounts used for income tax purposes.

Deferred tax assets and liabilities are measured using the tax rates expected to apply to taxable income in the years in which those

temporary differences are expected to reverse based on tax rates enacted or substantively enacted at reporting date.

2.17. Income tax (cont’d)

A deferred tax asset is recognised in the Statement of Financial position to the extent the management of the Group and the Company

believes it will be realised in the foreseeable future, based on taxable profit forecasts. If it is believed that part of the deferred tax asset is

not going to be realised, this part of the deferred tax asset is not recognised in the financial statements.

Deferred income tax assets and deferred income tax liabilities are offset, if a legally enforceable right exists to set off current tax assets

against current income tax liabilities and the deferred income taxes relate to the same taxable entity and the same taxation authority.

2.18. Dividends

Dividends are recorded in the financial statements when they are declared by the Annual General Shareholders’ meeting.

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AB KN ENERGIES CONSOLIDATED AND SEPARATE

FINANCIAL STATEMENTS 2023

2 ACCOUNTING PRINCIPLES (CONT’D)

2.19. Basic and diluted earnings per share

Basic earnings per share are calculated by dividing the net profit attributable to the shareholders by the weighted average of ordinary

registered shares issued. Provided that the number of shares changes without causing a change in the economic resources, the weighted

average of ordinary registered shares is adjusted in proportion to the change in the number of shares as if this change took place at the

beginning of the previous period presented. Since there are no instruments reducing profit (loss) per share, there is no difference between

the basic and diluted earnings per share.

2.20. Provisions

General

Provisions are recognised when the Group and the Company has a present legal or constructive obligation in respect of past events and

it is probable that an outflow of resources will be required to settle the obligation and the amount has been reliably estimated. Where the

Group and the Company expects the provision to be reimbursed the reimbursement is recognised as a separate asset but only when the

reimbursement is virtually certain. Expenses related to provisions are recorded in the statement of comprehensive income.

Greenhouse gas (GHG) emissions

The Company applies a 'net liability' approach in accounting for the emission rights received. It records the emission allowances granted

to it at a nominal (null) amount, as it is allowed by IAS 20 “Accounting for Government Grants and Disclosure of Government Assistance”.

Liabilities for emissions are recognised only as emissions are made (i.e. provisions are never made on the basis of expected future

emissions) and only when the reporting entity has made emissions in excess of the rights held. Costs of allowances are recorded under

cost of sales caption in the other comprehensive income.

2.21. Deferred government grants

Asset-related grants

Asset-related government and the European Union grants and third-party compensations comprise grants received in the form of non-

current assets or intended for the acquisition of non-current assets. Grants are initially recognised at fair value of the asset received and

subsequently accounted for in the statement of comprehensive income by reducing the depreciation charge of related asset over the

expected useful life of the asset.

The Group and the Company
	2023	2022
Balance as at 1 January	5,468	5,771
Received during the year	-	89
Reclassification	-	(4)
Amortisation	(344)	(388)
Compensation of costs	(9)	-
Balance as at 31 December	5,115	5,468

Amortisation of grants related to assets of EUR 344 thousand for 2023 (EUR 388 thousand for 2022) has been included into cost of sales

in the statement of comprehensive income.

The Group and the Company has no unfulfilled conditions or contingencies attached to these grants as at 31 December 2023 and as at 31

December 2022.

Income-related grants

Government and the European Union grants received as a compensation for the expenses or unearned income of the current or previous

reporting period, also, all other grants, which are not asset-related grants, are treated as income-related grants. The income-related grants

are recognised as used in parts to the extent of the expenses incurred during the reporting period or unearned income to be compensated

by that grant. These grants are recognised in the statement of comprehensive income, net of related expenditure.

2.22. Revenue recognition

Revenue from Contracts with Customers

The Group and the Company recognizes revenue at the time and to the extent that the transfer of goods or services to customers would

reflect an amount that the Group and the Company expects to receive in exchange for those goods or services. In applying this Standard,

the Group and the Company considers the terms of the contract and all relevant facts and circumstances. Revenue is recognized using the

5-step model:

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AB KN ENERGIES CONSOLIDATED AND SEPARATE

FINANCIAL STATEMENTS 2023

2 ACCOUNTING PRINCIPLES (CONT’D)

2.22. Revenue recognition (cont’d)

Step 1 – Identification of the contract with the customer.

The contract acknowledges an agreement between two or more parties (subject to purchase / sale conditions) that creates enforceable

rights and enforceable obligations (not applicable if a joint venture agreement is signed).

A contract that is subject to IFRS 15 is recognized only if the following criteria are met:

the parties have approved the contract (in writing, orally or in accordance with other usual business practices) and are bound by the obligations under

the contract,

there is a possibility to identify the rights of each party in respect of the goods and / or services to be transferred,

there is a possibility of identifying the payment terms provided for the goods and / or services to be transferred,

the contract is of a commercial nature,

there is a possibility of getting a reward in return for the goods and / or services that will be transferred to the customer.

Contracts with the customer may be combined or separated into several contracts, while retaining the criteria of the former contracts.

Such interconnection or separation is considered a change of contract.

Step 2 – Identification of operational commitments in the contract.

The contract establishes a commitment to deliver goods and / or services to the customer. When goods and / or services can be

distinguished, liabilities are recognized separately. Each commitment is identified in one of two ways:

the product and / or service is separate, or

a set of individual goods and / or services that are essentially the same and passed on to the customer in a uniform model.

Step 3 – Determination of a transaction price.

The Group and the Company considers the terms of the transaction and the usual business practices. The transaction price is the amount

of consideration that the Group and the Company expects to receive after delivering promised goods and services to the Customer, except

for amounts collected on behalf of third parties. The fee provided for in a contract with a client may include fixed amounts, variable

amounts, or both.

Step 4 – The transaction price is attributable to the contractual performance obligations.

The Group and the Company attributes the portion of the transaction price to each operating obligation in an amount that reflects the

amount of consideration to which the Group and the Company expects to be entitled in exchange for the promised goods or services

transferred to the customer. The transaction price is allocated to each operating obligation based on the relative individual selling prices

of the good or service promised in the contract. If the contract does not specify the price of the service or product separately (for example,

one price for two products), the Group and the Company determines it. Similar transactions are treated equally.

Step 5 – Revenue is recognised when the Group and the Company performs operating obligations.

Revenue is recognised when the operating obligation is settled by the transfer of goods or services to the customer (i. e. the customer

acquires control over the mentioned goods or services). Revenue is recognized as an amount equal to the transaction price that was

determined for the respective operating obligation. The recognised amount of revenue is attributed to the settled liability that can be

settled at a particular point of time or over a period.

Revenue is recognized when the amount of revenue can be measured reliably and when it is probable that the economic benefits

associated with the transaction will flow to the Company, and when specific criteria have been met for each type of income. The Company

relies on historical results, considering the customer type, the transaction type and the terms of each agreement.

Revenue is recognised by classifying it as per customer contracts, other income and finance income.

Revenue from contracts with clients is only recognized when the control of goods or services is transferred to the client to the extent that

reflects the remuneration which the Group and the Company expects to receive in return for these goods or services.

The Group and Company has following main revenue streams:

- Income from LNGT services (55% from total consolidated sales revenue in 2023, 57% in 2022)

One performance obligation exists – to ensure the compensation of for all fixed operating costs of LNGT infrastructure. The Group and

the Company acts as a principal in service provision. Revenues are recognized at the over the point of time when the services were rendered

based on amount collected from the users of LNG terminal due to the following reasons:

✓ The Group and the Company has a present right to payment for the rendered LNGT services;

✓ Significant risks and rewards of ownership have been transferred to the client;

✓ The client has accepted the service.

- Liquid energy products transshipment services (33% from total consolidated sales revenue in 2023, 34% in 2022)

One performance obligation exists – to provide liquid energy product loading service for which the loading rate is specified. The Company

acts as a principal in service provision. Revenues are recognized over time due to the following reasons:

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AB KN ENERGIES CONSOLIDATED AND SEPARATE

FINANCIAL STATEMENTS 2023

2 ACCOUNTING PRINCIPLES (CONT’D)

2.22. Revenue recognition (cont’d)

✓ By providing the services of loading of liquid energy products, the Group and the Company does not create an alternative use of the assets, which

it could sell as goods.

✓ The Group and the Company shall have the unconditional refund right for the performed share of production. In the event the client does not

perform or is behind the schedule in performing his obligations, the Company, having notified the client, has the right to suspend the provision

of services and/or to detain the liquid energy products within the terminal until the client’s obligations are fulfilled. All the consequences and

losses arising from the detention of liquid energy products and/or suspension of the provision of services shall be borne by the client.

✓ With the client’s delay in dispatching the liquid energy products from the terminal, additional storage fees shall be applied. This way the Group

and the Company shall not only compensate the expenses of storage of liquid energy products, but also obtain income.

Calculation of percentage of completeness of performance obligation already satisfied at year end is calculated in the following way. The

Group and the Company recognises revenues from liquid energy transshipment considering the level of fulfilment of a service. The level

of service provided is measured as percentage of transshipment cost expenses from the total cost of services. In the case reliable evaluation

of the service agreement is impossible, the revenues are recognised only as a part of expenses incurred that can be recoverable. Service

provided at certain level of completion is already received and consumed by the customer and the customer benefits from it (it would not

incur the whole loading service cost in service reperformance case), therefore management believes that percentage of completion

accounting method applied by the Group and the Company is in line with IFRS 15 requirements.

- Income from other LNG terminal activities (10% from total consolidated sales revenue in 2023, 7% in 2022). Main source

of other LNG terminal activities income:

Small-scale LNG reloading station in Klaipėda:

Small-scale LNG reloading station activities have one performance obligation exists – to provide LNG reloading station services. Company

acts as a principal in service provision. Revenues are recognized over the point of time when services are rendered.

✓ The Group and the Company has a present right to payment for the rendered LNG reloading station services;

✓ Significant risks and rewards of ownership have been transferred to the client;

✓ The client has accepted the service.

Operation of LNG terminal in Açu port in Brazil:

Operation of LNG terminal in Açu port in Brazil has one performance obligation exists – to provide LNG terminal management and

operation services. Company acts as a principal in service provision. Revenues are recognized over the point of time based on services

provided.

✓ The Group and the Company has a present right to payment for the rendered LNG terminal operation services;

✓ Significant risks and rewards of ownership have been transferred to the client;

✓ The client has accepted the service.

- Other activities

Revenues from other activities consist of sales of goods and other services rendered (mainly storage of oil products, consulting services).

The Group and the Company acts as a principal in service provision. Revenues from sales of goods are recognized when the control of the

goods is passed to customer (at point in time), revenues from other services – when the services are provided (over the point in time).

Revenues are recorded in the statement of comprehensive income under the item “Revenues from contracts with customers”, and the

assets resulting from contracts with customers are accounted for as short-term assets under the item “contract assets” in the statement of

financial position. Related costs are accounted for in the statement of comprehensive income under the item “Cost of sales”.

Due to the Group’s and the Company’s business nature the management did not make any other significant accounting judgments,

estimates or assumptions relating to revenue from contracts with customers recognition except for take or pay transactions described

below.

Contract assets – accrued income

Contract assets mean the right to the remuneration for goods or services, which were delivered or provided to the client, but not invoiced

yet.

If the Company renders services to the Client before the Client pays for these services or before the payment term, the contractual assets

are calculated by the amount equal to the earned contingent remuneration. The assets resulting from contracts with clients, i.e. the

accumulated income, after all the contractual obligations are fulfilled and the invoice is issued, are recognised as a trade receivable.

Contract liabilities – prepayments received

Contract liabilities include advances received from customers for services to be delivered in the future. Contract liabilities also include

interest and fees paid by AB Amber Grid on behalf of AB Achema (as disclosed in Note 25).

Income from liquefied natural gas terminal services regulated by National Energy Regulatory Council

Income from LNGT services is regulated by NERC. Based on LNG terminal law clause 5.2, all users of the natural gas transmission system,

including final consumers, are obliged to pay the additional Security Supplement together with their other payments for the natural gas

transmission service.

The revenue of the LNG terminal activity comprises from:

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AB KN ENERGIES CONSOLIDATED AND SEPARATE

FINANCIAL STATEMENTS 2023

2 ACCOUNTING PRINCIPLES (CONT’D)

2.22. Revenue recognition (cont’d)

i) LNG regasification service fixed part which is collected through additional Security Supplement;

ii) LNG regasification service variable part;

iii) LNG reloading service.

Regasification and reloading revenue are collected directly from the clients after services are provided based on quantities. For the actual

tariffs see the LNGT services in the annual report. The LNG Security Supplement is collected by the transmission service operator

(hereinafter referred to as “TSO”) either directly from the user or from suppliers of natural gas in case the user has no direct contractual

obligations with the TSO. The additional Security Supplement is calculated by NERC on an annual basis in proportion to the planned

natural gas consumption capacities as set out in National legislation in relation to gas market.

Prices set for the LNGT services for the year 2023 and 2022:

• LNG regasification service price fixed part is approved by NERC based on the LNG revenue cap. LNG revenue cap is set by NERC

and adjusted annually according to the necessary costs of the LNG terminal and determined return on investment. The fixed

part of the price is included into the additional Security Supplement to the natural gas transmission price, whether the Company

is not able to cover the set revenue level from LNG regasification service price variable part directly from LNG terminal users.

• LNG regasification service price variable part is calculated based on the upper limit of LNG revenue divided by LNG terminal

capacity per unit:

- price of variable part for the year 2023 set by resolution No. O3E-799 on 31 May 2022, was 1.41 EUR/MWh.

- price of variable part for May-December 2022 set by the resolution No. O3E-437 on 31 March 2022, was 1.19 EUR/MWh;

- price of variable part for January-April 2022 set by the resolution No. O3E-1496 on 16 November 2021, was 0.41 EUR/MWh;

• NERC on 25 November 2022 adopted decision on reloading service prices for the year 2023. Differentiated LNG reloading tariff

was set based on size of LNG cargos to be reloaded:

- Small scale cargos up to 15,000 m

LNG – 0.62 EUR/MWh (0.56 EUR/MWh in 2022);

- Medium scale cargos from 15,000 up to 50,000 m

LNG – 0.48 EUR/MWh (0.44 EUR/MWh in 2022);

- Large scale cargos from 50,000 m

LNG – 0.35 EUR/MWh (0.31 EUR/MWh in 2022).

Sales of goods

Revenues from sales of goods are recognised upon delivery and transfer of risks of products and customer acceptance.

Interest income

Interest income is recognised in profit (loss) on accrual basis (using the effective interest rate method).

Dividend income

Dividend income represents gross dividends from investment and recognised when the shareholder’s rights to receive payment is

established.

Rent income

Rent income is recognised over the lease term on a straight-line basis.

Income from fines and penalties

Income from fines and penalties is recognized when the Company has evidence that fines and penalties will be received and the

probability that it would not be received is low or when money is already received.

2.23. Expenses recognition

Expenses are recognised based on accrual and revenue and expense matching principles in the reporting period when the income related

to these expenses was earned, irrespective of the time the money was spent. In those cases when the costs incurred cannot be directly

attributed to the specific income and they will not bring income during the future periods, they are expensed as incurred.

The amount of expenses is usually accounted for as the amount paid or due, excluding VAT. In the cases when a long period of payment

is established and the interest is not distinguished, the amount of expenses shall be estimated by discounting the amount of payment

using the market interest rate.

2.24. Impairment of non-financial assets

The Group and the Company reviews at least at each reporting date the carrying amounts of non-financial assets, excluding inventories

and deferred income tax assets, to assess whether an indication of impairment exists. If such indication exists, the Company estimates the

asset’s recoverable amount.

Non-financial assets are reviewed for impairment whenever events or changes in circumstances indicate that carrying amount of an asset

may not be recoverable. Whenever the carrying amount of an asset exceeds its recoverable amount, an impairment loss is recognised in

the profit (loss). Reversal of impairment losses recognised in prior years is recorded when there is an indication that the impairment losses

recognised for the asset no longer exist or have decreased. The reversal is accounted in the same caption of the profit (loss) as the

impairment loss.

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AB KN ENERGIES CONSOLIDATED AND SEPARATE

FINANCIAL STATEMENTS 2023

2 ACCOUNTING PRINCIPLES (CONT’D)

2.24. Impairment of non-financial assets (cont’d)

Recoverable amount of an asset or cash-generating unit is its value in use or fair value less costs to sell depending on which is greater. In

assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects

current market assessments of the time value of money and the risks specific to the asset.

For impairment testing the asset that cannot be assessed individually is grouped into the minimum asset’s group generating cash inflows

during continuous use and that is independent from other asset or asset’s groups generating cash flows (cash generating unit or CGU).

Where the carrying amount of an asset exceeds its recoverable amount the impairment loss is recognised in the profit (loss). Impairment

losses related to the value of CGU are proportionally attributed to decrease the carrying amount of the asset, prescribed to the unit (unit

group).

Previously recognised impairment losses are reversed only if there is any indication that such losses no longer exist or have decreased.

The reversal is limited so that the carrying amount of the asset does not exceed the carrying amount that would have been determined

net of depreciation or amortisation had no impairment loss been recognised for the asset in prior years. The reversal is accounted in the

same caption of the profit (loss) as the impairment loss.

2.25. Use of estimates and judgements

The preparation of the financial statements in accordance with IFRS as adopted by the EU, requires management to make judgements,

estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and

expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be

reasonable under the circumstances, the results of which form the basis of making the judgments about carrying values of assets and

liabilities that are not readily apparent from other sources. Actual results may differ from the estimates. Estimates and underlying

assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised prospectively.

Significant accounting judgements

Information about judgements made in applying accounting policies that have the most significant effect on the amounts recognised in

the financial statements is included in the following notes:

- Lease term: whether the Group and the Company is reasonably certain to exercise the option to purchase FSRU (Note 13);

- Provision for acquisition of emission allowances (Note 16);

- The deferred tax (Note 21).

Assumptions and estimation uncertainties

Information about assumptions and estimation uncertainties as at 31 December 2023 that have a significant risk of resulting in a material

adjustment to the carrying amounts of assets and liabilities in the next financial year is included in the following notes:

- Impairment evaluation of property, plant and equipment and right of use asset: key assumptions underlying recoverable

amounts of identified cash generating units (Note 3);

- Useful life of property, plant and equipment and intangible assets (Note 3);

- Residual value and useful life of FSRU (Note 3);

- Impairment evaluation of investments to subsidiaries: key assumptions underlying recoverable amounts (Note 5);

- Net realisable value of inventory (Note 6)

- Assessment of expected credit losses and impairment losses on receivable amounts: key assumptions determining the

impairment allowance (Note 7);

- Recognition of deferred tax assets: availability of future taxable profit against which deductible temporary differences and tax

losses carried forward can be utilized (Note 21);

- Measurement of non-current employee benefits: key actuarial assumptions (Note 12);

- Recognition and measurement of provisions and contingencies: key assumptions about the likelihood and magnitude of an

outflow of resources (Note 25).

2.26. Contingencies

Contingent liabilities are not recognised in the financial statements. They are disclosed unless the possibility of an outflow of

resources embodying economic benefits is remote.

A contingent asset is not recognised in the financial statements but disclosed when an inflow of economic benefits is probable.

2.27. Financial guarantee contracts

Financial guarantee contracts issued by the Group and the Company are those contracts that require a payment to be made to reimburse

the holder for a loss it incurs because the specified debtor fails to make a payment when due in accordance with the terms of a debt

instrument. Financial guarantee contracts are recognised initially as a liability at fair value, adjusted for transaction costs that are directly

attributable to the issuance of the guarantee. Subsequently, the liability is measured at the higher of the best estimate of the expenditure

required to settle the present obligation at the reporting date and the amount recognised less cumulative amortisation.

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AB KN ENERGIES CONSOLIDATED AND SEPARATE

FINANCIAL STATEMENTS 2023

2 ACCOUNTING PRINCIPLES (CONT’D)

2.28. Subsequent events

Subsequent events that provide additional information about the Group’s and the Company’s position at the date of the statement of

financial position (adjusting events) are reflected in the financial statements. Subsequent events that are not adjusting events are disclosed

in the notes if material.

2.29. Offsetting

When preparing the financial statements, assets, and liabilities, as well as income and expenses are not set off, except the cases when

certain International Financial Reporting Standard specifically allows such set-off.

2.30. Fair value

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market

participants at the measurement date.

However, the objective of a fair value measurement in both cases is the same: to estimate the price at which an orderly transaction to sell

the assets or to transfer the liability would take place between market participants at the measurement date under current market

conditions (i.e., an ultimate price at the measurement date from the perspective of a market participant that holds the asset or owes the

liability).

In determining the fair value of non-financial assets, market participant’s ability to derive economic benefit from the assets in using it in

the highest and best use or selling the asset to another market participant, who would use it according to the highest and best use, is

considered.

In determining the fair value, a business entity should determine all the following:

the specific assets or liability, the fair value of which is determined (together with the appropriate unit of account);

when non-financial asset is valuated, the valuation assumption, which is fit for the purpose of determining the fair value (along with the corresponding

highest and best use of the non-financial asset);

the principal (or most advantageous) market for the assets or liability;

the valuation technique(s) appropriate for the measurement, considering the availability of data with which to develop inputs that represent the

assumptions that market participants would use when pricing the asset or liability and the level of the fair value hierarchy within which the inputs

are categorised.

The objective of using a valuation technique is to estimate the price at which an orderly transaction to sell the assets or to transfer the

liability would take place between market participants at the measurement date under current market conditions. Three widely used

valuation techniques are the market approach, the cost approach and the income approach.

Market approach. A valuation technique that uses prices and other relevant information generated by market transactions involving

identical or comparable (i.e., similar) assets, liabilities or a group of assets and liabilities, such as a business.

Cost approach. A valuation technique that reflects the amount that would be required currently to replace the service capacity of an asset

(often referred to as current replacement cost).

Income approach. Valuation techniques that convert future amounts (e.g., cash flows or income and expenses) to a single current (i.e.,

discounted) amount. The fair value measurement is determined based on the value indicated by current market expectations about those

future amounts.

Fair value hierarchy. To increase consistency and comparability in fair value measurements and related disclosures, the IFRS 13 establishes

a fair value hierarchy that categorises into three levels the inputs to valuation techniques used to measure fair value.

Level 1 inputs. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at

the measurement date.

Level 2 inputs. Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either

directly or indirectly.

Level 3 inputs. Level 3 inputs are unobservable inputs for the asset or liability.

For assets and liabilities that are recognised in the financial statements at fair value on a recurring basis, the Group and the Company

determines whether transfers have occurred between levels in the hierarchy by re-assessing classification (based on the lowest level input

that is significant to the fair value measurement as a whole) at the end of each reporting period.

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AB KN ENERGIES CONSOLIDATED AND SEPARATE

FINANCIAL STATEMENTS 2023

3 PROPERTY, PLANT AND EQUIPMENT

GROUP

	Land	Buildings	Machinery,	Other non-	Construction	Total
		and	plant and	current	in progress
Acquisition cost		structures	equipment	assets
Balance as at 31 December 2021	38	182,072	189,092	26,056	13,249	410,507
Acquisitions	-	82	355	689	3,002	4,128
Advance payments	-	-	-	4	-	4
Retirements and disposals	-	(8)	(77)	(837)	-	(922)
Transfer from construction in progress	-	164	3,804	489	(4,457)	-
Reclassification	-	10	(10)	-	(524)	(524)
Effect of foreign currency translation	-	-	5	15	-	20
Balance as at 31 December 2022	38	182,320	193,169	26,416	11,270	413,213
Acquisitions	-	213	838	652	1,823	3,526
Advance payments	-	-	4	3	-	7
Retirements and disposals	-	-	(100)	(287)	-	(387)
Transfer from construction in progress	-	3,616	6,951	714	(11,307)	(26)
Reclassification	-	-	182	(145)	-	37
Effect of foreign currency translation	-	-	3	7	-	10
Balance as at 31 December 2023	38	186,149	201,047	27,360	1,786	416,380
Accumulated depreciation and impairment:
Balance as at 31 December 2021	-	115,179	123,053	17,520	4,069	259,821
Depreciation for the year	-	2,977	4,180	1,325	-	8,482
Retirements and disposals	-	(8)	(77)	(630)	-	(715)
Impairment for the year (reversal)	-	-	-	-	27	27
Reclassifications		39	881	112	(1,204)	(172)
Effect of foreign currency translation	-	-	(8)	(22)	-	(30)
Balance as at 31 December 2022	-	118,187	128,029	18,305	2,892	267,413
Depreciation for the year	-	3,125	4,284	1,191	-	8,600
Retirements and disposals	-	-	(100)	(244)	-	(344)
Reclassifications	-	702	1,296	48	(2,048)	(2)
Effect of foreign currency translation	-	-	1	3	-	4
Balance as at 31 December 2023	-	122,014	133,510	19,303	844	275,671
Net book value as at 31 December 2021	38	66,893	66,039	8,536	9,180	150,686
Net book value as at 31 December 2022	38	64,133	65,140	8,111	8,378	145,800
Net book value as at 31 December 2023	38	64,135	67,537	8,057	942	140,709

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AB KN ENERGIES CONSOLIDATED AND SEPARATE

FINANCIAL STATEMENTS 2023

3 PROPERTY, PLANT AND EQUIPMENT (CONT’D)

COMPANY

	Land	Buildings	Machinery,	Other non-	Construction	Total
		and	plant and	current	in progress
Acquisition cost		structures	equipment	assets
Balance as at 31 December 2021	38	182,072	189,045	25,937	13,249	410,341
Acquisitions	-	82	340	686	3,002	4,110
Advance payments	-	-	-	4	-	4
Retirements and disposals	-	(8)	(77)	(837)	-	(922)
Transfer from construction in progress	-	164	3,804	489	(4,457)	-
Reclassification	-	10	(10)	-	(524)	(524)
Balance as at 31 December 2022	38	182,320	193,102	26,279	11,270	413,009
Acquisitions	-	213	835	652	1,823	3,523
Advance payments	-	-	4	3	-	7
Retirements and disposals	-	-	(100)	(287)	-	(387)
Transfer from construction in progress	-	3,616	6,951	714	(11,307)	(26)
Reclassification	-	-	182	(145)	-	37
Balance as at 31 December 2023	38	186,149	200,974	27,216	1,786	416,163
Accumulated depreciation and impairment:
Balance as at 31 December 2021	-	115,179	123,041	17,487	4,069	259,776
Depreciation for the year	-	2,977	4,159	1,274	-	8,410
Retirements and disposals	-	(8)	(77)	(630)	-	(715)
Impairment for the year (reversal)	-	-	-	-	27	27
Reclassifications	-	39	881	112	(1,204)	(172)
Balance as at 31 December 2022	-	118,187	128,004	18,243	2,892	267,326
Depreciation for the year	-	3,125	4,273	1,162	-	8,560
Retirements and disposals	-	-	(100)	(244)	-	(344)
Reclassifications	-	702	1,296	48	(2,048)	(2)
Balance as at 31 December 2023	-	122,014	133,473	19,209	844	275,540
Net book value as at 31 December 2021	38	66,893	66,004	8,450	9,180	150,565
Net book value as at 31 December 2022	38	64,133	65,098	8,036	8,378	145,683
Net book value as at 31 December 2023	38	64,135	67,501	8,007	942	140,623

The Group’s and the Company’s depreciation of property, plant and equipment amounts to EUR 8,600 thousand and EUR 8,560 thousand

for the year 2023, respectively (EUR 8,482 thousand and EUR 8,410 thousand – in 2022). In 2023 the depreciation EUR 344 thousand was

reduced by amortisation of related grant (EUR 388 thousand – in 2022). EUR 8,532 thousand and EUR 8,492 thousand of depreciation

charge has been included into cost of sales of the Group and the Company, respectively (EUR 8,376 thousand and EUR 8,303 thousand –

in 2022). The remaining amount EUR 68 thousand (EUR 107 thousand – in 2022) has been included into operating expenses in the

Statement of comprehensive income of both, the Group and the Company.

Part of the Group’s and the Company’s property, plant and equipment with the acquisition cost of EUR 43,150 thousand as at 31 December

2023 was completely depreciated (EUR 42,529 thousand on 31 December 2022), however, it was still in operation.

The Group’s and the Company‘s property, plant and equipment attributed to Liquefied natural gas terminal (net book value amounted to

EUR 36,212 thousand) was pledged to the Ministry of Finance of Republic of Lithuania for the state guarantee, given to European

Investment Bank (hereinafter – EIB) and Nordic Investment Bank (hereinafter – NIB) as at 31 December 2023 (net book value amounted to

EUR 38,132 thousand as at 31 December 2022).

The Group’s and the Company's property, plant and equipment attributed to Subačius liquid energy terminal, with net book value

amounting to EUR 4,089 thousand, was pledged to the Ministry of Finance of the Republic of Lithuania for the state guarantee, given to

NIB as at 31 December 2023 (net book value of pledged property, plant and equipment amounted to EUR 4,277 thousand as at 31

December 2022).

Impairment of property, plant and equipment and right of use asset attributed LNG reloading station assets

The management of the Group and the Company has assessed the internal and external indications of impairment for property, plant and

equipment attributed to LNG reloading station as at 31 December 2023.

During 2023, significant changes in the economic environment and financial markets did not take place on both regional and global scales.

As of 31 December 2023, the management of the Group and the Company did not identify any other negative significant events or changes

in circumstances that would indicate potential impairment of assets attributed to the LNG reloading station. The Cash Generating Units

(CGUs) future cash flows have been reviewed considering current market conditions and management's expectations for future

performance, along with a reassessment of the Weighted Average Cost of Capital (WACC) used for discounting future pre-tax cash flows.

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AB KN ENERGIES CONSOLIDATED AND SEPARATE

FINANCIAL STATEMENTS 2023

3 PROPERTY, PLANT AND EQUIPMENT (CONT’D)

As at the end of the year 2023 the management of the Group and the Company performed an impairment test of property, plant and equipment

attributed to LNG reloading station project by comparing discounted future cash flows forecasted for period till year 2048 (end of estimated useful life

of assets) to carrying amounts of this cash generating unit (CGU).

Long-term results, such as those after the end of the rental period, were based on management judgment, strategic partner assumptions, available

LNG market development studies, and other publicly available data sources.

Based on the impairment test results, no impairment was recognized for property, plant, and equipment and right-of-use assets attributed to the LNG

reloading station as of 31 December 2023. The net book value of property, plant, and equipment and right-of-use assets attributed to the LNG reloading

station amounted to EUR 22,273 thousand as of 31 December 2023 (EUR 23,635 thousand as of 31 December 2022).

Impairment of property, plant and equipment and right of use asset attributed to Klaipėda liquid energy terminal assets

During 2023, significant changes in the economic environment and financial markets did not occur at both regional and global scales. As of 31

December 2023, the management of the Group and the Company did not identify any other negative significant events or changes in circumstances

that would indicate potential impairment to assets attributed to the Klaipėda liquid energy terminal. The CGU future cash flows have been reviewed in

light of current market conditions and management’s expectations for future performance, along with a reassessment of the WACC used for

discounting future pre-tax cash flows.

The CGU’s cash flows were projected for the period of 2024-2048 based on the estimated remaining useful life of key assets. Additionally, the segment

operates in an asset-heavy and stable industry, relying on long-term contracts, allowing for the execution of long-term cash flow projections.

Restorative and maintenance investments into Klaipėda liquid energy terminal assets were assumed to reach EUR 54,664 thousand during the

forecasted period.

Operating assumptions used in cash flow calculations are projected based on global oil market forecasts from the year 2030, while income and expense

assumptions for the remaining periods are projected based on a long-term 2% growth rate, aiming for inflation target maintenance.

To determine the value in use of the CGU, future pre-tax cash flows are calculated and discounted with a pre-tax discount rate representing the current

market valuation of the time value of money as well as the significant risks allocated to related assets.

The discount rate was calculated as the weighted average cost of capital using data based on listed oil/gas distribution sector company performance

during 2023, as well as other commonly used indicators such as the risk-free rate of Lithuanian government bonds, country risk premium, corporate

credit spread, and effective tax rate reflecting the market that the CGU is generally based in. To reflect risks and uncertainties arising from the Group’s

and the Company’s business environment, an additional risk premium of 1.08% was estimated and added directly to the pre-tax WACC estimate.

Accordingly, the pre-tax discount rate was estimated at 9.71% and used for determining the value in use of the CGU as of December 31, 2023 (compared

to 10.27% as of December 31, 2022).

Considering the changes in impairment testing assumptions, the result of the impairment testing of Klaipėda liquid energy terminal’s assets did not

indicate any potential impairment as of 31 December 2023.

Sensitivity analysis of Klaipėda oil terminal assets value in use within an impairment test carried out as of 31 December 2023

The major elements impacting the amount of the value in use of Klaipėda liquid energy terminal assets within the individual CGU are income generated

from terminal operation and the discount rate applied.

The sensitivity of changes of the elements mentioned above on the impairment are presented below.

Difference between the recoverable amount of CGU and its carrying value, EUR thousand

			Change in discount rate
	(1.0) p.p.	(0.5) p.p.	0.0 p.p.	+0.5 p.p.	+1.0 p.p.
(10.0)%	(6,664)	(10,483)	(14,035)	(17,342)	(20,424)
(5.0)%	8,075	3,654	(0,460)	(4,292)	(7,866)
0.0%	22,813	17,791	13,115	8,758	4,692
5.0%	37,552	31,927	26,690	21807	17,250
10.0%	52,291	46,065	40,265	34,857	29,808

Change in income

projection

The Group and the Company have additionally assessed annual investments and income levels from key clients as major elements impacting the value

in use of Klaipėda liquid energy terminal assets. Under the base scenario, EUR 54,664 thousand of capital investments are assumed during the valuation

period. It is estimated that a 10% proportional increase in annual capital expenditure would reduce the recoverable amount of the Cash Generating

Unit (CGU) by EUR 2,963 thousand, while a 10% decrease would result in an increase by EUR 2,963 thousand.

The net book value of property, plant, and equipment and right-of-use assets attributed to the Klaipėda liquid energy terminal amounted to EUR

81,923 thousand as of 31 December 2023 (compared to EUR 88,933 thousand as of 31 December 2022).

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AB KN ENERGIES CONSOLIDATED AND SEPARATE

FINANCIAL STATEMENTS 2023

3 PROPERTY, PLANT AND EQUIPMENT (CONT’D)

Right-of-use assets

GROUP

	Land	Buildings	Machinery,	Other non-	Total
		and	plant and	current
		structures	equipment	assets
Acquisition cost
Balance as at 31 December 2021	22,592	1,065	393,035	45	416,737
Acquisitions / disposals	3,789	792	-	-	4,581
Effect of foreign currency translation	-	4	-	-	4
Balance as at 31 December 2022	26,381	1,861	393,035	45	421,322
Acquisitions / disposals	74	345	-	385	804
Balance as at 31 December 2023	26,455	2,206	393,035	430	422,126
Accumulated depreciation and impairment:
Balance as at 31 December 2021	7,379	957	70,100	45	78,481
Depreciation for the year	538	237	13,550	-	14,325
Effect of foreign currency translation	-	-	1	-	1
Balance as at 31 December 2022	7,917	1,194	83,651	45	92,807
Depreciation for the year	540	257	13,550	43	14,390
Effect of foreign currency translation	-	2	-	-	2
Balance as at 31 December 2023	8,457	1,453	97,201	88	107,199
Net book value as at 31 December 2021	15,213	108	322,935	-	338,256
Net book value as at 31 December 2022	18,464	667	309,384	-	328,515
Net book value as at 31 December 2023	17,998	753	295,834	342	314,927
COMPANY	Land	Buildings	Machinery,	Other non-	Total
		and	plant and	current
Acquisition cost		structures	equipment	assets
Balance as at 31 December 2021	22,592	1,036	393,035	45	416,708
Acquisitions / disposals	3,789	792	-	-	4,581
Balance as at 31 December 2022	26,381	1,828	393,035	45	421,289
Acquisitions / disposals	74	337	-	385	796
Balance as at 31 December 2023	26,455	2,165	393,035	430	422,085
Accumulated depreciation and impairment:
Balance as at 31 December 2021	7,379	952	70,100	45	78,476
Depreciation for the year	538	230	13,550	-	14,318
Balance as at 31 December 2022	7,917	1,182	83,650	45	92,794
Depreciation for the year	540	250	13,550	43	14,383
Balance as at 31 December 2023	8,457	1,432	97,200	88	107,177
Net book value as at 31 December 2021	15,213	84	322,935	-	338,232
Net book value as at 31 December 2022	18,464	646	309,385	-	328,495
Net book value as at 31 December 2023	17,998	733	295,835	342	314,908

The Group’s and the Company’s depreciation of right-of-use asset amounts to EUR 14,390 thousand and EUR 14,383 thousand for the

year 2023, respectively (EUR 14,325 thousand and EUR 14,318 thousand in 2022). EUR 14,098 thousand of depreciation charge has been

included into cost of sales of both, the Group and the Company (EUR 14,088 thousand in 2022) and the remaining amount of EUR 292

thousand and EUR 285 thousand has been included into operating expenses in the Statement of comprehensive income of the Group and

the Company, respectively (EUR 237 thousand and EUR 230 thousand in 2022).

Since right of use assets do not generate separate cash flow, the management of the Group and the Company has assessed the internal

and external indications of impairment of right-of-use assets along with other tangible assets as common CGU as at 31 December 2023

and 31 December 2022. The management did not identify additional impairment of the right-of-use assets as at 31 December 2023.

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AB KN ENERGIES CONSOLIDATED AND SEPARATE

FINANCIAL STATEMENTS 2023

4 INFORMATION ABOUT SEGMENTS

The management of the Group and the Company has identified the following segments in accordance with the new Group’s strategy,

where the names of segments were changed; however, these changes did not have an impact on the grouping:

LET – Liquid energy terminals in Klaipėda and Subačius, offering transshipment services for liquid energy products, long-term storage solutions for such

products, and other related services;

LNG business that includes LNGT and comLNG segments:

LNGT – LNG terminal in Klaipėda which receives, and stores liquefied natural gas, regasifies and supplies it to Gas Main pipeline;

comLNG – LNG commercial activities – includes LNG reloading station and execution of other global LNG projects;

The Group includes its investments in subsidiaries and associates to the specific segments according to which activities these entities are

involved in: UAB KN Global Terminals, UAB SGD SPB and KN Açu Servicos de Terminal de GNL LTDA – comLNG, UAB SGD terminalas –

LNGT, BALTPOOL UAB and Sarmatia Sp. z. o. o. – LET.

As at 31 December 2023, there were three customers each of which generated revenues exceeding 10% of total Company’s revenues and

in total amounted to EUR 38,220 thousand:

Customer A – EUR 15,388 thousand (LET);

Customer B – EUR 11,795 thousand (LNGT);

Customer C – EUR 11,037 thousand (LNGT);

As at 31 December 2022, there were five customers each of which generated revenues exceeding 10% of total Company’s revenues and

in total amounted to EUR 55,683 thousand:

Customer A – EUR 16,059 thousand (LET);

Customer B – EUR 9,141 thousand (LNGT);

Customer C – EUR 10,527 thousand (LNGT);

Customer D – EUR 11,047 thousand (LNGT);

Customer E – EUR 8,909 thousand (LNGT).

Main indicators of the segments of the Group included in the statement of comprehensive income and statement of financial position for

the financial year 2023 and 2022 are described below:

	LET		LNG	Total
For the year ended 31 December 2023		LNGT	comLNG
Revenues from contracts with customers	27,919	48,743	6,863	83,525
Profit (loss) before income tax	4,896	9,717	1,359	15,972
Segment net profit (loss)	4,407	7,902	917	13,226
Interest revenue	1,262	82	170	1,514
Loan interest expense	-	4,220	1	4,221
Interest on financial lease liabilities	366	1,155	43	1,564
Depreciation and amortisation	5,262	2,189	1,200	8,651
Depreciation of right-of-use-assets	481	13,762	147	14,390
Acquisitions of tangible and intangible assets	3,233	413	93	3,739
Segment total assets*	108,697	346,163	24,215	479,075
Loan and related liabilities	(20)	164,445	(42)	164,383
Lease liabilities	18,604	192,513	2,049	213,166
Segment total liabilities	24,731	371,321	7,847	403,899

	LET		LNG	Total
For the year ended 31 December 2022		LNGT	comLNG
Revenues from contracts with customers	27,817	44,614	5,387	77,818
Profit (loss) before income tax	3,186	(10,571)	485	(6,900)
Segment net profit (loss)	3,220	(9,128)	4	(5,904)
Interest revenue	-	31	72	103
Loan interest expense	-	966	7	973
Interest on financial lease liabilities	365	1,423	43	1,831
Depreciation and amortisation	4,646	2,487	1,206	8,339
Depreciation of right-of-use-assets	436	13,740	149	14,325
Acquisitions of tangible and intangible assets	4,200	123	40	4,363
Segment total assets*	113,183	362,642	25,685	501,510
Loan and related liabilities	(20)	143,202	(42)	143,140
Lease liabilities	18,567	245,600	2,081	266,248
Segment total liabilities	26,329	400,387	8,117	434,833

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AB KN ENERGIES CONSOLIDATED AND SEPARATE

FINANCIAL STATEMENTS 2023

4 INFORMATION ABOUT SEGMENTS (CONT’D)

Reconciliation of information on reportable segments to the amounts reported in the financial statements

I. Revenues	2023	2022
Total revenues for reportable segments	83,525	77,818
Consolidated revenue	83,525	77,818
II. Profit (loss) before tax	2023	2022
Total profit (loss) before tax for reportable segments	15,972	(6,900)
Consolidated profit (loss) before tax from continuing operations	15,792	(6,900)
III. Net profit (loss)	2023	2022
Total net profit (loss) for reportable segments	13,226	(5,904)
Consolidated net profit (loss)	13,226	(5,904)
IV. Interest on financial lease liabilities	2023	2022
Total interest on financial lease liabilities for reportable segments	1,564	1,831
Consolidated interest on financial lease liabilities	1,564	1,831
V. Depreciation and amortization	2023	2022
Total depreciation and amortization for reportable segments	8,651	8,339
Consolidated depreciation and amortization	8,651	8,339
VI. Depreciation of ROU assets	2023	2022
Total depreciation of ROU assets for reportable segments	14,390	14,325
Consolidated depreciation of ROU assets	14,390	14,325
VII. Acquisitions of tangible and intangible assets	2023	2022
Total acquisitions of tangible and intangible assets for reportable segments	3,739	4,363
Consolidated acquisitions of tangible and intangible assets	3,739	4,363
VIII. Assets*	2023	2022
Total assets for reportable segments	479,075	501,510
Consolidated total assets	479,075	501,510
IX. Loan and related liabilities	2023	2022
Total loan and related liabilities for reportable segments	164,383	143,140
Consolidated loan and related liabilities	164,383	143,140
X. Lease liabilities	2023	2022
Total lease liabilities for reportable segments	213,166	266,248
Consolidated financial lease liabilities	213,166	266,248
XI. Liabilities	2023	2022
Total liabilities for reportable segments	403,899	434,833
Consolidated total liabilities	403,899	434,833

*Segment total assets – total assets of the Group, excluding Cash and cash equivalents and short-term deposits at the period end.

AB KN ENERGIES CONSOLIDATED AND SEPARATE

FINANCIAL STATEMENTS 2023

4 INFORMATION ABOUT SEGMENTS (CONT’D)

The Group’s and Company’s customers are both Lithuanian and foreign. Sales revenue by geography is as follows:

	Group		Company
	2023	2022	2023	2022
Lithuanian clients	49,033	55,814	49,033	55,863
Foreign clients	34,492	22,004	31,323	18,859
	83,525	77,818	80,356	74,722

Majority of property, plant and equipment is located in Lithuania and only less than 1% - in Brazil.

5 INVESTMENT IN SUBSIDIARIES

The Company
	31-12-2023	31-12-2022
Cost of shares of UAB KN Global Terminals	4,540	4,540
Cost of shares of UAB SGD terminalas	38	38
	4,578	4,578

The Company indirectly controls subsidiaries UAB SGD SPB and KN Açu Servicos de Terminal de GNL LTDA.

UAB KN Global Terminals

The subsidiary was registered on 20 November 2015. The main activity – expansion of operation of international LNG terminal activities,

LNG transportation activities, other economic activities.

The authorized capital of UAB KN Global Terminals is EUR 4,540,000, divided into 4,540,000 shares, each with a nominal value of EUR 1.00,

granting 4,540,000 votes.

As the Company has been appointed as the operator of a liquefied natural gas (LNG) terminal in the Brazilian Port of Açu, on 13th of

December 2019, UAB KN Global Terminals together with UAB SGD SPB established KN Acu Servicos de Terminal de GNL LTDA. As to the

long-term contract with Gas Natural Açu (GNA), KN, through its subsidiary, assumes the responsibility for the provision of safe, reliable

and efficient operations, including maintenance of the jetty and its installations, gas pipeline and gas metering stations as well as

supporting the commissioning of the LNG Terminal.

The management of the Company has reassessed indications of impairment of its investment in the subsidiary and found no indications

as of 31 December 2023.

Unaudited financial position of UAB KN Global Terminals is as follows:

	UAB KN Global Terminals
	2023	2022
Non-current assets	151	151
Current assets	5,808	4,665
Current liabilities	55	1
Equity	5,904	4,815

Unaudited comprehensive income of UAB KN Global Terminals is, as follows:

		UAB KN Global Terminals
	2023	2022
Income	1,156	721
(Expenses) (68)		(68)
Profit (loss)	1,088	653

UAB SGD terminalas

The subsidiary UAB SGD terminalas (Burių str. 19, 92276 Klaipėda, 304139242) was established and registered on 27 December 2018. UAB

SGD terminalas objective is to perform activities of operating and managing a whole structure of LNG terminal in Klaipėda. The subsidiary

is currently inactive.

Unaudited financial position of UAB SGD terminalas is as follows:

		UAB SGD terminalas
	2023	2022
Current assets	20	24
Current liabilities	1	1
Equity	19	23
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AB KN ENERGIES CONSOLIDATED AND SEPARATE

FINANCIAL STATEMENTS 2023

		5 INVESTMENT IN SUBSIDIARIES (CONT’D) Unaudited comprehensive income of UAB SGD terminalas is as follows:
		UAB SGD terminalas
	2023	2022
Income	-	-
(Expenses)	(4)	(4)
Profit (loss)	(4)	(4)

6 INVENTORIES

	Group		Company
	31-12-2023	31-12-2022	31-12-2023	31-12-2022
Spare parts, construction materials and other inventories	1,082	1,374	1,082	1,374
Diesel fuel for the LNG Terminal purpose	359	257	359	257
Fuel for transport and other equipment	113	47	113	47
Liquefied natural gas	46	46	46	46
Emission allowances	8	133	8	133
Liquid energy products for sale	-	263	-	263
	1,608	2,120	1,608	2,120

No write down of inventories to net realisable value accounted as at 31 December 2023. As of 31 December 2022, the Group and the

Company accounted the write-off of inventories in the amount of EUR 92 thousand that have been written down to the net realizable

value.

In 2023 the Group and the Company recognised inventories for EUR 3,068 thousand (in 2022: EUR 5,549 thousand) in cost of sales and

EUR 114 thousand in operating expenses (in 2022: EUR 37 thousand). Inventories recognised as costs during the year were included into

following captions under costs of sales and operating expenses:

	2023	2022
Inventories recognised under cost of sales:
Natural gas	1,941	3,942
Repair and maintenance of assets	380	223
Liquid energy products	355	1,019
Emission allowances	216	168
Services for tankers	111	125
Transport	41	52
Work safety costs	23	19
Other	1	1
	3,068	5,549
Inventories recognised under operating expenses:
Expenses for transport	33	36
Other	81	1
	114	37

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AB KN ENERGIES CONSOLIDATED AND SEPARATE

FINANCIAL STATEMENTS 2023

7 TRADE RECEIVABLES AND OTHER RECEIVABLES

Group

Company

31-12-2023

31-12-2022

31-12-2023

31-12-2022

Trade receivable

10,556

11,879

9,830

11,336

Prepayments

810

796

810

765

Other receivables	2,441	2,066	2,222	1,871
	13,807	14,741	12,862	13,972

Trade and other receivables are non-interest bearing and are generally settled on 2 - 20 days payment terms.

Trade receivable disclosed below:

	Group		Company
	31-12-2023	31-12-2022	31-12-2023	31-12-2022
Receivables from LNG terminal activities	7,854	8,521	7,855	8,521
Receivables for transshipment of liquid energy
products and other related services	3,410	4,261	3,410	4,261
Receivable for operating and management services	804	620	77	77
Less: impairment allowance	(1,512)	(1,523)	(1,512)	(1,523)
	10,556	11,879	9,830	11,336

	Group		Company
	31-12-2023	31-12-2022	31-12-2023	31-12-2022
Receivables from third-party customers	5,583	6,801	4,839	6,221
Receivables from related parties (Note 26)	4,973	5,078	4,991	5,115
	10,556	11,879	9,830	11,336

The Group and the Company has recognized impairment allowance in the amount of EUR 1,512 thousand on 31 December 2023 (EUR

1,523 thousand on 31 December 2022).

Change in allowance (reverse) for trade receivables for 2023, amounting to EUR 11 thousand (for 2022 – allowance, amounting to EUR 12

thousand) has been included into operating expenses in the statement of the comprehensive income.

Movements in the allowance for impairment in respect of trade receivables

The movement in the allowance for impairment in respect of trade receivables during the year was as follows:

Group and Company

	31-12-2023	31-12-2022
Balance at 1 January	1,523	1,511
Impairment of the year	-	12
Reversal of impairment	(11)	-
Balance at 31 December	1,512	1,523

The age analysis of trade receivables of the Group and the Company as at 31 December 2023 and 2022 is as follows:

Group

				Trade receivables past due but not impaired
Trade neither past due nor		Less than	30 – 59	60 – 89	90 – 179	180 – 279	280 – 359	More than	Total
impaired		30 days	days	days	days	days	days	360 days
2023	4,946	1,575	49	-	-	-	-	3,986	10,556
2022	6,999	896	6	3	-	3,975	-	-	11,879

Company

			Trade receivables past due but not impaired
Trade neither past due		Less than 30	30 – 59	60 – 89	90 – 179	180 – 279	280 – 359	More than	Total
nor impaired		days	days	days	days	days	days	360 days
2023	4,220	1,575	49	-	-	-	-	3,986	9,830
2022	6,456	896	6	3	-	3,975	-	-	11,336

All receivable amounts from the liquefied natural gas terminal services are pledged to UAB Hoegh LNG Klaipėda for 10 years period from

2014 (agreement concluded on 2 March 2012, Note 25).

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AB KN ENERGIES CONSOLIDATED AND SEPARATE

FINANCIAL STATEMENTS 2023

7 TRADE RECEIVABLES AND OTHER RECEIVABLES (CONT’D)

Other receivables disclosed below:

	Group		Company
	31-12-2023	31-12-2022	31-12-2023	31-12-2022
Receivable interests from short-term deposits	1,037	-	1,029	-
VAT receivable	979	860	979	860
Excise duty receivable	214	983	214	983
Other receivable taxes (1)	211	195	-	-
Other receivables	-	28	-	28
Total	2,441	2,066	2,222	1,871

(1) Other receivable taxes related to subsidiary KN Acu Servicos de Terminal de GNL Ltda receivable social security taxes (INSS). Any

employee on a Brazilian payroll is subject to social security contributions. According to the current legislation, the monthly social security

contribution in Brazil is due on the total amount of the remuneration at rates of 7.5% up to 14%.

8 CONTRACT ASSETS

The Group and the Company

	31-12-2023	31-12-2022
Current contract assets:
Accrued income	556	328
	556	328

Accrued income for storage of liquid energy products as of 31 December 2023 and 31 December 2022 calculated as percentage of

completion based on expenses incurred from the total estimated cost of contracted services. Upon completion of transshipment of liquid

energy products and acceptance by the customer, the amounts initially recognized as contract assets are reclassified as trade receivables.

9 OTHER FINANCIAL ASSETS

The Group and the Company

	Group		Company
	31-12-2023	31-12-2022	31-12-2023	31-12-2022
Short-term deposits (1)	57,500	-	53,000	-
Deposit for tax obligations (2)	3,321	3,271	3,321	3,271
Other guarantees	465	-	465	-
Total	61,296	3,271	56,786	3,271

(1) As at 31 December 2023, the Group had 6 short-term deposits at banks, amounted to EUR 57,500 thousand, with maturity of more

than 3 months, the Company had had 4 short-term deposits at banks, amounted to EUR 53,000 thousand, with maturity of more

than 3 months. Annual interest rate was from 2.30% to 4.00% for agreements signed.

In 2020-2021 the Group and the Company made a deposit to the State tax inspection for tax which may arise from the movement of excise

goods under suspension of excise duty. The additional excise duty cash collateral in 2023 for EUR 2,550 thousand, from which EUR 2,500

thousand was recovered in May 2023. The use of the deposit is indefinite (returned within 5 working days from the submission of the

request).

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AB KN ENERGIES CONSOLIDATED AND SEPARATE

FINANCIAL STATEMENTS 2023

10 CASH AND CASH EQUIVALENTS

	Group		Company
	31-12-2023	31-12-2022	31-12-2023	31-12-2022
Cash at banks	19,535	72,423	17,405	66,848

Cash and cash equivalents are not pledged as at 31 December 2023 and 31 December 2022. The Group and the Company didn’t have

restricted cash as at 31 December 2023 and 31 December 2022.

Calculated values of cash and cash equivalents are denominated in the following currencies showed in EUR:

	Group		Company
Currency	31-12-2023	31-12-2022	31-12-2023	31-12-2022
EUR	14,049	66,687	12,628	61,909
USD	4,777	4,939	4,777	4,939
BRL	709	797	-	-
	19,535	72,423	17,405	66,848

Management of the Group and the Company considered potential impairment losses on cash held in banks as per IFRS 9 requirements.

Assessment is based on official Standard & Poor’s long–term credit ratings:

	Group		Company
	31-12-2023	31-12-2022	31-12-2023	31-12-2022
A+	7,276	26,784	5,855	22,006
A-	5,962	17,000	5,962	17,000
AA-	5,588	27,842	5,588	27,842
BB-	709	797	-	-
	19,535	72,423	17,405	66,848

Based on management’s assessment performed and best estimate cash and its equivalents are presented at fair value and no indications

of cash impairment exist as at 31 December 2023 and 31 December 2022.

11 ISSUED CAPITAL AND RESERVES

The Company's authorised capital is EUR 110,315,009.65, divided into 380,396,585 shares, each with one voting right. All shares are paid.

72.47% of the shares (275,687,444 shares) are owned by the State of Lithuania, represented by the Ministry of Energy.

The Company has not acquired any own shares and has arranged no deals regarding acquisition or transfer of its own shares during the

year 2023 and 2022.

A legal reserve is a compulsory reserve under Lithuanian legislation. Annual transfers of not less than 5% of net profit, calculated in

accordance with International Financial Reporting Standards, are compulsory until the reserve reaches 10% of the share capital. The legal

reserve is fully formed as at 31 December 2023 and 31 December 2022.

Other (distributable) reserves are formed based on the decision of the General Shareholders’ Meeting on profit distribution. These reserves

can be used only for the purposes approved by the General Shareholders’ Meeting. The largest portion of the Company’s other reserves

are formed for investments.

12 NON-CURRENT EMPLOYEE BENEFITS

Provisions for non-current employee benefits represent payable amounts calculated in accordance with the Lithuanian laws. Each employee

at retirement age is entitled to receive a payment of 2 monthly salaries upon retirement. As at 31 December 2023 and 31 December 2022

the Company and the Group has recognised employee benefits related to the length of service of employees, which is described in

collective agreement. Depending on time spent in the Company, the employer is entitled to a higher benefit payment than the one

prescribed by the law.

As at 31 December 2023 and 31 December 2022, the Company and the Group reclassified a portion of non-current employee benefits

under short term liabilities.

On 31 December 2023 the liabilities related to the defined benefit obligations to the employees terminating the employment on the

normal retirement date were EUR 816 thousand (EUR 631 thousand – in 2022) as follows:

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AB KN ENERGIES CONSOLIDATED AND SEPARATE

FINANCIAL STATEMENTS 2023

12 NON-CURRENT EMPLOYEE BENEFITS (CONT’D)

Group and Company

	2023	2022
Start of period	631	756
Calculated per year	210	(93)
Paid per year	(25)	(32)
End of period	816	631
Current	122	62
Non-current	694	569

The main preconditions applied to assess long-term employee benefit liability are presented below:

Group and Company

	31-12-2023	31-12-2022
Discount rate	3.91%	1.94%
Staff turnover rate	7.94%	8.46%
Future salary increases	7.90%	4.90%

13 LOANS AND LEASE LIABILITIES

Loans

The Group and the Company

	31-12-2023	31-12-2022
Nordic Investment Bank’s loan (b, c)	121,525	96,102
European Investment Bank’s loan (a)	42,853	46,703
Guarantee payment to the Ministry of Finance to the Republic of Lithuania	(126)	(130)
Payable loan interest	131	465
	164,383	143,140

(a) A credit contract dated at 9 July 2013 was concluded by the Company with European Investment Bank (EIB) to grant a credit up to EUR

87,000 thousand to implement LNGT project. According to the contract, EIB financed up to 50% of necessary funds for the project

implementation. According to the contract, credit tenor is up to 20 years (5 years grace period, 15 years linear repayment scheme applied),

interest rate is variable comprising bank margin with inclusion of 3 months EURIBOR rate, and whose margin was submitted by the EIB in

payment offers. The contract also provided that minimum credit tranche was EUR 15,000 thousand, and the whole credit sum had to be

paid out to the Company over no more than 6 tranches.

The performance of 100% Company’s contractual financial liabilities is ensured by the State Guarantee and aligned with EU commission.

The Finance ministry of the Republic of Lithuania being issuer of the state aid guarantee has pledge on all property, plant and equipment

created during LNGT project (Note 3).

Above credit was facilitated in several tranches:

i. First tranche. On 20 December 2013, the 1st tranche amounting to EUR 15,000 thousand was received with full principal

amortization till 20 December 2033. The principal repaid by EUR 966 thousand as of 31 December 2023. First tranche loan balance

as at 31 December 2023 – EUR 9,859 thousand (as at 31 December 2022 – EUR 10,766 thousand).

ii. Second tranche. On 28 November 2014, the 2nd tranche amounting to EUR 15,000 thousand was received with full principal

amortization till 28 November 2034. The principal repaid by EUR 967 thousand as of 31 December 2023. Second tranche loan

balance as at 31 December 2023 – EUR 10,843 thousand (as at 31 December 2022 – EUR 11,751 thousand).

iii. Third tranche. On 15 December 2017, the 3rd tranche amounting to EUR 24,700 thousand was received with full principal

amortization till 20 September 2034. The principal repaid by EUR 2,093 thousand as of 31 December 2023. Third tranche loan

balance as at 31 December 2023 – EUR 22,151 thousand (as at 31 December 2022 – EUR 24,186 thousand).

The Company complied with covenants prescribed in the loan agreement as at 31 December 2023 and as at 31 December 2022.

(b) On 27 November 2014, the Company has concluded the Credit Agreement with the Nordic Investment Bank (NIB) regarding granting

a credit of up to EUR 34,755 thousand for the implementation of the LNGT project (the same). According to the contract, credit tenor was

up to 20 years (5 years grace period, 15 years linear repayment scheme applied, interest: floating, which rate was provided in the NIB

disbursement offer (a fixed margin + 6 months EURIBOR). The Loan contract also provided that the minimal payable amount of credit was

EUR 7,000 thousand, and all the credit had to be paid out to the Company in no more than 5 tranches.

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AB KN ENERGIES CONSOLIDATED AND SEPARATE

FINANCIAL STATEMENTS 2023

13 LOANS AND LEASE LIABILITIES (CONT’D)

On 10 November 2015 there was signed NIB loan agreement amendment to reduce the loan principle to EUR 22,000 thousand.

On 31 August 2017, the Company withdrew the amount of EUR 22,000 thousand. Resulting in requirement of full principal amortization

till 19 June 2034. The principal repaid by EUR 1,419 thousand as of 31 December 2023. NIB loan balance as at 31 December 2023 – EUR

14,187 thousand (as at 31 December 2022 – EUR 16,615 thousand).

The performance of 100% Company’s contractual financial liabilities is ensured by the State Guarantee and aligned with EU commission.

The Finance ministry of the Republic of Lithuania being issuer of the state aid guarantee has pledge on property, plant and equipment

created during LNGT project.

(c) On 19 November 2019, the Company concluded the Credit Agreement with the Nordic Investment Bank (NIB) regarding granting a

credit of up to EUR 134,145 thousand for restructuring of the lease payments of the FSRU. According to the Loan contract, the term of the

credit was up to 25 years (5 years grace period, 20 years linear repayment scheme), interest: floating (a fixed margin + 6 months EURIBOR).

The Loan contract also provides that the minimal payable amount of credit is EUR 5,000 thousand with the annual tranche cap EUR 26,829

thousand (making total 5 annual tranches). Loan balance as at 31 December 2023 – EUR 107,338 thousand (as at 31 December 2022 – EUR

79,487 thousand).

The performance of 100% Company’s contractual financial liabilities is ensured by the State Guarantee and aligned with EU commission.

The Finance ministry of the Republic of Lithuania being issuer of the state aid guarantee has following collateral structure: Subačius liquid

energy terminal and all existent and future receivables from security supplement till 2044. Pledge of receivables from security supplement

is postponed till 31 January 2025 as performance bank guarantee of EUR 20,000 thousand is issued for 5 years tenor in favour of the

Finance ministry of the Republic of Lithuania for credit support. For issuance of the state guarantee, likewise historically, a guarantee

administration payment of 0.1% to the Ministry of Finance to the Republic of Lithuania was incurred.

On 31 March 2023, the Company withdrew the amount of EUR 6,707 thousand, followed by three consecutive tranches on 30 June 2023,

30 September 2023 and 31 December 2023 respectively, each amounting to EUR 6,707 thousand. The withdrawal schedule in 2022 was

the same as in 2023: on 31 March 2022, the Company withdrew the amount of EUR 6,707 thousand, followed by three consecutive tranches

on 30 June 2022, 30 September 2022 and 31 December 2022 respectively, each amounting to EUR 6,707 thousand.

LEASE LIABILITIES

	Group		Company
	31-12-2023	31-12-2022	31-12-2023	31-12-2022
Lease liabilities	213,166	266,248	213,147	266,226

Lease liabilities as at 31 December 2023 can be specified as follows:

Group

	FSRU lease	Land rent	Jetty rent	Other*	Total
Long term lease liabilities	-	18,851	4,856	752	24,459
Short term lease liabilities	187,510	661	122	414	188,707
	187,510	19,512	4,978	1,166	213,166

Company

	FSRU lease	Land rent	Jetty rent	Other*	Total
Long term lease liabilities	-	18,851	4,856	743	24,450
Short term lease liabilities	187,510	661	122	404	188,697
	187,510	19,512	4,978	1,147	213,147

Lease liabilities as at 31 December 2022 can be specified as follows:

Group

	FSRU lease	Land rent	Jetty rent	Other*	Total
Long term lease liabilities	195,022	19,231	5,392	477	220,122
Short term lease liabilities	45,353	443	77	253	46,126
	240,375	19,674	5,469	730	266,248

Company

	FSRU lease	Land rent	Jetty rent	Other*	Total
Long term lease liabilities	195,022	19,231	5,392	463	220,108
Short term lease liabilities	45,353	443	77	245	46,118
	240,375	19,674	5,469	708	266,226

* Other comprises of lease of transport vehicles, office rent.

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AB KN ENERGIES CONSOLIDATED AND SEPARATE

FINANCIAL STATEMENTS 2023

13 LOANS AND LEASE LIABILITIES (CONT’D)

The interest rate for lease liabilities varies from 0.5% to 2% as at 31 December 2023 and as at 31 December 2022. The main characteristics

of rent agreements by asset group, as well as the movement of the lease liability can be presented as follows:

GROUP, denominated in euros

			Carrying							Carrying
		Year of	amount as at		Interest		Re-	Additional	Exchange	amount as at
	Currency	maturity	31-12-2022	Interests	payments	Payments	assessment	disbursement	rate effect	31-12-2023
FSRU lease	USD	2024	240,374	1,056	(1,079)	(45,473)	-	-	(7,368)	187,510
Land rent	EUR	2055	19,674	388	(390)	(234)	74	-	-	19,512
Jetty rent	EUR	2065	5,469	99	(99)	(491)	-	-	-	4,978
Other	EUR	2023	731	21	(18)	(289)	339	382	-	1,166
			266,248	1,564	(1,586)	(46,487)	413	382	(7,368)	213,166

COMPANY, denominated in euros

			Carrying							Carrying
		Year of	amount as at		Interest		Re-	Additional	Exchange	amount as at
	Currency	maturity	31-12-2022	Interests	payments	Payments	assessment	disbursement	rate effect	31-12-2023
FSRU lease	USD	2024	240,374	1,056	(1,079)	(45,473)	-	-	(7,368)	187,510
Land rent	EUR	2055	19,674	388	(390)	(234)	74	-	-	19,512
Jetty rent	EUR	2065	5,469	99	(99)	(491)	-	-	-	4,978
Other	EUR	2023	709	19	(18)	(284)	339	382	-	1,147
			266,226	1,562	(1,586)	(46,482)	413	382	(7,368)	213,147

As at 31 December 2023 and 31 December 2022 the Group and the Company did not have residual value guarantees related to lease

agreements or leases not yet commenced to which the Group and the Company is committed. Only one agreement, FSRU lease, contains

purchase option, which is described below.

Floating Storage and Regasification Unit (FSRU) lease

On 2nd March 2012 the Company has signed the 10 years Build, Operate and Transfer (BOT) lease contract with Hoegh LNG Ltd. regarding

LNG Floating Storage and Regasification Unit (FSRU) with a purchase option. FSRU has arrived at the Seaport of Klaipėda at 27th October

2014 and has been taken over by the Company on 27th November 2014. There have been no changes in the BOT lease contract with

Hoegh LNG Ltd. regarding LNG Floating Storage and Regasification Unit (FSRU) in the year 2023 and 2022. The terms and condition of

the BOT lease contract do not provide any restrictions on the Company’s activities, associated with dividends, additional borrowings or

additional rent.

FSRU operating lease payments include such elements:

• Charter Hire Element

• OPEX Element (Services, spares, consumables, insurance in FSRU mode, ship radio and communication)

• Management Fee

• Crew Costs or Maritime personnel expenses

At the lease period end the Group and the Company has an option to purchase FSRU Independence. On 25 February 2021 the General

Shareholders’ Meeting approved the decision to acquire the floating storage regasification unit “Independence”. The acquisition is

expected to be settled in December 2024.

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AB KN ENERGIES CONSOLIDATED AND SEPARATE

FINANCIAL STATEMENTS 2023

13 LOANS AND LEASE LIABILITIES (CONT’D)

RECONCILIATION OF MOVEMENTS OF LIABILITIES TO CASH FLOWS ARISING FROM FINANCING ACTIVITIES

In accordance with IAS 7 Disclosure Initiative requirements, the following table provides disclosure that enable users of financial statements

to evaluate changes in liabilities arising from financing activities (loans taken), including both changes arising from cash flows and non-

cash changes:

		Group		Company
Non-current interest-bearing loans and borrowings, including	Loans	Lease liabilities	Loans	Lease liabilities
interest payable as at 1 January 2022	119,923	287,105	119,923	287,080
Additional loan disbursements (Cash flows)	26,829	4,580	26,829	4,580
Loan repayments (Cash flows)	(3,901)	-	(3,901)	-
Repayment of lease liabilities (Cash flows)	-	(47,901)	-	(47,895)
Interest and loan administration fee charged	973	1,831	964	1,829
Interest and loan administration fee paid (Cash flows)	(759)	(1,726)	(759)	(1,725)
Guarantee payments (Cash flows)	(606)	-	(606)	-
The effect of changes in foreign exchange rates	-	17,380	-	17,380
Other payments / reclassifications	681	4,979	690	4,977
Non-current interest-bearing loans and borrowings, including
interest payable as at 1 January 2023	143,140	266,248	143,140	266,226
Additional loan disbursements (Cash flows)	26,829	382	26,829	382
Loan repayments (Cash flows)	(5,445)	-	(5,445)	-
Repayment of lease liabilities (Cash flows)	-	(46,487)	-	(46,482)
Interest and loan administration fee charged	3,993	1,564	3,993	1,562
Interest and loan administration fee paid (Cash flows)	(3,990)	(1,586)	(3,990)	(1,586)
Guarantee payments (Cash flows)	(144)	-	(144)	-
The effect of changes in foreign exchange rates	-	(7,368)	-	(7,368)
Reassessment	-	413	-	413
Non-current interest-bearing loans and borrowings, including
interest payable as at 31 December 2023	164,383	213,166	164,383	213,147

14 TRADE PAYABLES AND OTHER LIABILITIES

	Group		Company
	31-12-2023	31-12-2022	31-12-2023	31-12-2022
Trade payables	4,779	3,596	4,521	3,564
Other payables and current liabilities	656	2,275	623	2,157
	5,435	5,871	5,144	5,721

Trade payables disclosed below:

	Group		Company
	31-12-2023	31-12-2022	31-12-2023	31-12-2022
Other payments related FSRU	2,030	1,640	2,030	1,640
Payable to contractors	274	184	274	184
Payable for gas services	255	-	255	-
Payable for railway services	79	99	79	99
Other trade payables	2,141	1,673	1,883	1,641
Total	4,779	3,596	4,521	3,564

On 31 December 2023 trade payables of EUR 2,030 thousand were denominated in USD (on 31 December 2022 – EUR 912 thousand).

Trade payables are non-interest bearing and are normally settled within 30-day payment terms.

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AB KN ENERGIES CONSOLIDATED AND SEPARATE

FINANCIAL STATEMENTS 2023

14 TRADE PAYABLES AND OTHER LIABILITIES (CONT’D)

Other payables and current liabilities disclosed below:

	Group		Company
	31-12-2023	31-12-2022	31-12-2023	31-12-2022
Accrued expenses and liabilities	411	909	411	909
Real estate tax payable	126	126	126	126
Payable for insurance	35	-	35	-
Received guarantee payment (1)	-	880	-	880
Other taxes payable	10	120	-	-
Other liabilities	74	240	51	242
	656	2,275	623	2,157

(1) Received guarantee payment related to particular client‘s fulfilment of payment obligations. Guarantee payment was returned

on 2 October 2023 after the execution of the contract. Total amount of EUR 880 thousand was paid.

Other liabilities are non-interest bearing and have an average payment term of one month.

15 PAYROLL RELATED LIABILITIES

	Group		Company
	31-12-2023	31-12-2022	31-12-2023	31-12-2022
Accrual of annual bonuses	1,577	1,711	1,517	1,631
Accrued vacation reserve	881	769	829	715
Salaries payable	589	500	589	500
Social insurance payable	268	265	258	228
Income tax payable	251	190	206	176
Other deductions	2	2	2	2
Total	3,568	3,437	3,401	3,252

16 PROVISIONS

The Group and the Company

	31-12-2023	31-12-2022
Emission allowances provision (1)	6,419	5,663
Legal provision (2)	944	-
	7,363	5,663

(1) Greenhouse gas emission allowances in advance is distributed for the periods covering the next few years. The first period started

from 2005 and ended in 2007, the second period started from 2008 and ended in 2012, the third period started from 2013 and ended

in 2022, and the current period started from 2023 and will end in 2025. Companies that participate in the project from 2005 are obliged

to report about real extent of pollution of each calendar year. When available allowances are not sufficient to cover actual pollution,

then a penalty should be paid for each ton of excess carbon dioxide.

Emission rights are accounted for when evaluating the deficit between the emission allowances allocated under the national allocation

plan for emission allowances and the actual pollution for the particular year. The quantity of used emission allowances is audited by

external auditors each year.

As at 31 December 2023, the Group and the Company has accounted for a provision of EUR 6,419 thousand regarding the emission

made which exceed available emission rights (as at 31 December 2022 – EUR 5,663 thousand).

Movement of provision in 2023:

Balance as at 31 December 2022	(5,663)
Purchase of emission allowances	91
Emission allowances used	6,526
Additional provision made	(7,373)
Balance as at 31 December 2023	(6,419)

(2) In January 2023 PGNiG Supply & Trading GmbH, users of the LNG terminal, submitted claims to the Company for a compensation,

because during loading operations in December 2022, the LNG carrier ordered by PGNiG Supply & Trading GmbH experienced

demurrage while loading liquefied natural gas to the Floating Storage Regasification Unit (FSRU). The demurrage of LNG carrier

ordered by PGNiG Supply & Trading GmbH arose due to a technical malfunction of the equipment of the FSRU as of November 25,

2022, where the capacity of LNG regasification was partially limited, which in turn led to the fact that the mentioned LNG carrier

exceeded the laytime while loading the LNG cargo. PGNiG Supply & Trading GmbH provided claim for compensation for demurrages

and boil off in the amount of EUR 944 thousand. After evaluation of claims and legal/regulatory measures, the

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AB KN ENERGIES CONSOLIDATED AND SEPARATE

FINANCIAL STATEMENTS 2023

16 PROVISIONS (CONT’D)

Company evaluated requested compensation claims as reasonable and agreed on its compensation through negotiations and settlement

agreement.

Movement of provision in 2023:

Balance as at 31 December 2022	-
Additional provision made	(944)
Balance as at 31 December 2023	(944)

17 REVENUE FROM CONTRACTS WITH CUSTOMERS

	Group		Company
	2023	2022	2023	2022
Income from LNGT regasification services collected
directly from LNGT users (1)	46,077	33,586	46,077	33,586
Sales of liquid energy products transshipment services	25,885	25,137	25,885	25,137
Other sales related to LNG terminals activity	8,072	5,407	4,666	2,262
Other sales related to transshipment	1,697	1,023	1,697	1,023
Sales of consulting services	1,437	267	1,674	316
Sales of inventories	357	1,669	357	1,669
Income from LNGT services included in security
supplement (2)	-	10,729	-	10,729
	83,525	77,818	80,356	74,722

(1) The significant factor, which has influenced the increase in Group’s and Company‘s revenue in 2023, is higher regasification volumes

compared to the previous year.

Income from LNGT services contains income from LNG regasification service and LNG reloading service. The tariffs of this services are

adjusted annually and regulated by NERC. Regasification and reloading income are collected directly from the clients after services

are provided based on quantities.

In 2023 the Company has implemented regasification model in order to reduce the additional security supplement price for the natural

gas consumers. Regasification tariff which is actual just for the LNG terminal users from May, 2023 was increased according to the

upper limit of the Company’s LNG revenue. After these changes it was possible to decrease the security supplement and to collect all

revenue directly from LNG terminal users.

(2) Security supplement – security of supply fee applied to natural gas transmission price paid by Lithuanian natural gas consumers. LNG

terminal additional security supplement tariff is applied to Terminal users, who regasify gas via LNG terminal and use gas transmission

system. LNG terminal additional security supplement tariff is set by NERC by the resolutions annually and is dedicated to cover

operating costs of LNG terminal, its infrastructure and tie-in, independently from gas volumes regasified and submitted to gas

transmission system.

Security supplement income was not recognized in 2023 due to implemented regasification model when regasification tariff was

increased and security supplement from May 2022 was 0 EUR.

18 COST OF SALES

		Group	Company
	2023	2022	2023	2022
Depreciation of right-of-use asset	(14,098)	(14,088)	(14,098)	(14,088)
Expenses related to FSRU rent (OPEX element, management, crew cost)	(8,605)	(7,471)	(8,605)	(7,471)
Wages, salaries and social security	(8,563)	(8,217)	(8,119)	(7,587)
Depreciation and amortisation (incl. amortisation of grants)	(8,438)	(8,198)	(8,341)	(8,107)
Tax on environmental pollution and Emission allowances	(7,446)	(5,686)	(7,446)	(5,686)
Natural gas	(1,890)	(3,942)	(1,890)	(3,942)
Port charges	(1,533)	(1,536)	(1,533)	(1,536)
Repair and maintenance of assets	(1,458)	(1,020)	(1,355)	(967)
Insurance	(1,187)	(445)	(1,187)	(704)
Railway services	(1,180)	(1,240)	(1,180)	(1,240)
Electricity	(1,067)	(1,831)	(1,067)	(1,831)
Cost of liquid energy products sold	(355)	(1,019)	(355)	(1,019)
Other	(4,204)	(3,010)	(3,773)	(2,528)
Total	(60,024)	(57,703)	(58,949)	(56,706)

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AB KN ENERGIES CONSOLIDATED AND SEPARATE

FINANCIAL STATEMENTS 2023

19 OPERATING EXPENSES

	Group		Company
	2023	2022	2023	2022
Wages, salaries and social security	(6,053)	(5,298)	(5,866)	(4,933)
Consulting and legal costs (1)	(1,409)	(598)	(1,234)	(501)
Telecommunication and IT expenses	(521)	(395)	(496)	(330)
Salaries and other related expenses to governing bodies	(348)	(185)	(348)	(185)

Operating tax expense	(299)	(179)	(84)	(85)
Depreciation of right-of-use asset	(292)	(237)	(285)	(230)
Expenses for business trips	(282)	(100)	(226)	(100)
Depreciation and amortization	(213)	(141)	(213)	(141)
Advertising and external communication	(208)	(110)	(208)	(97)
Training costs	(166)	(134)	(165)	(134)
Administration of bank accounts	(71)	(209)	(69)	(201)
Other	(1,101)	(846)	(863)	(589)
	(10,963)	(8,432)	(10,057)	(7,526)

(1) Remuneration to auditors. Consulting and legal costs contain EUR 93 thousand and EUR 65 thousand expenses incurred for financial

statutory audit performed by external auditor of the Group and the Company for the year ended 31 December 2023, respectively (EUR 70

thousand and EUR 55 thousand – for the year ended 31 December 2022, respectively). Remuneration to the independent audit firms for

regulated activity review services amounts to EUR 13 thousand for both, the Group and the Company, (EUR 13 thousand – for the year

ended 31 December 2022).

20 INCOME (EXPENSES) FROM FINANCIAL AND INVESTMENT ACTIVITIES – NET

	Group		Company
	2023	2022	2023	2022
Income from currency exchange on the lease
liabilities	7,368	-	7,368	-
Interest income	1,514	103	1,344	31
Fines income	43	56	43	56
Gain from lease liabilities	-	949	-	949
Other financial income	216	113	204	22
Financial activity income, total	9,141	1,221	8,959	1,058
Interest expenses	(4,221)	(973)	(4,219)	(965)
Interest on the lease liabilities	(1,564)	(1,831)	(1,562)	(1,829)
Losses from currency exchange	(114)	(88)	(103)	(81)
Loss from financial derivatives	-	(72)	-	(72)
Losses from currency exchange on the lease liabilities	-	(17,380)	-	(17,380)
Other financial activity expenses	(65)	(3)	(6)	-
Financial activity expenses, total	(5,964)	(20,347)	(5,890)	(20,327)

21 INCOME TAX

	Group		Company
	2023	2022	2023	2022
Current income tax expense	(440)	(508)	-	-
Deferred tax (expenses) income	(2,306)	1,504	(2,306)	1,504
Income tax (expense) income recorded in the profit
(loss)	(2,746)	996	(2,306)	1,504

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AB KN ENERGIES CONSOLIDATED AND SEPARATE

FINANCIAL STATEMENTS 2023

21 INCOME TAX (CONT’D)

Reconciliation between income tax expense of the Group and Company and the result of taxable income of the Group and the Company

multiplied by income tax rate for the years 2023 and 2022 is as follows:

Group

	2023	2023	2022	2022
Accounting profit (loss) before tax		15,972		(6,900)
Applying 15% profit tax	15.00%	2,396	15.00%	(1,035)
Effect of tax rates in foreign jurisdictions	1.10%	176	(3.88)%	268
Tax effect of:
Tax-exempt income	(0.15)%	(24)	0.16%	(11)
Non-deductible expenses of income tax	1.65%	263	(1.41)%	97
Income tax recognised in other comprehensive income	0.20%	32	0.20%	(14)
Adjustments in respect of prior years	(1.20)%	(191)	4.90%	(338)
Other	0.59%	94	(0.54)%	37
	17.19%	2,746	14.43%	(996)

Company

	2023	2023	2022	2022
Accounting profit (loss) before tax		14,676		(8,236)
Applying 15% profit tax	15.00%	2,201	15.00%	(1,235)
Tax effect of:
Tax-exempt income	(0.16)%	(24)	0.13%	(11)
Non-deductible expenses of income tax	1.78%	262	(0.91)%	75
Income tax recognised in other comprehensive income	0.22%	32	0.17%	(14)
Adjustments in respect of prior years	(1.30)%	(191)	4.10%	(338)
Other	0.17%	26	(0.23)%	19
	15.71%	2,306	18.26%	(1,504)

Movements of deferred tax balances:

Group and Company

Balance as at 31 December 2023

2023

Net balance

at 1 January

Recognised in

profit or loss

Recognised

in OCI

Recognised

directly in

equity

Other

Net

Deferred tax

assets

Deferred tax

liabilities

Right-of-use asset

(50,105)

2,064

(48,041)

Lease liability

39,255

(7,283)

31,972

Accelerated depreciation for tax purposes

187

(10)

177

Vacation reserve

107

124

Accrued annual bonuses

244

(17)

227

Emission allowances

849

113

962

Other temporary differences

(74)

Impairment of non-current assets

8,038

(826)

7,212

Long-term employee benefit liability

(2)

123

Associates’ equity method

Different depreciation rates of non-current assets

(1,417)

243

(1,174)

Accrued income

(1)

Accrued taxable losses

9,561

3,351

12,912

Investment incentive of non-current assets under the

law previously in force

(1,782)

109

(1,673)

Tax assets (liabilities) before set-off

5,106

(2,306)

2,832

53,720

(50,888)

Set-off of tax

(50,888)

50,888

Net tax assets (liabilities)

5,106

(2,306)

2,832

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AB KN ENERGIES CONSOLIDATED AND SEPARATE

FINANCIAL STATEMENTS 2023

21 INCOME TAX (CONT’D)

Group and Company

Balance as at 31 December 2022

				Recognised
	Net balance	Recognised in	Recognised	directly in					Deferred tax Deferred tax
2022	at 1 January	profit or loss	in OCI	equity		Other	Net	assets	liabilities
Non-current asset (right-of-use asset)	(8,533)	(2,317)	-		-	-	(10,850)		-	(10,850)
Accelerated depreciation for tax purposes	197	(10)	-		-	-	187		187	-
Vacation reserve	114	(7)	-		-	-	107		107	-
Accrued annual bonuses	139	105	-		-	-	244		244	-
Emission allowances	539	310	-		-	-	849		849	-
Other temporary differences	60	17	-		-	-	77		77	-
Impairment of non-current assets	8,034	4	-		-	-	8,038		8,038	-
Long-term employee benefit liability	113	(6)	(14)		-	-	93		93	-
Associates’ equity method	5	(5)	-		-	-	-		-	-
Different depreciation rates of non-current assets	(763)	(654)	-		-	-	(1,417)		-	(1,417)
Accrued income	(53)	52	-		-	-	(1)		-	(1)
Accrued taxable losses	5,657	3,904	-		-	-	9,561		9,561	-
Investment incentive of non-current assets under the law previously in force	(1,893)	111	-		-	-	(1,782)		-	(1,782)
Tax assets (liabilities) before set-off	3,616	1,504	(14)		-	-	5,106		19,156	(14,050)
Set-off of tax	-	-	-		-	-	-		(14,050)	14,050
Net tax assets (liabilities)	3,616	1,504	(14)		-	-	5,106		5,106	-

As at 31 December 2023 the Group and the Company did not recognise as deferred tax asset in total amounting to EUR 306 thousand:

EUR 227 thousand from allowance of trade accounts receivable and EUR 79 thousand from Group companies’ tax losses carried forward

(UAB KN Global Terminals, UAB SGD SPB, UAB SGD terminalas). As at 31 December 2022 the Group and the Company did not recognise

as deferred tax asset in total amounting to EUR 319 thousand: EUR 229 thousand from allowance of trade accounts receivable and EUR 96

thousand from Group companies’ tax losses carried forward (UAB KN Global Terminals, UAB SGD SPB, UAB SGD terminalas).

As at 31 December 2023 and 31 December 2022 the Company’s management’s judgement was not to recognize as deferred tax asset

from the investment incentive as the management does not expect to use the investment incentive to set off against taxable profit in the

future.

In the Statement of Financial position deferred income tax asset and deferred income tax liability are set-off as they both are related to

the same tax authority.

While assessing deferred income tax asset and liability components as at 31 December 2023 and 2022 the Company has used the domestic

Lithuanian income tax rate of 15%. The Group’s subsidiary KN Açu Serviços de Terminal de GNL Ltda applies Brazilian Tax System and

subsidiary´s administration has elected the Real Profit Regime that is calculated on quarterly basis. The official rates for Income tax rate is

25% and Social Contribution on Net Profit is 9%.

22 BASIC AND DILUTED EARNINGS (LOSSES) PER SHARE

Basic earnings per share are calculated by dividing net profit (loss) of the Group by the weighted average number of ordinary shares

outstanding. Diluted earnings per share equal to basic earnings per share as the Group has no instruments issued that could dilute shares

issued.

Basic and diluted earnings per share are as follows:

	Group
	2023	2022
Net profit (loss) attributable to shareholders	13,226	(5,904)
Weighted average number of outstanding ordinary shares (thousand)	380,397	380,397
Earnings and reduced earnings (in EUR)	0.04	(0.02)

23 DIVIDENDS

	2023	2022
Dividends declared	-	-
Weighted average number of shares (thousand)	380,397	380,397
Dividends declared per share (expressed in EUR per share)	-	-

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AB KN ENERGIES CONSOLIDATED AND SEPARATE

FINANCIAL STATEMENTS 2023

24 FINANCIAL ASSETS AND LIABILITIES AND RISK MANAGEMENT

Credit risk

The Group and The Company have significant concentration of trading counterparties. Trade receivables from the main customers are as

follows:

- Client A accounted for approximately 35% as at 31 December 2023 (about 31% as at 31 December 2022) of total Group trade

receivables;

- Client B – as at 31 December 2023 accounted for approximately 19% (0% as at 31 December 2022) of the total Group’s and

Company’s receivables from all its customers;

- Client C – as at 31 December 2023 accounted for approximately 13% (about 11% as at 31 December 2022) of the total Group’s

and Company’s receivables from all its customers.

- Client D – as at 31 December 2023 accounted for approximately 9% (about 9% as at 31 December 2022) of the total Group’s and

Company’s receivables from all its customers.

The average payment term for the main customers mentioned above varies from 12 to 20 calendar days, whereas the usual payment terms

for all other customers is 5 days. A possible credit risk for the Group’s and the Company’s customers is managed by a continuous

monitoring of outstanding balances.

The Group’s and Company’s procedures are in force to ensure on a permanent basis that services are provided to reliable customers and

do not exceed an acceptable credit exposure limit. The Group and the Company trades only with reputable third parties, so there is no

requirement for collateral.

The maximum exposure to credit risk is represented by the carrying amount of each financial asset, including derivative financial

instruments, if any, in the Statement of Financial position. Consequently, the Group and the Company considers that its maximum exposure

is reflected by the amount of trade receivables, net of allowance for doubtful accounts and cash and other short-term deposits recognized

at the date of Statement of Financial position. In the management’s opinion there were no reasonably likely circumstances, which would

raise additional obligations to the Group and the Company.

The following table provides information about the exposure to credit risk for trade receivables from the customers:

Group

31-12-2023

	Gross carrying	Loss	Credit impaired
	amount	allowance
Current (not past due)	4,946	-	No
1-30 days past due	1,575	-	No
31-59 days past due	49	-	No
60-89 days past due	-	-	No
90-179 days past due	-	-	No
180-279 days past due	-	-	No
More than 280 days past due	5,498	(1,512)	Yes
	12,068	(1,512)

Company

31-12-2023

	Gross carrying	Loss	Credit impaired
	amount	allowance
Current (not past due)	4,220	-	No
1-30 days past due	1,575	-	No
31-60 days past due	49	-	No
60-89 days past due	-	-	No
90-179 days past due	-	-	No
180-279 days past due	-	-	No
More than 280 days past due	5,498	(1,512)	Yes
	11,342	(1,512)

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AB KN ENERGIES CONSOLIDATED AND SEPARATE

FINANCIAL STATEMENTS 2023

24 FINANCIAL ASSETS AND LIABILITIES AND RISK MANAGEMENT (CONT’D)

Group

31-12-2022

	Gross carrying	Loss	Credit
	amount	allowance	impaired
Current (not past due)	6,999	-	No
1-30 days past due	896	-	No
31-59 days past due	6	-	No
60-89 days past due	3	-	No
90-179 days past due	-	-	No
180-279 days past due	3.975	-	No
More than 280 days past due	1,523	(1,523)	Yes
	13,402	(1,523)

Company

31-12-2022

	Gross carrying	Loss	Credit
	amount	allowance	impaired
Current (not past due)	6,456	-	No
1-30 days past due	896	-	No
31-60 days past due	6	-	No
60-89 days past due	3	-	No
90-179 days past due	-	-	No
180-279 days past due	3,975	-	No
More than 280 days past due	1,523	(1,523)	Yes
	12,859	(1,523)

Interest rate risk

The Group’s and the Company’s income and operating cash flows are influenced by changes in market interest rates, which are linked to

EURIBOR base. Overall, 35% of loan portfolio is exposed to floating interest rate risk no hedging derivative instruments were used. Thus,

such standing has implications on financial results.

EIB facility with 3 tranches is exposed to 3 months EURIBOR with zero-floor applicable on EURIBOR base. In contrast, NIB facilities are

exposed to 6 months EURIBOR with no zero-floor applicable on EURIBOR base.

			Carrying	Carrying
		Maturity date	amount as at	amount as at	Interest rate	Floating interest rate exposure
			31-12-2023	31-12-2022
EIB loan:
st						Negative total interest rate is set at
1	tranche	20-12-2023	9,739	10,766	fixed margin + 3 months EURIBOR	zero
nd						Negative total interest rate is set at
2	tranche	28-11-2034	10,820	11,751	fixed margin + 3 months EURIBOR	zero
rd						Negative total interest rate is set at zero
3	tranche	20-09-2034	22,127	24,186	fixed margin + 3 months EURIBOR
NIB loan:						Negative interest is accrued and
Reloading station		19-06-2034	14,376	16,615	fixed margin + 6 months EURIBOR	offset on the repayment date as part
						of the loan
FSRU loan		31-12-2044	107,316	79,487	Fixed margin	No exposure to floating interest rate
			164,378	142,805

Fixed margin varies from 0,066% to 0,78% as at 31 December 2023.

The Group and the Company is constantly assessing its possibilities to hedge interest rate risks on its loans. Thus, the loans related with

long-term LNG terminal solution with high probability in future are expected to be with partially or fully fixed interests.

The Group’s and the Company’s excess liquidity in forms of money and time deposits are distributed across the accounts of major

Lithuanian banks, which are granted with Standard Poor’s or equivalent long-term term borrowing BBB- or better external rating according

to the foreign rating agencies. Partner bank’s rating is assessed either on a stand-alone or applying a bank group logic into which exposure

is present. Also, the Group and the Company is monitoring recommendation of the Central Bank of Lithuania.

Retrospectively, risk related to the funds security in banks was limited, because the Group and the Company carried out transactions with

the banks that have high ratings provided by the foreign rating agents.

As at 31 December 2023 increase/decrease in EURIBOR interest rate by 10 basis points would increase/decrease yearly interest expenses

amount by EUR 43 thousand (as at 31 December 2022 – EUR 28 thousand).

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AB KN ENERGIES CONSOLIDATED AND SEPARATE

FINANCIAL STATEMENTS 2023

24 FINANCIAL ASSETS AND LIABILITIES AND RISK MANAGEMENT (CONT’D)

Exchange rate risk

The Group and the Company is exposed to foreign currency fluctuations primarily related to the U.S. dollar. Foreign exchange risk arises

from future commercial transactions as well as recognized liabilities including impact arising from IFRS 16 “Leases”.

Because the highest part of lease payments is denominated in US dollars, as a result changes in exchange rates occur in the statement of

comprehensive income, the Group and the Company incurred the currency exchange gain amounting to EUR 7,368 thousand for 2023

arising from IFRS 16 “Leases” and loss amounting to EUR 17,380 thousand for 2022.

Summary of exchange rates as at 31 December 2023 and 31 December 2022 to EUR:

	Exchange rate as at	Average exchange rate	Exchange rate as at	Average exchange
	31-12-2023	in 2023	31-12-2022	rate in 2022
USD	1.1050	1.0814	1.0666	1.0538
BRL	5.3618	5.4026	5.6386	5.4424

Group (denominated in euro)

31-12-2023	EUR	USD	BRL	Total
Cash and cash equivalents	14,049	4,777	709	19,535
Trade receivables	9,830	-	726	10,556
Lease liabilities	(25,637)	(187,510)	(19)	(213,166)
Trade payables	(2,490)	(2,031)	(258)	(4,779)
Total	(4,248)	(184,764)	1,158	(187,854)

Company (denominated in euro)

31-12-2023	EUR	USD	BRL	Total
Cash and cash equivalents	12,628	4,777	-	17,405
Trade receivables	9,830	-	-	9,830
Lease liabilities	(25,637)	(187,510)	-	(213,147)
Trade payables	(2,490)	(2,031)	-	(4,521)
Total	(5,669)	(184,764)	-	(190,433)

Group (denominated in euro)

31-12-2022	EUR	USD	BRL	Total
Cash and cash equivalents	66,687	4,939	797	72,423
Trade receivables	11,336	-	543	11,879
Lease liabilities	(25,851)	(240,375)	(22)	(266,248)
Trade payables	(2,652)	(912)	(32)	(3,596)
Total	49,520	(236,348)	1,286	(185,542)

Company (denominated in euro)

31-12-2022	EUR	USD	BRL	Total
Cash and cash equivalents	61,909	4,939	-	66,848
Trade receivables and other receivables	11,336	-	-	11,336
Lease liabilities	(25,851)	(240,375)	-	(266,226)
Trade payables and other liabilities	(2,652)	(912)	-	(3,564)
Total	44,742	(236,348)	-	(191,606)

As at 31 December 2023 increase in USD currency rate by 10 basis points would decrease yearly loss from currency exchange amount by

EUR 185 thousand (as at 31 December 2022 – EUR 237 thousand).

As at 31 December 2023 increase in BRL currency rate by 10 basis points would increase yearly income from currency exchange amount

by EUR 6 thousand (as at 31 December 2022 – EUR 7 thousand).

Liquidity risk

The Company’s and Group’s policy is to maintain sufficient cash and cash equivalents or have available funding through an adequate

amount of committed credit facilities to meet its commitments at a given date in accordance with its strategic plans.

The Group’s liquidity (total current assets / total current liabilities) and quick ratios ((total current assets - inventories) / total current

liabilities) as at 31 December 2023 were 0.45 and 0.42, respectively (1.30 and 1.28 as at 31 December 2022).

The Company’s liquidity (total current assets / total current liabilities) and quick ratios ((total current assets - inventories) / total current

liabilities) as at 31 December 2023 were 0.44 and 0.41, respectively (1.27 and 1.20 as at 31 December 2022).

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AB KN ENERGIES CONSOLIDATED AND SEPARATE

FINANCIAL STATEMENTS 2023

24 FINANCIAL ASSETS AND LIABILITIES AND RISK MANAGEMENT (CONT’D)

The decrease in the liquidity ratios at the end of the year formed due to the change (increase) in short-term liabilities. The Company has

the obligation to acquire the FSRU by the end of 2024. For the acquisition, the Company has secured a loan from NIB. The maximum

amount of the loan is up to 160 mEUR. The Government of the Republic of Lithuania is a guarantor of the loan. After acquiring the FSRU,

the liquidity ratios should return to the sufficient level above 1.

The table below summarizes the maturity profile of the Group’s and Company’s financial liabilities as at 31 December 2023 assessed on

contractual undiscounted payments:

Group

	Carrying	On	Less than 3	3 to 12	1 to 5 years	More than 5	Total
	amount	demand	months	Months		years
Trade and other payables	5,435	-	5,381	159	-	-	5,540
Lease liabilities	213,166	-	14,031	166,273	2,238	35,362	217,904
Loan and interest	164,383	-	2,310	9,306	70,269	198,851	280,736
Balance as at 31 December 2023	382,984	-	21,722	175,738	72,507	234,213	504,180

Company

	Carrying	On	Less than 3	3 to 12	1 to 5 years	More than 5	Total
	amount	demand	months	Months		years
Trade and other payables	5,144	-	4,985	159	-	-	5,144
Lease liabilities	213,147	-	13,996	166,267	2,232	35,395	217,890
Loan and interest	164,383	-	2,310	9,306	70,269	198,851	280,736
Balance as at 31 December 2023	382,674	-	21,291	175,732	72,501	234,246	503,770

The table below summarizes the maturity profile of the Group’s and Company’s financial liabilities as at 31 December 2022 assessed on

contractual undiscounted payments:

Group

	Carrying	On	Less than 3	3 to 12	1 to 5 years	More than 5	Total
	amount	demand	months	Months		years
Trade and other payables	5,871	-	5,849	22	-	-	5,871
Lease liabilities	266,248	-	14,085	42,182	188,737	32,574	277,578
Loan and interest	143,140	-	1,414	5,632	25,696	118,174	150,916
Balance as at 31 December 2022	415,259	-	21,348	47,836	214,433	150,748	434,365

Company

	Carrying	On	Less than 3	3 to 12	1 to 5 years	More than 5	Total
	amount	demand	months	Months		years
Trade and other payables	5,721	-	5,699	22	-	-	5,721
Lease liabilities	266,226	-	14,082	42,175	188,721	32,574	277,552
Loan and interest	143,140	-	1,414	5,632	25,696	118,174	150,916
Balance as at 31 December 2022	415,087	-	21,195	47,829	214,417	150,748	434,189

EUR 78 thousand of the EUR 5,330 thousand of Group’s trade and other payables as at 31 December 2023 (EUR 184 thousand of the EUR

10,356 thousand amount as at 31 December 2022) are the retention amounts under contracts, which are paid for when all work under a

contract has been completed. There is no possibility to forecast these payment terms.

Fair value of financial assets and liabilities

The Company’s and Group’s principal financial instruments not carried at fair value are trade and other receivables, trade and other

payables, non-current and current borrowings.

Fair value is stated as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market

participants at the measurement date.

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AB KN ENERGIES CONSOLIDATED AND SEPARATE

FINANCIAL STATEMENTS 2023

24 FINANCIAL ASSETS AND LIABILITIES AND RISK MANAGEMENT (CONT’D)

Fair value of financial assets and liabilities (cont’d)

The following methods and assumptions are used to estimation the fair value of each class of financial assets and liabilities as at 31

December 2023:

Group

			Carrying amount				Fair value
			Financial
	Fair value -	Financial	liabilities at
	hedging	assets at	amortised
Financial assets not measured at fair value	instruments	amortised cost	cost	Total	Level 1	Level 2	Level 3	Total
Trade receivables	-	10,556	-	10,556
Cash	-	19,535	-	19,535
Short term deposits	-	57,500	-	57,500
Contract assets	-	556	-	556
	-	88,147	-	88,147
Financial liabilities not measured at fair value
Loan and interest	-	-	(164,383)	(164,383)	-	(164,383)	-	(164,383)
Financial lease liabilities	-	-	(213,166)	(213,166)
Trade payables	-	-	(4,779)	(4,779)
	-	-	(382,328)	(382,328)

Company

			Carrying amount				Fair value
			Financial
	Fair value -	Financial	liabilities at
	hedging	assets at	amortised
Financial assets not measured at fair value	instruments	amortised cost	cost	Total	Level 1	Level 2	Level 3	Total
Trade receivables	-	9,830	-	9,830
Cash	-	17,405	-	17,405
Short term deposits	-	53,000	-	53,000
Contract assets	-	556	-	556
	-	80,791	-	80,791
Financial liabilities not measured at fair value
Loan and interest	-	-	(164,383)	(164,383)	-	(164,383)	-	(164,383)
Financial lease liabilities			(213,147)	(213,147)
Trade payables	-	-	(4,521)	(4,521)
	-	-	(382,051)	(382,051)

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AB KN ENERGIES CONSOLIDATED AND SEPARATE

FINANCIAL STATEMENTS 2023

24 FINANCIAL ASSETS AND LIABILITIES AND RISK MANAGEMENT (CONT’D)

The following methods and assumptions are used to estimation the fair value of each class of financial assets and liabilities as at 31

December 2022:

Group

			Carrying amount				Fair value
			Financial
	Fair value -	Financial	liabilities at
	hedging	assets at	amortised
Financial assets not measured at fair value	instruments	amortised cost	cost	Total	Level 1	Level 2	Level 3	Total
Trade receivables	-	11,879	-	11,879
Cash	-	72,423	-	72,423
Contract assets	-	328	-	328
	-	84,630	-	84,630
Financial liabilities not measured at fair value
Loan and interest	-	-	(143,140)	(143,140)	-	(143,140)		(143,140)
Financial lease liabilities			(266,248)	(266,248)
Trade payables	-	-	(3,596)	(3,596)
	-	-	(412,984)	(412,984)

Company

			Carrying amount				Fair value
			Financial
	Fair value -	Financial	liabilities at
	hedging	assets at	amortised
Financial assets not measured at fair value	instruments	amortised cost	cost	Total	Level 1	Level 2	Level 3	Total
Trade receivables	-	11,336	-	11,336
Cash	-	66,848	-	66,848
Contract assets	-	328	-	328
	-	78,512	-	78,512
Financial liabilities not measured at fair value
Loan and interest	-	-	(143,140)	(143,140)	-	(143,140)		(143,140)
Financial lease liabilities			(266,226)	(266,226)
Trade payables	-	-	(3,564)	(3,564)
	-	-	(412,930)	(412,930)

No transfers occurred between levels in the hierarchy by re-assessing categorization as at 31 December 2023 compared to 31 December

2022.

Capital management

The primary objectives of the Company’s capital management are to ensure that the Company complies with externally imposed capital

requirements. Capital includes equity attributable to equity holders.

The Company manages its capital structure and adjusts it in the light of changes in economic conditions and the risk characteristics of its activities.

To maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders, return capital to shareholders or issue

new shares.

The Company must keep its equity at least up to 50% of its share capital, as imposed by the Law on Companies of Republic of Lithuania as at 31

December 2023 and as at 31 December 2022.

The Company’s activities are financed using its equity and loan capital.

25 COMMITMENTS AND CONTINGENCIES

The Tax Authorities have not performed full-scope tax investigations at the Company and the Group. The Tax Authorities may inspect

accounting, transaction and other documents, accounting records and tax returns for the current and previous 3 calendar years at any

time, and where appropriate, for the current and previous 5 or 10 calendar years and impose additional taxes and penalties. Management

of the Group and The Company is not aware of any circumstances which would cause calculation of additional significant liabilities due to

unpaid taxes.

The Customs of the Republic of Lithuania and the Tax Authorities have granted to the Company the exemption from the obligation to

provide guarantees for possible tax liabilities. The total amount of exemptions amounts to EUR 420,321 thousand as at 31 December 2023

(EUR 371,000 thousand as at 31 December 2022).

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AB KN ENERGIES CONSOLIDATED AND SEPARATE

FINANCIAL STATEMENTS 2023

25 COMMITMENTS AND CONTINGENCIES (CONT‘D)

Material contractual liabilities (acquisition of property, plant and equipment) amounted to EUR 1,864 thousand as at 31 December 2023

(EUR 791 thousand as at 31 December 2022).

The Company has an agreement on assignment of claim rights and a maximum pledge agreement with UAB Hoegh LNG Klaipėda which

maximum amount of USD 50,000 thousand per one year as at 31 December 2023 and as at 31 December 2022. The said agreements are

intended to secure obligations of the Company to Hoegh LNG Klaipėda under the Time Charter Party (Lease of a Floating Storage and

Regasification Unit in conjunction with maintenance and operation services) agreement concluded on 2 March 2012.

The Company takes out part of NIB loan on a quarterly basis, fulfilling the legal obligation to reduce the security supplement until the

acquisition of the Floating Storage Regasification Unit (FSRU) and to spread the costs of the LNG terminal over the expected period of its

operation. The revenue cap of LNG terminal is reduced by the part of the loan taken. In accordance with the provision of the NERC

Methodology, it is foreseen after the acquisition of the FSRU, the reduced income in 2020-2024 will be compensated to cover the loan

repayments according to the loan schedule over the period 2025-2044.

Legal disputes

• The Company is defending an action brought in 2014 by UAB “Naftos grupė“, which allegedly incurred loss in the amount of

EUR 5 million and additionally aims to recover the surplus of oil products allegedly owned by UAB “Naftos grupė“ and stored

by the Company.

Competition Council is involved in the process, however there is a lack of evidence for the Court and the case is suspended until

the criminal case (described in the next bullet point) is resolved.

Based on judgement of legal advisors, the management of the Company believes that the defence against the action will be

successful, no provisions for this ongoing case have been formed in the preparation of the financial statements of 31 December

2023.

• The Company is a civil plaintiff in a criminal case on the accusations against the former managers of the Company and against

companies UAB “Naftos grupė“ and UAB “Artilona”.

In 2017 the court of the first instance issued a verdict to award the payment of EUR 20.9 million and 5% annual interest in favour

of the Company and, additionally, to cover the court representation costs. However, all accused persons appealed against the

first instance court decision and the case was transferred to the appellate instance, Court of Appeal of Lithuania. Currently, the

case is still on-going. Court session dates for the year 2024 have been scheduled.

Since the Company is a plaintiff in the case, no significant additional costs related to this case will be incurred.

• Since 2015 the Company is involved as a third interested party in the legal cases with AB Achema, which has submitted overall

13 complaints regarding the resolutions of the NERC to the court. AB Achema requests the court to annul NERC resolutions

related to the additional security component of natural gas supply transmission price.

As a result of this disputes, AB Amber Grid calculates fine and interest for AB Achema for overdue payments for security

component. As at 31 December 2023 the amount of the fine and interest calculated by AB Amber Grid and paid to the Company

amounts to EUR 4,002 thousand (as at 31 December 2022 – EUR 4,002 thousand). The Company does not recognise the received

payments for fines and interest as income until a court decision is rendered. Payments received are presented under Contract

liabilities caption in the statement of financial position.

In the opinion of the Company's management, the Company will not incur any significant additional costs related to this case,

therefore no provisions for those ongoing cases have been formed in the preparation of the financial statements of 31 December

2023.

• Vilnius Commercial Arbitration Court resolved the case based on the claim filed by the Company regarding the judgment of a

debt of EUR 1,529 thousand and EUR 44 thousand interest from the VERUM PLUS AG. The claim has been satisfied. Bankruptcy

proceedings to the VERUM PLUS AG has been initiated, however, the process has been suspended, because the defendant

appealed the bankruptcy case.

In the opinion of the Company's management, the proceedings from this case are not probable, therefore no assets for this

ongoing case have been formed in the preparation of the financial statements of 31 December 2023.

26 RELATED PARTY TRANSACTIONS

A related party is a person or entity that is related to the Company and the Group:

1) A person or a close member of that person's family is related to the Company and the Group:

• has control or joint control over the Company;

• has significant influence over the Company; or

• is a member of the key management personnel of the Company and the Group.

2) An entity is related to the Company and the Group, if any of the following conditions applies:

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AB KN ENERGIES CONSOLIDATED AND SEPARATE

FINANCIAL STATEMENTS 2023

26 RELATED PARTY TRANSACTIONS (CONT’D)

• The entity and the Company / Group are members of the same group (which means that each parent, subsidiary and fellow subsidiary is

related to the others).

• One entity is an associate or joint venture of the other entity (or an associate or joint venture of a member of a group of which the other

entity is a member).

• One entity is a joint venture of a third entity and the other entity is an associate of the third entity.

• The entity is controlled or jointly controlled by a person identified in (1).

• The entity is a post-employment defined benefit plan for the benefit of employees of either the Company / Group or an entity related to

the Company / Group. If the Company is itself such a plan, the sponsoring employers are also related to the reporting entity.

Transactions with Lithuanian State controlled enterprises and institutions, and other related parties

Group:

		Purchases	Sales		Receivables	Payables
Klaipeda State Seaport Authority	2023	2,544	-	31-12-2023	-	460
	2022	2,503	-	31-12-2022	-	458
AB "Amber Grid"	2023	-	(789)	31-12-2023	3,975	-
	2022	-	10,729	31-12-2022	3,975	-
UAB „Ignitis“	2023	-	11,039	31-12-2023	998	-
	2022	-	10,530	31-12-2022	1,103	-
Public Institution Lithuanian Energy Agency	2023	-	3,359	31-12-2023	-	-
	2022	-	3,365	31-12-2022	-	-
Energijos skirstymo operatorius, AB	2023	675	-	31-12-2023	-	19
	2022	287	-	31-12-2022	-	35
AB LTG CARGO	2023	1,307	-	31-12-2023	-	79
	2022	1,430	-	31-12-2022	-	99
Other related parties	2023	96	1	31-12-2023	-	7
	2022	59	-	31-12-2022	-	3
Transactions with related parties, in total:	2023	4,622	13,610	31-12-2023	4,973	565
	2022	4,279	24,624	31-12-2022	5,078	595

Company:

		Purchases	Sales		Receivables	Payables
Klaipeda State Seaport Authority	2023	2,544	-	31-12-2023	-	460
	2022	2,503	-	31-12-2022	-	458
AB "Amber Grid"	2023	-	(789)	31-12-2023	3,975	-
	2022	-	10,729	31-12-2022	3,975	-
UAB „Ignitis“	2023	-	11,039	31-12-2023	998	-
	2022	-	10,530	31-12-2022	1,103	-
Public Institution Lithuanian Energy Agency	2023	-	3,359	31-12-2023	-	-
	2022	-	3,365	31-12-2022	-	-
Energijos skirstymo operatorius, AB	2023	675	-	31-12-2023	-	19
	2022	287	-	31-12-2022	-	35
AB LTG CARGO	2023	1,307	-	31-12-2023	-	79
	2022	1,430	-	31-12-2022	-	99
KN Acu Servicos de Terminal de GNL Ltda	2023	6	325	31-12-2023	18	-
	2022	-	151	31-12-2022	37	-
Other related parties	2023	96	1	31-12-2023	-	7
	2022	59	-	31-12-2022	-	3
Transactions with related parties, in total:	2023	4,628	13,935	31-12-2023	4,991	565
	2022	4,279	24,775	31-12-2022	5,115	595

Other related parties are following: Toksika, UAB, VĮ Registrų centras, Nordic Metrology Science, UAB, UAB GET Baltic, VĮ Regitra, Lietuvos

jūrų krovos kompanijų asociacija, Lietuvos pastas, AB, Lietuvos jūrinis klasteris, Lietuvos parodų ir kongresų centras Litexpo, UAB,

Association Baltic Institute of Corporate Governance, Windward Ltd.

• Purchases from State Klaipėda State Seaport Authority include land rent, jetty usage and FSRU port fee.

• Sales to AB Amber Grid include credit invoice as to legal decision – creditable debt for LNG installation. Receivables from AB Amber

Grid include amount of security supplement for two invoices issued as of 31 December 2022. Interest and fines for AB Achema for

delayed payments of the security component to the upper ceiling of the natural gas transmission price are recognized and accounted

for as contract liabilities (Note 25).

• Sales to UAB Ignitis include income from LNG regasification and reloading services as well as income from customs brokerage services.

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AB KN ENERGIES CONSOLIDATED AND SEPARATE

FINANCIAL STATEMENTS 2023

26 RELATED PARTY TRANSACTIONS (CONT’D)

• In 2023 and 2022 sales to Public Institution Lithuanian Energy Agency include income from rent of tanks.

• Purchases from AB LG Cargo comprise purchase of railway services.

• Purchases from AB Energijos skirstymo operatorius include acquisition of electricity power.

• Purchases from KN Acu for business trip expenses. Sales to KN Acu include consulting services and bank guarantees.

Management salaries and other payments

The Company's management consists of the Chief Executive Officer (CEO) and Directors.

The Groups’ management consists of the Chief Executive Officer (CEO), Directors and Directors of subsidiaries.

		Group	Company
	2023	2022	2023	2022
Payroll related costs	1,073	813	945	697
Number of management	10	10	6	6

During 2023 and 2022 the management of the Group and the Company did not receive any loans, guarantees, and no other payments or

property transfers occurred. In 2023, management decided to adjust the disclosure of remuneration-related information by including

bonuses paid to the management of both the Group and the Company executives. Consequently, the indicators for the prior period of

2022 were also corrected.

27 SUBSEQUENT EVENTS

On 10 January 2024 the new wording of the Articles of Association of the Company were registered within the Register of Legal Entities

of the Republic of Lithuania following the amendment of the Company’s name – AB KN Energies. Also the Group Company’s name was

changed from SGD Logistika, UAB to KN Global Terminals, UAB.

No other significant events have occurred after the date of financial statements that would require disclosure or amendment in the financial

statements.

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AB KN ENERGIES CONSOLIDATED AND SEPARATE

FINANCIAL STATEMENTS 2023

CONFIRMATION OF RESPONSIBLE PERSONS

15 March 2024

Referring to the Article 22 of the Law on Securities of the Republic of Lithuania and the Rules on Preparation and Submission

of Periodic and Additional Information of the Bank of Lithuanian, Responsible Persons Darius Šilenskis, Chief Executive

Officer of AB KN Energies, Tomas Tumėnas, Chief Financial Officer of AB KN Energies, and Rasa Tamaliūnaitė, Chief

Accountant of AB KN Energies, hereby confirm that to the best of our knowledge the Consolidated Interim Report of AB

KN Energies for 2023 includes a fair review of the development and performance of the business and the present state of

the Company together with the description of the main risks and uncertainties that are encountered.

Chief Executive Officer Darius Šilenskis

Chief Financial Officer Tomas Tumėnas

Chief Accountant Rasa Tamaliūnaitė

AB KN ENERGIES

CONSOLIDATED ANNUAL

REPORT

2023

 
 
 
 
 
AB KN ENERGIES CONSOLIDATED 
ANNUAL REPORT 2023  
AB KN ENERGIES CONSOLIDATED ANNUAL REPORT 
     GENERAL INFORMATION ABOUT THE GROUP AND THE COMPANY ................................................................................................................................ 57 
     A FOREWORD OF THE CEO ................................................................................................................................................................................................................. 61 
     INFORMATION ABOUT THE GROUP AND THE COMPANY AND ITS ACTIVITIES ........................................................................................................... 63 
     LIQUID ENERGY TERMINALS ............................................................................................................................................................................................................... 64 
     LNG ................................................................................................................................................................................................................................................................ 66 
     NEW ENERGIES ......................................................................................................................................................................................................................................... 72 
     THE CORPORATE STRATEGY ............................................................................................................................................................................................................... 73 
     SIGNIFICANT EVENTS OF THE REPORTING PERIOD .................................................................................................................................................................. 77 
     SIGNIFICANT EVENTS OCCURRED AFTER THE END OF THE REPORTING PERIOD ........................................................................................................ 78 
     BUSINESS ENVIRONMENT AND MARKET ...................................................................................................................................................................................... 79 
     FINANCIAL RESULTS OF GROUP’S ACTIVITY ................................................................................................................................................................................ 84 
     CONSOLIDATION ..................................................................................................................................................................................................................................... 85 
     FINANCIAL RESULTS OF THE GROUP’S AND THE COMPANY’S ACTIVITY ........................................................................................................................ 86 
     INVESTMENTS ........................................................................................................................................................................................................................................... 98 
     ACTIVITY PLANS AND FORECASTS ................................................................................................................................................................................................... 99 
     INFORMATION ABOUT THE SHAREHOLDERS AND SHARES OF THE COMPANY ........................................................................................................ 100 
     INFORMATION ABOUT THE EMPLOYEES OF THE GROUP .................................................................................................................................................... 105 
     RISK FACTORS AND RISK MANAGEMENT ................................................................................................................................................................................... 111 
     OTHER INFORMATION ........................................................................................................................................................................................................................ 116 
 
   

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AB KN ENERGIES CONSOLIDATED

ANNUAL REPORT 2023

GENERAL INFORMATION ABOUT THE GROUP AND THE COMPANY

1. REPORTING PERIOD

AB KN Energies Consolidated Interim Report for the year 2023 is prepared for the period from 1 January 2023 until 31

December 2023.

2. CONFIRMATION OF RESPONSIBLE PERSONS

Referring to the Article 22 of the Law on Securities of the Republic of Lithuania and the Rules on Preparation and Submission

of Periodic and Additional Information of the Bank of Lithuanian, Responsible Persons Darius Šilenskis, Chief Executive

Officer of AB KN Energies, Tomas Tumėnas, Chief Financial Officer of AB KN Energies, and Rasa Tamaliūnaitė, Accounting

Manager of AB KN Energies, hereby confirm that to the best of our knowledge the Consolidated Interim Report of AB KN

Energies for 2023 includes a fair review of the development and performance of the business and the present state of the

Company together with the description of the main risks and uncertainties that are encountered.

3. PERSONS RESPONSIBLE FOR THE INFORMATION SUBMITTED IN THE ANNUAL REPORT

JOB TITLE

FULL NAME

TEL. NUMBERD

AB KN Energies, Chief Executive Officer

Darius Šilenskis

+370 52 127 733

AB KN Energies, Chief Financial Officer

Tomas Tumėnas

+370 68 236 616

AB KN Energies, Chief Accountant

Rasa Tamaliūnaitė

+370 61 888 260

4. ISSUER INFORMATION AND CONTACT DETAILS

Name of the Company: AB KN Energies (hereinafter – the Company, KN or Issuer)

Legal status: Stock Company

Authorized share capital: 110,315,009 EUR

Date and place of registration: 27 September 1994, State Enterprise Centre of Registers

Company code: 110648893

Address: Burių street 19, 92276 Klaipėda

Telephone numbers: +370 46 391772

Fax numbers: +370 46 311399

E-mail address: info@kn.lt

Internet site: www.kn.lt

5. INFORMATION ON SUBSIDIARIES AND CONTACT DETAILS

Name of the Company: UAB SGD terminalas

Legal status: Private Limited Liability Company

Authorized share capital: 37,500 EUR

Date and place of registration: 27 December 2018, State Enterprise Centre of Registers

Company code: 304977459

Address: Burių street 19, 92276 Klaipėda

Telephone numbers: +370 46 391772

Fax numbers: +370 46 311399

E-mail address: info@kn.lt

Internet site: www.kn.lt

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AB KN ENERGIES CONSOLIDATED

ANNUAL REPORT 2023

Name of the Company: UAB KN Global Terminals

Legal status: Private Limited Liability Company

Authorized share capital: 4,540,000 EUR

Date and place of registration: 20 November 2015, State Enterprise Centre of Registers

Company code: 304139242

Address: Burių street 19, 92276 Klaipėda

Telephone numbers: +370 46 391772

Fax numbers: +370 46 311399

E-mail address: info@kn.lt

Internet site: www.kn.lt

6. INFORMATION ON SUBSIDIARIES OF UAB KN GLOBAL TERMINALS AND CONTACT DETAILS

Name of the Company: UAB SGD SPB

Legal status: Private Limited Liability Company

Authorized share capital: 25,000 EUR

Date and place of registration: 9 October 2019, State Enterprise Centre of Registers

Company code: 305278800

Address: Burių street 19, 92276 Klaipėda

Telephone numbers: +370 46 391772

Fax numbers: +370 46 311399

E-mail address: info@kn.lt

Internet site: www.kn.lt

Name of the Company: KN Açu Serviços de Terminal de GNL LTDA

Legal status: Limited Liability Company

Authorized share capital: 642,600 BRL (Brazilian reals)

Date and place of registration: 13 December 2019, State Register of Legal Entities of Rio de Janeiro

Company code: NIRE 33.210.894.765; CPNJ 35.785.170/0001-03

Address: F66 Fazenda Saco Dantas s/n, Distrito Industrial, Area 1 and Area 2, 28200-000 São

João da Barra, State of Rio de Janeiro

Telephone numbers: +370 46 391772

Fax numbers: +370 46 311399

E-mail address: info@kn.lt

Internet site: www.kn.lt

7. GROUP STRUCTURE AND MAIN TYPES OF ACTIVITY

Structure of AB KN Energies Group (hereinafter – Group) on 31 December 2023:

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AB KN ENERGIES CONSOLIDATED

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The Group’s Capital on 31 December 2023:

NAME OF THE COMPANY

TYPE OF SHARE

NUMBER OF SHARES

(UNIT)

SHARE FACE

VALUE

TOTAL FACE VALUE

AB KN Energies

Common registered shares

380,396,585

0.29 EUR

110,315,009 EUR

UAB SGD terminalas

Common registered shares

37,500

1.00 EUR

37,500 EUR

UAB KN Global Terminals

Common registered shares

4,540,000

1.00 EUR

4,540,000 EUR

UAB SGD SPB

Common registered shares

25,000

1.00 EUR

25,000 EUR

KN Açu Serviços de Terminal

de GNL LTDA

Common registered shares

642,600

1.00 BRL

642,600 BRL

BRL – Brazilian real.

The companies of the Group and their main activities:

NAME OF THE COMPANY

ADDRESS

OWNERSHIP

PART,%

ACTIVITIES

AB KN Energies

Burių street 19, 92276

Klaipėda

100

The business activity of AB KN Energies can be

divided into three segments: Liquid energy terminals,

LNG, and New energies. Liquid energy terminals

include activities of Klaipėda liquid energy terminal

and Subačius liquid energy terminal. LNG activities

stand for Klaipėda LNG terminal, small-scale LNG

station in Klaipėda, and Global LNG activities. New

energies segment includes investments in new

energy sources like synthetic fuels, hydrogen and

hydrogen carriers, other alternative energy carriers,

and carbon capture and storage (CCS).

UAB SGD terminalas

Burių street 19, 92276

Klaipėda

100

Operation (management) and development of LNG

terminal infrastructure in Klaipėda.

The company is currently inactive.

UAB KN Global Terminals

Burių street 19, 92276

Klaipėda

100

Participation in the international LNG and energy

projects, providing project development or terminal

operation services or investing into them, and all

other related activities and provision of any other

relevant services

UAB SGD SPB

Burių street 19, 92276

Klaipėda

100 owned by UAB

KN Global

Terminals

International development of LNG terminal

operating services by investing and establishing

other project companies in Lithuania and abroad.

KN Açu Serviços de Terminal

de GNL LTDA

F66 Fazenda Saco Dantas

s/n, Distrito Industrial, Area

1 and Area 2, 28200-000

São João da Barra, State of

Rio de Janeiro

90 owned by UAB

KN Global

Terminals and 10

owned by UAB SGD

SPB

LNG terminal operation and maintenance services in

the port of Açu, Brazil, including the technical and

commercial operation of the installation of the quay

and its facilities, gas pipeline and gas metering

stations.

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AB KN ENERGIES CONSOLIDATED

ANNUAL REPORT 2023

8. AGREEMENTS WITH INTERMEDIARIES OF PUBLIC SECURITIES TRADING

The Company has an agreement with Financial Markets Department of AB SEB Bankas for accounting of the Company’s

securities and related services.

AB SEB BANK FINANCIAL MARKETS DEPARTMENT:

Company code

112021238

Address

J. Balčikonis street 7, LT-08247 Vilnius, Lithuania

Telephone

1528

E-mail

info@seb.lt

Website

www.seb.lt

9. AGREEMENTS WITH BROKERAGES FOR PUBLIC ISSUE

The Company’s shares are traded on the regulated market; they are listed in the Baltic Main List of the Stock Exchange of

AB NASDAQ Vilnius.

THE MAIN DATA ABOUT THE SHARES OF THE COMPANY:

ISIN code

LT0000111650

Abbreviation

KNE1L

Share emission

380,396,585

The Company's shares have been listed on the Nasdaq Vilnius Secondary List since 16th January of 1996 and since 4th April

of 2016 the Company's shares are listed on the Nasdaq Vilnius Main List.

The securities of the subsidiary companies are not publicly traded.

Details of the shares and shareholders are provided in the 2023 Annual Report’s chapter “Information about the

shareholders and shares” of the Company”.

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AB KN ENERGIES CONSOLIDATED

ANNUAL REPORT 2023

A FOREWORD OF THE CEO

Dears,

Last year marked a significant milestone in the history of our company. In June, after approving the long-term strategy for

2023–2050, we embarked on a new stage in the life of our company, which has been successfully operating for over 60

years – the journey of energy transformation. We committed ourselves not only to continue and invest in our usual activities

but also to develop and invest in the new energy segment, assisting Lithuania and the entire region in transitioning to more

sustainable energy sources and climate-neutral activities, while continuing to ensure energy security for Lithuania.

At the beginning of this year, we marked this new phase of our activity by changing the official name of the company. Our

new name, KN Energies, represents the meaning behind our new strategy, which provides for the three most important

directions of activity: liquid energy products, liquefied natural gas terminals and new energy types, such as synthetic fuels,

hydrogen and its compounds and other alternative energy carriers, as well as carbon dioxide capture and storage, energy

storage and balancing solutions.

It is important to note that at this stage, we are not seeking quick and drastic decisions; we are experiencing evolution, not

revolution. We keep pace with innovations and strive for ensuring cleaner energy – with the goal of becoming a climate-

neutral company by the year 2050. We will focus our efforts on the transition from fossil to cleaner resource energy and

future technologies. For current and future customers, we intend to be the partners who will create opportunities to provide

customers with the most relevant key and new types of energy in every period of time. To achieve this goal, we plan to

gradually diversify our activities, consistently creating the essential new infrastructure, and adapt existing infrastructure as

needed.

Our efforts in transforming the company are also reflected in the business results of the previous year. In 2023, we made

significant achievements in almost all our activities segments. Diversification of activities has created additional

opportunities to generate income from services provided by liquid energy terminals, high utilization levels of LNG

infrastructure, breakthroughs in international LNG projects, ensured control over energy costs and emissions, decision-

making, and continuous efforts to increase operational efficiency and expertise have enabled profitable operations and

improved cash flows.

The net profit of the KN Group in 2023 was EUR 13.2 million, while a loss of EUR 5.9 million was recorded a year ago.

Our consistent focus on the development of the international LNG business over the past few years has led to a significant

breakthrough in this area. In 2023, we became the commercial operator of the second LNG terminal in Germany, which this

year opened the door to a new partnership for the commercial operation of two more LNG terminals. Currently, we provide

commercial operation services for four floating LNG terminals in Germany. Last year, we also assisted customers in Italy in

the implementation of the greenfield Piombino LNG terminal project, providing assistance with storage vessel installation,

start-up, commissioning and equipment testing.

Another important international achievement is the framework agreement signed last year by KN and the company SK E&S

on cooperation opportunities in the field of international LNG business development. SK E&S, belonging to one of the

largest conglomerates in the Republic of Korea, is responsible for energy sectors such as LNG, renewable energy resources,

and hydrogen.

An important accomplishment last year was also achieved in our planned liquefied carbon dioxide capture and

transportation project in Lithuania and Latvia with our partners. The European Commission granted it the status of a Project

of Common Interest (PCI). This means that the project is recognized as a cross-border project of great importance, which

will significantly contribute to the implementation of the energy policy and climate goals of the European Union.

All these achievements demonstrate that KN’s systematic efforts have earned the reputation of a professional and reliable

LNG terminal operator and project developer not only in Europe, but also worldwide.

Record activity volumes were maintained last year at the Klaipėda LNG terminal, where a record amount of natural gas was

regasified and reloaded in 2023, reaching 34 TWh (compared to 32.4 TWh in 2022). This strategically important national

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AB KN ENERGIES CONSOLIDATED

ANNUAL REPORT 2023

asset was not only the main source of natural gas supply for Lithuania but also regional infrastructure ensuring gas supply

to other countries. This year, the main priorities in Klaipėda LNG terminal operations will remain ensuring reliable

regasification operations and infrastructure accessibility for customers.

The year 2024 will be special not only because it will commemorate the 10th year of operation of the FSRU Independence,

but also because Lithuania will become owner of it. By the end of this year, Independence will be registered in the Lithuanian

Register of Seagoing Ships, the Lithuanian flag will be hoisted on it and it will be bound by the legal acts in force here, and

taxes from seamen’s salaries will go to the country’s budget. Last year, we also successfully selected the technical operator

of the vessel – for the next 5 years, the Norwegian capital company Hoegh LNG Klaipėda will operate the vessel.

As the strategic operator of energy terminal infrastructure, KN ensures energy security not only in LNG but also in the field

of liquid energy products – by offering strategic reserve storage of oil products and uninterrupted import and export

opportunities.

Due to the change in the geopolitical situation, Klaipėda has become an important import point for oil products in the

region and Central Europe, including Ukraine over the last few years. We continue our cooperation with customers in that

region and we are ready at any time, whenever required, to help them maintain the smooth supply of energy resources to

Ukraine, along with the option of exporting other liquid energy products produced in their factories.

In 2023, we also focused our attention on the sustainability agenda. We actively continued the projects of supplying our

terminals with self-produced green energy. One of the most significant investments related to energy consumption was

implemented at the Subačius liquid energy products terminal. A 300 kW solar power plant and a modern, environmentally

friendly heating system have been installed here, replacing the liquid fuel boilers used for space heating until now. We

estimate that these implemented solutions will reduce the annual emissions of greenhouse gases by half. In 2024, we will

continue to implement processes and technological improvements to further reduce volatile organic compound (VOC) and

CO2 emissions.

One of the most important and sustainable projects in the Klaipėda LNG terminal segment in 2024 will remain the project

of the connection of the power line with the terminal, which will enable us to meet electricity needs from the shore using

renewable energy sources. This project will help significantly reduce the amount of CO2 emissions caused by the operation

of the terminal and, accordingly, reduce the costs of environmental pollution permits.

In 2023, the company did not experience critical safety incidents, but this is one of the areas where improvement knows no

bounds. Therefore, our goal is to continue strengthening a culture of safety behaviour within the KN group, creating

necessary conditions, and promoting safe behaviour among our employees.

Looking forward to 2024, the geopolitical landscape is likely to remain unchanged, and we will continue to focus on

improving the safety and security of our infrastructure and ensuring its resilience to physical and cyber threats.

Environmental, social and risk management aspects will be high on our agenda this year, as well as innovation, digitization,

energy efficiency improvements and the continuous search for new business opportunities.

In summary, I see 2024 as the year when KN will lay the foundation for a new, long-term period of existence in the future

energy world. Despite prevailing geopolitical tensions and threats, we will enhance our resilience, competitiveness, and do

what we do best – by operating terminal infrastructure, we will serve as a bridge for the most important liquid energy

streams in the region, ensuring energy security, assisting clients worldwide in operating and developing LNG projects.

We will continue to play a responsible role in investing our competences and resources in sustainability, both in developing

infrastructure for sustainable energy products and in the responsible use of natural resources, reducing waste and emissions

and the climate impact of our activities. I believe that our new strategic approach will contribute to a sustainable balance

between people, planet, and profit, adding value for all our stakeholders, including our employees, communities and all

those affected by the KN's activities.

Darius Šilenskis,

CEO of KN Energies

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AB KN ENERGIES CONSOLIDATED

ANNUAL REPORT 2023

INFORMATION ABOUT THE GROUP AND THE COMPANY AND ITS

ACTIVITIES

AB KN Energies is a state-owned public company established in Lithuania, operating liquid energy terminals in Klaipėda

(KLET) and Subačius (SLET), Lithuania, and liquefied natural gas LNG terminals (big scale, “Independence”, and small scale,

Klaipėda LNG reloading station) in Klaipėda, Lithuania, and Açu, Brazil, as well as providing commercial operator’s services

to four LNG terminals in Germany, and consultations in LNG terminal projects to clients in such countries as Italy. KN is a

strategically important company in terms of energy security for Lithuania and neighbour regions. The Company ensures

the import access of LNG into Lithuania and surrounding countries, storage of state fuel reserve of the Republic of Lithuania,

as well as reliable and effective transshipment, storage and blending of liquid energy products, petrochemicals, biofuels

and synthetics fuels and other liquid energy products in the port of Klaipėda, Lithuania.

KN is becoming a player in global LNG market by investing accumulated operational and development know-how as well

as bridging energy markets by enabling customers to supply and trade energy resources worldwide. KN is transforming

from a company initially dedicated for region's energy independence into a leading safety-driven, regional liquid energy

and LNG hub operator and valued partner for global FSRU based LNG solutions.

In a longer run, KN will not only continue its’ current activities and projects and maintain the status of strategic importance

entity but will further expand its footprint in FSRU based LNG projects development worldwide, invest into new energy and

renewable business streams, such as hydrogen related products (hydrogen carriers), CCS, energy balancing (flow batteries).

In June 2023, KN has adopted a long-term strategy KN 2050 with a clearly expressed commitment to become net-zero by

2050.

To embody a new strategic shift and net-zero transformation, the Board of the Company (Board) has proposed shareholders

to change Company’s name from AB Klaipėdos nafta to AB KN Energies from the beginning of 2024. The Extraordinary

General Meeting of Shareholders convened on November 30th, approved respective amendments to the Company's

Articles of Association. AB Klaipėdos nafta has formally changed its legal name to AB KN Energies from January 10th, 2024.

In line with this change KN Board acting as Shareholders of KN subsidiary, UAB SGD logistika, approved new Articles of

Association and new entity name aligned with the mother company name – UAB KN Global Terminals, effective at the same

date as for AB KN Energies.

INFORMATION ABOUT INVESTMENT INTO ASSOCIATES

The Company has investments into the following associate companies as at 31 December 2023:

NAME OF THE COMPANY

ADDRESS

OWNERSHIP

PART,%

ACTIVITIES

UAB BALTPOOL

9 A. Juozapavičiaus str.,

LT-09311, Vilnius

Development of activity of energy resources (biofuel,

gas) exchange, administration of Public Interest

Services (PIS) funds.

Sarmatia Sp. z o.o.

ul. Nowogrodzka 68, Prima

court, 02-014 Warsaw,

Poland

Analysis and engineering of possibilities to construct

oil pipeline between Asian states and the Baltic Sea.

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AB KN ENERGIES CONSOLIDATED

ANNUAL REPORT 2023

LIQUID ENERGY TERMINALS

Liquid energy terminals segment includes activities of Liquid energy Terminal in Klaipėda and Liquid energy Terminal in

Subačius which are providing services of liquid energy products transshipment, long-term storage of liquid energy

products, and other services related to liquid energy products transshipment.

KLAIPĖDA LIQUID ENERGY TERMINAL

The Company is one of the largest liquid energy transshipment terminals in the Baltic States. The terminal’s main activity is

to transship liquid energy products delivered by rail tanks into tankers.

The Company’s Liquid energy terminal handles these liquid energy and chemical industry products:

▪ Light Products (hereinafter – LP):

 Different types of diesel fuel.

 Different types of gasoline.

 Jet fuel.

▪ Heavy Oil Products (hereinafter – HFO):

 Different types of fuel oil.

 Technological fuel.

 Vacuum gas oil (VGO).

 Crude oil.

 Bitumen.

▪ Biofuels:

 Ethanol.

 Fatty acid methyl ester.

 Hydrotreated vegetable oil.

▪ Other products of the chemical industry:

 Monoethylene glycol.

CHARACTERISTICS OF KLAIPĖDA LIQUID ENERGY TERMINAL:

Location

Territory of AB KN Energies Klaipėda terminal, address: Burių street 19, Klaipėda

Liquid energy product tanks

51 tanks

Volume of the tanks

571 thousand m

total volume

The capacity of the terminal

8 - 10 million t / year

Jetty berths

Harbour entrance depth:

14.5 m

Max. draught at the jetty

13.5 m

Max. length of serviced tankers

Up to 275.0 m

Railway

Two double-track rail tank loading racks:

▪ Two tracks for liquid energy products that do not require maintaining of specific

temperature conditions (up to 2 x 30 tank wagons are services simultaneously);

▪ Two tracks for liquid energy products that require maintaining of specific

temperature conditions (up to 2 x 32 tank wagons are services simultaneously);

▪ One of the tracks is adapted to liquid energy products of all types;

▪ 124 tank wagons can be loaded at the same time.

Road tanker loading

4 loading points at the same time

Modern laboratory

Equipped to inspect main quality parameters of liquid energy products

Total capacity of three boilers of own

boiler station

100 MWh

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The processes of liquid energy products transshipment service in the Company’s liquid energy terminal mainly include the

following operations: i) reloading of liquid energy products from rail tanks, ii) temporary storage of liquid energy products

in the terminal’s shore tanks and iii) loading liquid energy products into tankers.

To supply the clients with imported liquid energy products delivered to Klaipėda seaport by tankers, the Company is using

trucks loading station located in its terminal.

Klaipėda liquid energy terminal provides the following services:

▪ Transshipment of liquid energy products from rail tanks into tankers.

▪ Transshipment of liquid energy products from tankers into rail tanks.

▪ Reloading of liquid energy products into trucks.

▪ Accumulation and storage of liquid energy products.

▪ Collection of wastewaters from sea vessels which is contaminated with oil products.

▪ Mooring services.

▪ Inspection of quality parameters of liquid energy products.

▪ Adding bio-additives and marking substances to liquid energy products.

▪ Blending of heavy and light liquid energy products.

▪ Supply of fuel and water to vessels.

SUBAČIUS LIQUID ENERGY TERMINAL

After the approval of the share emission agreement with the Republic of Lithuania on 11 June 2012, the Company has

started to manage Subačius liquid energy terminal. After the takeover of Subačius liquid energy terminal infrastructure the

Company’s activity and services have been diversified and expanded including services of long-term liquid energy product

storage.

CHARACTERISTICS OF SUBAČIUS LIQUID ENERGY TERMINAL:

Location

In Kunčiai village, Kupiškis district

Volume of the tanks

Total 66 tanks

Volume of the tanks

Almost 338 m

thousand total volume

Railway

The rail trestle which can simultaneously handle 14 rail tanks

Road trucks loading

Modern loading station of auto trucks

Modern laboratory

Able to detect the main quality parameters of liquid energy products

Subačius liquid energy terminal provides the following services:

▪ Storage of liquid energy product (fuel) stocks of the

Lithuanian State to ensure the national energy security

under the relevant legal acts.

▪ Long-term storage of liquid energy products (gasoline,

diesel fuel).

▪ Short-term storage and handling of liquid energy

products (gasoline, diesel fuel and biofuels) to the

customers.

▪ Adding bio-additives and marking substances to liquid

energy products.

The infrastructure of Subačius liquid energy terminal is

continuously upgraded to ensure proper provision of high-

quality services to customers, as well as safe and reliable

operation of the facility.

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LNG

REGULATED LNG. KLAIPĖDA LNG TERMINAL

Regulated LNG activities (LNGT includes activity of LNG terminal in Klaipėda which receives, and stores liquefied natural

gas, regasifies, and supplies it to main gas pipeline.

ASSURANCE OF LONG-TERM OPERATION OF KLAIPĖDA LNG TERMINAL

At the end of 2019 Board of KN took decisions regarding long-term (until 2044) activities of the Klaipėda LNG Terminal,

including principal decision on the FSRU acquisition after 2024. At the end of 2019, Parliament approved state guarantee

for Stage I (optimization of LNG security supplement) and Stage II (purchase of FSRU) of the long-term LNG supply project,

which enabled AB KN Energies to sign agreement with NIB on the loan for the purpose of Stage I. Consequently, security

supplement reduction (by almost 40% since 2020) was proposed to National Energy Regulation Council (NERC). Based on

NERC decision security supplement has been reduced and is applicable to all gas consumers starting January 2020.

Loan agreement for Stage II (FSRU acquisition) has been signed with NIB on 2020-03-09. On 2020-11-20 the European

Commission (EC) approved the state aid to be provided in the form of state guarantee for the FSRU acquisition loan. By

this, principal issues related to FSRU acquisition financing are solved.

Following the Law on LNG Terminal, LNG activities must be carried out until at least 2044-12-31 and the LNG terminal

operator acquires FSRU and becomes an operator no later than 2024-12-31. In 2021, following an extensive market

investigation and an open tender for the acquisition of FSRU, the existing purchase option to acquire FSRU “Independence”

has proven to be the most economically advantageous solution for KN. In October 2022, KN has informed the Norwegian

company Höegh LNG of its decision to execute the right of FSRU Independence buy-out option. As the following step KN

decided to hire experienced technical manager for the FSRU’s operation and maintenance (O&M) service provision. Hoegh

LNG Klaipėda UAB is appointed as technical manager of the FSRU as a result of an open tender procedure for the acquisition

of the O&M service. Hoegh LNG Klaipėda UAB will be a technical manager for 5 years with possibility to extend period for

another 5 years.

It was decided that FSRU “Independence” will fly the Lithuanian flag and be administrated by Lithuanian flag authority. For

this purpose, the legislation was reviewed and amended in 2023.

DELIVERIES TO KLAIPĖDA LNG TERMINAL

In 2023, six users from Estonia, Latvia, Norway, Poland and Lithuania have been using services of LNGT in Klaipėda. 36 LNG

carriers have arrived at the LNGT and 31.89 TWh of LNG have been regasified and reloaded during 2023. In 2023, Lithuania's

natural gas consumption was about 149 TWh, 85% from all imported natural gas in Lithuania’s transmission system operator

AB “Amber Grid” system were from Klaipėda LNGT.

In 2023, the average utilization of Klaipėda’s LNGT was 71% (vs 72% in 2022). In comparison, based on data from GIE ALSI,

the average European utilization of LNG terminals in 2023 was 59%.

The LNGT complements and extends the existing natural gas supply infrastructure of the country, creates opportunities for

supply diversification, allowed to cut imports from Russia, ensures the security of natural gas supply and fulfils the EU

Directive N-1 Infrastructure Standard, i.e., creates preconditions for Lithuania to independently supply itself with the natural

gas needed to meet the demand of the first necessity.

INFRASTRUCTURE OF THE LIQUEFIED NATURAL GAS TERMINAL

LNG Terminal of AB KN Energies is based on a FSRU technology. The terminal is connected to the gas transmission network

of the natural gas transmission system operator AB Amber Grid by an 18-kilometre connecting gas pipeline. LNG Terminal

functions – receive liquefied natural gas from LNG carriers, store them, regasify, and supply liquefied natural gas to

transmission network or reload into other LNG carriers.

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LNG TERMINAL INFRASTRUCTURE

LNG FLOATING STORAGE WITH REGASIFICATION UNIT

The LNG floating storage with regasification unit is an LNG tanker (Independence), which at the Klaipėda Seaport receives

liquefied natural gas from the LNG vessels – LNG carriers, which are moored at the FSRU. According to the schedules of

the Terminal users, LNG is passed through special equipment to return the LNG to a gaseous state and supply it to the gas

transmission system. In 2012 10-year lease (with purchase option) (starting from December 2014) of LNG floating storage

with regasification unit has been signed with Norwegian company Höegh LNG Ltd. The builder of this ship is South Korean

shipyard Hyundai Heavy Industries Co. Ltd.

TECHNICAL CHARACTERISTICS OF THE FSRU INDEPENDENCE*:

Klaipėda seaport jetty

157

The volume of the tanks

170,000 m³

Maximum LNG filling level

98% at 70 kPag

Maximum LNG loading capacity

9,000 m³/h LNG

Maximum LNG reloading capacity

5,000 m³/h LNG when LNG regasification is performed during LNG reloading

FSRU capabilities

3.75 billion m³ of natural gas per year (10.24 million m³ per day)

Minimum operative LNG heel

3,500 m

LNG

Maximum gas flow into the gas pipeline

10.24 million m³ per day

*Terminal’s technical specifications are given according to the current normative conditions: combustion/measurement temperature -25/0

°C, pressure - 1.01325 bar.

JETTY AND ITS FACILITIES

There is a permanently moored FSRU at the jetty, which receives LNG from

the LNG carriers that deliver them. Special offshore equipment includes high

pressure platform, service platform, mooring and berthing dolphins,

catwalks, fire extinguishing towers, control room, fire protection equipment,

service cranes and high-pressure gas loading arms, and other necessary

equipment and systems.

CONNECTING PIPELINE OF THE LNG TERMINAL

The terminal is connected to the gas transmission network of the natural

gas transmission system operator AB “Amber Grid” by an 18-kilometre-long

and 700 mm diameter connecting pipeline. A gas metering station is built

at the point of connection to the transmission network.

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SERVICES OF THE LNG TERMINAL

The Terminal provides the following services: i) LNG

regasification, ii) LNG reloading. The LNG

regasification service consists of the following

related services:

▪ Acceptance LNG loading from an LNG

carrier to the Terminal, physical and virtual

temporary storage of the cargo in the

Terminal and LNG regasification.

The LNG reloading service consists of the following

related services:

▪ Acceptance of LNG cargo from the LNG

carrier that arrived, physical and virtual

storage of the cargo and reload (re-

export) of LNG to an LNG carrier of not

less than 5,000 m

The following prices apply to the services provided by the terminal:

▪ The fixed part of the price of the LNG regasification service is approved annually by the National Energy Regulatory

Council. This part of the price is included in the additional component of the natural gas supply security to the

transmission price, whether the Company is not able to collect the set revenue level from LNG regasification

service price variable part directly from LNG terminal users.

▪ The variable part of the price of the LNG regasification service is paid by the users of the LNG terminal for the

regasified gas volume. Tariffs are approved annually by NERC. LNG regasification service price variable part is

calculated based on the upper limit of LNG revenue divided by LNG terminal capacity per unit.

SERVICES OF THE TERMINAL

SERVICE PRICE

NERC DECREE

LNG regasification service price (2023)

1.41 EUR/MWh

31 May 2022 No. O3E-799

LNG regasification service price (2024)

1.83 EUR/MWh

29 May 2023 No. O3E-715

LNG reloading service price (2023):

- Small scale LNG cargo, up to 15,000 m

- Medium scale LNG cargo, from 15,000 m3

to 50,000 m

inclusive

- Large scale LNG cargo, from 50,000 m3

0.62 EUR/MWh excluding VAT

0.48 EUR/MWh excluding VAT

0.35 EUR/MWh excluding VAT

25 November 2022 No. O3E-1620

LNG reloading service price (2024):

- Small scale LNG cargo, up to 15,000 m

- Medium scale LNG cargo, from 15,000 m

to 50,000 m

inclusive

- Large scale LNG cargo, from 50,000 m

0.72 EUR/MWh excluding VAT

0.56 EUR/MWh excluding VAT

0.40 EUR/MWh excluding VAT

17 November 2023 No. O3E-1688

The LNG terminal fully ensures the third-party access requirements in accordance with EU laws. The terminal’s activities are

organized in observance with the Regulations for Use of the Liquefied Natural Gas Terminal (hereinafter – Terminal

regulations), adopted after public consultations with market participants and approved by NERC. The terminal’s capacities

are allocated to the users on the same conditions in the way of public and transparent capacity allocation procedures or

on Spot capacity allocation procedure in case of free capacities left. LNGT ensures multiuser environment, i. e. allows several

terminal users to use LNG regasification services simultaneously at the same time based on mandatory borrowing/lending

conditions.

Detailed information on LNGT services and operating model could be found in the Terminal regulations or on www.kn.lt.

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KLAIPĖDA SMALL SCALE LNG TERMINAL (RELOADING STATION)

During 2023, 13 cargoes were delivered to Klaipėda small scale LNG terminal (hereinafter – LNG reloading station or ssLNG).

The LNG was loaded to LNG Trucks and distributed to consumers in Lithuania, Poland, Latvia and Estonia. In total 1,037

LNG trucks were loaded at the LNG reloading station in 2023.

AB KN Energies has opened an onshore LNG reloading station in the autumn of 2017. The purpose of the LNG reloading

station project is to develop small scale LNG infrastructure in the Baltic States and Poland, which not only increases energy

security for areas that are further away from the gas pipeline, but also provides the benefits of alternative and clean energy

to a significant number of consumers. This infrastructure also contributes to ensuring the availability of LNG as a clean fuel

for shipping and heavy road transport.

On April 1st, 2020, Orlen S.A. commenced commercial operations at KN-operated LNG reloading station. The capacities of

the LNG reloading station are allocated to Orlen S.A. for a five-year period until March 31, 2025.

The LNG reloading station is designed to receive cargo from small scale LNG carriers, store LNG, load LNG into LNG Trucks,

ISO containers or bunker LNG-powered vessels.

The LNG reloading station is a commercial project of the Company financed by the Company and partly by the European

Union support funds under the CEF-Transport program for the implementation of the HEKLA and Blue Baltics projects.

TECHNICAL CHARACTERISTICS OF THE LNG RELOADING STATION:

Klaipėda seaport jetty

Technology

Five pressure tanks

Volume of the tanks

5 x 1,000 m

Fill level

86%

LNG receiving speed (from ship)

up to 1,250 m

Daily loading capacity for LNG Trucks

Loading of LNG Trucks

2 LNG Truck loading bays (possible simultaneous loading)

LNG Truck loading speed

up to 100 m

Bunkering speed

up to 500 m

Utilization of boil of gas

Gas pipeline connection to the Company’s boiler house

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GLOBAL LNG PROJECTS

KN draws on the development and advisory experience of more than ten new LNG import projects in Europe, Latin America

and Asia since 2015. KN is among the very few companies worldwide with experience of successfully commissioning floating

LNG import terminals on two continents (completed: KN-owned Klaipėda terminal in Lithuania; advisory support service

for commissioning and start-up of Piombino LNG terminal in Italy; advisory service to Cartagena terminal in Colombia;

operation and maintenance of Port of Açu LNG terminal in Brazil as part of long term O&M engagement) also achieving

several worlds “firsts” and commercial innovation in the industry, including multi-user mode, virtual LNG swaps, continuous

small-scale reloads and FSRU integration with on-shore truck loading infrastructure. KN retained experienced LNG business

development team and relatively lean corporate and organizational overhead allow for streamlined decision making and

commercial agility, while retaining the financial strength to drive and compete for new LNG projects.

LNG TERMINAL IN AÇU PORT IN BRAZIL

In 2020 KN became the operator of LNG terminal at Açu Port, Brazil. Under the contract concluded with UTE GNA I

GERAÇÃO DE ENERGIA S.A., and UTE GNA II GERAÇÃO DE ENERGIA S.A. , KN as the operator of the LNG Terminal is

responsible for the smooth operation of the LNG Terminal, including the technical and commercial operation of the

installation of the quay and its facilities, gas pipeline and gas metering stations. KN has gathered a team of local

professionals and established a company KN Açu Serviços de Terminal de GNL Ltda., which is responsible for the execution

of this project in Brazil, ,. The contract is concluded for a period of 13 years operational period following the completion of

the terminal which occurred in September 2021 and can be extended with a mutual agreement.

FSRU AT THE PORT OF AÇU. COURTESY BY GNA

In July 2023 AB KN Energies and bp Gas & Power Investments Limited (hereinafter - bp) signed a cooperation agreement

on the development of a new LNG project in the Port of Açu. KN is invited to contribute to the development of the Açu

trucked LNG station project.

The project involves the planned construction of an LNG truck loading station at the port, allowing gas to be delivered to

consumers that are not connected to the gas pipeline network in the southeast region of Brazil. This could create new

demand centres and support industrial customers’ decarbonisation agendas.

Under the cooperation agreement, bp and KN will collaborate by evaluating the project's commercial viability, as well as

executing various development phase tasks.

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COMMERCIAL OPERATIONS SERVICES FOR DET LNG TERMINALS IN GERMANY

In January 2024 KN executed a contract with Deutsche Energy Terminal GmbH (DET), the German state-owned company

that operates state-controlled LNG terminals on the provision of commercial management services of four German LNG

terminals on the North Sea coast.

On behalf of the German Federal Ministry for Economics Affairs and Climate Action, the DET operates Germany's first LNG

terminals on the North Sea coast, the Wilhelmshaven 1 LNG Terminal and the Brunsbüttel LNG Terminal. Additionally, DET

will operate two upcoming terminals: the second LNG terminal in Wilhelmshaven and the LNG terminal in Stade on the

Lower Elbe River.

In recent years Germany is rapidly embarking on the development of the construction of floating LNG terminals in order

to provide new sources of natural gas supply following the failure of gas supplies via pipelines from Russia. The German

Government is using the state-owned LNG terminals to secure reliable energy supplies to the federal market. Germany is

expected to have a total of five FSRU-based LNG import terminals within this year, four of which will be operated by DET.

According to the contract signed by KN and DET, commercial management services for the four LNG terminals will include

services related to commercial and logistics operations, gas dispatching processes, accounting and reporting of the

commercial activities to the DET, development and provision of IT systems and tools and other terminal operational services

adapted to the customer’s needs.

The contract also includes a commitment to capacity building and knowledge transfer of KN expertise to DET staff. During

the term of the contract, the objective is to train the local team to be able to ensure the commercial operation of the

terminals themselves.

Wilhelmshaven LNG terminal is the first LNG import facility in Germany, located in Port of Wilhelmshaven on the North Sea

coast. The LNG terminal has been successfully completed in extremely short terms and started commercial operations in

January 2023.

The solution for the terminal is based on the FSRU

technology, which is supplied and operated by the

Norwegian company Hoegh LNG. The annual design

capacity of the terminal is 7.5 billion cubic meter of

natural gas, which corresponds to over 8% of

Germany’s 2021 gas demand.

The Brunsbüttel LNG terminal, situated in the port city

of Brunsbüttel at the Elbe River's mouth, The facility is

based on the FSRU technology. The terminal receives

gas from LNG carriers via the FSRU Höegh Gannet,

operated by the Norwegian company Hoegh LNG and

which was built in 2018 and has a storage capacity of

170,000 cubic meters. After expansion of the natural

gas grid network the terminal will have a designed

annual capacity of 7.5 billion cubic meters of natural

gas.

Both Stade and Wilhelmshaven-2 LNG terminals will

start commercial operations in 2024.

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NEW ENERGIES

In June 2023, KN adopted a long-term strategy KN 2050 with a clearly expressed commitment to become net-zero by 2050.

According to KN2050 strategy, KN will not only continue its’ current activities and projects and maintain the status of

strategic importance entity but will further expand its participation in FSRU based LNG projects development worldwide,

invest into new energy and renewable business streams, such as hydrogen related products (hydrogen carriers), CCS, energy

balancing (flow batteries).

HYDROGEN CARRIERS

The European Union aims to become climate-neutral by 2050. The development of a hydrogen economy is one of the EU’s

pillars in transitioning to a low-carbon society. A specific goal set by the European Commission related to the hydrogen

economy is to produce 10 million tons of renewable hydrogen by 2030 and import 10 million tons of renewable hydrogen

by 2030. In addition, it is expected that hydrogen and, to some extent, biomethane will replace natural gas in the energy

value chain in Lithuania.

It is expected that Northern Europe will become a hydrogen export region, while Central Europe will become a hydrogen

import region. The main method of hydrogen transportation in Europe is seen to be pipeline transportation. It is still unclear

which hydrogen carrier will be given priority. In order to take advantage of the opportunities offered by the hydrogen

economy, KN will closely monitor the market and develop its capabilities in the field of hydrogen carriers, where it still lacks

experience: pure hydrogen and ammonia, other LOHC raw materials used.

CCS (CARBON CAPTURE AND STORAGE)

The carbon capture and storage market is still in its early stages. The carbon capture and storage market is still emerging -

the world’s first commercial project will be implemented in Norway in 2025, and its initial capacity will be up to 1.5 million

tons per year. CCS technology is still immature and still requires significant capital expenditures, making it difficult to

commercialize. Many of the projects that will soon be operational are largely funded by governments, such as Norway’s

“Longship” project, which is about 80% funded by the Norwegian government.

However, financing opportunities are improving mainly due to EU programs and the number of CCS projects. The increasing

number of projects are also due to the fact that in some, so called, “hard-to-abate” industries, such as fertilizers, cement,

or oil refining, carbon dioxide capture is currently the only way to reduce CO2 emissions and achieve ambitious EU goals.

In November 2022 KN, Mitsui O.S.K. Lines Ltd, Larvik Shipping AS, Akmenės cementas, AB and SCHWENK Latvija SIA signed

consortium agreement on establishment of CCS Baltic Consortium that is primarily aimed at significantly decreasing

CO2 emissions originating from two EU Member States – Lithuania and Latvia, through CCS technology. The Baltic States

currently do not have CO2 transport and sequestration infrastructure and are one of the last coastal territories in Europe

where such system has not yet been developed or planned. Therefore, the consortium project intends to fill this gap by

developing a robust and sustainable CO2 value chain that may be utilised by all emitters in the Baltics, thus having

significant decarbonisation potential for the region. The project aims to create a carbon capture and storage value chain in

Lithuania and Latvia with initial annual quantities of about 1.6 Mt of CO

could be captured in the factories of “Akmenės

cementas” and “SCHWENK Latvija”. This gas would be transported by land transport to KN’s energy products terminal in

Klaipėda and transshipped to special ships to permanent storage sites in Europe, potentially in the North Sea.

In November 2023 the European Commission has included CCS Baltic Consortium in the final 6th list of Project of Common

Interest. This means that the project is recognized as a cross-border project of great importance, which will significantly

contribute to the implementation of the energy policy and climate goals of the European Union.

After the project receives PCI status, detailed studies will continue and applications for EU funding will be submitted. It is

expected that the project will attract large-scale EU investments to Lithuania and Latvia. It is estimated that the total value

chain capital investments can reach around 1.1-1.2 billion Euros. The final investment decision is planned to be taken in Q1

of 2027, and the CO

capture and export operations will start in 2030.

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ENERGY STORAGE (FLOW BATTERIES)

The global network battery storage market is still in its early stages of development. However, it is rapidly expanding, and

as the share of renewable energy resources (RER) in the energy balance increases, so will the need for energy storage in

the grid. To effectively exploit RER and increase their use, it is necessary to create energy storage devices, especially battery

storage devices that can be easily expanded, unlike the currently widely used electricity storage using hydroelectric power

plants.

KN prioritizes flow batteries due to some similarities of the technology infrastructure with KN’s terminals’ current

infrastructure, but in the coming years, KN will not limit its goals to this technology alone. Flow batteries are not only the

most promising solution for the future but can also give the Company the opportunity to leverage its competitive

advantage in the field of liquid product storage, as they are based on liquid electrolyte tanks.

THE CORPORATE STRATEGY

In June 2023, the Supervisory Council of AB KN Energies has approved KN's corporate strategy for the period 2023-2050.

The strategy took effect on June 14, 2023, and is centred around efficiency of current activities, preparation for the energy

transformation and transitioning towards activities in the new energy field. It aims to achieve complete climate neutrality

for KN's operations by 2050, with a target of reducing emissions by over 30% by 2030 and approximately 70% by 2040.

KN aspires to become a significant contributor to the future energy supply and value chains, generating further value in

the energy sector, ensuring energy security and competitiveness of energy resources in the region, and delivering financial

returns to shareholders.

In the light of these goals, the KN’s strategy emphasizes improving current businesses and efficiency to retain competitive

advantage and enhance profitability. It outlines the aim of achieving profitable growth by developing existing core business

areas while investing a share of profit into the infrastructure and competence of the new energies.

The KN strategy is based on medium-term growth and long-term portfolio diversification, divided into three phases until

2050:

▪ 2023-2030: Increasing profitability in existing activities and securing financing for investments in new and more

sustainable energy sources.

▪ 2031-2040: Focusing on the development of the LNG business and diversifying transshipment of liquid energy

products.

▪ 2041-2050: Expanding activities in the market of new energies, including investments in new energy sources like

synthetic fuels, hydrogen and hydrogen carriers, other alternative energy carriers, and CCS.

KN envisions a world where sustainable liquid energy as well as chemicals and feedstock solutions empower industries and

communities, creating a cleaner, safer, and more prosperous future for all. KN strives to be at the forefront of this

transformation, continuously innovating and expanding portfolio of services to support the global energy transition and

achieve climate neutrality by 2050.

The new strategy sets a long-term target for a return on capital employed (ROCE) of approximately 8% (compared to 4.4%

in 2022). It also aims to achieve an average revenue of EUR 172 million for the KN group of companies from 2041 to 2050,

with revenue increasing by 122% in 2050 compared to 2022.

The target for the KN group of companies is to achieve an average EBITDA of EUR 85 million from 2041 to 2050. It aims for

172% higher EBITDA in 2050 compared to 2022. Additionally, the EBITDA margin is expected to increase from 45% in 2022

to 55% in 2050.

Starting in 2026, KN aims to pay annual dividends of at least EUR 5 million, targeting a dividend yield of approximately 5%.

The total dividend payments are expected to reach at least EUR 240 million for the period of 2031-2050.

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Key Highlights in the short-term (2030): by 2030, KN aims to establish a strong foundation for the new and more sustainable

energy activities and plans to achieve a 50% revenue growth.

OPERATIONAL TARGETS IN KEY SEGMENTS:

▪ Liquids Energy Terminals: The strategy involves a heightened emphasis on product and customer portfolio

diversification. This includes expanding the handling of biofuels and entering the storage and handling market for

chemical products such as methanol. Emphasis will continue to be placed on operational excellence, commercial

and operational efficiency, and delivering enhanced value to customers.

▪ LNG: The focus will be on continued value creation in the regional and global LNG market. By 2030, decisions will

be made regarding the expansion of the capacities of the Klaipėda LNG terminal, taking market demand in

consideration. Additionally, decisions regarding the strategy of the LNG reloading station will be determined. KN

also plans to expand LNG business development activities globally in growth markets gradually.

▪ New Energies: By 2030, KN aims to develop business opportunities in the hydrogen carrier handling and storage

market. It also seeks to establish a CO2 storage and handling business to contribute to controlling and reducing

carbon emissions. Additionally, a pilot battery project and a sustainable business model for participating in the

energy storage/balancing market will be developed. The exploration of new energy sources will facilitate KN's

transition towards a greener economy.

KN plans to invest approximately EUR 300 million by 2030, with over 45% of capital investments dedicated to building new

infrastructure and competences for the handling and storage of new energies, as well as to enhancing the sustainability

and reducing emissions across all KN activities.

The updated strategy also corresponds with the Letter of Expectations from the Ministry of Energy of the Republic of

Lithuania, received by KN on 8 March 2023. As the majority shareholder holding 72.47% of KN's shares, the Ministry outlines

the company's objectives and financial expectations concerning Lithuania's energy independence, transformation, and

international development.

For more detailed information about the KN strategy, please refer to the strategy summary following this link: KN Strategy

2050.

VISION

KN envisions a world where sustainable liquid energy as well as chemicals and feedstock solutions empower industries and

communities, creating a cleaner, safer, and more prosperous future for all.

We strive to be at the forefront of this transformation, continuously innovating and expanding our portfolio of services to

support the global energy transition and achieve climate neutrality by 2050.

MISSION

Enabling safe and reliable liquid energy as well as chemicals and feedstock flows for customers in the Baltic Sea region by:

▪ Offering storage and transshipment solutions for a variety of liquid energy products, chemicals, and feedstocks

for consumption in the region and export into the global market.

▪ Enabling the decarbonization of the region by focusing on sustainable solutions and energy carriers.

▪ Providing national energy security to the Lithuanian state for both liquid energy and electricity.

Supporting customers globally with knowledge and capabilities in the development and operations of LNG or other

sustainable energy infrastructure projects.

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KN IS ABOUT TO EMBARK ON A TRANSFORMATIVE JOURNEY SPANNING UNTIL 2050

DRIVING SUCCESS: PROFITABLE GROWTH THROUGH CORE BUSINESSES – KEY TO OUR NEW STRATEGY

Based on its 2050 vision, KN’s 2030 strategy would aim for improving operations and laying the foundation for new energy

businesses.

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LIQUIDS ENERGY TERMINALS: DIVERSIFICATION AND IMPROVED PROFITABILITY

Transform conventional oil terminal to liquid energy and chemical terminal.

Grow revenues and strengthen EBITDA margin by diversifying product and

client portfolio, operational excellence and improving generated value for

customers.

By 2030:

▪ Increase biofuels transshipment and enter market for chemicals

storage and transshipment (methanol and others).

▪ Ensure vertical diversification of liquid energy and chemicals

transshipment business.

▪ Enhance customer value proposition and operational excellence.

LNG: CAPITALIZING ON THE MOMENTUM AND EXPANDING GLOBAL FOOTPRINT

Focus on value creation in regional LNG business while capturing short-

term growth in global LNG market.

By 2030:

▪ Review Klaipėda LNG terminal regasification capacity based on

market demand.

▪ Offer additional services and enhance value proposition of

Klaipėda LNG hub.

▪ Assess ssLNG terminal strategy.

▪ Expand floating LNG footprint in growth markets (1-2 new

investments; 3 additional O&M contracts).

NEW ENERGIES: ENTER THE NEW ENERGIES MARKETS

Capturing opportunities in the new energies will contribute to the green

transition of the economy.

Investments into new energies are substantial for KN to develop new

capabilities in this business segment.

By 2030:

▪ Develop at least 3 mature business cases to enter transshipment

and storage market of hydrogen carriers.

▪ Build a CO2 storage and transshipment business to manage and

reduce carbon emissions.

▪ Establish a battery pilot project in the region and develop a

sustainable business model for KN to enter the energy storage/

balancing market.

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SIGNIFICANT EVENTS OF THE REPORTING PERIOD

February 2023. By the decision of Supervisory

Council of AB KN Energies, as of 22 February 2023, until

the end of term of office of Company’s acting Supervisory

Council, Šarūnas Radavičius was elected as an

independent member of the Audit Committee of the

Company. In addition, Supervisory Council decided, to

elect Živilė Valeišienė as an independent member of

Remuneration and Nomination Committee of the

Company until the end of term of office of Company’s

acting Supervisory Council.

March 2023. The Company received the Letter of

expectations of the shareholder from the Ministry of

Energy of the Republic of Lithuania, which owns 72.47%

of the Company's shares. More information about the

Letter of expectations can be found on www.kn.lt.

March 2023. The Company has been chosen by

Italian energy company Snam FSRU Italia to cooperate in

the start-up of a greenfield FSRU based LNG terminal

project in the port of Piombino.

March 2023. A 300 kW solar power plant has been

commissioned at the Subačius liquid energy terminal. The

electricity produced by the plant will meet 100% of the

electricity demand of the terminal operating in the

Kupiškis District.

April 2023. Šarūnas Radavičius was elected as a

Chairman of the Audit Committee.

April 2023. KN published the Social Sustainability

Report of 2022. Report is prepared following the

international Global Reporting Initiative Standards (GRI).

April 2023. An Annual General Meeting of

Shareholders of the Company was convened. Annual

General Meeting of Shareholders has adopted the

following resolutions: 1) to approve the audited Financial

Statements of the Company for the year 2022, 2) to

allocate profit of the Company, 3) to approve the Report

on remuneration of the Company.

May 2023. The Company and SK E&S, which is

responsible for energy sectors such as LNG, renewable

and hydrogen within the SK Group, signed a Framework

Agreement on cooperation opportunities in the field of

international LNG business development.

June 2023. The Company and AB ORLEN Lietuva have

entered into a collaborative agreement for diesel loading

operations at KN’s leased Marijampolė Terminal.

June 2023. The Supervisory Council of the Company

has approved KN's corporate strategy for the period

2023-2050. The strategy takes effect on June 14, 2023,

and is centred around efficiency of current activities,

preparation for the energy transformation and

transitioning towards activities in the new energy field. It

aims to achieve complete climate neutrality for KN's

operations by 2050, with a target of reducing emissions

by over 30% by 2030 and approximately 70% by 2040.

June 2023. Živilė Valeišienė was elected as a

Chairman of the Remuneration and Nomination

Committee.

June 2023. The Company is starting its commercial

operation of the Brunsbüttel LNG terminal in Brunsbüttel,

northern Germany.

July 2023. KN and BP Gas & Power Investments

Limited signed a cooperation agreement on the

development of a new LNG project in Latin America.

August 2023. According to National Energy

Regulatory Council (NERC) data, the WACC calculated for

the Company in 2024 will be 5.06% (4.16% in 2023). NERC,

in determining the upper limit for LNG regasification

revenues for the Company for 2024, applied the

forecasted regulated asset base (RAB) of EUR 38.2 million.

September 2023. KN was entrusted with the

organization of international LNG terminal market event

"European LNG Terminal Managers Meeting 2023".

October 2023. An Annual General Meeting of

Shareholders of the Company was convened. Annual

General Meeting of Shareholders has adopted the

following resolutions: 1) to approve the main terms and

conditions of the FSRU INDEPENDENCE technical and

operational management (O&M) service procurement

agreement where Norwegian capital company Hoegh

LNG Klaipėda will serve as its technical operator for a

minimum of 5 years, 2) To elect “KPMG Baltics”, UAB as

the Company’s audit firm to perform the audit of the

statutory separate and consolidated Financial Statements,

to verify Regulated Activities report of the Company, to

assess its Annual Report for the years 2023 and to issue

the Audit highlights memorandum.

November 2023. The European Commission has

included CCS Baltic Consortium to the final list of Project

of Common Interest (PCI) to the planned liquefied carbon

dioxide (CO2) capture and transportation project in

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Lithuania and Latvia, planned by KN and its partners. This

means that the project is recognized as a cross-border

project of great importance, which will significantly

contribute to the implementation of the energy policy and

climate goals of the European Union.

November 2023. At an Extraordinary General

Meeting of Shareholders, shareholders of KN approved:

1) an update to the company's Articles of Association. This

update included a new legal entity name for the company.

2) The amended Remuneration Policy of the Company. 3)

The amended Corporate Governance Policy of the

Company.

December 2023. A record-breaking 90,000 tonnes of

petrol were loaded onto the tanker SKS DARENT, marking

the largest petrol batch handled to date in the Klaipėda

liquid energy terminal.

December 2023. KN resumes the supply of diesel to

Ukraine in ISO containers. At the company's liquid energy

products terminal in Klaipėda, 30,000 tonnes of diesel was

loaded into ISO containers and transported by rail to

Ukraine via Poland.

SIGNIFICANT EVENTS OCCURRED AFTER THE END OF THE

REPORTING PERIOD

January 2024. KN secured the public tender for the

commercial services of four German LNG terminals on the

North Sea coast. The company has signed contract with

Deutsche Energy Terminal GmbH (DET), the German

state-owned company that operates state-controlled LNG

terminals.

January 2024. AB Klaipėdos nafta is turning a new

page in history by continuing its operations under the new

legal name AB KN Energies. This name change reflects the

company’s strategic changes and new long-term strategy

to follow the path of sustainable energy by switching from

fossil fuels to new types of energy.

The new wording of the Articles of Association of AB KN

Energies were registered within the Register of Legal

Entities of the Republic of Lithuania following the

amendment of the Company’s name.

With the change of the Company name, on January 10th,

2024, the ticker of AB „KN Energies“ securities on the

Nasdaq Vilnius Stock Exchange changed from KNF1L to

KNE1L. The securities ISIN code remains unchanged and

is LT0000111650.

Legal entity name of Company’s subsidiary UAB SGD

logistika is changed to UAB KN Global Terminals, with no

further changes to its obligations or commitments.

January 2024. Tomas Tumėnas was appointed Chief

Financial Officer (CFO) of KN Energies.

INFORMATION ABOUT PUBLIC ANNOUNCEMENTS

Following the requirements of the Law of the Republic of Lithuania, all main events concerning the Company and

information about the time and venue of the General Meeting of Shareholders are published on the website of the

Company www.kn.lt and in AB NASDAQ Vilnius (www.nasdaqomxbaltic.com) Stock Exchange.

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BUSINESS ENVIRONMENT AND MARKET

LIQUID ENERGY TERMINALS’ BUSINESS ENVIRONMENT AND MARKET

The Company’s liquid energy products’ transshipment activities are mostly affected by:

▪ Company's infrastructure (number of jetties, water depth at jetties) and suprastructure for transshipment and

storage of liquid energy products (number of tanks, pipelines, trestles, etc.).

▪ Liquid energy terminals’ economic attractiveness from logistical point of view (both transshipment tariffs and costs

of the entire logistic chain).

▪ Macroeconomic, geopolitical environment in the regional and global oil refining and trade markets, overall market

situation.

Main KN Liquid energy business clients – crude oil refineries, traders, and producers operating in the regional and global

oil and petroleum product markets. Strategic oil refinery (hereinafter – Refinery) in the region, part of which oil products

are transshipped through Company's oil terminals are in southeast direction – it is Mažeikiai plant in Lithuania (managed

by AB ORLEN Lietuva).

Main Company’s competitors are oil terminals operating along the eastern coast of the Baltic Sea.

Company’s liquid energy terminals Y2023 activity results were mainly

affected by mixed geopolitical and demand/supply factors:

▪ Global fuel consumption continued to grow in 2023, exceeded

2022 and nearly reached the pre-pandemic volumes,

▪ Sanctions applied to Russian oil products (diesel, gasoline and

other) import to EU from Feb 2023, raised concerns about

possible shortages of diesel in EU, however,

▪ During 2023 the region was still receiving diesel and gasoil

cargoes flow from east of Suez enough to cover the volumes

that it could no longer receive from Russia.

European refineries' crude runs and products output in 2023 was slightly lower in comparison with 2022 - additional

pressure to European oil products market demand/supply balance and therefore – refining margins of the region’s

refineries was exerted by:

▪ Disruptions to Europe’s oil products supply due to industrial action in France (~60% of France refining capacities

were offline in spring), and other unplanned refineries outages in the region,

▪ Economic headwinds in some of Europe’s largest countries that has constrained diesel demand,

▪ Fluctuating volumes of diesel import arrivals to Europe from Middle East, India and China.

Despite all this turbulence in the market, Company’s 2023 Liquid energy terminals segment revenues remained stable and

close to the levels of 2022 and were primarily driven by:

▪ Increased transshipment and storage volumes of biofuels and light oil products, which continued to increase its

share vs dark oil products in Company’s total transshipment turnover in 2023,

▪ Further expansion of its footprint in logistics chain of fuel supply to existing and new customers in southwest

directions.

According to the statistical data, during 2023 ports of the eastern Baltic Sea coast transshipped approximately 64.8 million

tons of oil products, i.e., 25.4 million tons or 28% less compared to 2022. Transshipment volumes of liquid fuels in Baltic

states dropped from 18.1 to 10.1 million tonnes where total decrease in Estonian and Latvian ports was ~ 7.6 million tons

and 0.4 million tons - in Klaipėda port.

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During 2023, port of Klaipėda handled about 4.4 million tons of oil products, i.e., 8.6% less than in 2022. Due to decreased

transshipment volumes in Latvia and Estonia ports, Klaipėda port increased its share in total Baltic states liquid energy

products transshipment market up to 43%.

* Figures are based on Klaipėda Port Authority data

TRANSSHIPMENT OF LIQUID ENERGY PRODUCTS

During 2023 the Company’s Klaipėda and Subačius Liquid energy terminals transshipped 4,119 kt of liquid energy products

compared to 4,267 kt during 2022, i.e. 3.5% or 148 kt less. Stable transshipment of liquid energy products is influenced by

the global and regional factors mentioned in the section “Liquid energy Terminals’ Business Environment and Market”.

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Transshipment of bitumen in KLET continued to grow. During the 12 months of 2023, KN loaded about 82.5 kt of bitumen

or 18% more compared to 2022.

During 2023 biofuels transshipment in KLET intensified and exceeded 2022 result +21%, the increase was driven mainly by

services of ethanol handling.

Transshipment of liquid energy products (diesel and gasoline) to tank trucks in 2023 was ~7% higher compared to 2022.

Intensified activity of the clients involved in transshipment of biofuels and diesel in 2023 significantly contributed to

increased demand for the storage services for these products – revenue from the rent of shore tanks during 2023 increased

27% compared to 2022.

To further expand the scope of activities and diversify products portfolio in Klaipėda and Subačius Liquid energy terminals,

the Company continues to develop business relationships with international and regional market players.

* Figures based on KN data

OVERVIEW OF KLAIPĖDA LNG TERMINAL OPERATING ENVIRONMENT

During 2023 NERC adopted the following resolutions related to the operating environment of Klaipėda LNGT:

▪ On 11 May 2023, decree No. O3E-638 NERC determined LNG regasification revenue cap of 59.2 MEUR for Y2024;

▪ On 29 May 2023, decree No. O3E-715 NERC approved variable component of the LNG regasification price (LNG

regasification tariff) for the Y2024. LNG regasification tariff is set at 1.83 EUR/MWh;

▪ On 6 June 2023, decree No. O3E-757 NERC approved KN investments for Y2024. Total value of investments

reaches 3.219 MEUR;

▪ On 17 November 2023, by decree No. O3E-1688 NERC approved LNG reload service price for Y2024 (approx. 15%

increase in comparison to price of Y2023).

▪ On 22 November 2023, by decree No. O3E-1694 NERC approved security of supply fee applied to natural gas

transmission price equal to 205,93 EUR/(MWh/day/year). LNG Terminal costs included in the security of supply

fee is equal to 0 EUR/(MWh/day/year).

Other relevant events related to the operation of the LNGT:

▪ On 26 June 2023, KN announced public consultation regarding the amendment to the Regulations for the Use of

the LNG Terminal. Public consultation lasted until 7 July 2023. Main amendments related to upcoming Long-term

LNG regasification capacity allocation procedures for period until Y2044. On 27 July 2023, NERC approved updated

Regulations for the Use of the LNG Terminal which came into force after one month from the approval.

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LNGT capacity allocated for the Terminal Gas Year 2023 (period from 1 January 2023 to 31 December 2023):

ALLOCATED CAPACITY

AMOUNT OF ALLOCATED CAPACITY, GWh*

PERIOD

LNG regasification capacity**

33,000

1 January 2023 – 31 December 2023

940

15 February 2023 – 30 March 2023

393

1 May 2023 – 30 June 2023

491

1 June 2023 – 31 July 2023

940

1 July 2023 – 31 August 2023

936

1 August 2023 – 25 September 2023

* Combustion / measurement temperature 25/0 °C, pressure 1.01325 bar, natural gas gross calorific value 11.35 kWh/nm

, expansion factor

1: 578 m3 LNG / nm

of gas).

**During Gas Year LNG regasification capacity may be changed to LNG reloading capacity.

Total 36,700 GWh LNG regasification capacities of LNGT were allocated for the Terminal Gas Year 2023 (period from 1

January 2023 to 31 December 2023). In 2022 KN has allocated long-term capacity until the end of 2032. LNGT users from

Lithuania, Latvia and Poland have been granted 4 LNGT capacity packages of 6 TWh/year (24 TWh) each for a period of ten

years starting from 1st January 2023. Following the renewal of the LNGT capacity allocation mechanism this year, in ten

years approximately 60% of the LNGT total capacity per year is allocated to terminal users with long-term contracts. During

the Annual Capacity allocation procedure, the LNGT regasification capacity of 9 TWh has been allocated to five Terminal

users for the 2023 Terminal gas year.

On September 2023 based on procedure set in the updated Regulations for use of LNG Terminal, the Company has started

Long-term capacity allocation and has successfully allocated:

▪ Long-term capacity of 9 TWh (in 3 packages of 3 TWh) for the period starting from 2025 up until end of 2032;

▪ Long-term capacity of 4 TWh (1 package of 4 TWh) for the period starting from 2033 up until end of 2044.

The procedure resulted in full allocation of Nominal Terminal LNG regasification capacity until 2032. Starting from Y2025,

the Company does not expect to organize Annual capacity allocation. The Company plans to allocate LNG regasification

capacity for Spot cargoes during the Terminal Gas Year or in case of unused LNG regasification capacity, there might be

available capacity on the Secondary market.

31,894 GWh of LNG have been regasified and transmitted to AB “Amber Grid” transmission system during 2023. It should

be noted that in 2023, six users from Estonia, Latvia, Poland, Norway, and Lithuania have been using LNGT in Klaipėda.

Starting from the Terminal Gas Year 2023 new terminal user from Latvia has started to use services of the Terminal.

During 2023 the Klaipėda LNGT:

▪ Performed 67 ship-to-ship operations (54 ship-to-ship operations in 2022).

▪ 2,243 thousand tonnes of LNG were received (2,175 thousand tonnes in 2022).

▪ 2.752 billion nm

of natural gas were regasified and supplied to the natural gas transmission system (2.796 billion

in 2022).

▪ 116,432 tonnes LNG were reloaded into small scale LNG carriers (114,438 tonnes were reloaded in 2022).

▪ Accepted LNG origin was 49% from USA, 40% from Norway, 5.6% from Trinidad and Tobago, 2.9% from Nigeria

and 2.8% from Algeria.

The demand for LNG terminal capacity depends on several key criteria:

▪ Joint gas demand of Lithuania and other neighbouring countries.

▪ Pricing offered by competing natural gas supply sources (gas supplied by pipeline or other LNG terminals in the

region) and quantity of gas supplied.

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▪ Limitations of the Lithuanian natural gas infrastructure (transmission system capacity) and interconnections.

▪ Supply of LNG in the global market.

▪ LNG prices in the region and worldwide.

▪ Duration and terms of gas supply contracts.

▪ Availability and freight costs of LNG carriers.

▪ In 2023 one of the highest impacts for increasing the utilisation of LNGT capacities was as of 2022 halted Russian

natural gas imports to Lithuania.

KLAIPĖDA LNG TERMINAL CAPACITY EXPANSION

KN as the operator of Klaipėda LNGT together with gas transmission system operator AB “Amber Grid” suspended actions towards

expansion of current Klaipėda LNG terminal regasification capacity and expansion of gas transmission system capacity in relevant

entry and exit points. Decision was made based on results of Klaipėda LNG Terminal Long-term capacity allocation procedure which

was launched in September 2023. During the Procedure KN offered 9 TWh for the period 2025-2032 and 28 TWh for the period 2033-

2044. Market interest for the period 2033-2044 were low. After assessing the low interest in long-term capacity after 2033 and the

potential growth of LNG supply in the region and other risks, KN decided to postpone the Klaipėda LNG terminal capacity expansion

project for the future and will offer LNG terminal capacity to the market at a later stage.

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FINANCIAL RESULTS OF GROUP’S ACTIVITY

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CONSOLIDATION

The financial results of the Group consist of the financial results of the parent company AB KN Energies and its directly and

indirectly controlled subsidiaries. According to IFRS 10, the parent company controls an entity when the parent company

is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns

through its power over the entity. Control is generally obtained by holding more than one half of the voting rights.

Subsidiaries are fully consolidated from the date on which control is transferred to the Group.

The financial statements of subsidiaries have been prepared using uniform accounting policies and for the same reporting

period as that covered by the financial statements of the Group. On consolidation, all inter-company transactions, balances,

and unrealized gains and/or losses on transactions among the Group companies are eliminated.

On consolidation, the revenue and expenses are translated into euros at an average exchange rate observed during

reporting period. The assets and liabilities of foreign operations are translated into euros at the rate of exchange prevailing

at the reporting date. The exchange differences arising on translation for consolidation are recognised in other

comprehensive income.

CONSOLIDATED FINANCIAL RESULTS OF THE GROUP INCLUDE THE FOLLOWING COMPANIES:

NAME OF THE COMPANY

ADDRESS

OWNERSHIP PART,%

AB KN Energies

Burių street 19, 92276 Klaipėda

100

UAB SGD terminalas

Burių street 19, 92276 Klaipėda

100

UAB KN Global Terminals

Burių street 19, 92276 Klaipėda

100

UAB SGD SPB

Burių street 19, 92276 Klaipėda

100 owned by UAB KN Global

Terminals

KN Açu Serviços de Terminal de GNL LTDA

F66 Fazenda Saco Dantas s/n, Distrito Industrial,

Area 1 and Area 2, 28200-000 São João da Barra,

State of Rio de Janeiro

90 owned by UAB KN Global

Terminals and 10 owned by UAB

SGD SPB

More information about the structure of the Group and its subsidiaries can be found in the Annual Report section “General Information

About the Group and the Company”.

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FINANCIAL RESULTS OF THE GROUP’S AND THE COMPANY’S

ACTIVITY

THE KEY FINANCIAL RATIOS OF THE GROUP (IN EUR THOUSAND, IF NOT INDICATED

OTHERWISE)

* Adj. – adjusted financial indicators/data are recalculated and presented by eliminating from net profit (loss) the following

amounts: (1) the impact of unrealised foreign currency exchange rates (forex) arising from IFRS 16 requirements, (2)

respective impact of deferred income tax arising from forex and (3) impact of financial derivatives.

THE GROUP

2023

2022

2021

2020

2019

Transshipment of liquid energy products, thousand t

4,119

4,267

3,651

5,149

5,749

LNG regasification and reloading, GWh

33,958

32,446

16,569

21,987

20,237

Investments of non-current assets

4,547

4,559

9,080

7,163

22,051

FINANCIAL FIGURES

Sales

83,525

77,818

61,811

80,114

104,363

EBITDA (AVR)

35,638

34,987

26,108

48,168

70,979

EBIT (AVR)

12,702

12,193

(53,165)

19,379

14,316

Net profit (loss)

13,226

(5,904)

(64,011)

33,958

7,561

Adj. Net profit (loss)

6,963

8,869

(47,178)

11,454

12,731

PROFITABILITY

Return on assets (ROA) (AVR)

2.3%

(1.0%)

(10.5%)

5.2%

1.6%

Adj. Return on assets (ROA) (AVR)

1.2%

1.5%

(7.7%)

1.7%

2.7%

Return on equity (ROE) (AVR)

9.1%

(4.2%)

(35.5%)

16.7%

3.9%

Adj. Return on equity (ROE) (AVR)

4.4%

6.0%

(27.5%)

5.8%

6.5%

Return on Capital Employed (ROCE) (AVR)

4.0%

4.4%

0.2%

6.9%

5.1%

Adj. Return on Capital Employed (ROCE) (AVR)

3.9%

4.2%

0.2%

7.3%

5.0%

EBITDA margin (AVR)

42.7%

45.0%

42.2%

60.1%

68.0%

EBIT margin (AVR)

15.2%

15.7%

(86.0%)

24.2%

13.7%

Net profit margin (AVR)

15.8%

(7.6%)

(103.6%)

42.4%

7.2%

Adj. Net profit margin (AVR)

8.3%

11.4%

(76.3%)

14.3%

12.2%

FINANCIAL STRUCTURE

Debt ratio (D/E) (AVR)

265%

313%

295%

201%

248%

Adj. Debt ratio (D/E) (AVR)

252%

284%

296%

219%

241%

Debt ratio (D/E) - excluding IFRS 16 liabilities (AVR)

125%

121%

97%

60%

50%

Adj. Debt ratio (D/E) - excluding IFRS 16 liabilities

(AVR)

119%

110%

97%

65%

49%

Debt to EBITDA (AVR)

Debt (excluding IFRS 16) to EBITDA (AVR)

Debt service coverage ratio (DSCR) (AVR)

Gross liquidity ratio (AVR)

0.45

1.30

1.28

1.47

1.27

RINKOS VERTĖS RODIKLIAI

Price-Earnings Ratio (P/E)

5.8

(15.4)

(1.8)

3.6

18.3

Adj. Price-Earnings Ratio (P/E)

11.0

10.3

(2.5)

10.7

10.9

Earnings per share (EPS)

0.035

(0.016)

(0.168)

0.089

0.020

Adj. Earnings per share (EPS)

0.018

0.023

(0.124)

0.030

0.033

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THE KEY FINANCIAL RATIOS OF THE COMPANY (IN EUR THOUSAND, IF NOT INDICATED

OTHERWISE)

* Adj. – adjusted financial indicators/data are recalculated and presented by eliminating from net profit (loss) the following

amounts: (1) the impact of unrealised foreign currency exchange rates (forex) arising from IFRS 16 requirements, (2)

respective impact of deferred income tax arising from forex and (3) impact of financial derivatives.

THE COMPANY

2023

2022

2021

2020

2019

Transshipment of liquid energy products, thousand t

4,119

4,267

3,651

5,149

5,749

LNG regasification and reloading, GWh

33,958

32,446

16,569

21,987

20,237

Investments of non-current assets

4,547

4,559

9,080

7,163

22,051

FINANCIAL FIGURES

Sales

80,356

74,722

58,633

77,474

104,138

EBITDA (AVR)

34,346

33,696

24,582

47,291

71,396

EBIT (AVR)

11,514

11,000

(54,610)

18,532

14,733

Net profit (loss)

12,370

(6,732)

(64,917)

33,495

7,947

Adj. Net profit (loss)

6,107

8,041

(48,084)

10,991

13,117

PROFITABILITY

Return on assets (ROA) (AVR)

2.2%

(1.2%)

(10.6%)

5.1%

1.7%

Adj. Return on assets (ROA) (AVR)

1.1%

1.4%

(7.9%)

1.7%

2.7%

Return on equity (ROE) (AVR)

8.6%

(4.8%)

(36.0%)

16.4%

4.1%

Adj. Return on equity (ROE) (AVR)

4.0%

5.5%

(28.1%)

5.6%

6.7%

Return on Capital Employed (ROCE) (AVR)

3.6%

4.0%

(0.4%)

6.6%

5.2%

Adj. Return on Capital Employed (ROCE) (AVR)

3.5%

3.8%

(0.4%)

7.0%

5.1%

EBITDA margin (AVR)

42.7%

45.1%

41.9%

61.0%

68.6%

EBIT margin (AVR)

14.3%

14.7%

(93.1%)

23.9%

14.1%

Net profit margin (AVR)

15.4%

(9.0%)

(110.7%)

43.2%

7.6%

Adj. Net profit margin (AVR)

7.6%

10.8%

(82.0%)

14.2%

12.6%

FINANCIAL STRUCTURE

Debt ratio (D/E) (AVR)

270%

316%

297%

201%

247%

Adj. Debt ratio (D/E) (AVR)

256%

287%

298%

218%

241%

Debt ratio (D/E) - excluding IFRS 16 liabilities (AVR)

127%

123%

97%

60%

50%

Adj. Debt ratio (D/E) - excluding IFRS 16 liabilities

(AVR)

121%

111%

98%

65%

49%

Debt to EBITDA (AVR)

Debt (excluding IFRS 16) to EBITDA (AVR)

Debt service coverage ratio (DSCR) (AVR)

Gross liquidity ratio (AVR)

0.42

1.22

1.20

1.41

1.21

RINKOS VERTĖS RODIKLIAI

Price-Earnings Ratio (P/E)

6.2

(13.5)

(1.8)

3.6

17.4

Adj. Price-Earnings Ratio (P/E)

12.6

11.3

(2.4)

11.1

10.5

Earnings per share (EPS)

0.033

(0.018)

(0.171)

0.088

0.021

Adj. Earnings per share (EPS)

0.016

0.021

(0.126)

0.029

0.034

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AB KN ENERGIES CONSOLIDATED

ANNUAL REPORT 2023

ALTERNATIVE PERFORMANCE MEASURES (APM)

MEASURE

CALCULATION

Debt (excluding IFRS 16) to EBITDA

(total current and non-current liabilities at the end of the period – current and non-

current IFRS lease liabilities) / EBITDA of the last twelve months

Debt ratio (D/E)

total current and non-current liabilities at the end of the period / total equity at the end

of the period

Adjusted debt ratio (D/E)

(total current and non-current liabilities) / total adjusted equity at the end of the period

Debt ratio (D/E) – excluding IFRS 16

liabilities

(total current and non-current liabilities at the end of the period – total current and non-

current IFRS 16 lease liabilities) / total equity at the end of the period

Adjusted Debt ratio (D/E) – excluding

IFRS 16 liabilities

(total current and non-current liabilities at the end of the period – total current and non-

current IFRS 16 lease liabilities) / total adjusted equity at the end of the period

Debt service coverage ratio (DSCR)

EBITDA of the last twelve months / (total current loan obligations at the end of the period

+ interest expenses of the period)

Debt to EBITDA

total current and non-current liabilities at the end of the period / EBITDA of the last

twelve months

EBIT

earnings before taxes – financial activity income + financial activity expenses

Adjusted EBIT

earnings before interest and taxes – unrealised foreign exchange rates impact – impact of

financial derivatives

EBIT margin

EBIT / revenue

Adjusted EBIT margin

adjusted EBIT / revenue

EBITDA

earnings before taxes – financial activity income + financial activity expenses +

depreciation and amortization expenses + impairment expenses and reversals

EBITDA margin

EBITDA / revenue

Gross liquidity ratio (current ratio)

total current assets at the end of the period / total current liabilities at the end of the

period.

Net profit margin

net profit (loss) for the period / revenue

Adjusted net profit margin

adjusted net profit (loss) for the period / revenue

Return on assets (ROA)

net profit (loss) of the last twelve months / (assets at the end of the period + assets at the

beginning of the period) / 2

Adjusted return on assets

adjusted net profit (loss) of the last twelve months / (assets at the end of the period +

assets at the beginning of the period) / 2

Return on Capital Employed (ROCE)

EBIT / (total equity + total long-term loans and deferred government grants at the end of

the period)

Return on equity (ROE)

net profit (loss) of the last twelve months / (equity at the end of the period + equity at the

beginning of the period) / 2

Adjusted return on equity

adjusted net profit (loss) of the last twelve months / (adjusted equity at the end of the

period + adjusted equity at the beginning of the period) / 2

Price-Earnings Ratio (P/E)

average share price for the period / (net profit (loss) of the last twelve months/ total

number of shares at the end of the period)

Earnings per share (EPS)

net profit (loss) for the period/ total number of shares at the end of the period

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AB KN ENERGIES CONSOLIDATED

ANNUAL REPORT 2023

FINANCIAL RESULTS

KN uses alternative performance measures (APM) to provide better understanding of the Group and the Company business

operations. Currently, net profit (loss) of the Group and the Company is affected by material non-cash items. Therefore, the

adjusted financial indicators are recalculated and presented by eliminating from net profit (loss) the following amounts: (1)

the impact of unrealised foreign currency exchange rates (forex) arising from IFRS 16 requirements, (2) respective impact

of deferred income tax arising from forex and (3) impact of financial derivatives.

Since 2019, KN’s financial results have been affected by IFRS 16 “Leases” – a new standard which came into effect on 1

January 2019 and by the reduction of LNG security supplement from 1 January 2020 by EUR 26.8 million per annum. These

changes have significantly affected KN’s statement of financial position, statement of comprehensive income, and financial

indicators. When the standard has become effective, the lease obligations are recognized in the statement of financial

position as an asset and a liability (right-of-use assets and a lease liability). As most lease payments are denominated in

USD, the positive impact of unrealized USD/EUR exchange rate in amount of EUR 7,368 thousand has been recognized in

the statement of comprehensive income in 2023 (in 2022 – a negative impact of EUR 17,380 thousand). However, it is a

non-cash item, which has no impact to the Group’s and the Company’s actual earnings. The reduction of the LNG security

supplement reduced revenue of the Group and the Company for 2020-2023 in amount of EUR 26.8 million per annum. The

LNG security supplement reduction is financed by NIB loans; therefore, the cash flows of the Group and the Company are

not affected. The reduced revenue will be returned to the Company over the period of operation of the LNG terminal.

The calculation of adjusted net profit (loss) of the Group and the Company is presented below:

INCREASE/(DECREASE) IN EUR THOUSAND

31-12-2023

THE GROUP

31-12-2023

THE COMPANY

Net profit (loss)

13,226

12,370

Unrealised foreign exchange rates impact

(7,368)

Deferred tax impact from unrealised forex

1,105

Net profit (loss) adjusted

6,963

6,107

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AB KN ENERGIES CONSOLIDATED

ANNUAL REPORT 2023

The main reasons for the increase of the Group’s net profit by EUR 19,130 thousand compared to 2022 are – EUR 1,187

thousand higher net profit from Liquid energy products terminals, EUR 17,030 thousand higher net profit from regulated

LNG activities and EUR 920 thousand higher net profit from commercial LNG activities.

Group’s adjusted net profit decrease by EUR 1,906 thousand, compared to 2022, is due to EUR 4,006 thousand lower

adjusted net profit from regulated LNG activities. For detailed explanations see below.

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AB KN ENERGIES CONSOLIDATED

ANNUAL REPORT 2023

Result of Liquid energy terminals:

Adjusted net profit from Liquid energy terminals is higher by EUR 1,187 thousand. Main reasons: (1) although Liquid energy

products transshipment was slightly lower in 2023 (4,119 thousand t in 2023, 4,267 thousand t in 2022) the segment’s sales

revenue was EUR 102 thousand higher mainly due to increase in storage services. (2) The segment’s variable costs in 2023

were EUR 2.9 million lower compared to 2022, mainly due to lower gas and electricity prices, as well as the Company’s

internal initiatives to reduce heat and electricity consumption.

Result of regulated LNG activities:

Adjusted net profit from regulated LNG activities is lower by EUR 4,006 thousand due to:

(i) higher expenses by EUR 5,287 thousand – main reasons: (1) higher emission allowances’ expenses by EUR 1.7 million;

(2) FSRU expenses higher by EUR 1.1 million due to inflation and higher opex maintenance; (3) customers’ compensation

expenses of EUR 0.9 million in 2023; (4) higher insurance expenses by EUR 0.5 million, consultation costs by EUR 0.4 million,

and other expenses by EUR 0.7 million caused lower adjusted net profit (loss); therefore,

(ii) revenue is higher by EUR 4,129 thousand – main reasons: (1) higher regasification revenue by EUR 11.5 million due to

increased demand and regasification tariff from 0.41 EUR/MWh (from May 2022 – 1.19 EUR/MWh) in 2022 to 1.41

EUR/MWh in 2023; (2) higher LNG reloading revenue by EUR 0.9 million; (3) other LNGT revenue is higher by EUR 2.4 million

mainly due to payments from the clients for the unused allocated capacity; (4) lower revenue from the fixed part of LNG

regasification service fee by EUR 10.7 million due to implemented LNG terminal capacity allocation and tariffication model

when KN part in security supplement from May 2022 was decreased to 0 EUR/(MWh/day/year).

Result of commercial LNG activities:

Adjusted net profit from commercial LNG activities is higher by EUR 920 thousand due to EUR 1.4 million higher revenue

from global LNG projects in 2023, compared to 2022. Expenses from commercial LNG activities are EUR 653 thousand or

13.2% higher compared to 2022. Main reasons: EUR 78 thousand higher wages, salaries and social security, EUR 90

thousand higher repair and exploitation expenses, EUR 74 thousand higher consulting and legal costs and EUR 461

thousand higher other cost of sales and operating expenses.

Result of New energies segment:

The Company had a loss of EUR 7 thousand from New energies segment. In 2023, the Company has invested resources in

the field of CCS in order to enter new markets. During 2023 business trips were made to events organised by the European

Commission, also KN participated in the regional CO2 Baltic Carbon Forum conference in Latvia, the CCUS Forum

conference in Denmark, a review of the most advanced Norwegian CO2 project and similar events. The Company has not

generated any revenues from new energies segment in 2023.

SALES REVENUE

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AB KN ENERGIES CONSOLIDATED

ANNUAL REPORT 2023

The Group’s sales revenue in 2023 (EUR 83,525 thousand) is 7.3% or EUR 5,707 thousand higher compared to 2022 (EUR

77,818 thousand). Sales revenue from Liquid energy terminals is 0.4% or EUR 102 thousand higher, 27.4% or EUR 1.476

thousand higher revenue from commercial LNG activities and 9.3% or EUR 4.129 thousand higher revenue from regulated

LNG activities. The activity of LNG terminal is regulated and has a price cap thus activity does not depend on regasification

volume. For more information, concerning regulated revenues refer to the article “Regulated profit of LNG terminal”. More

information about result of each business segment is provided in article “Financial results”.

The Company’s sales revenue in 2023 (EUR 80,356 thousand) is 7.5% or EUR 5,634 thousand higher compared to 2022

(EUR 74,722 thousand).

Sales revenue by geography is provided bellow. Sales revenue from foreign clients is revenue from the clients not registered

in Lithuania.

EXPENSES

2023 and 2022 cost of sales and operating expenses for the Group and the Company:

2023

GROUP

2022

GROUP

Change

2023vs2022

+/- %

2023

COMPANY

2022

COMPANY

Change

2023vs2022

+/- %

Cost of sales

60,024

57,703

2,321

4.0%

58,949

56,706

2,243

4.0%

Operating expenses

10,963

8,432

2,531

30.0%

10,057

7,526

2,531

33.6%

Total costs

70,987

66,135

4,852

7.3%

69,006

64,232

4,774

7.4%

Total cost of the Group of 2023 comprises EUR 70,987 thousand and is higher by 7.3% or by EUR 4,852 thousand

comparing to 2022 (EUR 66,135 thousand). Main reasons: (1) EUR 1,134 thousand higher expenses related to FSRU rent

(OPEX element, management, crew cost) and decreased performance of steam heaters and replacement of them (2) EUR

1,761 thousand higher emission allowances (EA) and tax on environmental pollution due to higher EA prices and quantities

(3) wages, salaries and social security costs are higher by EUR 1.101 thousand or by 11.7% (4) EUR 951 thousand higher

claims received from customers, mainly due to unexpected LNGT related downtime claims.

Total cost of the Company of 2023 comprises EUR 69,006 thousand and is higher by 7.4% or by EUR 4,774 thousand

compared to 2022 (EUR 64,232 thousand). The main reasons and the figures are the same as per above explanation for the

Group’s cost.

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AB KN ENERGIES CONSOLIDATED

ANNUAL REPORT 2023

The listing of the Group’s major expenses is presented below:

2023

2022

Change

2023vs2022

+/- %

Depreciation of right-of-use asset

14,390

14,325

0.5%

Wages, salaries and social security

14,616

13,515

1,101

8.1%

Depreciation and amortization

8,651

8,339

312

3.7%

Expenses related to FSRU rent (OPEX element, management, crew cost)

8,605

7,471

1,134

15.2%

Emission allowances and tax on environmental pollution

7,447

5,686

1,761

31.0%

Variable costs (natural gas, electricity, railway services)

4,137

7,013

-2,876

-41.0%

Port charges

1,533

1,536

-3

-0.2%

Repair and exploitation expenses

1,458

1,028

430

41.8%

Consulting and legal costs

1,409

598

811

135.6%

Insurance expenses

1,187

757

430

56.8%

Claims received from customers

1,021

951

1,358.6%

Contribution for National Energy Regulatory Council (NERC)

611

477

134

28.1%

Tax on real estate

504

Cost of liquid energy products sold

355

1,019

-664

-65.2%

Work safety costs

251

194

29.4%

Other cost of sales and operating expenses

4,812

3,603

1,209

33.6%

Total costs

70,987

66,135

4,852

7.3%

The Group’s major expenses by segments in 2023 is presented below:

2023

LET

LNG

New

Total

LNGT

comLNG

energies

Depreciation of right-of-use asset

481

13,762

147

14,390

Wages, salaries and social security

8,627

3,657

2,332

14,616

Depreciation and amortization

5,262

2,189

1,200

8,651

Expenses related to FSRU rent (OPEX element, management,

crew cost)

8,605

Emission allowances and tax on environmental pollution

281

7,166

7,447

Variable costs (natural gas, electricity, railway services)

4,089

4,137

Port charges

1,532

1,533

Repair and exploitation expenses

928

338

192

1,458

Consulting and legal costs

447

690

266

1,409

Insurance expenses

270

905

1,187

Claims received from customers

935

1,021

Contribution for National Energy Regulatory Council (NERC)

611

Tax on real estate

420

504

Cost of liquid energy products sold

355

Work safety costs

206

251

Other cost of sales and operating expenses

2,002

1,431

1,378

4,812

Total costs

23,455

41,927

5,598

70,987

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AB KN ENERGIES CONSOLIDATED

ANNUAL REPORT 2023

The Group’s major expenses by segments in 2022 is presented below:

2022

LET

LNG

New

Total

LNGT

comLNG

energies

Depreciation of right-of-use asset

436

13,740

149

14,325

Wages, salaries and social security

8,059

3,202

2,254

13,515

Depreciation and amortization

4,647

2,486

1,206

8,339

Expenses related to FSRU rent (OPEX element, management,

crew cost)

7,471

Emission allowances and tax on environmental pollution

174

5,512

5,686

Variable costs (natural gas, electricity, railway services)

6,950

7,013

Port charges

1,536

Repair and exploitation expenses

609

317

102

1,028

Consulting and legal costs

142

264

192

598

Insurance expenses

254

436

757

Claims received from customers

Contribution for National Energy Regulatory Council (NERC)

477

Tax on real estate

420

504

Cost of liquid energy products sold

1,019

Work safety costs

154

194

Other cost of sales and operating expenses

1,616

1,070

917

3,603

Total costs

24,550

36,640

4,945

66,135

In 2023, the total amount of Liquid Energy terminal’s expenses amounts to EUR 23,455 thousand (2022 – EUR 24,550

thousand) and are 4.5% or EUR 1,095 thousand lower versus 2022. In 2023 regulated LNG activity expenses amounted to

EUR 41,927 thousand and are higher by EUR 5,287 thousand or by 14.4% compared to 2022 (EUR 36,640 thousand).

Expenses from commercial LNG activities amounts to EUR 5,598 thousand and are 13.2% or EUR 653 thousand higher than

2022 (EUR 4,945 thousand). A detailed explanation of each segment is provided in article “Financial results”.

REGULATED PROFIT OF LNG TERMINAL

LNG terminal, its infrastructure and connection implementation as well as exploitation costs fully or partially are included

into the natural gas transmission service price in accordance with the rules and guidance’s set by NERC based on the

regulations set in the Energy Law, Natural Gas Law and other laws of the Republic of Lithuania related with energy prices

regulation.

The total level of LNG terminal revenue is confirmed by NERC based on the approved methodology of Government

regulated prices in the natural gas sector (hereinafter – Methodology). According to the Methodology, the level of LNG

terminal revenue is calculated for upcoming year by summing 2 components: 1) Estimated necessarily costs for the LNG

terminal exploitation and operational assurance; 2) Estimated return on investment of LNG terminal infrastructure.

The revenue of the LNG terminal activity comprises of 3 components:

▪ Fixed part of LNG regasification service price is approved annually by NERC. This part of the price is included into

the additional Security Supplement added to the gas transmission price.

▪ Variable part of LNG regasification service price is received for the regasified volume directly from LNG terminal

users. The regasification tariff is approved annually by NERC.

▪ LNG reloading service revenue for reloaded LNG quantity. The tariff of the LNG reloading service is also approved

annually by NERC.

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AB KN ENERGIES CONSOLIDATED

ANNUAL REPORT 2023

Revenue from LNG regasification (variable part) and LNG reloading service revenue is recognized at the moment during

which the services were provided according to the tariffs approved by NERC.

The tariff of LNG Security Supplement is set annually by NERC based on the amount required to be collected (estimated

LNG terminal revenue) and proportionally allocated for the forecasted gas consumption capacities. LNG security

supplement is paid by the users of natural gas transmission system, including the end users, together with the other

payments for the natural gas transmissions services. The payments are collected by the transmission service operator

(hereinafter – TSO) either directly from users or from suppliers of natural gas in case the user has no direct contractual

obligations with the TSO.

Actual LNG Security Supplement contributions and payments may differ from planned ones (calculated at the approval of

Security Supplement) due to the variation of consumption capacities or other differences.

The differences between the net profit of LNG terminal segment (non-regulated) and the profit of the regulated activity

are determined by different calculation principles. Financial accounting is in accordance with IFRS, while the result of

regulated activities is calculated in accordance with the methodology approved by NERC.

LNG operating expenses are recognized in the relevant period when they are incurred.

The regulated profit of LNG terminal is calculated by adjusting the determined return on investment by income and

expenses not attributable for the regulated activity in terms of regulation (which influence financial results).

During the 1st regulatory period (2014-2019) a surplus has been calculated by NERC after the third and the fifth regulatory

years. The surplus after third full regulatory year (2014-2017) has reduced the level of LNG terminal revenue for 2019 and

surplus after fifth regulatory year (2014-2019) reduces the level of LNG terminal revenue for 2021. The identified surplus

has reduced LNG terminal revenue for 2019 by EUR 787 thousand and revenue for 2021 by EUR 2,589 thousand.

For the 2nd regulatory period (2020-2024) NERC has calculated the surplus of regulated profit after two periods (2020-

2021) and has reduced the level of LNG terminal revenue for 2023 by EUR 568 thousand. Moreover, due to significant net

excess income earned in 2020, the Company’s LNG terminal revenue for 2022 was reduced by EUR 7,105 thousand.

According to the changes of Methodology, Company accumulates collected additional income from variable and fixed

parts of LNG regasification price to reduce the security supplement in the future periods when costs of LNG terminal will

not be collected directly by LNG terminal users and accordingly KN part of the security supplement will be positive.

Assess the impact of regulated activities, the Company in management accounting calculates normalized profit. Normalized

profit is adjusted for temporary regulatory differences.

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AB KN ENERGIES CONSOLIDATED

ANNUAL REPORT 2023

LNG REGULATED ACTIVITY TEMPORARY REGULATORY DIFFERENCES

2014-2019

surplus

2020

2021

2022

2023*

Regulated Asset Base (RAB)

47,047

44,176

41,304

37,282

Weighted Average Cost of Capital (WACC)

2.90%

3.46%

4.14%

4.16%

Return on Investments (ROI) (RAB x WACC)

1,364

1,528

1,710

1,551

Total temporary regulatory adjustment

(7,526)

2,646

812

1,748

1) adjustment related to prior years: payback of

excess net income / (compensation of excess net

cost)

(130)

2,254

7,105

568

2) adjustment related to the current year: (excess

net income) / excess net cost

(2,459)

(7,395)

392

(6,293)

3,834

3) adjustment related to the upcoming year: (excess

net income) / excess net cost

(2,654)

Payback / (compensation) in:

Year 2020

(130)

Year 2021

2,589

(335)

Year 2022

7,105

Year 2023

625

(392)

Year 2024

(6,855)

Year 2025

351

(6,249)

Year not specified

12,797

2,415

Settlement of advances received in year 2024

2,654

Contingent asset / (liability) from other

temporary regulatory differences as at the end

of the period

(2,459)

(9,984)

(7,339)

(6,527)

(4,778)

Contingent asset from security supplement

reduction as at the end of the period

26,829

53,658

80,487

107,316

* Inspection of the regulated activity has not been completed yet

IMPACT OF IFRS 16 AND CAPITALISATION OF PURCHASE OPTION

As at 31 December 2019 the Group and the Company has capitalized purchase option under the lease agreement.

According to IFRS 16 requirements, lessee should remeasure lease liability of each agreement upon the occurrence of either

a significant event or a significant change in circumstances at each financial statements’ date. It is the duty of the

management to re-evaluate the probability to realise the purchase option at each financial statements’ date in the

upcoming reporting periods and in circumstances if any changes occur, it must be reflected in the financial statements

respectively. During the year 2022 no significant events and circumstances have occurred that would have the impact and

respectively no changes in finance lease accounting under IFRS 16 requirements have been made as at 31 December 2022.

During the year of 2019 the following significant events have happened that determined the need to reassess the

probability of realizing the purchase option:

▪ On 1st March 2019 amendments of the Republic of Lithuania Law on Liquefied Natural Gas Terminal No XI-2053

Article 5 and 9 (further – the Law) entered into force stipulating obligation to the Company as a Liquefied Natural

Gas terminal operator to acquire ownership of FSRU (by selecting the most economic option) not later than by

31st December 2024;

▪ On 19th September 2019 European Commission has approved state aid consent regarding LNG security

supplement reduction;

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AB KN ENERGIES CONSOLIDATED

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▪ On 24th October 2019 the Board of the Company has adopted a decision to acquire FSRU no later than by 31

December 2024 with the conditions that 1) loan to finance the purchase is arranged and 2) Parliament approves

the State guarantee for the loan;

▪ On 19th December 2019 a binding offer from NIB to finance the 100% purchase price of FSRU (up to 160 MMEUR)

has been received;

▪ On 19th December 2019 Parliament has approved granting State guarantees for NIB loans for LNG security

supplement reduction and purchase of FSRU;

▪ On 20th December 2019 a loan agreement with NIB has been signed for the LNG security supplement reduction.

While evaluating the probability to realize the purchase option the management of the Company has considered different

economic, commercial and FSRU technological circumstances, which has shown that:

▪ Currently used FSRU is economically most favourable when compared to the 1) availability; 2) price factors of the

same size and functionality of new and used FSRUs and conversions of LNG carriers and 3) possible additional

investments needed for any other FSRU;

▪ In terms of size the industry is currently being equipped by modern 170-180 tm

FSRUs and LNG carriers, enabling

to unload to FSRU full cargo of conventional size LNG carriers (140-180 tm

) and not limiting LNG suppliers’

interest in using the terminal;

▪ Current terminal size and parameters are needed in order to meet N-1 criteria for energy security, i.e. to ensure

gas supply in the event of failure of the largest supply infrastructure during highest daily demand;

▪ Technologically currently used FSRU has the technology that is still regarded as advanced/not obsolete in

comparison with other developments and can easily accept “green gases” and remain functional in the context of

the EU “green policy” decisions in a long term;

▪ In 2020 implemented dry-dock has confirmed that currently used FSRU is in good condition and is designed to

be operative for at least 25 more years.

▪ On 20th November 2020 European Commission has approved state aid consent regarding acquisition of LNG

floating and storage unit. The decision of the European Commission secures Company’s ability to make a

withdrawal of funds under the Loan agreement concluded between the Company and Nordic Investment Bank on

9 March 2020.

▪ During 2021, KN, as part of a project of long-term LNG import infrastructure solution, organised intensive

discussions with market participants, a market consultation on the procurement documents and launched a public

international tender for the acquisition of the FSRU in mid-year.

▪ In February 2022 the Board of KN has taken a decision on the acquisition of the FSRU Independence at the end

of its lease agreement.

▪ On 25th of February 2022 Extraordinary General Meeting of Shareholders has adopted the resolution and

approved the decision of the AB KN Energies Board to acquire the FSRU Independence.

▪ Company has notified Höegh group companies that KN exercises an option right to acquire Independence. After

fulfilling all the option conditions specified in the Time Charter Party, the Company will acquire the FSRU no later

than 6 December 2024. Until then the Company will continue to lease the FSRU under the same conditions.

Therefore, , the management of the Company is reasonably certain that the purchase option of lease contract will be

realized. As a result, no changes in purchase option accounting as at 31 December 2023 have been made.

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INVESTMENTS

Major investment projects in 2023:

NO.

PROJECT

AMOUNT OF

INVESTMENT

DESCRIPTION

Investments in pipelines and tanks

560 TEUR

Investments have been made to ensure safety and expand

infrastructure for loading.

Implementation of cyber security

requirements

450 TEUR

Implemented cyber security requirements in Operational

Technology (OT) management systems belonging to the Critical

Information Infrastructure (CI) in accordance with internal and

external audit recommendations and the requirements of the

National Cyber Security Centre (NCSC).

Installation of solar power plants at the

Subačius Liquid Energy Products Terminal

210 TEUR

A 300-kW solar power plant is installed at the Subačius Liquid

Energy Products Terminal. The electricity it generates meets 100%

of the electricity demand of the terminal in the Kupiškis district.

Reconstruction of the heating system at the

Subačius Liquid Energy Products Terminal

153 TEUR

The heating system at the Subačius liquid energy terminal has

been replaced by an air-to-water system. The investment helps to

reduce the use of fossil fuels, greenhouse gas (GHG) emissions

and heating costs.

Investing in ISO container infrastructure

473 TEUR

Infrastructure is in place for the handling of ISO containers on the

railway overpass. The investment allows to increase the range of

services offered by the Company.

Other investments

2,701 TEUR

Other investments related to maintenance, business continuity,

compliance, cyber-security, and workplace safety.

Total

4,547 TEUR

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ACTIVITY PLANS AND FORECASTS

In June 2023, the Supervisory Council of AB KN Energies has approved KN's corporate strategy for the period 2023-2050.

The strategy takes effect on June 14, 2023, and is centred around efficiency of current activities, preparation for the energy

transformation and transitioning towards activities in the new energy field. For more detailed information about the KN

strategy, please refer to the strategy summary following this link: KN Strategy 2050.

The long-term KN corporate strategy has three main lines of action — liquid energy products, LNG terminals, and work on

new forms of energy such as synthetic fuels, hydrogen and its compounds, other alternative energy carriers, carbon capture

and storage, etc.

By 2030, KN aims to lay a solid foundation for the future business of new energies. The company will do this gradually by

diversifying its activities, building new and adapting existing infrastructure. By 2030, KN will aim to develop at least three

business opportunities to enter the hydrogen carrier handling and storage market, to create a CO2 storage and handling

business to help control and reduce carbon emissions, and to create a pilot battery project in the region and a sustainable

business model for the company to become a part of the energy storage/balancing market. Harnessing the potential of

new energy sources will gradually help the company move towards a green economy.

In the face of future changes, the company will continue to focus on its current activities, which will help it to secure the

steady income needed to invest in new forms of energy. KN is planning a 50% revenue growth by 2030, driven by local,

regional, and global market activities.

KN currently operates three liquid energy product terminals in Klaipėda, Subačius, and Marijampolė, and is the operator of

LNG terminals in Lithuania, Germany and Brazil.

The development of liquid energy terminals is expected to diversify the product and customer portfolio further. There are

plans to increase the handling of biofuels and to enter the storage and handling market for chemical products (methanol,

etc.). The LNG business will strive to expand the business development activities of the floating LNG terminals in growth

markets. Additionally, KN will continue to focus on operational excellence, commercial and operational efficiency, and

creating more value for customers.

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INFORMATION ABOUT THE SHAREHOLDERS AND SHARES OF THE

COMPANY

SHAREHOLDERS AND SHARES OF THE COMPANY

THE MAIN DATA ABOUT SHARES OF THE COMPANY:

ISIN code

LT0000111650

Abbreviation

KNE1L

Share emission

380,396,585

The Company’s shares are traded on the regulated market; they are listed in the Baltic Main List of the Stock Exchange of

AB NASDAQ Vilnius.

SHAREHOLDERS OF THE COMPANY

As at 31 December 2023 all the shares of the Company were owned by 5,327 shareholders (on 31 December 2022 – 5,388)

All shares of the Company are of one class ordinary registered shares granting their owners (shareholders) equal rights.

One ordinary registered share of the Company grants one vote in the General meeting of Shareholders.

An ordinary registered share of the Company shall grant the following economic rights to its owners (shareholders):

1. To receive a part of the Company’s profit (dividends);

2. To receive funds of the Company in the event the Authorized Capital of the Company is being reduced in order

to pay funds of the Company to the shareholders;

3. To receive a part of the assets of the Company in case of liquidation;

4. To receive shares free of charge if the Authorized Capital is increased out of the funds of the Company (except in

the cases specified by the imperative norms of the valid laws);

5. To have the preferential right in acquiring shares or convertible bonds issued by the Company except in cases

when the General Shareholders’ Meeting by a qualified majority of votes that shall not be less than 3/4 of the

participating and voting shares for solution of this matter, resolves to withdraw the preferential right in acquiring

the Company’s newly issued shares or convertible bonds for all the shareholders;

6. To lend to the Company in the manner provided by law, however, when borrowing from its shareholders the

Company has no right to pledge its assets to the shareholders. When the Company borrows from its shareholder,

the interest rate may not be higher than the average interest rate offered by commercial banks of the location

where the Lender has his place of residence or business, which was in effect on the day of conclusion of the Loan

Agreement. In such a case the Company and its shareholders shall be prohibited from negotiating a higher interest

rate;

7. Other economic rights established by the laws.

An ordinary registered share of the Company shall grant the following non-economic rights to its owner (shareholder):

1. To attend the General Shareholders’ Meetings and to vote according to voting rights carried by their shares (unless

otherwise provided for by the laws);

2. To receive information on the Company to the extent allowed by the imperative norms of the valid laws;

3. To file a claim with the court for reparation of damage resulting from misconduct by the Manager of the Company

and Board members or noncompliance with their obligations prescribed by the laws and the Articles of Association

of the Company as well as in other cases laid down by laws.

4. The right to vote at General Shareholders’ Meetings may be withdrawn or restricted in cases established by laws,

also in case share ownership is contested;

5. Other non-economic rights established by the laws and the Articles of Association of the Company.

According to AB SEB bankas data.

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The Company has not been informed about mutual agreements of its shareholders which could limit the transfer of

securities and (or) right of vote.

MAJOR SHAREHOLDERS OF THE COMPANY HAVING MORE THAN 5% OF SHARES (EACH) OF THE COMPANY AS

AT 31 DECEMBER 2023 AND 2022:

SHAREHOLDER’S NAME (COMPANY’S NAME, ADDRESS,

COMPANY CODE OF REGISTRATION)

31 DECEMBER 2023

31 DECEMBER 2022

NUMBER OF

OWNED

SHARES (UNIT)

PART OF

AUTHORIZED

CAPITAL (%)

NUMBER OF

OWNED

SHARES (UNIT)

PART OF

AUTHORIZED

CAPITAL (%)

The Republic of Lithuania, represented by the Ministry of

Energy of the Republic of Lithuania (Gediminas Ave. 38/2,

Vilnius, 302308327)

275,687,444

72.47%

275,687,444

72.47%

UAB koncernas “ACHEMOS GRUPĖ“ (Vykinto st. 14, Vilnius,

156673480)

39,662,838

10.43%

39,662,838

10.43%

Other (each owning less than 5%)

65,046,303

17.10%

65,046,303

17.10%

Total

380,396,585

100.00%

380,396,585

100.00%

SHAREHOLDERS STRUCTURE BY CATEGORIES AND BY THE REGIONS:

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DYNAMICS OF KNE1L SHARE PRICE AT NASDAQ VILNIUS DURING 2019 – 2023:

2023

2022

2021

2020

2019

Highest share price in EUR

0.280

0.308

0.359

0.414

0.444

Lowest share price in EUR

0.200

0.203

0.298

0.301

0.357

Price per share at the beginning of the period in EUR

0.241

0.308

0.322

0.361

0.410

Price per share at the end of the period in EUR

0.202

0,240

0.307

0.320

0.362

Average share price in EUR

0.231

0.265

0.320

0.351

0.393

Traded volume, pcs.

5,872.655

8,541,326

19,004,133

23,934,244

5,908,666

Turnover in EUR thousand

1,351

2,220

6,110

7,928

2,296

Capitalisation in EUR thousand

76,840

91,295

116,782

121,920

137,875

Earnings per share (EPS)*

0.018

0.023

(0.124)

0.030

0.033

* Calculated using adjusted net profit (loss).

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AB KN ENERGIES CONSOLIDATED

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AUTHORIZED SHARE CAPITAL OF THE COMPANY

The Company’s authorized share capital did not change during 2023 and amounted to EUR 110,315 thousand as at 31

December 2023. All the shares of the Company are fully paid. The authorized capital is divided into 380,396,585 ordinary

shares with a nominal value of 0.29 Eur. During 2023 the Company did not acquire any of its own shares.

DIVIDENDS

The General Meeting of the Shareholders held on 22 April 2022 approved allocation of profit (loss) for the year 2022 with

no declared dividends.

BELOW IS THE HISTORICAL INFORMATION ABOUT DIVIDENDS PAID IN THE PERIOD FOR THE PRIOR FINANCIAL

YEAR:

2023

2022

2021

2020

2019

Dividends paid in EUR thousand

7,538

7,947

11,577

Dividends per one share in EUR

0.0198

0.0209

0.0304

Net profit (loss) per 1 share in EUR

0.03

(0.12)

0.03

0.02

0.03

Dividends for net profit (of previous FY),%

70%

100%

DIVIDEND POLICY

On 28th July 2021 the Board of AB KN Energies has approved the renewed Dividend Policy. The Dividend Policy provides

that the Board of the Company shall, in accordance with the Company's audited financial statements which are prepared

in accordance with IFRS, present the draft decision of dividends allocation to the Company’s shareholders for approval. The

amount of dividends is proposed taking into account the Company's return on equity for the reporting period.

The Company sets the goal to increase the shareholders’ value and pay stable dividends. The main objectives for a Dividend

Policy are:

▪ compliance with the applicable laws of the Republic of Lithuania, secondary legislation, the Articles of Association,

and internal documents of the Company;

▪ assurance of the Company’s shareholders interests;

▪ commitment to high corporate governance standards;

▪ enhance of the Company’s market value;

▪ definition of the Company’s procedures relating to transparent publication and payment of dividends.

AB KN Energies Dividend Policy is based on the existing legislation of the Republic of Lithuania (regulation effective starting

since 28th December 2021 (Lithuanian Government Resolution of 6th June, 2012 No. 655 on approval of the description of

the procedure for the exercise of the state property and non-property rights in state-owned entities (hereinafter – the

Resolution) – the regulation has replaced the Lithuanian Government Resolution of 14th January, 1997 No. 20 on the

dividends for the state-owned shares, however all the principles and regulations on dividends allocation are valid and have

been placed into Resolution), the Company's Articles of Association and other Company's internal documents.

According to the art. 4.4. of the Company’s Dividend Policy the amount of dividends for the years 2021-2024 is calculated

by eliminating from the Company’s distributable net profit (loss) unrealised foreign exchange rates impact and other

unrealised gains (losses). The Company’s return on equity is calculated based on the data of the set of audited annual

financial statements, net profit (loss) of the reporting period by eliminating the impact of unrealised foreign exchange rates

and other unrealised gains (losses) divided by the average equity at the beginning and end of this period. Equity at the

beginning of the reporting period is adjusted by estimating the impact of unrealised foreign exchange rates and other

unrealised gains (losses) accumulated before the reporting period. Equity at the end of the reporting period is adjusted by

estimating the impact of unrealised foreign exchange rates and other unrealised gains (losses) of the reporting period and

those accumulated before the reporting period.

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According to the art. 4.5 of the Company’s Dividend Policy, the Board of the Company shall consider the following on a

yearly basis:

▪ the financial indicators for assessment of the Company's current financial position (net debt / EBITDA, DSCR, ISCR,

Equity ratio);

▪ the Company's performance of the current period, in order to ensure the scope of funds needed for the smooth

operation;

▪ the scope of equity and loan necessary for strategic and investment projects’ implementation;

▪ any financial and non-financial liabilities for the Company investors;

▪ the stock market situation related to dividend income;

▪ implementation of the Company’s Strategy;

▪ a change in plans of strategic, investment projects, their scope or their financing.

According to the art. 4.7. of the Company’s Dividend Policy dividends for the financial year should be allocated as follows:

▪ Not lower than 85% from the Company’s distributable profit if ROE of the financial reporting year is not higher

than 1 per cent.

▪ Not lower than 80% from the Company’s distributable profit if ROE of the financial reporting year is higher than

1% but not higher than 3% .

▪ Not lower than 75% from the Company’s distributable profit if ROE of the financial reporting year is higher than

3% but not higher than 5%.

▪ Not lower than 70% from the Company’s distributable profit if ROE of the financial reporting year is higher than

5% but not higher than 10%.

▪ Not lower than 65% from the Company’s distributable profit if ROE of the financial reporting year is higher than

10% but not higher than 15%.

▪ Not lower than 60% from the Company’s distributable profit if ROE of the financial reporting year is higher than

15%.

Dividend rate, as a rule, should not be less than presented in the article 4.7. of the Company’s Dividend Policy, however,

based on criteria in article 4.5., lower dividend rate could be proposed.

The full Company’s Dividend Policy is available on Company’s website.

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AB KN ENERGIES CONSOLIDATED

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INFORMATION ABOUT THE EMPLOYEES OF THE GROUP

PERSONNEL

The Company's main asset is its employees who are the most important link to the achievement of Company’s goals.

Company's personnel policy is focused on the development of teamwork, constant progress in professional development

and process efficiency, the optimal use of work resources, training of qualified staff, and development of the Company’s

culture that empowers personal growth, cooperation, succession planning, and creates additional value for the company

and its stakeholders.

Number of the Group employees at the end of the year:

31-12-2023

31-12-2022

CHANGE,%

AB KN Energies

338

326

3.7%

UAB SGD terminalas

0.0%

UAB KN Global Terminals

0.0%

UAB SGD SPB

0.0%

KN Açu Serviços de Terminal de GNL LTDA

3.8%

Total

371

358

3.6%

The number of employees does not include employees on maternity/paternity leave.

The breakdown of the number of the Group and the Company employees by gender as at 31 December 2023:

FEMALES

MALES

AB KN Energies

25.4%

252

74.6%

UAB SGD terminalas

50.0%

UAB KN Global Terminals

50.0%

UAB SGD SPB

50.0%

KN Açu Serviços de Terminal de GNL LTDA

14.8%

85.2%

Total

25.1%

278

74.9%

The average age of the Group’s employees – 44.0 years. Detailed information about employees’ age, work experience, and

education is provided in figures bellow in years.

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Education of the Group’s employees by categories:

EMPLOYEE

CATEGORY

EMPLOYEES

31-12-2023

UNIVERSITY

VOCATIONAL

SECONDARY

AND OTHER

EMPLOYEES

31-12-2022

UNIVERSITY

VOCATIONAL

SECONDARY

AND OTHER

Managers*

Specialist

198

172

188

165

Workers

124

118

Total

371

229

358

226

* The managers of the Company include Chief Executive Officer (CEO), Directors and Heads of Divisions.

PAYROLL SYSTEM AND REMUNERATION POLICY

The Company seeks to create motivating, efficient, fair, transparent, and easy to understand compensation system which

aims to attract, retain, and motivate employees whose skills and work results help the Company to successfully develop

and implement its mission and achieve strategic business objectives. Therefore, in September of 2016 the Employee

Remuneration Policy has been formed and approved. In September of 2017 The Procedure of Remuneration System

Formation has been approved.

The Employee Remuneration Policy defines the principles of determination and payment of remuneration as well as the

incentives of employees. The Remuneration policy applies to all employees of the Company.

The goals of the Remuneration Policy are to:

▪ Establish clearly understandable, fair, and transparent procedures for the determination and payment of

remuneration as well as the incentives of employees, aiming to ensure the Company’s competitiveness in the

labour market;

▪ Encourage the employees to achieve the objectives set in the corporate strategy, to create value added and

increase the returns to shareholders while fostering the values of the Company.

The remuneration of the employee may consist of the following components: a fixed component, i. e. a monthly salary (or

a wage) and a variable component payable for either short-term performance results or the annual results of the

Company’s/the employee’s performance.

The Company’s remuneration system is based on job structure framework, created using the Hay Methodology by

determining the weight of each position (to ensure fair remuneration for work within the Company). The amount of the

monthly remuneration for the position is determined by assessing the level of knowledge and work experience required to

139

136

143

140

18-24 25-39 40-54 55-64 65 and more

NUMBER OF THE GROUP'S EMPLOYEES BY AGE GROUPS

2022

2023

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AB KN ENERGIES CONSOLIDATED

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perform the functions of each position, the complexity of the functions, the degree of responsibility and management level,

the impact / risk on the Company's performance, working conditions. In order to ensure the competitiveness of the

remuneration of the Company's employees and to promote the achievement of results, the remuneration (fixed and

variable remuneration components) focuses on the range of the 50th and 75th per centiles of the remuneration market of

foreign capital companies operating in Lithuania. Employees in the same position can receive different monthly pay

depending on qualifications, experience, capabilities, and functions and responsibilities assigned to the employee. The

variable component is set according to the procedure laid down in the Remuneration Policy.

Employee’s base salaries are usually reviewed once a year taking into account: Lithuanian labour market trends; the

Company's performance results; The results of the evaluation of the Company's employees; demand – supply situation for

jobs important to the company in the labour market.

Detailed information on the remuneration system of the Company's management is provided in 2023 AB KN Energies

Report on Remuneration.

The breakdown of employee related expenses (EUR thousand) of the Group:

2023

2022

CHANGE,%

AB KN Energies

13,985

12,520

11.7%

UAB SGD terminalas

0.0%

UAB KN Global Terminals

0.0%

UAB SGD SPB

0.0%

KN Açu Serviços de Terminal de GNL LTDA

619

983

-37.0%

Total

14,616

13,515

8.1%

Employees according to categories:

EMPLOYEE CATEGORY

AVERAGE NUMBER OF EMPLOYEES

2023

GROUP

2022

GROUP

CHANGE,%

2023

COMPANY

2022

COMPANY

CHANGE,%

Managers*

-11.1%

-8.7%

Specialists

192

183

4.9%

169

159

6.3%

Workers

118

123

-4.1%

118

123

-4.1%

Total

358

360

-0.6%

329

328

0.3%

* The managers of the Company include Chief Executive Officer (CEO), Directors and Heads of Divisions.

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The Company’s 2023 average monthly salary of all employees is 12.5% higher compared to 2022 (2023 – 3,114 EUR/month,

2022 – 2,768 EUR/month).

EMPLOYEE CATEGORY

AVERAGE MONTHLY SALARY (GROSS), EUR

2023

GROUP

2022

GROUP

CHANGE,%

2023

COMPANY

2022

COMPANY

CHANGE,%

Managers*

6,508

5,532

17.7%

6,771

5,666

19.5%

Specialists

3,054

2,686

13.7%

3,221

2,791

15.4%

Workers

2,020

1,834

10.1%

2,020

1,834

10.1%

Total

3,114

2,768

12.5%

3,209

2,809

14.2%

* The managers of the Company include Chief Executive Officer (CEO), Directors and Heads of Divisions. The following sums were

calculated for the remuneration to the Group‘s managers in 2023: EUR 4,462 thousand, in that amount taxes paid by the employer included

EUR 293 thousand (when in 2022 were EUR 3,643 thousand from which EUR 184 thousand of taxes paid by the employer). The average

annual salary of manager of the Group amounted to EUR 93.0 thousand in 2023 (in 2022 – EUR 67.5 thousand).

** The average monthly salary is calculated according to the average monthly wage calculation procedure as stated in the State companies’

employees’ average monthly salary calculation procedure approved by the Government of Lithuania on 23 August 2002, resolution No.

1341 and its subsequent changes. On-call payments included.

The Company‘s average monthly salary of 2023 compared to 2022 increased, due to was paid more annual bonus by 63.3%

or EUR 532.8 thousand.

EMPLOYEE CATEGORY

STUCTURE OF AVERAGE MONTHLY SALARY (GROSS), EUR

2023

GROUP

2022

GROUP

CHANGE,%

2023

COMPANY

2022

COMPANY

CHANGE,%

Managers*

AMS without annual

bonus

5,548

5,029

10.3%

5,758

5,198

10,8%

Annual bonus

960

503

90.8%

1,013

468

116,5%

Managers total:

6,508

5,532

17.7%

6,771

5,666

19,5%

Specialists

AMS without annual

bonus

2,723

2,433

11.9%

2,872

2,540

13,1%

Annual bonus

331

254

30.3%

349

251

39,0%

Specialists total:

3,054

2,686

13.7%

3,221

2,791

15,4%

Workers

AMS without annual

bonus

1,927

1,766

9,1%

1,927

1,766

9,1%

Annual bonus

34,8%

Workers total:

2,020

1,834

10.1%

2,020

1,834

10,1%

Total

AMS without annual

bonus

2,788

2,549

9.4%

2,875

2,598

10,7%

Annual bonus

326

219

48.7%

334

211

58,3%

Total:

3,114

2,768

12.5%

3,209

2,809

14,2%

* The managers of the Company include Chief Executive Officer (CEO), Directors and Heads of Divisions.

** The average monthly salary is calculated according to the average monthly wage calculation procedure as stated in the State companies’

employees’ average monthly salary calculation procedure approved by the Government of Lithuania on 23 August 2002, resolution No.

1341 and its subsequent changes. On-call payments included.

***AMS – average monthly salary.

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2023 average monthly salary (gross) of employees by gender, EUR:

EMPLOYEE CATEGORY

2023 GROUP

2023 COMPANY

TOTAL

MALE

FEMALE

TOTAL

MALE

FEMALE

Managers*

6,508

6,562

6,358

6,771

6,930

6,358

Specialist

3,054

3,210

2,786

3,221

3,447

2,865

Workers

2,020

2,049

1,393

2,020

2,049

1,393

Total

3,114

3,104

3,147

3,209

3,189

3,270

*The Company‘s managers include Chief Executive Officer (CEO), Directors and Heads of Divisions.

**The average monthly salary is calculated according to the average monthly wage calculation procedure as stated in the State companies’

employees’ average monthly salary calculation procedure approved by the Government of Lithuania on 23 August 2002, resolution No.

1341 and its subsequent changes. On-call payments included.

EMPLOYEE PERFORMANCE EVALUATION AND ANNUAL BONUS ALLOCATION

The Company has implemented the procedures for annual employee performance evaluation and annual bonus allocation.

These bonuses depend on the achievement of the goals set directly for the person, service director or for the Company.

Annual employee performance review together with periodic and frequent one to one meetings throughout the year are

one of the most effective management and leadership techniques that increase employee engagement and help to achieve

the organizational goals. Such practice creates collaborative and positive relationships between managers and their

subordinates that allow to make it clear with employees while planning their careers, increasing their motivation, and

promoting continuous improvement in their professional field.

Employees of all categories – workers, specialists, and managers – are assessed and rewarded annual bonus for achieving

pre-set annual goals (WHAT) and evaluation on their compliance to Company’s values (HOW). In 2020 implementation of

Asaichi methodology being one of the three LEAN tools initiated in the Company brought even better performance

management when KPIs have been reviewed and actioned with personal accountability daily. Annual performance review

meetings, on the other hand, allow to reflect on the entire year through the lens of competence development, safety-

minded behaviour, learning opportunities, career-advancement, and aspirations.

EMPLOYEE SELECTION AND RECRUITMENT

The Teamtailor platform (Applicant tracking system) was implemented to ensure a more efficient recruitment of employees

as well as more convenient tool for hirings managers. Since April 2020 the Company implemented Employee Selection and

Recruitment procedure whose purpose is to standardize the employee selection process and ensure efficient and effective

procedures for organizing the selection of KN personnel (employees and trainees) in order to successfully achieve the

objectives of KN – to select employees who recognize the values of KN and have the greatest potential to achieve the

objectives set for them.

In order to ensure that the objectives set out in KN’s strategy are met, an assessment and planning of staffing needs is

carried out. Each year management of the Company draws up a staffing plan for the upcoming year. The plan takes into

account the workload of staff, the need for new positions (due to organizational changes or legal requirements), staff

mobility (transition from one staff position to another) and natural change (retirement, parental leave, etc). The main steps

of the recruitment process include the evaluation of need for employee, determination of required competencies, search

and attraction of potential candidates, job interviews, final decision, and preparation of the offer.

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PRINCIPLES OF EMPLOYEE COMPETENCE DEVELOPMENT

KN education system is designed to promote the development of employees both independently and through the learning

processes of strategically important knowledge and skills that are part of the curricula. All employees are given the

opportunity to participate in the programs. The implementation of KN education system is based on 6 principles: link with

business strategy, cooperation between departments, identification of needs based on assessment of employees'

competencies, measurement of learning effectiveness, integration of education with other processes and selection of

appropriate educational tools.

In 2023 no less than 15% of annual learning and development budget was allocated to fund employees with various formal

studies at different universities.

For the last four years Company conducts 360-degree feedback study for managers. Following the method, KN Managers

receive feedback on their behaviour according to the Company’s values and leadership competencies from people who

work with them. Based on survey results Managers create their Personal development plans and thus grow to be even

better leaders for their teams. In 2023 KN leadership competencies were developed by gathering best employees and

starting long-term leadership program which lasts 9 months. Also, in 2023 the Company continued investments into

development skills of sales and negotiation, project management competencies, the focus on the client, Emotional

Intelligence (EQ).

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RISK FACTORS AND RISK MANAGEMENT

The Company’s Board has approved Risk Management Policy that regulates risk management, defines risk management

principles and responsibilities, functions and responsibilities of the Chief Risk Officer as well as sets risk appetite and

tolerance limits. The risk management system is developed in accordance with the ISO 31000 guidelines. The list of principal

risks and the risk management plan are provided to and approved by the Company’s Board each quarter. The Board actively

participates in the principal risk management process by continuously monitoring the risk level changes and the risk

management measures’ action plans. The Company’s high-level management is responsible for shaping the personnel’s

attitude towards risk management, setting the risk management goals in the managed area, implementation of the control

measures, implementation and monitoring the efficiency of the risk management measures. The medium level managers

are responsible for implementation of the risk management process and provision of the results, as well as for reliability,

correctness, and impartiality of information.

The Audit Committee reviews financial reporting process as well as audit execution process and oversees internal control

environment, risk management and internal audit framework.

Risk probability:

▪ Low – there should be several unrelated events

for risk to materialize.

▪ Medium – there is 50% chance of risk to

materialize.

▪ High – almost certain that risk will materialize in

3-year period.

Risk impact:

▪ Low – risk could have impact to operations

without impact to yearly plans.

▪ Medium – risk could have impact to company’s

short-term plans implementation.

▪ High – risk could have major impact to

company’s strategy implementation.

Risk level:

▪ Low – risk managed if cost of management does

not outweigh possible impact.

▪ Medium – in most cases risk managed or

monitored, but there could be decision to

monitor risk.

▪ High – risk actively manged with possible

exception made by the Board (In some cases

strategy review process could be initiated to

reduce level of risk).

Risk matrix

Impact

Medium

High

Low

Medium

High

Low

Medium

Probability

Risk heat map

Impact

R4, R8

R5, R6, R7

R2, R3, R8,

R9, R10,

R11

Probability

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COMMENTS ON THE RISK CATEGORIES OF THE GROUP AND THE COMPANY ARE PROVIDED BELOW:

Risk No 1. Business risk – client concentration risk

Risk impact

Risk probability

Risk level

High

Low

Medium

The Company works with several big clients in the area of liquid energy products transshipment. One of the clients

contributes a significant portion of liquid energy product transshipment via operated liquid energy terminals and income

flows.

The Company continuously looks for other potential clients, flows of shipments and alternative activities. Also, the Company

reviews existing expenses and constantly searches for costs optimization possibilities.

The Company is striving to manage its business risks by diversifying its income sources and widening the range of services,

communicating, and cooperating with potential clients, who are interested in blending services, storage, and transshipment

of petrochemical products such as monoethylene glycol, ethanol, methanol and loading of new product bitumen. The

Company also operates LNG terminal, consults, and participates in international investment projects related with the

development of LNG terminals, provides small scale- LNG services.

During 2020 political risk materialized, and one of the largest clients BNK (UK) Limited, which belongs to the largest

exporters of Belarusian oil products – ZAT Belaruskaja neftenaja kampanija, announced a temporary suspension of

transshipment. Moreover, starting from 24th June 2021, sanctions on Belarus were introduced by Council Regulation (EU)

2021/1030 – no more transit of oil product flows from Belarus are possible and are not expected in the future. Due to these

external operational risks, KN has to implement long-term strategic decisions to adapt to new geopolitical circumstances.

Consequently, a long-term 2050 corporate strategy has been prepared.

Risk No 2. Operational risk – major incidents causing environmental and infrastructure damage.

Risk impact

Risk probability

Risk level

Medium

Operational risk is considered as risk directly related to the increase of losses caused by external factors (for example,

natural disasters, illegal acts of third parties, and others) or internal factors (for example, ineffective activity and

management, improper and inadequate utilization of funds, internal control deficiencies, ineffective procedures, human

error, malfunctions of information systems, cyber security control gaps, unduly allocation of functions or responsibilities,

and other).

Due to the nature of high-risk activities, risk could not be considered low impact.

To manage the internal operational risk, the Company implemented required organizational measures and procedures and

information systems to support business processes that ensure the proper functioning of the internal control system and

duly cooperation with the third parties concerned. The Company applies the following means of internal control: separation

of decision-making and controlling functions, management of transactions and accountancy, limitation of decision-making

powers and authority of their execution, collegial decision-making in crucial issues, and other.

In addition, KN constantly updates and reviews its insurance program in order to ensure loss minimization in case of an

accident.

Internal operational risk management is significantly influenced by the standards implemented and maintained in the

Company – Quality ISO 9001:2015, Environmental Protection ISO 14001:2015, Occupational Health and Safety ISO

45001:2018. These standards impose requirements for the control of processes according to the most significant risks and

management system audits, which ensure that the described rules and procedures operate in practice.

The Company strives to minimize legal compliance risk and ensure its operations are compliant with the applicable legal

requirements and standards. Infrastructure, as well as management and safety processes, cooperation with the third parties,

and control system, has been positively evaluated by the representatives of potential clients of the terminals.

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KN has established a compliance function to manage operational risks better and periodically updates its compliance status.

Risk No 3. Reputational damage to Company’s name

Risk impact

Risk probability

Risk level

Medium

KN values and considers its reputation in various areas: external public perception, stakeholder, and internal reputation as

an employer. The Company pays special attention to the stakeholders. It openly provides information to institutions, public

organizations and the general society and has been focusing on strengthening relations with communities for years.

The Company is also involved in educational initiatives, such as hosting company tours at the KN Liquid Energy Terminal

for students and pupils, presenting its operations and providing knowledge related to petroleum products, logistics,

laboratory work, and other.

KN’s reputation highly depends on the public’s perception of the LNG terminal’s economic value to the state of Lithuania.

Therefore, the Company constantly performs public perception analyses and, in 2023, noticed a significant improvement

in favourable public opinion influenced by new strategy update. Regarding the Company's general perception, no critical

events could impact reputation in the long term.

Risk No 4. Cyber risk

Risk impact

Risk probability

Risk level

High

Medium

High

Cyber risk refers to the potential for unauthorized access, use, disclosure, disruption, modification, or destruction of

information and systems by cybercriminals or malicious actors. Due to the geopolitical situation company initiated

additional measures to strengthen detection and recovery capabilities. In addition, KN actively participate in National and

regional level exercises.

The company’s regular activities include vulnerability management, conducting regular security assessments and

penetration testing, and providing employee training on the best practices of cybersecurity.

Risk No 5. Fraud prevention

Risk impact

Risk probability

Risk level

Medium

Low

The Company pays substantial attention to minimizing corruption risk and implements relevant internal processes. In 2023

company strengthened the controls related to new suppliers, employees, and contractors' controls as Geopolitical threats

remain in high risk level. One of the instruments for the prevention of infringements is the Whistleblowing channel, which

is open to all natural persons and legal entities: both existing and former KN employees, former and potential KN clients,

contractors, suppliers, and the community. It provides a possibility to inform the collegial managing bodies of KN directly.

Risk No 6. Environmental risk

Risk impact

Risk probability

Risk level

Medium

Low

In 2023, the Company continued to engage actively with representatives of neighbouring communities, holding meetings

to present ongoing Environmental Action Plan's progress and respond to relevant questions of concern to communities.

KN also openly shares environmental data with the public – the KN website provides ecological monitoring data of Klaipėda

Liquid Energy Terminal and information on the progress of the environmental action plan. With a consistent focus on the

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environment and open dialogue with communities, KN has achieved a steady annual decline in requests from communities

and institutions on environmental issues, with 0 request in 2023 and 4 requests received in 2022, compared to 18 in 2020

and 12 in 2021. In addition, after new strategy approval Company updated organizational structure after the update

Sustainability officer function was introduced by concentrating coordination activities, strategies of all sustainability areas

including environmental risk. In addition, considering environmental risk as part of process safety risk new standards for

process safety management were introduced in order to ensure information and escalation of possible risks and incidents.

Risk No 7. Project risk

Risk impact

Risk probability

Risk level

Medium

Low

Investment project management is an integral part of the Company’s business. Too effectively manage projects, KN initiated

the implementation of the project management methodology and project monitoring according to the PRINCE2 standard.

From 2023 all projects of the company were initiated following new project management and control standards.

The Company is looking for opportunities in international LNG investment projects. Also, the Company is involved in

analysing and searching of carbon capture and storage technologies and actively participating in developing of hydrogen

platform technologies. To attain the economic value that investment projects are supposed to generate, it is vital to ensure

that the projects are implemented within the defined budget and timeframe. Therefore, the Company’s management

constantly monitors the implementation statuses of the critical projects, related risks, and their mitigation measures.

Risk No 8. Foreign Exchange Rate Risks

Risk impact

Risk probability

Risk level

High

Medium

High

Due to the specifics of the business, the Group and the Company are exposed to the risk of EUR/USD foreign exchange

rate fluctuations due to FSRU lease payments in US dollars and to the risk of EUR/BRL foreign exchange rate due to activity

of subsidiary KN Açu in Brazil. Whereas NERC compensates FSRU lease payments as to regulated activity principles, the

impact is considered high. KN Açu’s exposure to currency risk is also regarded as low due to insignificant related transaction

amounts.

Risk No 9. Credit Risks

Risk impact

Risk probability

Risk level

Medium

Low

Medium

Possible credit risk of the Group’s and the Company’s customers is managed by continuous monitoring of outstanding

balances. The Group’s and the Company’s procedures are in force to ensure on a permanent basis that services are provided

to reliable customers and do not exceed an acceptable credit exposure limit. The Company trades only with reputable third

parties, collateral is not required.

Risk No 10. Interest Risks

Risk impact

Risk probability

Risk level

Medium

Low

Medium

The Group’s and the Company’s income and operating cash flows are influenced by changes in market interest rates, which

are linked to EURIBOR base. Overall, about half of the loan portfolio is exposed to floating interest rate risk; no hedging

derivative instruments were used. Thus, such standing has implications to financial results.

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EIB facility with three tranches is exposed to 3 months EURIBOR with zero-floor applicable on EURIBOR base. In contrast,

NIB facilities are exposed to 6 months EURIBOR with no zero-floor applicable on EURIBOR base.

The Group and the Company are constantly assessing its possibilities to hedge interest rate risks on its loans. Thus, the

loans related to long-term LNG terminal solution with high probability in future are expected to be with partially or fully

fixed interests.

The Group’s and the Company’s excess liquidity in the forms of money and time deposits are distributed across the accounts

of principal commercial banks in Lithuania, which are granted with Standard Poor’s or equivalent long-term term borrowing

BBB- or better external rating according to the foreign rating agencies. Partner bank’s rating is assessed either on a stand-

alone or applying a bank group logic into which exposure is present. Also, the Group and the Company is monitoring the

recommendation of the Central Bank of Lithuania.

Risk No 11. Liquidity Risks

Risk impact

Risk probability

Risk level

Medium

Low

Medium

The Company’s and the Group’s policy is to maintain sufficient cash and cash equivalents or have available funding through

an adequate amount of committed credit facilities to meet its commitments at a given date in accordance with its strategic

plans.

The Group’s gross liquidity (APM) as of 31 December 2023 was 0.45 (1.30 as of 31 December 2022). The Company’s gross

liquidity (APM) as of 31 December 2023 was 0.42 (1.22 as of 31 December 2022).

The decrease in the liquidity ratios at the end of the year formed due to the change (increase) in short-term liabilities. KN

Energies has the obligation to acquire the FSRU by the end of 2024. For the acquisition, the Company has secured a loan

from NIB. The maximum amount of the loan is up to EUR 160 million. The Government of the Republic of Lithuania is a

guarantor of the loan.

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OTHER INFORMATION

The activity of the Company is based on the Articles of Association, Civil Code and other laws and sub legislative acts of

the Republic of Lithuania. Changes in the Articles of Association can be made by the General Meeting of Shareholders.

TRANSACTIONS WITH RELATED PARTIES

The Company did not have any transactions or agreements with the members of its Supervisory Council and the Board.

More information regarding transactions with related Parties is presented in the Explanatory note to the Company’s

financial statements for 2023. In 2023 there were no changes in type of transactions with related parties, which could have

made impact on the financial activity of the Group and the Company. All transactions with the related parties have been

performed under market conditions (following the arm’s length principle).

PARTICIPATION IN ASSOCIATIONS

The Company has been acting as a member of the following associations as at the end of the year:

▪ Klaipėda Chamber of Commerce, Industry and Crafts, http://www.kcci.lt/

▪ Association of Lithuanian Stevedoring Companies, www.ljkka.lt

▪ Lithuanian Confederation of Industrialists, www.lpk.lt

▪ Gas Infrastructure Europe (GIE) association Gas LNG Europe (GLE) group, www.gie.eu.com

▪ Lithuanian LNG cluster, www.lngcluster.eu

▪ Lithuanian Shipowners Association, www.llsa.lt

▪ Lithuanian Hydrogen Platform

▪ LNG platform, www.sgdplatforma.lt

▪ Baltic Innovation Hub, https://baltictechpark.com

▪ The American Chamber of Commerce in Lithuania, www.amcham.lt

▪ Klaipėda Association of Industrialists, www.kpa.lt

INFORMATION ABOUT THE AUDIT

6th October 2023. An Annual General Meeting of Shareholders of the Company was convened. Annual General Meeting of

Shareholders has adopted the following resolutions: 1) to elect “KPMG Baltics”, UAB as the Company’s audit firm to perform

the audit of the statutory separate and consolidated Financial Statements, to verify Regulated Activities report of the

Company, to assess its Annual Report for the years 2023 and to issue the Audit highlights memorandum. 2) o set the

following payment conditions for the audit services: audit fee that should be paid for the audit services is EUR 108 400

excluding VAT. UAB Ernst & Young Baltic performed the audit for the years 2014-2018. UAB KPMG Baltics performed the

audit for the years 2008-2013, 2019-2020, 2021-2023.

The proposal regarding approval of the audit company is provided by the Board of the Company to the General Meeting

of Shareholders based on the public procurement procedures.

OTHER INFORMATION

The Company provides an analysis of its financial and non-financial performance, information on environmental issues,

with a focus on climate action, human resources, anti-corruption and anti-bribery, with a focus on bribery of foreign officials

in international business transactions. This information is contained in the "Sustainability (Social Responsibility) Report"

contained in the scope of this Annual Report. Environmental and climate-related topics are disclosed in the "Environmental

Impact and Protection on Environment" section, staff-related topics are disclosed in the "Social Impact" section, and anti-

corruption and anti-bribery and related information are disclosed in the "Governance" section.

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REPORT ON REMUNERATION

2023

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REMUNERATION

Remuneration principles of the Company’s governing and supervisory bodies are determined by the Remuneration policy

approved in General shareholders meeting in October 2022. Full remuneration policy can be found on Company’s website.

Remuneration for activities in the collegial bodies of the Company may be paid to the members of the collegial body of

the Company who are independent or not.

The personal data of the members of the Company’s governing and supervisory bodies is included in the report on

remuneration for the following purposes:

▪ to increase the transparency of the Company;

▪ to improve the accountability of the members of the governing bodies;

▪ to supervise the remuneration of the governing bodies.

Members of collegial governing and supervisory bodies of the Company are only eligible for receiving fixed monthly

compensation.

The remuneration to be paid must:

▪ promote the creation of long-term and sustainable value of the Company, to be fair and understandable.

▪ comply with the workload of the individual organs of the Company and their members.

▪ be competitive with the salary levels in the labour market of the respective field.

▪ ensure the indemnification of the liability assumed by the individual members of the Company bodies.

▪ promote the attraction of high-level professionals in their field to the management of the Company.

REMUNERATION OF THE SUPERVISORY COUNCIL IN 2023

TITLE

MONTHLY SALARY FOR 2023,

EUR

TOTAL FOR 2023, EUR

Robertas Vyšniauskas

3,516.00

42,192.00

Dovilė Kavaliauskienė

2,110.00

25,320.00

Mantas Šukevičius

2,637.00

31,644.00

Total

99,156.00

20th October 2022 extraordinary General Meeting of Shareholders has adopted the following resolutions: 1) to approve the amendment

of Remuneration Policy, 2) for the 4 years cadence of Supervisory Council members of AB KN Energies to elect: Mantas Šukevičius, Robertas

Vyšniauskas, and Dovilė Kavaliauskienė, 3) to determine fixed monthly remuneration for the members of Supervisory Council of AB KN

Energies, 4) to approve standard contract form, regarding the activity of the member of Supervisory Council of AB KN Energies.

REMUNERATION OF THE SUPERVISORY COUNCIL IN 2022

TITLE

MONTHLY SALARY FOR 2022,

EUR

TOTAL FOR 2022, EUR

Member 1

3,318.67

7,904.72

Member 2

2,110.00

5,023.81

Member 3

2,637.00

6,278.57

Member 4

1,140.59

4,448.30

Member 5

856.92

3,341.99

Total

26,997.39

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AB KN ENERGIES

REPORT ON REMUNERATION 2023

In 2023 the total remuneration for the members of the Supervisory Council amounted to EUR 99.2 thousand (2022 – EUR

27.0 thousand). Members of the Supervisory Council were not granted with any loans, guarantees, assets, premiums,

bonuses, shares or salary for service at any other company of the Group for the year 2023. They are not eligible for any

variable part of remuneration or for recovery of it.

REMUNERATION OF THE BOARD OF THE COMPANY IN 2023

TITLE

MONTHLY SALARY FOR 2023,

EUR

TOTAL FOR 2023, EUR

Guy Mason

2,637.00

31,644.00

Edvinas Katilius

3,516.00

42,192.00

Alfonso Morriello

2,637.00

31,644.00

Jūratė Lingienė

2,637.00

31,644.00

Karolis Švaikauskas

2,110.00

25,320.00

Total

162,444.00

REMUNERATION OF THE BOARD OF THE COMPANY IN 2022

TITLE

MONTHLY SALARY FOR 2022,

EUR

TOTAL FOR 2022, EUR

Member 1

2,202.82

26,430.47

Member 2

2,548.27

27,907.11

Member 3

2,252.51

18,574.22

Member 4

2,252.51

18,574.22

Member 5

1,811.55

9,108.60

Member 6

2,400.00

9,000.00

Member 7

2,095.00

2,205.26

Member 8

2,095.00

7,856.25

Total

119,656.13

In 2023 the total remuneration for the members of the Board amounted to EUR 162.4 thousand (2022 – EUR 119.7

thousand). In 2023 members of the Board were not granted any shares, did not receive any loans, guarantees, assets,

premiums, bonuses or any other benefits for work as members of the Bord or salary for service at any other company of

the Group. They are not eligible for any variable part of remuneration or for recovery of it.

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REPORT ON REMUNERATION 2023

REMUNERATION OF THE AUDIT COMMITTEE IN 2023

TITLE

MONTHLY SALARY FOR 2023,

EUR

TOTAL FOR 2023, EUR

Šarūnas Radavičius

1,676.95

17,210.84

Robertas Vyšniauskas

1,319.00

15,825.00

Mantas Šukevičius

1,319.00

15,825.00

Total

48,866.84

REMUNERATION OF THE AUDIT COMMITTEE IN 2022

TITLE

MONTHLY SALARY FOR 2022,

EUR

TOTAL FOR 2022, EUR

Member 1

1,319.00

1,648.75

Member 2

1,319.00

1,645.75

Member 3

1,140.59

4,448.30

Member 4

856.92

1,668.74

Member 5

856.92

9,426.12

Total

18,840.66

In 2023 the total remuneration for the independent members of the Audit Committee amounted to EUR 48.9 thousand (in

2022 – EUR 18.8 thousand). In 2023 members of the Audit Committee have not received any loans, guarantees or assets,

unpaid bonuses and other benefits or salary for service at any other company of the Group, were not granted any shares

of the Company. They are not eligible for any variable part of remuneration or for recovery of it.

REMUNERATION OF THE REMUNERATION AND NOMINATION COMMITTEE IN 2023

TITLE

MONTHLY SALARY FOR 2023,

EUR

TOTAL FOR 2023, EUR

Robertas Vyšniauskas

660.00

7.920.00

Dovilė Kavaliauskienė

Živilė Valeišienė

1,598.98

16,410.57

Total

24,330.57

REMUNERATION OF THE REMUNERATION AND NOMINATION COMMITTEE IN 2022

TITLE

MONTHLY SALARY FOR 2022,

EUR

TOTAL FOR 2022, EUR

Member 1

660.00

825.00

Member 2

Total

660.00

825.00

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AB KN ENERGIES

REPORT ON REMUNERATION 2023

In 2023 the total remuneration for the independent members of the Remuneration and Nomination Committee amounted

to EUR 24.3 thousand. According to Remuneration Policy Member 2 has not received any compensation since the same

person is already receiving compensation as a member in Audit Committee. In 2023 members of the Remuneration and

Nomination Committee have not received any loans, guarantees or assets, unpaid bonuses and other benefits or salary for

service at any other company of the Group, were not granted any shares of the Company. They are not eligible for any

variable part of remuneration or for recovery of it.

REMUNERATION OF THE CEO OF THE COMPANY IN 2023

The CEO of the Company is rewarded according to provisions set in the Remuneration policy approved by the Board of the

Company and the Company’s Procedure for rewarding bonuses to AB KN Energies top management employees.

The monthly salary of the CEO of the Company was set to EUR 9,600 since August of 2022. Following the Remuneration

policy, the CEO is also eligible for receiving annual bonus depending on the results of the Company and achievement of

the annual goals. The maximum bonus in case all goals are achieved consists of 4 monthly salaries. In 2023 variable pay for

the CEO, was EUR 2,960 (monthly equivalent of yearly bonus) (2022 – EUR 767 (monthly equivalent of yearly bonus).

CHANGES IN THE COMPANY RESULTS AND AVERAGE MONTHLY SALARY OF ALL EMPLOYEES

2023

2022

2021

2020

2019

Sales revenue

80,356

74,722

58,633

77,474

104,138

Net profit (loss)

12,370

(6,732)

(64,917)

33,495

7,947

Adj. net profit (loss)**

6,107

8,041

(48,084)

10,991

13,117

Average monthly

salary (gross), EUR***

3,114

2,765

2,609

2,600

2,282

* Remuneration of Members of governing and supervisory bodies are not included.

** adj. – adjusted financial indicators/data are recalculated and presented by eliminating from net profit (loss) the following amounts: (1)

the impact of unrealised foreign currency exchange rates (forex) arising from IFRS 16 requirements, (2) respective impact of deferred

income tax arising from forex, and (3) impact of financial derivatives.

***The average monthly salary is calculated according to the average monthly wage calculation procedure as stated in the State companies’

employees’ average monthly salary calculation procedure approved by the Government of Lithuania on 23 August 2002, resolution No.

1341 and its subsequent changes. On-call payments included

AB KN ENERGIES

GOVERNANCE REPORT

2023

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GOVERNANCE REPORT 2023

GOVERNANCE REPORT

AB KN ENERGIES GOVERNANCE REPORT INFORMATION .................................................................................................................................................... 124

MANAGEMENT OF THE COMPANY ................................................................................................................................................................................................ 124

OTHER GOVERNANCE INFORMATION ......................................................................................................................................................................................... 134

INFORMATION ON COMPLIANCE WITH TRANSPARENCY GUIDELINES ......................................................................................................................... 135

AB KN ENERGIES COMPLIANCE WITH THE CORPORATE GOVERNANCE CODE .......................................................................................................... 137

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AB KN ENERGIES

GOVERNANCE REPORT 2023

AB KN ENERGIES GOVERNANCE REPORT INFORMATION

AB KN Energies aims to make its corporate management and internal processes in a way to ensure transparent, effective,

and profitable activities and its activities retain the trust of our stakeholders. The internal control processes and

management practices implemented within the Company are in line with the best management practice principles. This

report provides main information and principles regarding management and related processes.

The Company’s management structure and managing and supervisory bodies are described in detail in article

“Management of the Company of the annual report”. This paragraph also contains information regarding corporate

management and organizational scheme, connection with the other bodies and short description of the functions of the

each managing body.

In order for the management and supervisory bodies of the Company to exactly and clearly understand the targets,

directions, and objectives the corporate strategy is being prepared with purpose to foreseen long term strategic goals and

tasks. The Supervisory Council of the Company is responsible for the approval of the strategy. AB KN Energies strategic

goals are described in the paragraph “The Corporate Strategy”. For more detailed information about the KN strategy, please

refer to the strategy summary following this link: KN Strategy 2050.

The Company, acting in compliance with Article 21(3) of the Law of the Republic of Lithuania on Securities and paragraph

24.5 of the Listing Rules of AB NASDAQ Vilnius, discloses how it complies with the Corporate Governance Code for the

Companies listed on NASDAQ Vilnius as well as its specific provisions or recommendations in the paragraph “AB KN

Energies Compliance with the Corporate Governance Code”.

Company’s annual report of the year 2023 along with Company’s governance report and explanatory notes of the year

2023 financial statements are published in AB KN Energies official website (http://www.kn.lt) and in AB NASDAQ Vilnius

(www.nasdaqomxbaltic.com) Stock Exchange.

MANAGEMENT OF THE COMPANY

MANAGEMENT STRUCTURE

The Company follows the Law on Companies, the Law on Securities, Articles of Association of the Company, and other legal

acts of the Republic of Lithuania during its operation.

The Company’s Articles of Association are registered in the Register of Legal Entities and indicate the following

management bodies:

▪ The General Meeting of Shareholders

▪ The Supervisory Council

▪ The Board

▪ Chief Executive Officer (CEO)

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GOVERNANCE REPORT 2023

ORGANIZATIONAL AND MANAGEMENT STRUCTURE OF THE COMPANY:

The General Meeting of Shareholders is the supreme management body of the Company. Competences of the General

Meeting of Shareholders of the Company, Shareholders’ rights, their implementation are identified in the Law on

Companies and in the Article of Association of the Company.

The Company’s CEO or authorised Head of any other department of the Company always participates in the Shareholders

Meetings while the member of the Supervisory Council and the CFO participate depending on the questions addressed.

In the last ordinary general meeting of Shareholders of the Company the following representatives of the Company took

part: Company’s CEO, Chairman of the Supervisory Council, Chairman of the Board, Chief Corporate Affairs Officer, Head

of Legal and Compliance Unit, Chief Financial Officer.

The Supervisory Council is a collegial supervisory body which consists of 3 (three) members (at least 2 (two) being

independent), elected for the period of four years in the General Meeting of Shareholders according to the procedure

established by the Law on Companies. The number of the terms of office a member may serve on the Supervisory Council

is not limited. The Supervisory Council is a collegial body supervising the activities of the Company, its status, competence,

and functions have been defined by the Law on Companies and the Articles of Association of the Company. Functions,

rights, and duties of the Supervisory Council are detailed in the Corporate Governance Policy of the Company, Decision

Making Matrix of the Company and Rules of Procedure of the Supervisory Council.

The Supervisory Council by its decision has formed an Audit Committee, which consists of 3 (three) members elected for

the office term of the Supervisory Council of which 1 (one) is independent and 2 (two) are delegated members of the

Supervisory Council. The Regulation of the Audit Committee of the Company, regulates functions, rights, and duties of the

Audit Committee. The key responsibilities of the Audit Committee are to assist the Supervisory Council in fulfilling its

oversight responsibilities in relation to financial reporting, the effectiveness of the system of risk management and internal

control, monitoring the independence of both the internal and external auditors and assessing their performance and

effectiveness. The Company’s head of internal audit is functionally subordinate to the Audit Committee and administratively

subordinated to the CEO. By the decision of the Supervisory Council of the Company and the approval of the General

Meeting of Shareholders the members of the Audit Committee have been elected until the end of office of the current

Supervisory Council.

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The Supervisory Council by its decision has formed Remuneration and Nomination Committee, which consists of 3

(three) members of which 1 (one) is independent and 2 (two) are delegated members of the Supervisory Council, elected

for the office term of the Supervisory Council. The Regulation of the Remuneration and Nomination Committee of the

Company, regulates functions, rights, and duties of the Remuneration and Nomination Committee. The Remuneration and

Nomination Committee acts as an advisory body to the Company's Supervisory Council, making recommendations on the

Company's remuneration policy, proposing to the Company the criteria for assessing the performance of its executives,

and making other recommendations relating to remuneration. The Remuneration and Nomination Committee, among

other functions, provides opinions to the Supervisory Council on the selection procedure of collegial bodies (excluding the

Supervisory Council), provides recommendations regarding candidates for vacant positions in the management bodies,

pays attention to the Company's continuity planning. The members of the Remuneration and Nomination Committee are

appointed by the decision of the Supervisory Council until the end of the term of office of the current Supervisory Council.

The Board is a collegial management body of the Company consisting of 5 (five) members, who are elected by the

Supervisory Council for the period of 4 (four) years with the requirement that at least 3 (three) members are independent.

The number of the terms of office a member may serve on the Board is not limited. The mandate of the Board members

has been determined by the Law on Companies and the Articles of Association of the Company, the Corporate Governance

Policy of the Company and Decision-Making Matrix of the Company.

The Chief Executive Officer (CEO) is a single person managing body of the Company. The CEO is the main person

managing and representing the Company. The duties and competence of the CEO have been determined by the Law on

Companies and the Articles of Association of the Company, the Corporate Governance Policy of the Company, Decision-

Making Matrix of the Company.

MEMBERS OF THE SUPERVISORY COUNCIL AS AT 31 DECEMBER 2023

Robertas Vyšniauskas (independent member, Chairperson of the Supervisory Council)

Chairman of the company’s Supervisory Council. Elected to the Supervisory Council on the 20

October

2022 by the Extraordinary General Meeting of Shareholders for a four-year term.

Education: Mykolas Romeris University, Faculty of Law, Master of Law (2010); Mykolas Romeris University,

Faculty of Law, Bachelor of Law (2004).

Participation in activities of other companies and organisations: since 2020, independent member of the

board of directors (until 09.11.2020) and general manager of UAB “Valstybės investicinis kapitalas”; since

2020, independent member of the board of UAB “Vilniaus vystymo kompanija”; since 2023 member of

audit committee of UAB “Vilniaus vystymo kompanija”; since 2019, independent member of the board

and member of the audit committee of UAB “EPSO-G”; since 2019, lecturer at VŠĮ “Vilniaus universitetas”.

Robertas Vyšniauskas does not hold shares of the Company.

Dovilė Kavaliauskienė (member)

Member of the Supervisory Council of the Company. Elected to the Supervisory Council on the 20

October 2022 by the Extraordinary General Meeting of Shareholders for a four-year term.

Education: Vilnius University, Faculty of Law, Master of Law (2016); Baltic Institute of Corporate Governance,

Corporate Governance Training for Public Sector (2022).

Participation in activities of other companies and organisations: since 2021, adviser to the Law and

Personnel Group of the Ministry of Energy of the Republic of Lithuania; from 2020 to 2021, adviser to the

Law and Personnel Division of the Ministry of Energy; from 2018 to 2020, adviser to the Law Division of

the Ministry of Energy; 2018, deputy head of the Law Division of the Ministry of Energy; from 2016 to 2018

chief specialist, Electricity Energy Division, Ministry of Energy; 2014, Legal Consultant, VšĮ „Vilniaus

universiteto teisės klinika.

Dovilė Kavaliauskienė does not hold shares of the Company

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Mantas Šukevičius (independent member)

Member of the Supervisory Council of the Company. Elected to the Supervisory Council on the 20

October 2022 by the Extraordinary General Meeting of Shareholders for a four-year term.

Education: Vilnius University, Faculty of Economics, Bachelor of Economics (Banking) (1997); Vilnius

University, Institute of International Relations and Political Science, Bachelor of Political Science (1998);

Vilnius University, Institute of International Relations and Political Science, Master of European Union

Studies (2000).

Participation in activities of other companies and organisations: since 2022, independent member of the

board of VĮ “Oro navigacija”; since 2022, independent member of the supervisory board of JSCB "Biznesni

Rivojlantirish Banki" ; since 2021, member of the board of UAB “Victory Funds”; since 2020, director of MB

“Buteo Invest”; since 2018, chairman of the management board of AB “Detonas”.

Mantas Šukevičius does not hold shares of the Company.

There were 9 meetings of Supervisory Council in 2023, which were attended by all Supervisory Council members.

SUPERVISORY COUNCIL ACTIVITY IN 2023

The Supervisory Council of the new term of office has been elected and started its activities on 20 October 2022.

During 2023 the Supervisory Council approved Corporate Strategy for the period of 2023-2050 of the Company.

Supervisory Council also reviewed Corporate Governance Policy and Articles of Association of the Company which were

later approved by the General Meeting of Shareholders. The Supervisory Council initiated the renewal of the Decision-

Making Matrix by seeking to determine the framework for the decision-making process in the Company. Supervisory

Council as top priority singled out the supervision of the activities of the Board and the CEO of the Company and

implementation of annual internal audit plan.

In addition to its regular tasks, the Supervisory Council in 2023 was also actively involved in the discussions about the

internal control system functioning as well as risk management improvement.

During 2023, the Supervisory Council carried out a supervision on the preparation and approval of the Company’s strategy

for 2024-2026 for the Governance Coordination Centre, as well as in accordance with its competence provided suggestions

and recommendations in the process of preparation of quarterly financial statements.

Overall, the Supervisory Council performed its functions in accordance with its’ approved annual plan and covered all

planned issues during the year.

MEMBERS OF THE AUDIT COMMITTEE AS AT 31 DECEMBER 2023

Šarūnas Radavičius (independent member, Chairperson of the Audit Committee)

Member of the Company’s Audit Committee, elected by decision of the Supervisory Council from 22

February 2023 until the end of the term of office of the Company’s current Supervisory Council. In the

Audit Committee meeting held on 20 April 2023, elected as a Chairperson of the Audit Committee.

Education: Vilnius University, Faculty of Economics, Accounting and Auditing (1993).

Participation in activities of other companies and organisations: since 2023, Lithuanian Chamber of

Auditors, member of the Presidium; since 2021, UAB Akropolis Group, Chairperson of the Audit

Committee; since 2021, AB Utenos trikotažas, Chairman of the Audit Committee; since 2019, owner of MB

Saluma.

Š. Radavičius does not hold shares of the Company.

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Robertas Vyšniauskas (independent member)

Chairman of the company’s Supervisory Council. Elected to the Supervisory Council on the 20

October

2022 by the Extraordinary General Meeting of Shareholders for a four-year term.

Education: Mykolas Romeris University, Faculty of Law, Master of Law (2010); Mykolas Romeris University,

Faculty of Law, Bachelor of Law (2004).

Participation in activities of other companies and organisations: since 2020, independent member of the

board of directors (until 09.11.2020) and general manager of UAB “Valstybės investicinis kapitalas”; since

2020, independent member of the board of UAB “Vilniaus vystymo kompanija”; since 2023 member of

audit committee of UAB “Vilniaus vystymo kompanija”; since 2019, independent member of the board

and member of the audit committee of UAB “EPSO-G”; since 2019, lecturer at VŠĮ “Vilniaus universitetas”.

Robertas Vyšniauskas does not hold shares of the Company.

Mantas Šukevičius (independent member)

Member of the Supervisory Council of the Company. Elected to the Supervisory Council on the 20

October 2022 by the Extraordinary General Meeting of Shareholders for a four-year term.

Education: Vilnius University, Faculty of Economics, Bachelor of Economics (Banking) (1997); Vilnius

University, Institute of International Relations and Political Science, Bachelor of Political Science (1998);

Vilnius University, Institute of International Relations and Political Science, Master of European Union

Studies (2000).

Participation in activities of other companies and organisations: sisince 2022, independent member of the

board of VĮ “Oro navigacija”; since 2022, independent member of the supervisory board of JSCB "Biznesni

Rivojlantirish Banki"; since 2021, member of the board of UAB “Victory Funds”; since 2020, director of MB

“Buteo Invest”; since 2018, chairman of the management board of AB “Detonas”.

Mantas Šukevičius does not hold shares of the Company.

On 24th of November 2022 until the end of term of office of Company’s acting Supervisory Council, Robertas Vyšniauskas

and Mantas Šukevičius were elected as Company’s Audit Committee members. After Company announced the selection of

one independent member to the Audit Committee, Šarūnas Radavičius was elected as an independent Audit Committee

member by decision of the Supervisory Council from 22nd February 2023 until the end of the term of office of the

Company's current Supervisory Council. By the decision of the General Meeting of Shareholders dated November 30th,

2023, the approval of the performance of functions of the elected Audit Committee members, of the Regulations of the

Audit Committee and of the standard contract regarding the activities of members of the Audit Committee was provided.

During the year 2023, 12 Audit Committee meetings have been arranged where all Audit Committee members have

participated.

AUDIT COMMITTEE ACTIVITY IN 2023

During the year 2023, the Audit Committee closely monitored the financial reporting process and audit of consolidated

financial statements of the Group. The Audit Committee assessed the effectiveness of the financial statement audit process.

The Audit Committee also monitored internal control and risk management system, reviewed and assessed the

effectiveness of the Group's risk assessment and management system, discussed significant changes in the internal control

system. Conflict of interest governance and whistleblowing topics were reviewed.

The Audit Committee also considered the external and internal audit plans of 2023, their results, and the assessments of

the Group's internal control, including the control of financial statements, Audit Committee also monitored the

independence of the auditors.

The Audit Committee’s annual plan for the year 2023 was fully executed.

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MEMBERS OF THE REMUNERATION AND NOMINATION COMMITTEE AS AT 31 DECEMBER 2023

Živilė Valeišienė (independent member, Chairperson of the Remuneration and Nomination

Committee)

Member of the Company’s Remuneration and Nomination Committee, elected by decision of the

Supervisory Council from 22nd February 2023 until the end of the term of office of the Company's current

Supervisory Council. Elected as a Chairperson of the Remuneration and Nomination Committee in the

Committee meeting held on 15 June 2023

Education: Baltic Institute of Corporate Governance (BICG), Training for Board Members (2021); Baltic

Management Institute (BMI), Executive Master's Degree (EMBA) (2013); Kaunas University of Technology,

Master of Applied Mathematics (1999).

Participation in activities of other companies and organisations: since 2022, Member of the Board of UAB

“Kelių priežiūra”.

Živilė Valeišienė does not hold shares of the Company

Robertas Vyšniauskas (independent member)

Chairman of the company’s Supervisory Council. Elected to the Supervisory Council on the 20

October

2022 by the Extraordinary General Meeting of Shareholders for a four-year term.

Education: Mykolas Romeris University, Faculty of Law, Master of Law (2010); Mykolas Romeris University,

Faculty of Law, Bachelor of Law (2004).

Participation in activities of other companies and organisations: since 2020, independent member of the

board of directors (until 09.11.2020) and general manager of UAB “Valstybės investicinis kapitalas”; since

2020, independent member of the board of UAB “Vilniaus vystymo kompanija”; since 2023 member of

audit committee of UAB “Vilniaus vystymo kompanija"; since 2019, independent member of the board

and member of the audit committee of UAB “EPSO-G”; since 2019, lecturer at VŠĮ “Vilniaus universitetas”.

Robertas Vyšniauskas does not hold shares of the Company.

Dovilė Kavaliauskienė (member)

Member of the Supervisory Council of the Company. Elected to the Supervisory Council on the 20th

October 2022 by the Extraordinary General Meeting of Shareholders for a four-year term.

Education: Vilnius University, Faculty of Law, Master of Law (2016); Baltic Institute of Corporate Governance,

Corporate Governance Training for Public Sector (2022).

Participation in activities of other companies and organisations: since 2021, adviser to the Law and

Personnel Group of the Ministry of Energy of the Republic of Lithuania; from 2020 to 2021, adviser to the

Law and Personnel Division of the Ministry of Energy; from 2018 to 2020, adviser to the Law Division of

the Ministry of Energy; 2018, deputy head of the Law Division of the Ministry of Energy; from 2016 to 2018

chief specialist, Electricity Energy Division, Ministry of Energy; 2014, Legal Consultant, VšĮ „Vilniaus

universiteto teisės klinika.

Dovilė Kavaliauskienė does not hold shares of the Company

REMUNERATION AND NOMINATION COMMITTEE ACTIVITY IN 2023

On 24th of November 2022 until the end of term of office of Company’s acting Supervisory Council, Robertas Vyšniauskas

and Dovilė Kavaliauskienė were elected as Company’s Remuneration and Nomination Committee members. After

Company’s announcement of selection of one independent member to the Remuneration and Nomination Committee,

Živilė Valeišienė was elected as an independent Remuneration and Nomination Committee member by the decision of the

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Supervisory Council from 22nd February 2023 until the end of the term of office of the Company's current Supervisory

Council.

During the year 2023, 8 Remuneration and Nomination Committee meetings have been arranged where all Remuneration

and Nomination Committee members have participated.

During the year 2023, the Remuneration and Nomination Committee reviewed and made recommendations for the

Remuneration Policy. The Remuneration and Nomination Committee assessed other policies, procedures and documents

that regulate the remuneration of management bodies, the CEO, and other executive employees.

The Remuneration and Nomination Committee also reviewed and gave recommendations for Company variable pay

structure and employee benefits packages. The Remuneration and Nomination Committee’s annual plan for the year 2023

was fully executed.

MEMBERS OF THE BOARD AS AT 31 DECEMBER 2023

Edvinas Katilius (chairperson, independent member)

Independent member, Chairman of the Board of the Company, appointed to the Board by the Supervisory

Council as of 25 April 2022.

Education: IMD Business School, Switzerland, MBA (2002); Aalborg University, Denmark, International

business MBA course (1994); Vilnius University, Lithuania, diploma in Econometrics (1993).

Current professional activity: PMI (Philip Morris International) Global Duty Free, Vice president (2017 –

now)

Edvinas Katilius does not hold shares of the Company.

Alfonso Morriello (independent member)

Independent member of the Board of the Company, appointed to the Board by the Supervisory Council

as of 25 April 2022.

Education: INSEAD, MBA (2001); University La Sapienza, Rome, MSc Electronics Engineering (1996).

Current professional activity: AXEGAZ Trading & Technologies S.A.S. Chief Executive Officer (2020 – now).

Alfonso Morriello does not hold shares of the Company.

Jūratė Lingienė (independent member)

Independent member of the Board of the Company, appointed to the Board by the Supervisory Council

as of 25 April 2022.

Education: ACCA (The Association of Chartered Certified Accountants) (1999 – 2004), UK ACCA Member –

Certified Accountant (FCCA); Vilnius University, Master’s degree in Finance (1997 – 1999); Vilnius University,

Bachelor degree in Audit and Accounting (1993 – 1997).

Current professional activity: SEB (Sweden) CFO for Technology and Staff functions (2015 –now).

Jūratė Lingienė does not hold shares the Company.

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Karolis Švaikauskas (member)

Member of the Board of the Company, appointed to the Board by the Supervisory Council as of 12 May

2022.

Education: Vytautas Magnus University, Faculty of Political Science and Diplomacy, Master’s Degree in

Political Science, Baltic Region Studies (2011); Humboldt University of Berlin (Germany), Scandinavian and

Northern European Studies (2010); Vytautas Magnus University, Faculty of Humanities, Bachelor's degree

in Historical Sciences (2009).

Current professional activity: member of the management board of AB „Amber Grid“ (2022 – now).

Head of the Energy Competitiveness Group of the Ministry of Energy of the Republic of Lithuania (2019 –

now).

Karolis Švaikauskas does not hold shares of the Company.

Guy Mason (independent member)

Independent member of the Board of the Company, appointed to the Board by the Supervisory Council

as of 25 April 2022.

Education: Engineering science and technology, Loughborough University (1986).

Current professional activity: Fellow of the Institute of Mechanical Engineers (FIMechE), non-executive

director and Chair of remuneration committee, Windward Limited (2021 - now). Trustee and Chair of the

Board for International Foundation for Aids to Navigation (2022-now).

Guy Mason does not hold shares of the Company.

The Board of the Company took office in 25th April 2022. On 13th May 2022 at the first meeting of the new Board of the

Company, independent Board member Edvinas Katilius was elected as a Chairperson of the Board.

BOARD ACTIVITY IN 2023

The Board reviewed the strategic, operational, financial, and safety issues throughout the year on a regular basis. In addition,

The Board monitored the Company’s financial and strategic goals against the annual plan for 2023 quarterly and approved

the yearly plan for 2024 after taking into account management’s assumptions.

The Board held 15 meetings in 2023, 4 of which were held in writing. The Board adopted 37 decisions in 2023.

During 2023, the Board actively participated in the preparation of the Corporate Strategy for the period 2023-2050 of the

Company, which was later approved by the Supervisory Council of the Company. The Board oversaw the Company’s risks

and reviewed management judgments about specific ones. During the year, 4 Risk reports were approved.

The Board discussed issues related with global LNG projects.

The Board made decision regarding the main terms and conditions of the FSRU INDEPENDENCE technical and operational

management (O&M) service procurement agreement, which was later approved by the General Meeting of Shareholders.

Overall, the Board performed in accordance with its’ approved annual plan and covered all planned issues during the year.

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The Board members attended the meetings in 2023:

DATE OF THE MEETING

EDVINAS

KATILIUS

GUY

MASON

JŪRATĖ

LINGIENĖ

ALFONSO

MORRIELLO

KAROLIS

ŠVAIKAUSKAS

1. January 24 (in writing)

2. February 03

3. February 07 (in writing)

4. March 23

5. April 24

6. June 02 (in writing)

7. June 15

8. July 20

9. July 26

10. September 08

11. September 25

12. October 19

13. November 17 (in

writing)

14. November 20

15. December 11

Attended Not attended

THE DIRECTORS OF THE COMPANY AS AT 31 DECEMBER 2023

Darius Šilenskis

(born 1981) – Chief Executive Officer. Works at the Company since 28 September 2015. Education: Baltic

Management Institute, Master of executives international business management (EMBA), (2013), Vytautas

Magnus University, Master of business administration (2013), Mykolas Riomeris university, Master of law

(2006, Law and management studies), Bachelor of law (2004, International law of the Sea studies).

Participation in activities of other companies and organisations: member of the board of directors of the

Association of Lithuanian Stevedoring Companies, member of the board of Lithuanian Maritime Cluster,

chairman of the Lithuanian LNG Platform, VŠĮ "Vilniaus teisės institutas" founder and venturer (owns 50%

rights of venture), UAB “Afinta” shareholder (owns 50% of the shares). The share of AB KN Energies held

by Darius Šilenskis is less than 5%; no shares in the related companies of AB KN Energies.

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Vaidotas Dirmeikis

(born 1988) – Acting Chief Financial Officer from 1 September 2023 until 15 January 2024. Education: The

Association of Chartered Certified Accountants (ACCA) certification (2023), ISM University of Management

and Economics, Master of Management (MSc) and Executive Programme (2018), Vilnius University,

Bachelor of Economics (BSc) (2011), Fontys University of Applied Sciences (The Netherlands), ERASMUS

International Business Management Studies (2010). Participation in activities of other companies and

organisations: MB “Paloma drinks”, head of company and member of small partnership. Vaidotas Dirmeikis

does not hold any shares in AB KN Energies.

Mindaugas Kvekšas, formerly Chief Financial Officer. Worked at the Company from 16 August 2021.

Tomas Tumėnas appointed as a Chief Financial Officer from 15 January 2024. More information

provided in official website www.kn.lt

Linas Kilda

(born 1972) – Chief Business Development Officer appointed from 3 August 2020. Education: Baltic

Management Institute (BMI), Executive Master of Business Administration (EMBA) (2023), Institute of

Geology and Geography, PhD (Physical Sciences) (2002); University of Aberdeen, Master of Petroleum

Geology (1998); Vilnius University, Engineering geologist and hydrogeologist (1995). Manager of

subsidiary UAB KN Global Terminals. No participation in other companies’ management. The share of

AB KN Energies held by Linas Kilda is less than 5%; no in the related companies of AB KN Energies.

Dainius Čiuta

(born 1975) – Chief Operations Officer. Appointed as Chief Operations Officer from 5 November 2020.

Education: Baltic Management Institute (BMI), International Executive Master of Business Administration

(EMBA) (2013); Kaunas University of Technology, Master of Chemical Technology Engineering (1999);

Klaipėda University, Bachelor of Chemical Technology (1997). Participation in the activities of other

companies, institutions and organizations: member of the board of children’s football club “FK Atmosfera”;

member of the Energy Committee of Lithuanian Confederation of Industrialists. Dainius Čiuta does not

own shares in AB KN Energies or other companies when the number of shares held exceeds 5% of all

shares in the company.

Mindaugas Navikas

(born 1979) – Chief Commercial Officer. Appointed as a Chief Commercial Officer from 8 September 2020.

Education: Stockholm School of Economics in Riga (SSE), Master of Business Management (EMBA) (2018);

Vilnius University, International Business School, Master of International Business Management (2006);

Vilnius University, Bachelor of Business Management (2002). No participation in other companies’

management. The share of AB KN Energies held by Mindaugas Navikas is less than 5%; no shares in the

related companies of AB KN Energies.

Rytis Valūnas

(born 1985) – Chief Corporate Affairs Officer. Works at the Company since 15 September 2012. Education:

Baltic Management Institute (BMI), International Executive Master of Business Administration (EMBA)

(2018), Baltic Institute of Corporate Governance, Professional Board Member Certificate (2015); The

Fletcher School of Law and Diplomacy/Harvard Law School, LL.M. (2011); Mykolas Romeris

University/Ghent University, MA in International Law (2009); Mykolas Romeris University, BA in Law (2007).

The share of AB KN Energies held by Rytis Valūnas is less than 5%; no shares in the related companies of

AB KN Energies.

No members of the Company‘s management have been convicted of crimes against property, business or finances.

Information about managers’ salary for the year 2023 is stated in chapter “Information about the employees of the Group“

in the Annual Report.

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OTHER GOVERNANCE INFORMATION

INFORMATION ON MAJOR SHARE PACKAGES CONTROLLED EITHER DIRECTLY OR INDIRECTLY.

Details of the shares are provided in chapter "Information about investment into other companies" in the Annual Report.

INFORMATION ON TRANSACTIONS WITH RELATED PARTIES

Details of the related party transactions provided in chapter “Related party transactions” in the Consolidated and Separate

Financial Statements.

INFORMATION ON SHAREHOLDERS HAVING SPECIAL CONTROL RIGHTS.

All shares of the Company are of one class ordinary registered shares granting their owners (shareholders) equal rights.

Details of the shares are provided in chapter "Shareholders and Shares of the Company” in the Annual Report.

INFORMATION OF AMENDMENTS TO THE COMPANY‘S ARTICLES OF ASSOCIATION

On 30th November 2023, the Articles of Association of the Company were amended by the decision of the General Meeting

of Shareholders and were registered in the Register of Legal Entities on 10th January 2024.

INFORMATION ON ALL AGREEMENTS BETWEEN SHAREHOLDERS

The Company does not have any information on agreements between shareholders.

INFORMATION ON THE VARIED POLICY APPLICABLE TO THE ELECTION OF THE COMPANY‘S CHIEF EXECUTIVE

OFFICER, THE MEMBERS OF MANAGEMENT AND SUPERVISORY BODIES

The Company does not have the variety policy applicable to the election of the chief executive officer and the members of

governing and supervisory bodies. There is Procedure for organizing the recruitment of collegial supervisory and

management bodies, chief executive officer of the company and during the selection of candidates to the Company‘s chief

executive officers, management and supervisory bodies, the candidates shall be subject to requirements that do not

discriminate a candidate on the grounds of age, sex, education, or professional experience. During the selection of a

candidate, the Company does not set any restrictions for nomination of a candidate on grounds of sex or age.

Considering the specificity of the Company‘s business activity and the status of a state-owned company, unbiased

requirements which are only related to the functions and competences of the members of a management or supervisory

bodies and the professional experience and education proportionate to these functions and competences are set.

General and independence requirements to candidates to the Company‘s Supervisory Council are set by the Description of

Selection of Candidates to the Boards of State or Municipal Companies and Candidates to the Collegial Supervisory or

Governing Body of a Company That is under Control of a State or Municipal Company Elected by the General Meeting as

adopted by Decision No 631 of 17 June 2015 of the Government of the Republic of Lithuania.

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INFORMATION ON COMPLIANCE WITH TRANSPARENCY

GUIDELINES

AB KN Energies complies with the 2010 July 14 Government Resolution No. 1052 “On the Approval of the Description of

the Guidelines for Ensuring the Transparency of the Activities of State-Owned Enterprises” (hereinafter – the Transparency

Guidelines). The Transparency Guidelines are mandatory for the Company, as the Company is a state-owned enterprise

(hereinafter – SOE).

The implementation of the transparency guidelines in the Company is mainly ensured through the information disclosed

in the annual report and the disclosure of information on the Company's websites by disclosing and providing information

in a format that is accessible and understandable to stakeholders.

Article 3 of the Transparency Guidelines states that SOEs which are listed on AB Nasdaq Vilnius comply with the provisions

of the Corporate Governance Code for the Companies Listed on Nasdaq Vilnius related to public disclosure of information.

Information on the Company's compliance with the provisions of this Code is disclosed in the Company's management

report.

BELOW IS THE STRUCTURED INFORMATION ON THE IMPLEMENTATION OF THE TRANSPARENCY GUIDELINES:

COMPLYING

PARTIALLY COMPLYING

NOT COMPLYING

INFORMATION / OTHER REQUIREMENTS MUST BE PUBLISHED ON THE COMPANY'S WEBSITE (WWW.KN.LT):

Name, code and register of the Company, where data

about the Company is collected and stored, registered

office (address)

Legal status, if the Company is reorganized (the method of

reorganization is indicated), liquidated, is about to go

bankrupt, or already bankrupt

Information about the institution representing the state

Activity plans, vision, and mission

Organizational structure

Details about the manager of the company *

Details about the chairperson of the Board and Board

members *

Details about the chairperson of the Supervisory Council and

its members *

Names of the committees, details about their chairs and

members *

Amount of nominal values of state-owned shares (in euros

to the nearest euro cent) and share (in percent) in the

authorized capital of the Company

Information on social responsibility initiatives and measures,

important ongoing or planned investment projects

Special obligations are fulfilled, which are determined in

accordance with the recommendations approved by the

Ministry of Economy and Innovation of the Republic of

Lithuania: the purpose of special obligations, state budget

appropriations and legal acts allocating them to the special

obligation and regulated pricing

If the Company is a participant in other legal entities (does not

apply to subsidiaries) name, code and register of such legal

entities, where the data on the Company is collected and

stored, registered office (address), website addresses

The set of the Company's annual financial statements, the

Company's annual report, as well as the report of the

auditor of the Company's annual reports must be

published on the Company's website within 10 working

days from the approval of the set of annual financial

statements.

Sets of the Company's interim financial statements, the

Company's interim reports must be published on the website

no later than within 2 months after the end of the reporting

period

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* The following data is published: name, surname, date of commencement of current positions, other current management

positions in other legal entities, education, qualification, professional experience; it shall be indicated whether a member

of the collegial body has been elected or appointed as an independent member.

TAKING INTO ACCOUNT THAT THE COMPANY IS THE PARENT COMPANY, THE FOLLOWING INFORMATION MUST BE PUBLISHED

ON THE COMPANY'S WEBSITE (WWW.KN.LT):

The structure of the Group of companies

Subsidiaries and subsequent subsidiaries of the Company:

Name, code and register of the Company, where data

about the Company are collected and stored, registered

office (address)

Share held by the Company (percentage) in the authorized

capital of subsidiary companies

Subsidiaries and subsequent subsidiaries of the Company

do not have website addresses

Annual consolidated financial statements and consolidated

annual reports

THE FOLLOWING DOCUMENTS / OTHER REQUIREMENTS MUST BE PUBLISHED ON THE COMPANY'S WEBSITE (WWW.KN.LT):

Articles of Association

Letter from the Ministry of Energy on the establishment of the

Company's goals and expectations for the Company

Business strategy or a summary thereof in cases where the

business strategy contains confidential information or

information which is considered a commercial (industrial)

secret

Remuneration policy, which includes the determination of the

remuneration of the head of the Company and the

remuneration of the members of the collegial bodies and

committees formed by the Company

Company's annual and interim reports

Sets of annual and interim financial statements for a period of

at least 5 years and the auditor's report of the annual financial

statements

The above documents are published in PDF format, and it

is technically possible to print them

OTHER REQUIREMENTS MUST BE PUBLISHED / FULFILLED IN THE SETS OF FINANCIAL STATEMENTS AND NOTICES:

The Company maintains its accounting records in a manner

that ensures that financial statements are prepared in

accordance with International Accounting Standards

The Company prepares a set of 6-month interim financial

statements

In addition to the annual report, the Company prepares an

additional 6-month interim report

IN ADDITION TO THE CONTENT REQUIREMENTS ESTABLISHED IN THE LAW ON FINANCIAL REPORTING OF COMPANIES OF THE

REPUBLIC OF LITHUANIA, THE COMPANY'S ANNUAL REPORT MUST ADDITIONALLY PROVIDE:

Brief description of the Company's business model

Results of the implementation of the objectives set in the

operational strategy

Information on significant events that occurred during and

after the financial year (prior to the preparation of the

For state-owned enterprises that are not required to prepare a

CSR report, it is recommended that information on

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annual report) and that were material to the Company's

operations

environmental, social and personnel, human rights, anti-

corruption, and anti-bribery issues be provided in the annual

report or annual activity report, as appropriate.

Profitability, liquidity, asset turnover, debt ratios

Implementation of the company's risk management policy

Implementation of investment policy, ongoing and

planned investment projects, and investments during the

reporting year

Total annual salary fund, average monthly salary by current

position and / or division

Implementation of dividend policy

Implementation of remuneration policy

The consolidated annual report contains the structure of

the group of companies, as well as the name, code and

about the Company, registered office (address), shares

(percentage) in the subsidiary's share capital, financial and

non-financial results for the financial year.

The Company's interim report provides a brief description of

the Company's business model, analysis of financial results for

the reporting period, information on significant events during

the reporting period, as well as profitability, liquidity, asset

turnover, debt ratios and their changes compared to the

corresponding period last year.

AB KN ENERGIES COMPLIANCE WITH THE CORPORATE

GOVERNANCE CODE

AB KN Energies (hereinafter referred to as the “Company”), acting in compliance with Article 22(3) of the Law of the Republic

of Lithuania on Securities and paragraph 24.5 of the Listing Rules of AB NASDAQ Vilnius, hereby discloses how it complies

with the Corporate Governance Code for the Companies listed on NASDAQ Vilnius as well as its specific provisions or

recommendations. In case of noncompliance with this Code or some of its provisions or recommendations, the specific

provisions or recommendations that are not complied with must be indicated and the reasons for such non-compliance

must be specified. In addition, other explanatory information indicated in this form must be provided.

FORM OF THE GOVERNANCE REPORT OF THE COMPANY:

PRINCIPLES / RECOMMENDATIONS

YES / NO /

NOT

APPLICABLE

COMMENTARY

Principle 1: General meeting of shareholders, equitable treatment of shareholders, and shareholders’ rights

The corporate governance framework should ensure the equitable treatment of all shareholders. The corporate governance

framework should protect the rights of shareholders.

1.1. All shareholders should be provided with access to the

information and/or documents established in the legal

acts on equal terms. All shareholders should be furnished

with equal opportunity to participate in the decision-

making process where significant corporate matters are

discussed.

Yes

All information that must be made public in accordance with

legal acts is published through the information system of the

Vilnius Stock Exchange and / or on the Company's website. The

place, date and time of the General Meeting of Shareholders

convened by the Company shall be determined in order to

enable the shareholders to participate in making decisions

important to the Company.

The procedure for submitting documents and other

information to shareholders is established in Article 5 of the

Company's Articles of Association.

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

All shares of the Company are ordinary registered shares with

a nominal value of EUR 0.29 (EUR 29 cents) per share.

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1.3. It is recommended that investors should have access

to the information concerning the rights attached to the

shares of the new issue or those issued earlier in advance,

i.e. before they purchase shares.

Yes

The Company's Articles of Association, which are publicly

available on the Company's website, specify the rights granted

by the shares.

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

Article 13.5 of the Company's Articles of Association (Article

16.14 of Articles of Association valid in year 2023). indicate the

cases when the approval of the General Meeting of

Shareholders is required.

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 Meeting of Shareholders

and implements other procedures of the Meeting in

accordance with the Law on Companies of the Republic of

Lithuania and provides all shareholders with equal

opportunities to participate in the meeting, get acquainted

with draft resolutions and material required for decision-

making.

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 that this information

should be placed on the website of the company. 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

All documents and information related to the General Meeting

of Shareholders, including notices of meetings to be convened,

draft resolutions, resolutions of the Meetings, are publicly

available in Lithuanian and English through Nasdaq Vilnius and

the Company's website.

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

All shareholders may exercise their right to participate in the

General Meeting of Shareholders in accordance with the

procedure established by legal acts and this right is unlimited.

The Company provides information on the implementation of

this right in the notice on convening the General Meeting of

Shareholders.

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.

Taking into account the structure of the shareholders

(controlling interest is owned by the Government of the

Republic of Lithuania) and the valid regulations for

organisation of the meeting of shareholders ensuring full

advance publication of the material of the General Meeting of

Shareholders and publicity of the decisions adopted by the

shareholders (publishing all this information on the website of

AB Nasdaq Vilnius Stock Exchange) and the opportunity to

vote in advance, there is no necessity to additionally install

costly system of IT, which would give the opportunity for the

shareholders to vote during the meeting of the shareholders

using telecommunication terminal equipment. Currently, there

are no measures in place to ensure proper identification of

voters.

1.9. It is recommended that the notice on the draft

decisions of the general meeting of shareholders being

Yes

Information about the candidates to the Company's collegial

bodies is provided in accordance with the procedure

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convened should specify 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.

established by legal acts. In accordance with the established

procedure, the suitability of candidates is assessed by the

selection board.

The name of the proposed audit firm and the remuneration for

the audit services shall be provided to the General Meeting of

the Shareholders in advance as a draft resolution.

1.10. Members of the company’s collegial management

body, heads of the administration

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

The last General Meeting of Shareholders was attended by the

Chairperson of the Board of the Company, Chief Executive

Officer of the Company, Chief Finance Officer and Head of the

Legal and Compliance Unit.

Principle 2: Supervisory board

2.1. Functions and liability of the supervisory board

The supervisory board of the company should ensure representation of the interests of the company and its shareholders,

accountability of this body to the shareholders and objective monitoring of the company’s operations and its management

bodies as well as constantly provide recommendations to the management bodies of the company.

The supervisory board should ensure the integrity and transparency of the company’s financial accounting and control

system.

2.1.1. Members of the supervisory board should act in

good faith, with care and responsibility for the benefit and

in the interests of the company and its shareholders and

represent their interests, having regard to the interests of

employees and public welfare.

Yes

The obligations specified in the recommendation are

embedded in the agreement on the activities of an

independent member of the Supervisory Council. The form of

the agreement is approved by the Company's General Meeting

of Shareholders.

2.1.2. Where decisions of the supervisory board may have

a different effect on the interests of the company’s

shareholders, the supervisory board should treat all

shareholders impartially and fairly. It should ensure that

shareholders are properly informed about the company’s

strategy, risk management and control, and resolution of

conflicts of interest.

Yes

The agreements with the members of the Supervisory Council

stipulates that each independent member of the Supervisory

Council has a duty to act in the interests of the Company and

all its shareholders.

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.

Yes

The Supervisory Council of the Company acts independently in

accordance with the requirements of legal acts when making

decisions that are significant to the Company's activities and

strategy.

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

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.

Yes

The members of the Supervisory Council have the right to

express their opinion on all the agenda of the meeting in

accordance with the Rules of Procedure of the Company's

Supervisory Council, which must be duly reflected in the

minutes of the meeting.

The obligations specified in the recommendation are

embedded in the agreement on the activities of an

independent member of the Supervisory Council.

For the purposes of this Code, heads of the administration are the employees of the company who hold top level management positions.

For the purposes of this Code, the criteria of independence of members of the supervisory board 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.

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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.

Yes

The Supervisory Council of the Company in the exercise of its

competence to supervise the activities of the Company's

management bodies, also performs the duties specified in the

recommendation.

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.

Yes

The Company ensures the provision of the Supervisory Council

with the resources necessary for its activities (provides

technical support during the meetings of the Supervisory

Council, provides all the necessary information). The Articles of

Association of the Company stipulate that the Board must

submit to the Supervisory Council the documents related to

the activities of the Company requested by it. The right to

information is also detailed in the contract for the activities of

a member of the Supervisory Council.

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.

Yes

According to the Law on Companies of the Republic of

Lithuania, the Supervisory Council is elected, and the

qualifications of its members are assessed at the General

Meeting of Shareholders.

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.

Yes

The members of the Company's Supervisory Council are

elected for a maximum term of 4 years specified in the Law on

Companies of the Republic of Lithuania.

The Articles of Association of the Company provide for the

possibility to recall the entire Supervisory Council or its

individual members before the end of the term of office of the

Supervisory Council.

2.2.3. Chair of the supervisory board should be a person

whose current or past positions constituted no obstacle to

carry out impartial activities. A former manager or

management board member of the company should not

be immediately appointed as chair of the supervisory

board either. Where the company decides to depart from

these recommendations, it should provide information on

the measures taken to ensure impartiality of the

supervision.

Yes

The chairperson of the Supervisory Council of the Company

and the Chief Executive Officer of the Company is not the same

person.

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.

Yes

Each member of the Supervisory Council participates in the

meetings of the collegial body and devote sufficient time to

perform their duties as a member of the collegial body. In

2023, 9 meetings of the Company's Supervisory Council were

held, which were attended by all members of the Supervisory

Council.

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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.

Yes

Information on candidates for members of the Company's

Supervisory Council (as well as information on the candidate's

compliance with the independence requirements) is submitted

to the General Meeting of Shareholders in accordance with the

procedure established by the Law on Companies of the

Republic of Lithuania.

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.

Yes

An independent member of the Supervisory Council shall be

remunerated for his / her activities in the Supervisory Council

in accordance with the procedure and conditions established

in the agreement signed with him / her regarding the activities

of the independent member of the Supervisory Council. The

terms and conditions of the agreement with the independent

member of the Supervisory Council shall be approved by the

General Meeting of Shareholders.

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.

Yes

The Supervisory Council evaluates its activities every year. The

Supervisory Council evaluates the organization of meetings,

efficiency, need for competencies, mutual cooperation,

cooperation with management, etc.

Principle 3: Management Board

3.1. Functions and liability of the management board

The management board should ensure the implementation of the company’s strategy and good corporate governance with

due regard to the interests of its shareholders, employees and other interest groups.

3.1.1. The management board should ensure the

implementation of the company’s strategy approved by

the supervisory board if the latter has been formed at the

company. In such cases where the supervisory board is not

formed, the management board is also responsible for the

approval of the company’s strategy.

Yes

The Board of the Company implements the strategy of the

parent company, which is approved by the Supervisory Council

of the Company.

3.1.2. As a collegial management body of the company, the

management board performs the functions assigned to it

by the Law and in the articles of association of the

company, and in such cases where the supervisory board

is not formed in the company, it performs inter alia the

supervisory functions established in the Law. By

performing the functions assigned to it, the management

board should take into account the needs of the

company’s shareholders, employees and other interest

groups by respectively striving to achieve sustainable

business development.

Yes

Because the Supervisory Council is formed in the Company, the

Board performs the functions of the Company's collegial

management body. The obligation to take into account the

Company, shareholders, employees and other interest groups

is embedded in the agreement signed with each of the

members of the Board regarding the activities of the member

of the Board.

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

The Company's Articles of Association stipulate which

Company's documents (guidelines, policies, etc.) are approved

by the Board. In cases where the documents are approved by

the Supervisory Council, the Board shall submit comments and

suggestions. In accordance with the Company's Articles of

Association, the Board considers and approves the Company's

list of risks and the plan of measures to reduce them, the risk

report, and the risk management policy.

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3.1.4. Moreover, the management board should ensure

that the measures included into the OECD Good Practice

Guidance

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 has various documents in place to ensure

internal control, ethics, and compliance management

measures, for example: the Head of Internal Audit is an

independent position, reports to the Audit Committee and is

administratively subordinate to the CEO; The Company has a

Code of Conduct (Code of Ethics) that applies to all employees

of the Company, including members of the Board and the

Supervisory Council.

3.1.5. When appointing the manager of the company, the

management board should take into account the

appropriate balance between the candidate’s

qualifications, experience and competence

Yes

When appointing the CEO, the Board of the Company shall

take into account his/her qualifications, experience and

competence.

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

The Board of the Company ensures the balance of

qualifications of its members. The members of the Board of the

Company are elected by the Supervisory Council of the

Company (Selection Committee), which evaluates the

qualifications of the candidates, experience in the

management position, suitability to hold the position of a

member of the Board of the Company and other necessary

aspects.

The aim is for the members of the Board to have competencies

considering the responsibilities and functions of the Board.

Every year, the members of the Board conduct a self-

assessment of their activities.

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

Information on candidates and their suitability to hold the

position of a member of the Company's collegial body is

provided in accordance with the procedure established by

legal acts, the suitability of candidates is assessed by the

Selection Committee. Information about the candidates for the

members of the Board of the Company, including their

curriculum vitae and declaration of interests, and other

documents specified in legal acts shall be submitted at the

meeting of the Supervisory Council of the Company at which

the Board or its individual members are elected. Information

on the positions held by the members of the Board or their

participation in the activities of other companies is regularly

collected, stored, and presented in the Company's Annual

Report and 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

After their election, the members of the Board are acquainted

with the Company's activities, organizational and management

structure, strategy, operational and financial plans.

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

The Board members are appointed for a fixed term, i.e., Board

members are elected for a period of 4 (four) years.

The Company's Articles of Association provide for the

possibility to remove both individual members of the Board

and the entire Board before the end of its term. The right to

recall members of the Board (individual or all) belongs to the

Company's Supervisory Council.

3.2.5. Chair of the management board should be a person

whose current or past positions constitute no obstacle to

carry out impartial activity. Where the supervisory board is

Yes

The current or former position of the Chairperson of the Board

of the Company does not create preconditions for the possible

emergence of impartiality. The Chairperson of the Board of the

Link to the OECD Good Practice Guidance on Internal Controls, Ethics and Compliance: https://www.oecd.org/daf/anti-bribery/44884389.pdf

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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.

Company has not held the position of the CEO of the

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

The members of the Board of the Company actively participate

in the meetings of the Board and devote sufficient time to the

performance of their duties as a member of the collegial body.

In 2023, 15 meetings of the Company's Board were held.

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, 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 Supervisory Council is formed in the Company.

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

Members of the Board are paid based on the Remuneration

Policy of the Company approved by the General Meeting of

Shareholders and agreement concluded with the Company

that is approved by the Supervisory Council.

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

These duties of the members of the Board are provided for in

the activity agreement of the member of the Board signed with

the Company, as well as in the Rules of Procedure of the Board.

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

Every year, the members of the Board of the Company evaluate

their activities by filling in questionnaires, which include an

evaluation of the work organization of the Board, cooperation

with the management, etc., the results of the evaluation of

activities are discussed at the Board meeting.

Information on the internal structure and work procedure of

the Board is published in the Company's Annual Report.

Principle 4: Rules of procedure of the supervisory board and the management board of the company

The rules of procedure of the supervisory board, if it is formed at the company, and of the management board should ensure

efficient operation and decision-making of these bodies and promote active cooperation between the company’s

management bodies.

4.1. The management board and the supervisory board, if

the latter is formed at the company, should act in close

cooperation in order to attain benefit for the company and

Yes

The legal acts regulating the activities of the Company's

Supervisory Council and the Board, the Articles of Association,

the Company's Corporate Governance Policy and the Rules of

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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 he supervisory board

about any derogations in its business development from

the previously formulated plans and objectives by

specifying the reasons for this.

Procedure of collegial bodies establish the principles and

procedure of cooperation between the Company's Supervisory

Council and the Board and ensure that management and

supervisory bodies function properly.

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

Meetings of collegial bodies are held according to the annual

meeting schedules approved in advance by the collegial

bodies (in coordination with the management).

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 members of the collegial body know about the agenda of

the meeting in advance. Preliminary agendas for meetings for

the whole year are drawn up at the beginning of the year. The

agendas are then adjusted and completed before each

meeting (usually at least 10 days before the meeting). The

members of the collegial bodies receive the material necessary

for making decisions on the issues of the agenda in advance

(5-7 days in advance) and have the opportunity to get

acquainted with it and ask questions, and for clarification. All

members of the collegial body shall be informed about any

comments or clarifications received.

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.

Yes

The dates and agendas of the meetings are coordinated so

that all members of the collegial bodies can participate in

them. The Chairperson of the Board regularly presents to the

Supervisory Council the most important decisions made by the

Board.

Principle 5: Nomination, remuneration and audit committees

5.1. Purpose and formation of committees

The committees formed at the company should increase the work efficiency of the supervisory board or, where the

supervisory board is not formed, of the management board which performs the supervisory functions by ensuring that

decisions are based on due consideration and help organise its work in such a way that the decisions it takes would be free

of material conflicts of interest.

Committees should exercise independent judgment and integrity when performing their functions and provide the collegial

body with recommendations concerning the decisions of the collegial body. However, the final decision should be adopted

by the collegial body.

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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

Yes

The Audit Committee, elected by the Supervisory Council, is

formed within the Company. The Supervisory Council

determined its functions, rights and obligations. The

Company's Audit Committee has been assigned with advisory

functions related to the audit control and assessment and

covering supervision of financial reports preparation and audit

execution process, examination of its effectiveness and

implementation of recommendations, analysis of need of

internal audit functions and other functions, as provided by the

Resolution No. 03-14 of the Board of the Bank of Lithuania on

24 January 2017, observes the integrity of the financial

information provided by the Company, paying special

attention to the relevance and transparency of the accounting

methods used by the Company and its group.

The Remuneration and Nomination Committee, elected by the

Supervisory Council is formed within the Company.

Supervisory Council determined its functions, rights and

obligations. The Company’s Remuneration and Nomination

Committee acts as an advisory body to the Company's

Supervisory Council, making recommendations on the

Company's remuneration policy, proposing to the Company

the criteria for assessing the performance of its executives, and

making other recommendations relating to remuneration.

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

Refer to the comment submitted regarding the item 5.1.1.

above.

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.

Yes

Refer to the comment submitted regarding the item 5.1.1.

above.

5.1.4. Committees established by the collegial body

should normally be composed of at least three members.

Subject to the requirements of the legal acts, committees

could be comprised only of two members as well.

Members of each committee should be selected on the

basis of their competences by giving priority to

independent members of the collegial body. The chair of

the management board should not serve as the chair of

committees.

Yes

The Audit Committee, formed by the Supervisory Council,

comprises of three members.

All of the acting members of the Audit Committee were

independent.

The Remuneration and Nomination Committee, formed by the

Supervisory Council, comprises of three members.

Two out of three members of the Remuneration and

Nomination Committee were independent.

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

Yes

The committees are formed by the decision of the Supervisory

Council. The rules of procedure of the committees, the rights,

and obligations of the members of the committees, as well as

the measures to ensure the activities of the members of the

committees shall be established by the rules for the

establishment and operation of the relevant committees

approved by the Supervisory Council.

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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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.

Information on the composition of committees, number of

meetings, participation and main activities is disclosed in the

Company'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 by the committee. A

committee may invite or request that certain employees of

the company or experts would participate in the meeting.

Chair of each committee should have the possibility to

maintain direct communication with the shareholders.

Cases where such practice is to be applied should be

specified in the rules regulating the activities of the

committee.

Yes

The rules of formation and operation of the Audit Committee

of the Company provide for the right of the Audit Committee

to invite the responsible persons of the Company to its

meetings and to receive the necessary explanations from them

in accordance with their competence.

The rules of formation and operation of the Remuneration and

Nomination Committee of the Company provide for the right

of the Remuneration and Nomination Committee to invite the

responsible persons of the Company to its meetings and to

receive the necessary explanations from them in accordance

with their competence.

5.2. Nomination committee

5.2.1. The key functions of the nomination committee

should be the following:

1) to select candidates to fill vacancies in the membership

of supervisory and management bodies and the

administration and recommend the collegial body to

approve them. The nomination committee should evaluate

the balance of skills, knowledge and experience in the

management body, prepare a description of the functions

and capabilities required to assume a particular position

and assess the time commitment expected;

2) assess, on a regular basis, the structure, size and

composition of the supervisory and management bodies

as well as the skills, knowledge and activity of its members,

and provide the collegial body with recommendations on

how the required changes should be sought;

3) devote the attention necessary to ensure succession

planning.

Yes

The Remuneration and Nomination Committee in the

Company was formed on 24th of November 2022 by electing

two members of the Supervisory Council, and on 22nd of

February 2023 an independent member was elected. The

functions of the Remuneration and Nomination Committee are

set in the Rules of Activities of the Remuneration and

Nomination Committee and cover the advisory function in

selection of candidates to the membership in supervisory and

management bodies and administration, as well as assessment

and recommendation on structure, size and composition of

supervisory and management bodies as well as attention to

succession planning ensurance. In addition, Remuneration and

Nomination Committee provides proposals and

recommendations on Remuneration Policy applied to

members of the supervisory and management bodies and the

heads of the administration as well as individual remuneration,

review on Remuneration Policy and its implementation.

5.2.2. When dealing with issues related to members of the

collegial body who have employment relationships with

the company and the heads of the administration, the

manager of the company should be consulted by granting

him/her the right to submit proposals to the Nomination

Committee.

Yes

The Rules on Activities of the Remuneration and Nomination

Committee provide the right to the Chief Executive Officer

consult and submit proposals to the Remuneration and

Nomination Committee.

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

Yes

Refer to the comment submitted regarding the item 5.2.1.

above.

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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.

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

Yes

The functions of the Audit Committee are also defined in the

rules of formation and operation of the Company's Audit

Committee.

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.

Yes

The members of the Audit Committee of the Company, while

performing their duties, have the right to receive from the

Company the required documents and / or copies thereof and

the information required to perform the functions of the Audit

Committee.

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 Head of Internal Audit participates in the meetings of the

Audit Committee, and other staff, if necessary, when discussing

specific issues. Representatives of the Company performing

the independent audit of the financial statements participate

in the meeting of the Audit Committee, if necessary.

5.4.4. The audit committee should be informed about the

internal auditor’s work program 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 shall receive the information referred to

in this paragraph and approve the annual plans of the internal

audit. The Head of Internal Audit informs the Audit Committee

about the implementation of the internal audit plans and

provides reports. Representatives of the company performing

the independent audit of the financial statements shall

participate in the meeting of the Audit Committee, if necessary.

5.4.5. The audit committee should examine whether the

company complies with the applicable provisions

regulating the possibility of lodging a complaint or

reporting anonymously his/her suspicions of potential

violations committed at the company and should also

ensure that there is a procedure in place for proportionate

and independent investigation of such issues and

appropriate follow-up actions.

Yes

Possible violations can be reported to the e-mail address

SpeakUp@kn.lt (information is available to the Head of

Internal Audit). The notification channel is open to all natural

or legal persons: both current or former Company’s employees

and former or potential Company’s customers, contractors,

suppliers, the community.

Possible violations can also be reported directly to the collegial

supervisory bodies of the Company by e-mail:

SupervisoryBodies@kn.lt

5.4.6. The audit committee should submit to the

supervisory board or, where the supervisory board is not

formed, to the management board its activity report at

least once in every six months, at the time that annual and

half-yearly reports are approved.

Yes

The Audit Committee informs the Supervisory Council of its

activities at least once a quarter and submits a written report

on its activities to the Supervisory Council quarterly.

The Audit Committee also informs the Board about its activities

at least once a year.

Principle 6: Prevention and disclosure of conflicts of interest

Issues related to the activities of audit committees are regulated by Regulation No. 537/2014 of the European Parliament and the Council of 16 April 2014

on specific requirements regarding statutory audit of public-interest entities, the Law on the Audit of Financial Statements of the Republic of Lithuania, and

the Rules Regulating the Activities of Audit Committees approved by the Bank of Lithuania.

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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.

6.1. 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. 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

The members of the Company’s supervisory and management

bodies oblige to act in such a manner so as to avoid conflict of

interests with the Company. This is determined in the Articles

of Association of the Company and in other documents of

operation of the Company.

For this purpose, the member of the Company's supervisory

and management bodies submits to the Company's body that

elected them and the Company the declarations about the

absence of the conflict of interests and oblige to immediately

inform about any change of the circumstances revealed in

these declarations.

In case of a conflict of interests between a member of the

Company’s supervisory and management bodies and the

Company during discussion of issues, such a member of the

supervisory or management bodies shall immediately notify

Company's body that elected them and not participate in

voting regarding specific items in view of which such conflict

arose. A member of the supervisory and management bodies

shall not be entitled to vote when the meeting of the

supervisory and management bodies discusses the issue

related to his work on the supervisory and management

bodies or the issue of his responsibility.

Principle 7: Remuneration policy of the company

The remuneration policy and the procedure for review and disclosure of such policy established at the company should

prevent potential conflicts of interest and abuse in determining remuneration of members of the collegial bodies and heads

of the administration, in addition it should ensure the publicity and transparency of the company’s remuneration policy and

its long-term strategy.

7.1. The company should approve and post the

remuneration policy on the website of the company; such

policy should be reviewed on a regular basis and be

consistent with the company’s long-term strategy.

Yes

On 2022 October 20, the Annual General Meeting of

Shareholders approved the updated Company's Remuneration

Policy, which applies to the CEO of the Company, members of

the Board, the Supervisory Council, and other committees. This

remuneration policy defines the principles and procedures for

determining, paying, and promoting the remuneration of

members of the Supervisory Council, members of the Board,

and Committees and the head of the Company who are

independent and not independent but not employees of the

state representative body.

New amended Remuneration Policy was approved by the

General Meeting of Shareholders on 30th of November 2023,

it came into force on 10th of January 2024. Published on the

Company's website https://www.kn.lt/en/about-

us/operational-documentation/remuneration-policy/3456

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

The Company's Remuneration Policy determines the

components of remuneration, their maximum amounts, and

the principles of awarding and paying.

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 remuneration of the members of the collegial bodies that

perform supervisory functions does not depend on the

performance of the Company.

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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.

Not

applicable

Termination payments are not foreseen in the Remuneration

Policy of the Company (https://www.kn.lt/apie-mus/darbo-

uzmokestis/1975).

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

During the year under review the Company has not applied

any schemes anticipating remuneration of directors in shares,

share options or any other right to purchase shares or be

remunerated on the basis of share price movements. This has

not been provided for neither by the existing Management

personnel remuneration procedure nor employment contracts

with directors and other employees of 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

The Company's Remuneration Report for 2023 will be

published on the website www.kn.lt.

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 Policy stipulates that the policy is submitted

for approval to the General Meeting of Shareholders at least

every 4 (four) years, as well as if there are significant changes

in the policy. In the event of a change in the Remuneration

Policy, all policy statements approved after the last General

Meeting of Shareholders vote on the Remuneration Policy shall

be submitted to the Meeting.

Principle 8: 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 execution of this recommendation is ensured by the

accurate supervision and control of the state institutions and

organisations regulating and controlling the Company’s

activities.

The management bodies consult with the employees on

corporate governance and other important issues, (employee)

participation in the Company’s share capital is not limited.

Publicity of the essential information about the Company's

activity creates the conditions for the holders of interests to

participate in the management of the Company according to

the procedure established by the law and the Article of

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

Yes

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company’s authorized capital, involvement of creditors in

corporate governance in the cases of the company’s

insolvency, etc.

Association, as well as for the Company's employees also

according to the Collective Agreement of the Company.

8.3. Where stakeholders participate in the corporate

governance process, they should have access to relevant

information.

Yes

8.4. Stakeholders should be provided with the possibility

of reporting confidentially any illegal or unethical practices

to the collegial body performing the supervisory function.

Yes

Principle 9: Disclosure of information

The corporate governance framework should ensure the timely and accurate disclosure of all material corporate issues,

including the financial situation, operations and governance of the company.

9.1. In accordance with the company’s procedure on

confidential information and commercial secrets and the

legal acts regulating the processing of personal data, the

information publicly disclosed by the company should

include but not be limited to the following:

Yes

Performance and corporate governance is regularly disclosed

by distributing press posts about publicly undisclosed

information, related to the Company on AB Nasdaq Vilnius

Stock Exchange website, as well as in the Company's annual

reports and financial statements, press releases published in

the exchange and in other public presentations of the

Company activity.

The Company is not limited only by disclosure of minimum

necessary public information and also publishes other

important information about the Company's activity.

The documents that contain certain information are published

in Lithuanian and English on the publicly accessible website of

the AB Nasdaq Vilnius Stock Exchange.

9.1.1. operating and financial results of the company;

Yes

They are made public on a monthly basis, as well as in the

Company's Interim and Annual Reports.

9.1.2. objectives and non-financial information of the

company;

Yes

Published in the Company's Interim and Annual Reports, in the

Company's Corporate Strategy.

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

They are made public in the Company's Interim and Annual

Reports, on the Company’s website.

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

They are made public in the Company's Interim and Annual

Reports.

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

They are made public in the Company's Interim and Annual

Reports.

9.1.6. potential key risk factors, the company’s risk

management and supervision policy;

Yes

They are made public in the Company's Annual Reports.

9.1.7. the company’s transactions with related parties;

Yes

The information is published on the Company's website.

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

They are made public in the Company's Interim and Annual

Reports, on the Company’s website.

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9.1.9. structure and strategy of corporate governance;

Yes

They are made public in the Company's Interim and Annual

Reports, on the Company’s website.

9.1.10. initiatives and measures of social responsibility

policy and anti-corruption fight, significant current or

planned investment projects.

This list is deemed minimum, and companies are

encouraged not to restrict themselves to the disclosure of

information included into this list. This principle of the

Code does not exempt companies from their obligation to

disclose information as provided for in the applicable legal

acts.

Yes

They are made public in the Company's Interim and Annual

Reports, on the Company’s website.

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

Refer to the comment submitted regarding the item 9.1.

above.

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

Refer to the comment submitted regarding the item 9.1.

above.

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 disclosed to all parties concerned at

the same time.

Yes

Refer to the comment submitted regarding the item 9.1.

above.

Principle 10: Selection of the company’s audit firm

The company’s audit firm selection mechanism should ensure the independence of the report and opinion of the audit firm.

10.1. With a view to obtain an objective opinion on the

company’s financial 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 Company observes this recommendation, annually, an

independent firm of auditors conducts an audit of the

Company’s annual financial statements and report according

to the International Accounting Standards and submits an

independent auditor's report concerning financial statements.

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.

The Company’s Board (a collegial body) proposes a candidate

firm of auditors to the General Meeting of Shareholders taking

into account the Audit Committee recommendation.

10.3. In the event that the audit firm has received

remuneration from the company for the non-audit services

provided, the company should disclose this publicly. This

information should also be available to the supervisory

board or, if the supervisory board is not formed at the

company, by the management board of the company

when considering which audit firm should be proposed to

the general meeting of shareholders.

Yes

The information about the payments to the audit company is

disclosed in the annual financial statements and also presented

to the Company’s Audit committee and Supervisory Council

when considering which audit firm should be proposed to the

General Meeting of Shareholders.

Non-audit services were provided by the audit firm for

regulated activity review services and remuneration amounts

to EUR 13 thousand for both, the Group and the Company.

AB KN ENERGIES

SUSTAINABILITY (CORPORATE

SOCIAL RESPONSIBILITY)

REPORT IN REFERENCE TO GRI

GUIDELINES

2023

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2023

SUSTAINABILITY (CORPORATE SOCIAL RESPONSIBILITY) REPORT

GENERAL INFORMATION ................................................................................................................................................................................................................... 153

HIGHLIGHTS 2023 .................................................................................................................................................................................................................................. 155

SUSTAINABILITY MANAGEMENT ..................................................................................................................................................................................................... 158

ENVIRONMENTAL IMPACT AND PROTECTION ON ENVIRONMENT ................................................................................................................................ 165

SOCIAL IMPACT ...................................................................................................................................................................................................................................... 176

GOVERNANCE ......................................................................................................................................................................................................................................... 194

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GENERAL INFORMATION

BOUNDARIES OF THE REPORT AND TAXONOMY REQUIREMENTS

Given the structure of the KN Group, this report provides data for the main Company, “KN Energies”, including subsidiaries.

When relevant/possible – separate data for “KN Açu Serviços de Terminal de GNL Ltda” (operating LNG terminal in

Port of Açu, which is located in the municipality of São João da Barra, belonging to the state of Rio de Janeiro, part of the

Federative Republic of Brazil) is provided. In addition, environmental data is also provided separately according to different

operating locations in Lithuania (two liquid energy terminals in Klaipėda and Subačius (Kupiškis region), an LNG terminal

and an LNG reloading station in Klaipėda). The Company also provides commercial operation services for Wilhelmshaven

1 LNG Terminal and the Brunsbüttel LNG Terminal in Germany. KN activities related information in regards of these

terminals is within the scope of this report and infrastructure related information is out of the scope of the report as it

should be accounted and reported by infrastructure owners.

This report has been prepared in reference to Universal and Topic standards and GRI Sector Standard 11: Oil and Gas 2021.

KN is held as a non-financial undertaking under the Accounting Directive and might also be held as a public-interest

company. However, KN is not considered a large undertaking with more than 500 employees or a parent undertaking of a

large group with more than 500 employees on average on a consolidated basis during the financial year. For this reason,

as the undertaking, KN is not subject to the disclosure obligations laid down in Articles 19a and 29a of the Accounting

Directive and does not fall within the scope of the Non-Financial Reporting Directive. Therefore, KN is not subject to

reporting obligations under Taxonomy Regulation.

According to COMMISSION DELEGATED REGULATION (EU) 2021/2139, economic operators not covered by Taxonomy

Regulation (EU) 2020/852 may also apply the Regulation voluntarily. Initial review of KN economic activities (H52.2.4 -

Cargo handling) for Taxonomy-eligibility according to the description provided by Taxonomy Regulation and its Delegated

Acts indicates that it is not included in the EU Taxonomy (i.e. it is not Taxonomy-eligible activities). However, in 2023 KN

started preparations for the implementation of Corporate Sustainability Reporting Directive (EU) 2022/2464 requirements

to report Sustainability performance according to European Sustainability Reporting Standards (ESRS). ESRS indicate that

Taxonomy related information should be included into Sustainability Report and clearly separately identified. KN focuses

on analysis and preparation to disclose its sustainability information (including renewal of the materiality assessment and

review of Taxonomy) under the mentioned standards and requirements (using mandatory forms) in the report for the

following year taking into account the new Company’s strategy until 2050 which aims to achieve complete climate neutrality

for KN's operations.

The Company constantly monitors emerging future guidelines as part of its sustainable operations efforts and will adjust

its reports accordingly considering the best market practices.

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STATEGIC COMMITMENT

In 2023 the new KN’s strategy until 2050 was approved bringing

Sustainable transformation to the core of Company’s direction.

KN committed to all its stakeholders to play a responsible role in

the ongoing energy transition, which is fundamental to ensuring

sustainable business and value creation in the energy sector in the

long term.

Ensuring smooth transition to new energies, fulfilling commitments

to the environment and people is our focus, priority, and areas of

investment.

ACHIEVE COMPLETE CLIMATE

NEUTRALITY FOR KN'S

OPERATIONS BY 2050

Last year we continued implementing activities for delivering on our sustainability goals in our impact ESG areas and

building sustainability culture within Organisation:

▪ Ensuring Safety culture and measures was a top priority.

▪ Investing in renewable solutions [300kW solar power plant and 24 heat pumps in SLE Terminal).

▪ Improving energy efficiency, giving attention to VOC emissions and waste management.

▪ Building competence of our people (9173 training hours in total).

▪ Working closely with our stakeholders.

HIGHLIGHTS 2023

*Direct Scope 1 emissions continued to decrease due to applied energy efficiency measures, however one-time increase in Scope 2 was recorded due to the

change of electricity supplier.

OUR NEXT STEPS

During 2024, we will:

▪ Review our emission management plan and align it to reflect agreed changes and ambitions set in the KN strategy (including

continuous investment).

▪ Continue our preparations for the implementation of CSRD (EU) 2022/2464 requirements to report Sustainability

performance according to European Sustainability Reporting Standards (ESRS) including Double Materiality assessment, as

transparency in reporting is crucial element in our activities.

▪ Devote resources to our stakeholder engagements, work actively with initiatives and improvements.

▪ Continue to map and gather data needed to make our sustainability roadmap systematic and as complete as possible.

▪ Continue to explore new clean energies field strengthening our ability to capitalise on future opportunities.

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AB KN ENERGIES SUSTAINABILITY

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SUSTAINABLE TRANSFORMATION AS STRATEGIC DIRECTION

Following the Company’s mission, KN envisions a world where sustainable liquid energy as well as chemicals and feedstock

solutions empower industries and communities, creating a cleaner, safer, and more prosperous future for all. KN strives to

be at the forefront of this transformation, continuously innovating and expanding its portfolio of services to support the

global energy transition and achieve climate neutrality by 2050.

These aspirations are embedded in the new Company’s strategy until 2050 that was developed and approved in 2023. The

new long-term strategy is centred around efficiency of current activities, preparation for the energy transformation and

transitioning towards activities in the new energy field. It aims to achieve complete climate neutrality for KN's operations

by 2050, with a target of reducing emissions by over 30 percent by 2030 and approximately 70 percent by 2040.

Sustainability is incorporated to the strategic level of the importance of the Organisation covering strategic commitments

to the environment, improvement of energy and operational efficiency, investment into people, digitalization, ESG topics

and ensuring the continuous development.

KN aspires to become a significant contributor to the future energy supply and value chains, generating further value in

the energy sector, ensuring energy security and competitiveness of energy resources in the region, and delivering financial

returns to shareholders.

In the light of these goals, the KN’s strategy emphasizes improving current businesses and efficiency to retain competitive

advantage and enhance profitability. It outlines the aim of achieving profitable growth by developing existing core business

areas while investing a share of profit into the infrastructure and competence of the new energies.

The KN strategy is based on medium-term growth and long-term portfolio diversification, divided into three phases until

2050:

▪ 2023-2030: Increasing profitability in existing activities and securing financing for investments in new and more

sustainable energy sources.

▪ 2031-2040: Focusing on the development of the LNG business and diversifying transshipment of liquid energy

products.

▪ 2041-2050: Expanding activities in the market of new energies, including investments in new energy sources like

synthetic fuels, hydrogen and hydrogen carriers, other alternative energy carriers, and CCS.

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AB KN ENERGIES SUSTAINABILITY

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KN plans to invest approximately EUR 300 million by 2030,

with over 45% of capital investments dedicated to building

new infrastructure and competences for the handling and

storage of new energies, as well as to enhancing the

sustainability and reducing emissions across all KN activities.

For more detailed information about the KN strategy, please

refer to the strategy summary following this link: KN Strategy

2050.

KN is actively involved in the debate on the future of fossil fuels and the transition to a more climate-neutral economy. KN

is actively engaged in various associated initiatives concerning LNG and fossil fuels synergy with renewable energy. Being

founder of Lithuanian LNG platform and member of LT Hydrogen platform, KN advocates for the consistent transition

towards net-zero economy. Accordingly, we actively participate in various conferences and seminars to share our know-

how in LNG terminals and discuss the future of energy. Furthermore, the Company is trying to find additional opportunities

to exploit its infrastructure and know-how and alternatives for new activities. In 2023 preparation activities to become a

member of the Gas Infrastructure Europe (GIE) association representing the interests of European gas infrastructure

operators were successfully implemented (membership announced in January 2024). GIE unites 68 members from 25

countries and GIE members are active in transmission, storage and regasification via LNG terminals of renewable and low-

carbon gases, including natural gas and hydrogen. GIE being the voice of the gas infrastructure operators of Europe which

work and innovate with LNG terminals, underground storages and transmission pipelines, membership of this organisation

will allow KN to contribute to fostering Europe’s energy resilience and decarbonisation.

With the strategic direction of the expanding activities in the market of new energies, KN is starting to explore

transshipment and storage of hydrogen carriers, CO2, energy storage/ balancing (flow batteries) business areas. In regards

to this, KN initiated the international CO2 capture and storage project together with the German capital companies

“Akmenės cementas” and “SCHWENK Latvija” operating in Latvia, and the international shipping companies “Larvik

shipping” (LS) and “Mitsui O.S.K. Lines” (MOL). The companies established the “CCS Baltic Consortium” consortium in 2022,

performed a project analysis, a feasibility study and submitted a project application to the EC for the 6th PCI status. In 2023,

The European Commission (EC) granted the status of Project of Common Interest (PCI) to the planned liquefied carbon

dioxide (CO2) capture and transportation project in Lithuania and Latvia, planned by KN and its partners. This means that

the project is recognized as a cross-border project of great importance, which will significantly contribute to the

implementation of the energy policy and climate goals of the European Union (EU). The EC decision is subject to approval

by the European Parliament in 2024. Detailed studies will continue and application for EU funding for the project will be

submitted. For more news and detailed information about the CCS project, please refer to this link: CCS Baltic EU.

KN is also actively participating in other various discussions about the transformation of the economy and energy sector

towards net zero, the Blue economy (sustainable use of ocean and sea resources and sustainable coast-related activities),

and Greentech. These activities help us follow and analyse the most relevant trends, understand the challenges and

opportunities and the position of other organisations locally and internationally, seek dialogue for transformation, and

educate the public.

TAXES

KN Group implements fair business principles responsibly and correctly, declaring and paying all operating taxes charged

in every market the Group operates. The principal paid taxes in Lithuania are Value Added Tax (VAT) and profit tax (paid to

the national budget), personal income tax (paid to the national budget and then redistributed to municipal budgets), taxes

paid to the State Social Insurance Fund in Lithuania, taxes paid directly to municipalities (real estate, pollution).

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In addition, KN as the owner of the excise warehouse also ensures correct declaration of excise duty and payment thereof

for storage of customers' oil products and natural gas – the Company pays this tax to the national budget. It is the main

reason why According to the State Tax Inspectorate, both in 2023 and in 2022, KN ranked the sixth among the largest

taxpayers in Lithuania. In 2023 49.1% of KN’s taxes (excluding excise) paid in Lithuania were related to Social Insurance

(49.0% in 2022), personal income tax comprised 43.0% (part of it reaches municipal budgets; 42.3% in 2022) and 8.0% of

taxes were paid directly to municipal budgets (8.6% in 2022).

The main taxes paid in Brazil are profit tax, withholding income tax, payroll tax, tax on remittance to abroad/import services,

municipal service tax.

KN Group neither seeks nor applies particular tax optimisation or artificial tax reduction schemes. Over the last eight years,

no complaints have been filed against the Group regarding the incorrect declaration and payment of taxes.

Taxes paid by KN group, in EUR thousand:

YEAR

AB KN ENERGIES, TOTAL

KN, EXCISE EXCLUDED

SUBSIDIARIES, TOTAL

SUBSIDIARIES, PAID IN BRAZIL

2016

78,192

9,647

Not operating

2017

126,482

10,431

Not operating

2018

166,581

10,163

Not operating

2019

173,587

8,557

Not operating

2020

195,065

5,821

751

747

2021

205,715

6,109

1,436

1,431

2022

214,745

5,589

1,491

1,486

2023

233,829

6,529

1,269

1,266

COMPLIANCE

In 2023, no penalties or sanctions related to environmental breaches were imposed on Klaipėda Liquid Terminal, Subačius

Liquid Terminal, or Klaipėda LNG Terminal and KN Açu in Brazil.

In 2023, no penalties or sanctions for labour law violations were imposed on KN and its subsidiaries.

SUSTAINABILITY MANAGEMENT

PRINCIPLES OF SUSTAINABILITY MANAGEMENT

From the perspective of KN, to be a successful and responsible member of society in the long term, the principles of

business sustainability shall go hand in hand with how we operate. Every organisation can create positive and negative

impacts through its activities, and we aim to be a business model that makes a positive impact. From 2023 with the adoption

of new Company’s strategy until 2050 Sustainability is incorporated to the strategic level of the importance of the

Organisation covering strategic commitments to the environment, improvement of energy and operational efficiency,

investment into people, digitalization, ESG topics and ensuring the continuous development. Adopted strategy is aimed to

direct Company to achieve complete climate neutrality for its operations by 2050.

KN has active Sustainability policy established in 2022, which guides Company’s sustainability management and activities.

It is valid for all Companies of KN Group. The Policy states that the following sustainability principles guide KN:

▪ Driving profit responsibly.

▪ Aiming for enhanced operational efficiency and productivity through thoughtful natural resource utilisation,

emissions, and waste reduction.

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AB KN ENERGIES SUSTAINABILITY

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▪ Pursue circular economy principles in the KN's activities.

▪ Creating a healthy, safe, collaborative, and diverse work environment.

▪ Fostering a culture of engagement in sustainability through employee education and engagement, and

▪ Assisting our customers on cleaner energy transition, considering Lithuania's and EU and other markets where the

KN is present, goals for the climate-neutral economy.

The Policy outlines the main principles for environmental, social and economic responsibility, governance and

accountability in sustainability management. KN expects each KN group employee, contractor and supplier will follow the

above practices to ensure that KN meets its sustainability goals.

The Sustainability policy is published on Company’s website: Sustainability policy. Also, it is introduced to all current

employees of KN and new employees when joining the Company.

Furthermore, the Company has additional policies providing guidelines for implementing sustainability principles in

different areas. Some publicly available policies can be found on KN’s website part dedicated to Sustainability:

https://www.kn.lt/zmones-ir-tvari-veikla/tvari-veikla/6246. KN operates in various countries and considers OECD Guidelines

for Multinational Enterprises.

Sustainability in the KN group is managed based on sustainability goals and measurable sustainability indicators.

Sustainability goals in the areas of environmental and social impact, as well as governance, have been set considering KN’s

impacts and material topics, as well as UN Sustainable development goals. Each goal has a concrete target for the short-

term period – the years 2024-2026, and the long-term period – the year 2030, and respective activities, which should help

to reach the goal, are planned. The relevant departments of the organisation are responsible for implementing these goals.

The information on these goals is provided in relevant thematic sections of this report.

Sustainability management in the Company starts at the Management Board level. While selecting the Independent Board

members, experience in applying environmental, social responsibility and corporate governance (ESG) criteria has also been

considered. The Board is active in determining the Company’s strategy and approves risk management plans, KN annual

activities plan and budget. It also analyses and evaluates the provided information concerning Company's activities,

business results, and financial situation. As of 2023, ESG-related goals are included among Company objectives, approved

by the Board.

Reporting results of sustainability progress to KN stakeholders regularly and via Sustainability report prepared while

following international standards and guidelines by the Governance coordination centre (analytical centre founded by the

Government of Lithuania, which seeks to ensure consistent and professional governance at state-owned enterprises), is an

integral part of the sustainability management process. To ensure efficient and purposeful Sustainability management new

dedicated role of Head of Sustainability was established in KN. KN's Head of Sustainability is directly responsible for

managing, reporting on and communicating Company's sustainability activities and issues.

To reach its sustainability goals, KN is also having regular practise of educating its management and employees on

sustainability topics.

STAKEHOLDERS

Stakeholder engagement is one of our principles of open and responsible action, which enables us to identify key topics

of interest to Stakeholders. The Company's activities, including relationships with stakeholders, are guided by the highest

standards of good governance practices, KN values and the Code of Conduct. In addition, KN is guided by the Stakeholder

Policy adopted by the Company in 2021 and published on its website. This Policy provides principles and guidelines for

developing KN's stakeholder relationships, ensuring opportunities to identify key topics of interest to stakeholders in the

context of the Company's sustainability.

Our key stakeholders are employees, shareholders, business partners, customers, communities, and society in general, and

decision-makers at the national and regional levels. The main topics relevant to our stakeholders include the safety of our

operations, economic impact, environmental performance improvement and good governance practices.

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OVERVIEW OF THE KEY STAKEHOLDERS OF THE COMPANY

STAKEHOLDER

AMBITION

WHY IS IT IMPORTANT?

HOW DO WE SEEK TO DEVELOP

RELATIONS?

Clients

• To help clients maintain

a competitive advantage

and move to more

sustainable forms of energy.

• To ensure that clients

have access to international

energy markets.

Satisfied clients are the foundation

for long-term growth and business

sustainability.

• To provide our know-how to create

added value for clients.

• To provide services to clients efficiently,

in a timely manner and with high quality.

• To seek innovations and offer innovative

solutions creating added value for clients.

Business partners

and business

community

Open, cooperative, proactive

members of the business

community, a good example

of the Company's business

sector.

Working with partners, we can

strengthen the value chain,

increase business competitiveness,

and create greater value for the

community members.

• In the course of the development of

professional contacts, sharing good

practices and experiences or raising and

calling for a common solution to the issues

relevant to the business community.

• Communicating on projects and sharing

experiences and knowledge.

• Taking part in solving the issues relevant

to the sector by offering its competencies.

Employees and

employee

representatives

KN’s innovative, adaptable,

and multicultural teams are

in demand worldwide.

People are our Company's core

asset and are always at the heart of

our technology-based operations.

Ensuring that members of the team have the

opportunity:

• to achieve high personal results;

• to continuously learn and improve;

• to earn a competitive salary;

• to feel proud of creating change and

connecting energy markets worldwide.

Develop relationships with employees or

their representative organisations based on

values and mutual dialogue.

Shareholders

An open and transparent

stock exchange participant

that meets the highest

standards set by investors

and earns the expected

return for shareholders.

The listing of a Company increases

confidence in its operations and

governance locally and

internationally. In turn, this

contributes to the long-term

success of the business.

Transparent, open, and timely

communication with investors, providing

them with regular and reliable data on the

Company's results and business plans.

State institutions

We ensure national energy

independence and meet

other goals set for a strategic

Company via the State letter

of Expectations and/or other

legislation.

By participating in the governance

of the state-controlled company

within the set rules and principles,

the state pursues business value

growth, dividend, or profit-sharing

yields, ensuring national security

interests, implementing strategic

projects or other objectives set by

law and formulating expectations

for companies accordingly. Clearly

presented government

expectations contribute to the

increase of the state's welfare.

• Business is developed responsibly,

increasing the value created for Lithuania

and all shareholders through Company

business decisions.

• Activities are carried out in such a way as

to ensure work safety, safe and reliable

operation of managed infrastructure, and

proper care of the environment.

The Company follows the highest standards

of transparency, governance, ethics, and

social responsibility, thus setting an example

for other organisations in the country and

promoting overall progress.

Municipal

institutions

Creating value for the

regions where the Company

operates

The Company acts as a responsible

member of the community, aiming

to create mutual value, i.e.

revealing its full business potential

and contributing to the success of

the region in which it operates.

• Activities are carried out in such a way as

to ensure work safety, safe and reliable

operation of managed infrastructure, and

proper care for the environment.

• Engagement in solving issues relevant to

the specific region by offering

competencies, know-how or other

resources.

Contributing to increasing the potential of

the regions through own business contacts

or communication with business partners.

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STAKEHOLDER

AMBITION

WHY IS IT IMPORTANT?

HOW DO WE SEEK TO DEVELOP

RELATIONS?

Neighbouring

communities

• To increase trust in the

Company and ensure its

lawful operations.

• To contribute to

promoting a positive impact

in relationships with

communities in society.

A sustainable and credible

neighbourhood, involvement of

communities related to the long-

term perspective of the Company

activity and "the right to act".

• Developing an open dialogue,

responding to the need to know and

understand the issues most relevant to

communities and the company's impact on

them, in line with the principle of good

neighbourliness.

Media, opinion

shapers

To be an open and

cooperative partner for the

media and opinion shapers

in providing correct and

reliable information.

We understand that information

about our activities as a strategic

Company is important for our

stakeholders, and, considering this,

we engage in an active dialogue.

• Our goal is to build and maintain

professional relationships with the media

and opinion shapers.

• We show initiative by sharing value-

creating knowledge and insights.

• When sharing information, we respect

customer data and comply with contractual

obligations.

SIGNIFICANT IMPACTS AND SUSTAINABILITY RISKS

The Company is constantly assessing its significant environmental and socioeconomic impacts. The result of the last

assessment is presented in the infographic below.

SIGNIFICANT IMPACTS OF KN

SIGNIFICANT ENVIRONMENTAL IMPACTS

SIGNIFICANT SOCIOECONOMIC IMPACTS

SIGNIFICANT GOVERNANCE IMPACTS

Greenhouse gas (GHG) emissions

Workplace creation

Establishment of Operational excellence

Emissions of other pollutants (NOx, Volatile

organic compounds, etc.)

Development of employee skills and

ensuring their welfare

Tangible leadership in sustainability in

Company’s operational areas

Waste (hazardous and non-hazardous)

Employee health and safety

Community disturbance (odours and noises)

Ensuring human rights and equal

opportunities at work

Water usage

Supporting local communities

Effluents

Ensuring the energy independence of the

country

Possible spills and other critical incidents

having an impact on the environment

(including groundwater and soil)

Taxes and dividends paid

In addition, while preparing this report, KN also assessed the main risks for the Company’s sustainability – they are

presented in the table below. All these impacts and risks were considered while determining Company’s Material topics

and setting respective ESG goals.

RISKS FOR KN’S SUSTAINABILITY

RISK

DESCRIPTION

RISK MANAGEMENT

Environmental

pollution due to

industrial accidents

or malfunctions

Employee errors, climate/weather conditions or industrial

accidents may cause damage to the environment,

property workers and surrounding communities.

KN Quality, Environmental Protection, Occupational

Health and Safety Management Systems meet the

requirements of the international standards ISO 9001:

2015, ISO 14001: 2015 and ISO 45001: 2018. These

standards are recertified regularly.

Process safety incident and technological malfunction

incident management procedures are reinforced.

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RISK

DESCRIPTION

RISK MANAGEMENT

KN is monitoring air pollution emissions from

stationary air pollution sources and monitoring an

impact on the environmental air quality.

Proper industrial accident management plans are in

place – they are timely revised and updated.

Regular training of employees on safety issues is

being performed.

Health and safety

incidents at Work

KN handles various fuels, oil and chemical products; its

terminals are classified as dangerous objects. All this

makes employee health and safety one of the most

crucial factors in and for Companies’ operations.

KN Quality, Occupational Health and Safety

Management Systems meet the requirements of the

international standards ISO 9001: 2015 and ISO 45001:

2018. These standards are recertified regularly.

Regular employee training is being performed.

A culture of zero safety accidents is fostered within the

Company, and a respective incentive system is in

place.

Lack of skilled

workforce

The competition for employees with specific

competencies, which the Company needs, has intensified,

especially among the port companies. Difficulties in

attracting new employees would mean an additional

workload for the Company's current workforce and may

negatively impact employee satisfaction and talent

retention.

Competitive remuneration policy, employee

competence development system, employee overall

compensation and benefits structure and process for

adaptation of new employees are in place.

Assessing and planning the demand for crucial

competence positions is being done, as well as

constantly reviewing employee value propositions and

employer branding strategy.

Conflicts with

communities

regarding KN

activities

Malfunctions or operations errors at KN terminals may

have a negative impact on people living in the

neighbourhood of the terminals, mainly worsening their

living conditions because of the oil products’ odours or

noise of the technical processes. Moreover, due to the

proximity of another logistic terminal with similar

activities, local communities sometimes may assume KN

is responsible for some of the negative impacts caused

by other companies.

Dedicated communication channels to submit

complaints for the communities and complaints

review/ assessment procedures are in place, enabling

KN activities to minimise the impact.

Regular communication and information for

communities about KN activities’ impact and

providing actual data of regularly performed

monitoring is ensured.

Cyber security

incidents

Cyber security risk is the potential for unauthorised

access, use, disclosure, disruption, modification, or

destruction of information and systems by cybercriminals

or malicious actors.

The Company’s cyber security is governed by the Cyber

Security Policy and Guidelines, which include

organisational and technical provisions of the Cyber

Law of the Republic of Lithuania. Regular activities

include vulnerability management, conducting regular

security assessments and penetration testing, and

providing employee training on the best cybersecurity

practices.

Non-compliance

The Company operates in different locations in Lithuania

and foreign countries and has many international

business partners. Therefore, corruption and other

infringement (for example – not following established

procedures and policies) could damage the Company's

reputation and negatively impact its business contracts.

Due diligence procedures are in place.

New policies and mechanisms to enable and ensure

them (f. e.g., training and whistleblowing procedures)

are constantly developed.

Additional general risk management system information is provided in this Consolidated Annual Report’s chapter “Risk

Factors and Risk Management”.

CLIMATE RISK AND ADAPTATION

The possible impact of climate change on the activities of the KN group has been assessed according to long-term climate

changes forecast and climate models for Lithuania, as well as the “Sensitivity of individual sectors to climate change”

analysis by the Ministry of Environment. As a result, the main risks are presented in the table below, as well as adaptation

strategies.

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CLIMATE RISKS AND ADAPTATION STRATEGIES

RISK CATEGORY

RISK DESCRIPTION

ADAPTATION STRATEGIES

PHYSICAL RISK

Acute risks

Risk of worsening operating conditions from extreme weather events:

- Changes in storm strength leading to increased wind speed

and more giant waves – impact on the product loading

process in the Port facilities and railway overpasses, the rising

possibility of loading incidents (spills);

- regional changes in temperatures, precipitation pattern and

frequency – e.g., downpours could impact transshipment

operations;

extreme weather temperatures and heat waves – possible risks for

employee health and logistics infrastructure.

Regular assessment of physical risks,

robust safety and health assurance

protocols, periodical renewal of emergency

response and crisis management plans.

Chronic risks

Risk of disruption of operational processes due to the long-term

increase in average temperatures, changing precipitation and wind

patterns, and rising sea levels.

Due to the expected increase in air temperature in the cold period of

the year, more frequent fluctuations in air temperature around 0°C are

expected. Due to more frequent freeze-thaw cycles, the operational

time of above-ground and underground infrastructure may be

shortened, and infrastructure repair and renovation costs may increase.

Due to the expected decrease in the number of days with snow cover

(especially in the western part of Lithuania), the probability of damage

to the underground infrastructure due to frost may increase, especially

during extreme cold, and the energy losses of thermal lines may

increase.

Regular assessment of physical risks.

Re-planning the work mode according to

the changing conditions, dedicating more

resources towards regular infrastructure

maintenance, and increasing infrastructure

resilience and energy efficiency. Reviewing

the cost planning process.

TRANSITIONAL RISKS

Policies and

regulations

Decreased revenue from reduced demand for oil and natural gas

(Fossil-Fuel Business Model Disruption).

Risk of increased costs due to introducing and expanding a carbon price

system.

Diversification of the portfolio of products.

Investigation of low-carbon technologies

(CO2 capturing, hydrogen, operation and

maintenance services of wind power parks

in the Baltic Sea) opportunities that

complement existing assets, strategy and

competencies.

The Company has the challenge to transform its operations so that the services provided meet the needs of the future and

the operations are climate neutral. We understand that in the coming decades, the world will have to transition from the

still widespread use of fossil fuels for energy and transportation to other forms of energy. KN has always been and wants

to remain an essential part of future energy supply and value chains while simultaneously successfully creating value in the

energy sector, ensuring energy security and financial returns for shareholders and Lithuania. In all this context, we need to

look far into the future, review the current business model, and make long-term decisions to ensure competitive advantage

and greater profitability of our activities in the future. Please refer to this report’s “Strategy” part for more information.

MATERIAL TOPICS

In 2022 Materiality assessment in KN was implemented: KN has analysed key sustainability topics to better respond to

stakeholder expectations, manage risks and act more sustainably. The initial list of topics was drawn up by the Company’s

representatives and sustainability experts, assessing the Company's impacts and the key aspects affecting sustainability.

Several remote meetings were held with key stakeholders – representatives of Klaipėda City Municipality Administration,

Klaipėda University, Klaipėda Department of the National Centre for Public Health under the Ministry of Health,

representatives of Klaipėda communities (Vitė, Melnragė, Dangė) and their associations in the Company's neighbourhood

as well as representatives of the Office of the President of the Republic of Lithuania, the Ministry of the Environment, the

Ministry of Economy and Innovations, the Ministry of Transport and Communications, the State Energy Regulatory Council.

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They discussed the Company's impacts and sustainability aspects, ranked materiality topics, and suggested additional

aspects. It is important to mention that all this has been done in the context of the ongoing pandemic, but before Russia’s

invasion of Ukraine, which happened at the end of February 2022.

Materiality topics were also rated by the Company's employees, customers and partners using a remote survey. Finally, the

Company's management expressed its position in the ranking process, and the materiality matrix was developed. According

to the widely used methodology, the matrix ranks the themes on the vertical axis according to their importance to

stakeholders and on the horizontal axis according to their importance to the Company. The Materiality matrix of KN

contains 36 topics: 11 environmental, 13 social and 12 governance topics. These topics were considered while setting

relevant ESG goals and during the corporate strategy update process.

While preparing report, GRI Sector Standard 11: Oil and Gas 2021, which came into effect on January 1st, 2023, has also

been analysed. This process helped to review the material topics determined in Materiality Matrix, as is encouraged by the

new version of Universal GRI standards, such as GRI 3: Material topics, effective since January 1st, 2023 (it stresses the

importance of the Company's impacts and reviews the role of stakeholders in the process of determining material topics).

As a result, the 22 most essential material topics were defined while preparing this report – they are listed (alphabetically,

according to relevant ESG area) in the infographic below. Performance on these topics and their management are

presented in this Sustainability report.

UPDATED MATERIAL TOPICS

Air emissions

Employment and Employment practices

Asset integrity and incident management

Energy usage

Employee competence development and turnover

Climate adaptation, resilience, and sustainable

innovation and transformation

Greenhouse gas emissions

Employee engagement, empowerment, and

satisfaction

Compliance

Waste

Competitive remuneration policy

Cyber security and data protection

Water and effluents

Freedom of association and collective bargaining

Payment to governments and taxes

Local Communities and social initiatives

Prevention of anti-competitive behaviour

Non-discrimination and equal opportunity

Prevention of corruption

Occupational health and safety

Procurement practices

Sustainability management and communication

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ENVIRONMENTAL IMPACT AND PROTECTION ON ENVIRONMENT

IMPACT MANAGEMENT

One of the most important KN's strategic objectives is to ensure the environmentally sustainable operation of KN terminals

and full compliance with environmental requirements as with the new long-term corporate strategy up to 2050, KN aims

at achieving complete climate neutrality for KN’s operations by 2050.

Since 2020, KN's environmental management system is certified with the ISO 14001:2015 standard and audited for its

compliance with the issued certificate (last audit in 2022). Both in the operation of the existing Liquid and LNG terminals

and the planning of new activities, KN complies with the basic principles of environmental protection set out in the National

Environmental Strategy of the Republic of Lithuania, with the conditions set out in the environmental permits, as well as

with the norms set out in the environmental rules and standards.

Also, KN has an approved “Quality, Environmental, Health and Safety Policy”, by which the Company commits:

▪ To protect the environment, to use natural and energy resources rationally and sparingly, and to carry out effective

prevention of pollution, waste generation, and unforeseen dangerous situations, and to strive for their reduction,

▪ Plan and carry out our activities by assessing possible risks, implementing, and using environmentally friendly and

advanced technologies and work methods.

Furthermore, the Company has a procedure for determining environmental protection aspects and environmental impact

management, the purpose of which is to determine and ensure the identification of environmental protection aspects, the

determination of their significance and impact on the environment, and their management to ensure the efficiency of

environmental protection and compliance with applicable legal acts and the requirements of the ISO 14001:2015 standard.

Following this procedure, KN has identified the significant environmental aspects of its operations and their impact on the

environment and designed the necessary control and management measures to avoid negative environmental impacts of

our activities and mitigate them.

KN’s environmental management areas are climate change mitigation, energy efficiency, prevention of and reducing air

emissions and pollution, waste reduction, usage of water and efficient use of other natural resources. The Company

continuously monitors its impact on environmental quality via the following indicators: greenhouse gas emissions,

emissions of other pollutants, energy consumption, water consumption, amount of and treatment of sewage, and waste

generated and managed via different methods. These indicators are provided in the report – providing data according to

various locations/activities: Klaipėda Liquid Energy Terminal, Subačius Liquid Energy Terminal , LNG terminal and related

infrastructure in Klaipėda.

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NEGATIVE IMPACT REDUCTION

We acknowledge our responsibility for our environmental footprint and search for ways to minimise it rather than comply

with environmental norms and requirements. Based on ISO standard 140001:2005 KN has Environmental Protection

Program which is active from 2022. The Program includes specific quantitative mitigation targets for 2024 and 2030 and

corresponding measures.

The main goals that were identified and tracked in the scope of the Program:

▪ To reduce direct CO2 emissions of Klaipėda Liquid Energy terminal (Scope 1) by at least 20% by the end of 2024

and at least 50% by the end of 2030, compared to 2020.

▪ Use only green electricity to reduce indirect CO2 emissions (Scope 2) generated while producing electricity used

in Klaipėda and Subačius Liquid Energy Terminals.

▪ To reduce natural gas and electricity consumption by at least 3% by the end of 2024 and at least 10% by the end

of 2030, compared to 2020.

▪ To reduce relative (emissions/transshipped products) VOC emissions from the handling and storage of petroleum

products by 35% by the end of 2024 and by 45% by the end of 2030, compared to 2020, and to ensure that

maximum odour concentration in ambient air (caused by relevant air emissions) will not exceed 1 odour unit in

the residential environment due to the activity of KLET by the end of 2024, and will not exceed 0.7 odour unit till

the end of 2030.

▪ To increase the% of waste recycled – to reach at least 70% by the end of 2024 and at least 90% of waste recycled

by the end of 2030.

In 2023 a new long-term corporate strategy up to 2050 with goal of achieving complete climate neutrality for KN’s

operations by 2050 was prepared and approved. It sets goals of reducing emissions by over 30 precent by 2030 and

approximately 70 percent by 2040. It requires a very clear focus on reduction of emissions into the atmosphere and increase

of energy efficiency using energy resources. Accordingly, KN sets the following short-term goals (2023-2030):

▪ 100% use of green electricity (KN) while producing electricity for own use in KLET and SLET.

▪ 30% reduction in VOC emissions vs 2022.

▪ >90% waste recycled.

Considering the significant update of the KN strategy, the internal emission management plan is planned to be reviewed,

aligned and updated in 2024 to reflect agreed changes and ambitions set in the KN strategy and progress of achievement

of goals will be reported accordingly in the annual Sustainability report for 2024.

We constantly seek new technical solutions to reduce emissions and waste and mitigate our impact. For example, since

2018, KN has been implementing the Environmental Action Plan in response to comments from communities regarding

perceived unpleasant odours. It aims to reduce volatile organic compound (VOC) emissions via more efficient neutralisation

of VOCs. Communities and other interested parties are constantly informed about the progress of implementing this plan.

KN investments related to the implementation of this plan have reached EUR 8 million.

Other significant investments related to reducing our negative environmental impact are mentioned in relevant impact-

related sections of this report.

COMMUNICATION ON ENVIRONMENTAL IMPACT

KN, following the environmental monitoring regulations of an Economic Entity and in coordination with the environmental

protection authorities, carries out a monitoring program. The Company monitors the environmental impact of the terminals

(emissions to ambient air and surface water and the quality of ambient air, groundwater, and surface water). It makes the

monitoring data available to stakeholders in a clear and

understandable way. The aim is to enable stakeholders to

assess the compliance of the terminal's activities with the

established environmental quality standards by allowing them

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to compare the actual emissions of pollutants with the established standards. Monitoring data is available on the

Company's website.

Since the end of 2022, KN has publicly shared VOC monitoring data in real-time on Company's website (www.kn.lt). The

public can also obtain real-time information on transshipment operations by calling a dedicated line, announced on

Company’s website.

KN is also constantly strengthening community relations – including discussions on environmental impact, the Company's

investments, as well as concerns of the residents. In 2023, one such meeting was held with local communities. KN also

regularly participates in meetings organised by state institutions on environmental quality issues, where it presents the

measures used and implemented to reduce the negative impact of its activities on the environment.

INCIDENTS, INSPECTIONS, COMPLAINTS

In 2023, there were no significant spills of oil products, chemicals, or waste in all the terminals operated by KN.

In 2023, 6 scheduled environmental inspections were performed in Klaipėda Liquid Energy Terminal, 2 scheduled

inspections were conducted in Subačius Liquid Energy Terminal, and 3 scheduled inspections were performed in the LNG

terminal.

In 2023, no penalties or sanctions related to environmental breaches were imposed on Klaipėda Liquid Energy Terminal,

Subačius Liquid Energy Terminal or Klaipėda LNG Terminal.

Since 2018, the Company has had a dedicated line, announced on Company's website, using which residents can file a

complaint about KLET activities. They can also file a written complaint via official Company e-mail. All complaints received

in any form (written, oral) are registered. Upon receipt of a complaint, the situation which gave rise to the complaint is

assessed/analysed, and a reply is provided to the complainant.

In 2023 no enquiries were received from public authorities related to the odours of the transshipment operations at the

premises of Klaipėda Liquid Energy Terminal. 2 complaints regarding KLET were received from communities. In 2023 no

enquiries were received from public authorities regarding Subačius Liquid Energy Terminal and LNG terminal. No

complaints regarding these two terminals were received from communities.

EMPLOYEE ENGAGEMENT IN ENVIRONMENTAL AND SUSTAINABILITY ISSUES

Employee engagement in environmental activities and their education on sustainability issues is an integral part of our

environmental initiatives. Waste prevention and recycling, saving energy resources, and education on climate change and

other environmental topics are the most important spheres of these initiatives.

The most important permanent activities and initiatives of 2023:

▪ In-house continuous training on waste generation, sorting, and management; Information on waste prevention

and sorting, as well as on KN's generated and transferred waste, is provided on the Company‘s intranet page.

▪ "I Care campaign", aimed at reminding employees to switch off various devices and lighting and save electricity.

▪ Encouraging employees to come up with ideas for KN that would help the Company to save energy resources.

▪ Participation in Spring Clean-Up Campaign "Darom" aimed to remove self-generated landfills, collect hazardous

waste, and clean green areas. KN employees and community were invited to team up and clean stadium area

access in Klaipėda.

▪ The Company also celebrates World Environment Day (June 5th). In 2023 all employees were invited to attend a

lecture on sustainability – Visvaldas Varžinskas, Associate Professor, the head of Kaunas University of Technology

(KTU) Institute of Environmental Engineering, KTU Packaging Innovation and Research Center, presented what is

the packaging materials and technologies of the future and what science has prepared for a changing tomorrow.

▪ On the European Waste Reduction Week, a visit was organized to the company Pack Klaipėda, located in Klaipėda

FEZ in November 2023. During the visit, employees were able to get acquainted with the production of sustainable

plastic for food packaging.

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As in other companies, teleworking has become commonplace during the pandemic and has taken hold among the

Company's employees, who are increasingly turning to hybrid working options that is becoming a regular practice. This

way, more meetings between different departments are being held by videoconferencing, thus reducing the number of

long-distance journeys and, consequently, contributing positively to the environmental impact.

In addition, much of the administrative work was digitalised (use of e-signature for signing contracts and other documents,

etc.) and is still being digitalised. The Company also has a dedicated Paperless initiative to promote a paperless working

culture. In 2023, number of printed pages of documents in KN had further decreased and reached 726,897 pages, 52,003

pages or 6.7% less compared to the last year (778,900 pages in 2022). For comparison, number of printed pages in 2019

was 954,679.

GREENHOUSE GAS (GHG) EMISSIONS

The Company prepares annual greenhouse gas (GHG) emission reports following the European Union Emissions Trading

Scheme requirements and annual GHG reports following the requirements of The Greenhouse Gas Protocol: A Corporate

Accounting and Reporting Standard (from now on – GHG Protocol). As GHG emissions directly contribute to climate

change, we are constantly searching for ways to reduce our emissions – starting with Scope 1 and Scope 2 emissions.

GHGs in KN’s accounting include CO2 and CH4 emissions. Emissions of other greenhouse gases (N

O, HFCs, PFCs, SF

) are

not accounted for because no significant sources of pollution with these gases have been identified.

GHG emissions we already account for:

▪ Scope 1. Direct CO2 emissions (from boilers and vehicles) and direct CH4 emissions (from gas leaks in pipelines

and tanks). Since 2022 we also include emissions from refrigeration reagents.

▪ Scope 2. Indirect CO2 emissions related to the production of purchased electricity. Since 2022 we also include

heat energy consumed in KN's leased office premises.

▪ Scope 3. Indirect CO2 emissions from the production of purchased materials, the paper used, and emissions

related to water supply, sewage, waste management and some services. Since 2022 electrical transmission losses,

some business travel-related data (flights, accommodation) and losses related to liquid energy product logistics

were also added into calculations.

Currently, 94% of KN’s GHG emissions are treated as Scope 3 emissions because FSRU Independence is owned by company

Hoegh LNG and thus included in Scope 3: the most significant share of these GHG emissions being CO2 emissions from

the used natural gas and diesel on vessels, used for transportation of LNG vessels. When KN takes over the FSRU

Independence in 2024, emissions of the LNG terminal will be accounted as Scope 1 emissions.

According to the Reporting Guidelines, it is not recommended to include information about the electricity produced for

your own needs in the calculations if it is produced from natural gas to avoid double accounting. Therefore, emissions

related to electricity produced by LNG Terminal for its own needs from liquefied natural gas are not included in any Scope.

Additionally, they are already included in Scope 3 as emissions from used natural gas and diesel in LNG Terminal.

CO2 EMISSIONS

TONNES, CO2 EQUIVALENT

2020

2021

RECALCULATED

(NEW SOURCES

INCLUDED)

2022

RECALCULATED

2023

Direct CO2 emissions (Scope 1), t/m

14,242

7,816

7,850

5,878

5,394

Indirect CO2 emissions (Scope 2), t/m

1,229

Indirect CO2 emissions (Scope 2)**, t/m

(-) 5,060

(-) 3,271*

(-) 3,707

(-) 3,397

(-) 1,781

Indirect CO2 emissions (Scope 3), t/m

66,042

53,694

62,839

94,192

110,504

Total CO2 emissions

80,284

61,510

70,694

100,092

117,127

*Market-based method (following GHG protocol). The year 2022 has been recalculated due to the updated emission factors in the

database.

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** With almost major part of purchased electricity coming from renewable sources, in 2023, KN did not release into the environment 1,781

of CO2 emissions.

*** 95% of KN’s GHG emissions (Scope1) consist of emissions from combustion plants using fossil fuels

The Scope 1 emissions decreased in 2023 compared to 2022 8%. In 2023, 8% less natural gas was used in Klaipėda Liquid

Energy terminal due to the more effective use of natural gas and 65% less liquid fuel in fuel-burning devices in Subačius

Liquid Energy terminal due to the usage of self-generated and saved green electricity for installed heat pumps. Increase in

Scope 3 emissions is influenced by the increased volumes of Klaipėda LNG terminal operations. The one time increase in

Scope 2 emissions was recorded due to the change of electricity supplier when part of year KN used electricity from

guaranteed supply service. The risk of further emissions increase was managed by signing the contract with the supplier

ensuring the green electricity supply and including such requirement as mandatory into future electricity procurement

conditions.

Further GHG reduction measures are foreseen - they aim to reduce emissions by 30% by 2030 (Scope 1 – Scope 2) and

reduce Scope 2 emissions by various energy efficiency means and expanding usage of green energy – continuing to

purchase 100% green electricity for Liquid Energy terminals and installing solar power plants.

RELATIVE GHG EMISSIONS PER TONNE OF PRODUCT TRANSSHIPPED IN KN TERMINALS AND DEGASSED, MhW:

2020

2021

RECALCULATED

(NEW SOURCES

INCLUDED)*

2022*

2023

CHANGE,%

Total emissions / Transshipped amounts at

KLET (kg CO2 / t of transshipment)

2.41

2.06

2.60

1.70

1.89

Total emissions / Transshipped amounts at

SLET (kg CO2 / t of transshipment)

0.21

0.33

0.63

0.47

0.98

109

Total emissions / LNG degasified and

transshipped volumes of natural gas (kg

CO2 / MWh

0.01

0.07

600

Total emissions / LNGT degasified and

transshipped volumes of natural gas (kg

CO2 / MWh)

3.01

3.28

3.73

2.88

3.24

*Market-based method (following GHG protocol).

** Recalculated relevant emissions additionally included overloaded natural gas volume.

ENERGY CONSUMPTION AND EFFICIENCY

KN pays much attention to the energy savings. To reach this, the Company is reviewing and optimising energy-intensive

liquid energy products handling and storage processes, and various electricity and natural gas saving measures have

already been applied, energy savings improvement measures application in other areas of the Company’s activities are in

focus too. A solar power plant project in the Subačius Liquid Energy terminal was completed in Q1, 2023. A feasibility study

for an electrical interconnection to the Klaipėda LNG terminal to reduce its’ CO2 emissions is being carried out and

preparation activities for the project implementation started.

ELECTRICITY CONSUMPTION (KLAIPĖDA AND SUBAČIUS LIQUID ENERGY TERMINALS, LNG TERMINAL IN

KLAIPĖDA: STORAGE VESSEL AND RELATED INFRASTRUCTURE)

ELECTRICITY, MWh

2020

2021

2022

2023

Electricity purchased and used

11,206

9,525

7,233

6,341

The proportion of green electricity in purchased electricity

100%

60%

Electricity generated from LNG and used in the Klaipėda LNG storage vessel

49,903

47,071

63,678

68, 849

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In 2023, 12% less electricity was used in Klaipėda and Subačius Liquid Energy Terminals than in 2022 (and 33% less than in

2021) – due to implemented energy efficiency measures. Energy intensity in 2023 (amount of energy used per tonne of

transshipped product) in KLET reduced by 7%, and in SLET increased by 60%, compared to 2022. As the LNG terminal in

2023 degasified 4% more natural gas than in 2022, the amount of electricity needed and thus generated in the storage

vessel from the LNG increased by 8%. Thus, the energy intensity in 2023 (amount of energy used per tonne of degasified

product) did not change.

USE OF FOSSIL FUEL (IN LIQUID TERMINALS AND LNG TERMINAL)

2021

2022

2023

Gas in fuel-burning devices in Klaipėda Liquid Energy terminal, millions of m

4.05

2.91

2.68

Diesel in fuel-burning devices in Klaipėda Liquid Energy terminal, tonnes

9.9

Gas in fuel-burning devices in the LNG storage vessel, millions of m

25.53

38.46

45.02

Liquid fuel in fuel-burning devices in Subačius Liquid Energy terminal, thousands of m

6.7

7.9

2.8

Diesel in various installations in Liquid Energy terminals and the LNG terminal, thousands

of m

11.9

9.4

7.4

One of the most signific investments in 2023 with the project value of more than EUR 200 thousand is the 300 kW solar

power plant installation at the Subačius Liquid Energy Terminal, which started to operate in March. The installation includes

731 solar modules on the roofs of the administration, boiler house, laboratory buildings and garage complex. The total

surface area of all the solar modules is around 3,000 square metres. The electricity produced by the plant will meet 100%

of the electricity demand of Subačius Liquid Energy Terminal.

In 2023, 24 heat pumps (air-to-water and air-to-air) in Subačius Liquid

Energy terminal were installed. The air-to-water heat pump has a total

capacity of 192 kW, while the 12 air-to-air heat pumps have a

combined total capacity of – 40 kW. Heat pumps will use renewable

energy from the solar power plant to heat the administration

buildings. The value of investment in this project is around EUR 147

thousand (the project is 100% financed by EMPA funds).

Klaipėda Liquid Energy Terminal has installed a solar collector system for a hot water system with a total surface area of 20

. The system will heat water for three administration buildings. The value of investment in this project is EUR 141

thousand (the project is partially financed by EMPA funds). It is preliminary estimated that the implemented solutions might

reduce KN CO2 emissions by at least 130 t per year. Actual data will be tracked and reported annually.

The Company also plans to continue investing in sustainable ways of generating electricity. A project of solar power plant

with a capacity of 800 kW, about 2.5 times larger, to be installed at the KN Liquid Energy Terminal in Klaipėda is also

estimated. This would require an investment of around EUR 700 thousand. The decision regarding this project

implementation is planned to be made in 2024.

OTHER SIGNIFICANT AIR EMISSIONS

This report provides data only for those air pollutants, the highest emissions of which are released by KN: carbon monoxide

(CO), nitrogen oxides (NOx) and volatile organic compounds (VOCs). Pollutant emissions have been calculated following

the methodologies in force in Lithuania.

At Klaipėda Liquid Energy Terminal, annual VOC emissions depend directly on the annual amount of liquid energy products

transshipped and CO and NOx emissions – on the amount of natural gas burned in various installations: for example, the

boiler room and VOC incinerator (aimed at reducing VOC emissions). At Subačius Liquid Energy Terminal, annual VOC

emissions depend directly on the annual amount of liquid energy products transshipped. CO and NOx emissions of SLET

are relevantly small – thus not included in this report. At the LNG terminal, CO and NOx emissions depend directly on the

amount of gas burned in the combustion plant.

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The Company carries out the handling works related to liquid energy products following the Integrated Pollution Prevention

and Control permit issued by the Environmental Protection Agency, which specifies that the Company, while carrying out

the loading of liquid energy products, is required to implement (and implements) these environmental measures to reduce

the emission of pollutants and odours into the environment:

▪ while unloading petroleum products (fuel oil, diesel oil, etc.) from railway wagons, the wagons are affixed with

special covers with valves that prevent the emission of VOC from wagons to the environment;

▪ VOC recovery unit is used while unloading gasoline from railway wagons into the ground tanks;

▪ gasoline, fuel oil and diesel oil are being loaded into the petrol tankers that were previously used for the

transportation of oil;

▪ VOC vapours produced during loading are burned in the VOC vapour incineration equipment - torch.

Since 2022 the air-pollution treatment plant to clean pollutants collected from 16 existing petroleum product storage tanks

located in the heavy fuels tank park and the railway liquid energy products loading sidings of railways No. 1-2, which are

used for loading heavy fuel products (e.g., fuel oil), is operating in KN. Another measure – collecting air pollutants from 12

newly built tanks storing light petroleum products (e.g., petrol) and cleaning them in an air pollutant treatment plant is

planned to be implemented in 2025 (Q2). Technical assessment of existing infrastructure of the Klaipėda terminal (feasibility

study) to identify the most optimal solution for collecting air pollutants using existing infrastructure was caried out by

international consortium of technical engineering companies in 2023. The most suitable option was selected; however, it

needs separate design works and additional equipment procurement as well as its integration into automatic management

system of terminals. Public procurement procedures are planned and may take up to 1 year. Consequently, the

implementation term for this measure was postponed to year 2025. After implementation it will allow the reduction of

emissions of VOCs as well as the intensity of odours in the residential environment.

VOC EMISSIONS OF KN ENERGIES LIQUID TERMINALS

2020

2021

2022

2023

VOC emissions of Klaipėda Liquid Energy terminal, tonnes

32,5

Permissible annual pollution levels (standards) for KLET, tonnes

151

153

159

VOC emissions of Subačius Liquid Energy terminal, tonnes

6,7

4,4

4,8

Permissible annual pollution levels (standards) for SLET, tonnes

In 2023, VOC emissions at the Klaipėda Liquid Energy terminal were 2% bigger than compared to 2022, due to increased

amounts of transshipped products. In 2023, VOC emissions in the Subačius Liquid Energy terminal were 30% lower than

compared to 2022 due to decreased transshipment. In 2023, as in the previous year, the actual VOC emissions did not

reach the permissible annual pollution levels (standards) set in the environmental permits issued to the terminals of the

Company.

Currently, the maximum permitted odour concentration in ambient air (caused by relevant air emissions) is 8 European

odour units (OUE/m3) and from January 1st 2026, operators will have to ensure that odours in ambient air from

planned/executed economic activities do not exceed 5 OUE/m3. In 2023 concentration of odours related to activities of

KN did not exceed 0,6 OUE/m3 which is significantly lower than permitted levels.

CO EMISSIONS OF KN ENERGIES TERMINALS

2020

2021

2022

2023

CO emissions of Klaipėda Liquid Energy terminal, tonnes

Permissible annual pollution levels (standards) for KLET, tonnes

CO emissions of Klaipėda LNG terminal, tonnes

135

117

118

189

Permissible annual pollution levels (standards) for LNGT, tonnes

308

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EMISSIONS OF KN ENERGIES TERMINALS

2020

2021

2022

2023

NOx emissions of Klaipėda Liquid Energy terminal, tonnes

Permissible annual pollution levels (standards) for KLET, tonnes

NOx emissions of Klaipėda LNG terminal, tonnes

140

Permissible annual pollution levels (standards) for LNG terminal, tonnes

252

CO emissions from operations of the Klaipėda Liquid Energy terminal were bigger due to the structure of products that

were transshipped during 2023, i.e. larger amounts of gas were directed to the VOC incinerator, and bigger consumption

of fuel in firefighting pumping stations on the quays that worked at their full capacity in 2023 (after its commissioning in

2022). NOx and CO emissions from operations of the Klaipėda LNG terminal were higher due to increased operations at

the terminal. In both cases NOx and CO emissions did not exceed permissible levels.

WATER AND SEWAGE

WATER AND SEWAGE RELATED TO THE ACTIVITIES OF LIQUID ENERGY TERMINALS

The primary water source used in the operations of Klaipėda Liquid Energy Terminal is centralised water supply networks.

In 2023, 54% of water from centralised networks was used for steam production and on the liquid energy product trestle.

34% of the water was spilt due to a broken pipe; the rest was used for household purposes and provided to subscribers.

Subačius Liquid Energy Terminal draws water from a groundwater well for economic activities. Since April 2022, surface

water has been used for firefighting purposes and thus accounted for.

Water consumption by Klaipėda and Subačius Liquid Energy Terminals does not significantly impact water sources, despite

that KN still applies measures to reduce water consumption. After optimizing the liquid energy products handling and

storage processes in 2022, KLET's boiler house used 35% less water for steam production in 2023 than in 2022. Water is

not reused in Klaipėda and Subačius Liquid Energy Terminals.

WATER CONSUMPTION AT KN LIQUID ENERGY TERMINALS, BY SOURCE, M

YEAR

SOURCE

KLAIPĖDA LIQUID ENERGY

TERMINAL

SUBAČIUS LIQUID ENERGY

TERMINAL

2020

Centralised network, m

76,951

Groundwater, m

3,533

Surface water, m

30,203

2021

Centralised network, m

69,309

Groundwater, m

6,814

Surface water, m

29,291

2022

Centralised network, m

82,624*

Groundwater, m

2,347

Surface water, m

24,715

734**

2023

Centralised network, m

53,381*

Groundwater, m

4,137***

Surface water, m

26,865

4,024***

* In 2022, 11,167 m3 of water spilt due to a broken pipe in the Klaipėda Liquid Energy terminal – it led to higher consumption of centralised

water. In 2023, was fixed 18,413 m

of water loss, due to broken pipe. As the incident with water pipes breakages repeats, it is planned to

implement maintenance activities (renewal and replacement of old parts) in the most used areas of the water pipes system.

** Surface water in Subačius Liquid Energy Terminal has been accounted for since April 1st, 2022.

***The water in Subačius Liquid Energy Terminal was used during fire safety exercises, fire safety systems tests and etc. – it led to higher

consumption of water.

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AB KN ENERGIES SUSTAINABILITY

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To meet all environmental protection requirements and established standards, KN collects and treats the sewage generated

in operation. The number of pollutants discharged with sewage is calculated following the methodologies approved in the

Republic of Lithuania. The installed accounting devices account for the amount of sewage released.

Klaipėda Liquid Energy Terminal operates a unique sewage treatment system. Wastewater generated by the Company's

economic activities (industrial – including bilge water from ships, domestic, and surface sewage) is collected and treated in

biological sewage treatment plants based on biosorption processes (with activated carbon and microorganisms). This

system installed by KN is a unique technology designed by the Company that allows for achieving an extremely high

sewage treatment efficiency (80-99%, depending on the indicator). The Company’s sewage treatment plant is also used for

collecting and treating sewage related to the activities of the State Seaport of Klaipėda – such as vessel-generated waste

(bilge water) and cargo residues.

The treated sewage is discharged into the Curonian Lagoon (via the Klaipėda port channel) only after laboratory control is

conducted and meeting the required standards is confirmed. Monitoring of discharged sewage and the impact on surface

water quality is performed – part of it is monitoring the condition of the Curonian Lagoon (Klaipėda Strait) below and above

the sewage discharge facility. The monitoring data is provided monthly on the KN website (in the Lithuanian language).

Subačius Liquid Energy Terminal operates a sewage treatment plant, which treats surface sewage collected from the

terminal territory and domestic sewage. Sewage is treated up to the standards and discharged into a surface water body –

the Lėvuo River. The company itself carries out the monitoring of SLET discharged effluents once a quarter, periodical

inspections are also ensured by state institutions.

Pollutants in the sewage discharged at both Klaipėda and Subačius Liquid Energy Terminals are below the permissible

annual pollution levels (norms) set out in the environmental permits issued to the Terminals – for example, the amount of

pollutants discharged in sewage from KLET is 2.5% of the annual norm, in SLET –19% of the annual norm.

SEWAGE TREATMENT AT KLAIPĖDA LIQUID ENERGY TERMINAL (DOMESTIC, INDUSTRIAL, SURFACE

WASTEWATER)

INDICATOR

ANNUAL LIMIT

SET IN THE

ENVIRONMENTAL

PERMIT, t/m

2020

2021

2022

2023

FACT,

t/m

TREATMENT

EFFICIENCY,%

FACT, t/m

TREATMENT

EFFICIENCY,%

FACT, t/m

TREATMENT

EFFICIENCY,%

FACT, t/m

TREATMENT

EFFICIENCY,%

BDS7

18.4

0.4551

0.3357

0.4039

0.4599

NOx

0.9108

0.3342

0.4059

0.4526

Phosphorus

1.6

0.0945

0.0533

0.0447

0.0587

Oil and oil

products

4.0

0.0124

100

0.0000

100

0.0269

100

0.0088

100

Total treated and

discharged

amount, m

353,002

287,676

224,816

267,216

SEWAGE TREATMENT AT SUBAČIUS LIQUID ENERGY TERMINAL (SURFACE WASTEWATER)

INDICATOR

ANNUAL LIMIT

SET IN THE

ENVIRONMENTAL

PERMIT, t/m

2020

2021

2022

2023

FACT, t/m

TREATMENT

EFFICIENCY,%

FACT, t/m

TREATMENT

EFFICIENCY,%

FACT, t/m

TREATMENT

EFFICIENCY,%

FACT, t/m

TREATMENT

EFFICIENCY,%

BDS7

1.4529

0.1228

Not

measured

0.2564

Not

measured

0.3551

Not

measured

0.2474

Not

measured

Oil and oil

products

0.3158

0.01677

Not

measured

0.0457

Not

measured

0.0104

Not

measured

0.0094

Not

measured

Suspended

substances

1.8950

0.14104

Not

measured

0.3505

Not

measured

0.4043

Not

measured

0.4295

Not

measured

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AB KN ENERGIES SUSTAINABILITY

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INDICATOR

ANNUAL LIMIT

SET IN THE

ENVIRONMENTAL

PERMIT, t/m

2020

2021

2022

2023

FACT, t/m

TREATMENT

EFFICIENCY,%

FACT, t/m

TREATMENT

EFFICIENCY,%

FACT, t/m

TREATMENT

EFFICIENCY,%

FACT, t/m

TREATMENT

EFFICIENCY,%

Total treated and

discharged

amount, m

26,697

52,318

58,307

63,168

WATER AND SEWAGE RELATED TO THE ACTIVITY OF THE LNG TERMINAL

The only water source used in the LNG storage vessel is the Curonian Lagoon – accounted as surface water. The related

infrastructure does not use Centralised water and uses just a small amount (less than 100 m3 per year) of groundwater.

Water in the vessel is used for these technological processes: (i) cooling of the ship's engines and auxiliary equipment

premises; (ii) in the gasification unit water is used in the LNG "defrosting" process; (iii) for "water curtain", which means the

continuous spraying of water on the hulls during the transshipment of LNG from/to the LNG carrier/storage vessel, so that

in the event of LNG leakage damage to the hull is prevented. In 2023, about 72.24% of the extracted water was used in the

gasification plant, about 27.16% was used in cooling and 0.6% for "water curtain".

SURFACE WATER CONSUMPTION AT KLAIPĖDA LNG TERMINAL, M

2020

2021

2022

2023

Amount of water used, m

67,735,270

69,292,488

75,333,840

64,502,040

At the Klaipėda LNG terminal, the water consumption decreased in 2023 compared to 2022 about 14%.

Used water from the LNG vessel is returned to the Curonian Lagoon. Water used in ships operations is not polluted – it

meets the established quality parameters and does not require treatment – therefore, it does not affect the water quality

of the Curonian Lagoon and is not considered sewage.

In the LNG storage vessel, during the gasification process in winter (when the water temperature is less than 13°C), the

water taken from the Curonian Lagoon is used in a "closed circuit". It means water is not discharged into the Curonian

Lagoon but is reused in the LNG gasification process.

WASTE MANAGEMENT

Following ISO 14001:2015, the Company has a Waste Management Procedure – it determines the waste management

process, including the accounting procedure of waste generated and managed (transferred to waste handlers). Waste is

managed following environmental requirements to avoid negative effects on the health of KN employees, the general

public and the environment. A dedicated department is created to manage waste-related processes, and internal audits of

the waste management system are carried out regularly to ensure compliance with the Waste Management procedure.

This department also manages a dedicated intranet page, where employees can find all relevant information related to

waste – it is helpful for employees at work and in their daily activities. Additional internal waste prevention and recycling

training is conducted for the Company's employees.

The most significant amount of waste in KN is generated during the operations of the terminals – loading operations,

technical maintenance, tank cleaning, and waste management. The largest part of hazardous waste consists of various

materials and water which had contact with oil products. Most non-hazardous waste is mixed municipal, scrap metal,

bitumen, and large/mixed construction waste. Information on hazardous and non-hazardous waste generated and

managed is presented separately, based on information provided by waste handlers, according to the Waste Management

Rules of the Republic of Lithuania.

We aim to increase the% of KN waste recycled – to reach at least 90% by the end of 2030. For that purpose, when concluding

contracts with licensed waste handlers, we ask them to ensure that priority will be given to waste recycling and that no less

than 90% of the amount transferred per year will be recycled. In 2023 the amount of hazardous and non-hazardous waste

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AB KN ENERGIES SUSTAINABILITY

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generated in KLET and SLET increased due to the planned and scheduled repair and cleaning of storage tanks, however it

is important to stress that more than 90% of the waste was recycled ensuring that such increase would not have the

negative impact.

MANAGEMENT OF WASTE FROM KLAIPĖDA LIQUID ENERGY TERMINAL

KAIPĖDA LIQUID ENERGY

TERMINAL

2020

2021

2022

2023

Total waste (tonnes)

428.73

1,019.43*

183.88

2,979.99**

Ways of managing non-

hazardous waste

tonnes

Non-hazardous waste, total:

125.31

100

97.68

100

91.65

100

191.84

100

Recycling

59.47

47.5

90.72

93.0

90.6

177.69

92.62

Disposal

9.12

7.3

0.17

0.2

9.13

4.76

Composting

5.16

4.1

5.71

5.8

1.87

2.0

Waste incineration (energy

production)

51.56

41.1

1.08

1.0

5.73

6.3

5.02

2.62

Information not provided by the

waste handler

1.06

1.1

Ways of managing hazardous

waste

tonnes

Hazardous waste, total:

303.42

100

921.75*

100

92.22

100

2,788.155

100

Recycling

290.26

95.7

909.40

98.7

77.91

84.5

2,773.392

99.47

Waste incineration (energy

production)

12.67

4.2

5.87

0.6

8.96

9.7

14.711

0.53

Disposal

0.49

0.2

6.48

0.7

5.36

5.8

0.052

* In 2021, the amount of hazardous waste generated in KLET increased due to disturbances caused by changes in technological

processes and waste not transformed into a fuel.

** In 2023, the amount of hazardous and non-hazardous waste generated in KLET increased (about 93%) due to the planned and

scheduled repair and cleaning of storage tanks.

MANAGEMENT OF WASTE FROM SUBAČIUS LIQUID ENERGY TERMINAL

SUBAČIUS LIQUID ENERGY TERMINAL

2021

2022

2023

Total waste (tonnes)

107.181

52.67

120.931

Ways of managing non-hazardous waste

tonnes

Non-hazardous waste, total:

2.31*

100

3.32*

100

7.144

100

Recycling

5.779

80.89

Disposal

0.726

10.16

Waste incineration (energy production)

0.639

8.94

Ways of managing hazardous waste

tonnes

Hazardous waste, total:

104.867

100

49.35

100

113.787

100

Recycling

97.856

93.3

99.3

112.355

98.74

Waste incineration (energy production)

7.011

6.7

0.35

0.7

1.432

1.26

* Information on how non-hazardous waste is managed is not provided by waste handlers

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AB KN ENERGIES SUSTAINABILITY

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MANAGEMENT OF WASTE FROM THE KLAIPĖDA LNG TERMINAL

KAIPĖDA LNG TERMINAL

2021

2022

2023

Total waste* (tonnes)

879.65

2,161.97

2,852.17

tonnes

Non-hazardous waste, total:

36.65

4.2

22.90

1.1

28.07

Hazardous waste, total:

843

95.8

2,139.07**

98.9

2,824.10**

* The waste from the LNG terminal is transferred to waste handlers by the owner of the LNG vessel.

** Amount of waste increased due to increased activity, the most significant part of this being shipping liquids, water separators.

OTHER ENVIRONMENTAL IMPACTS

KN provides liquid energy products and gas handling and storage services, and its operations don’t require large quantities

of raw materials. Only small amounts of materials are used to service and maintain the existing infrastructure – therefore,

they are not reported.

The responsible use of chemicals throughout the company chain is governed by the approved instructions for the use of

chemicals and chemical mixtures, which are designed to establish safe methods of use and accounting for chemicals and

chemical mixtures from acquisition to end-use.

In September 2019, after evaluating the groundwater monitoring report of Klaipėda Liquid Energy Terminal for the last five

years, the Lithuanian Geological Survey additionally instructed to prepare a management plan for the territory, including

the railway loading stage and clean-up the territory, which was identified as contaminated already in 1996, when

groundwater pollution monitoring was conducted. The respective 3-year plan for contaminated territory has been

prepared, and in 2021, the Company started cleaning the contaminated area. The cleaning works according to the plan

were finalized in 2023. The final detailed report will be prepared at the beginning of 2024 and submitted to the responsible

authorities that will make respective decisions regarding further progress.

SOCIAL IMPACT

IMPACT MANAGEMENT AND PROTECTION OF HUMAN RIGHTS

The Company's main asset is its employees who are the most important link to the achievement of Company’s goals.

Company's personnel policy is focused on the development of teamwork, constant progress in professional development

and process efficiency, the optimal use of work resources, training of qualified staff, and development of the Company’s

culture that empowers personal growth, cooperation, succession planning, and creates additional value for the company

and its stakeholders.

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AB KN ENERGIES SUSTAINABILITY

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KN targets in social impact area for 2023 were:

▪ to reduce the percentage of the pay gap between female and male positions at the same Hay level by >=10% in

comparison to last year (and totally reduce gender pay gap to 0% at the end of 2030).

▪ to increase rate of women in managerial positions at least 1 percentage per year (and to increase proportion of

women in managing roles to > 36% by 2030).

Indicators showing the achievement of these objectives and the extent of the measures taken are described in detail further

in this report.

We aim to create a motivating working environment. Achieving long-term success requires diverse ideas, perspectives, and

talents. Therefore, at KN, we support diversity: a key source of innovation and competitiveness, allowing each of us to fully

participate and contribute to the Company’s success and help to ensure that business operates efficiently and reaches its

potential. KN’s reward and incentive principles are based on its employees' qualifications, experience, competencies, and

performance, thus avoiding bias or personal preferences.

We are guided by the values of KN and adhere to the principles of respect, cooperation, professionalism, and progress.

Our values guide how we operate anywhere in the world and what we expect from ourselves, our colleagues, our clients,

our management, and other key stakeholder s. Our quarterly and annual recognition initiatives are based on values, not

only achievements. In 2023 KN initiated values review process in the Organisation. The main aim of the renewal is to update

Company’s values to reflect changed business environment and newly adopted KN strategy until 2050 as the values were

identified and agreed in 2018. The following actions were taken: In September – October 2023 discussions regarding values

took place in KN’s department level, i.e., managers discussed in their departments what we are doing well, what should be

improved and what should be continued and selected one representative from each department. On October 25

departments’ representatives participated in the dedicated event where values and how they should be changed were

discussed. About 100 employees participated in this event. As a result, 10 statements were identified which were reviewed

in a half-day session with the directors of the Company. The project is continued and planned to be finished in 2024 with

the values material being prepared and presented to employees of KN.

KN activities are also guided by the principles of human rights

protection and ensuring that the Company does not contribute to

any human rights infringements. We foster an environment where

employees are treated equally, respected, and empowered to reach

their potential. We ensure that the Company is free from all forms of

discrimination – gender, religion, age, disability, race, sexual

orientation, etc.

The Company is committed to a fair, competitive, and transparent remuneration policy, complies with laws on overtime

work and working time, respects the right of workers to rest and does not tolerate any form of harassment or violence. We

oppose all forms of discrimination and forced labour. As set out in the Code of Conduct of KN, which applies to KN Group

as a whole, the Company's employees, irrespective of gender, nationality, religion, social or marital status, membership of

a social or political organisation, or any other personal characteristic, have equal opportunities to hold managerial positions,

to take part in decision-making, and to develop their professional skills.

In 2023, the same as in the previous year, the Company did not register any cases of human rights violations or related

complaints. We will continue to strive to ensure the highest standards of human rights protection in KN and to secure an

organisational culture fostering human rights. Furthermore, we educate our staff periodically on Human rights issues and

want to reach the goal of every employee participating in training. One case of employee behaviour not in line with KN

Açu Code of Conduct was reported in 2023. The notice of suspected behaviour was given by KN Açu employee. Internal

investigation was carried out and resulted in dismissal of the employee whose behaviour was investigated.

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AB KN ENERGIES SUSTAINABILITY

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The KN’s remuneration system is based on the work

structure developed using the Hay Methodology

and comparing salary values with other companies

in the local country market the Company is

operating to ensure that every KN employee is

rewarded fairly and competitively. The Company's

objective is to ensure the competitiveness of the

employees' remuneration in the local market,

internal fairness of remuneration, and eliminate the

possibility of discrimination on any grounds (age,

gender, etc.) – specific goals concerning the pay

gap in place.

KN provides a working environment that meets strict standards of safety and well-being. We aim to ensure a healthy and

safe workplace through sustainable operations, high safety standards and increased employee awareness of workplace

safety. In our sustainability goals, we have a Zero critical and process safety incidents target and targets related to Total

Recordable Case Frequency (TRCF, introduced in 2023), Occupational accident frequency rate (LTIR) and Frequency of near

misses or potential safety incidents (IR).

The responsibility of the Company and its employees to each other, colleagues, and society, as well as management of

social impact, are defined by the following:

▪ Collective Agreement;

▪ Rules of Working Procedure;

▪ Personnel Policy;

▪ Code of Conduct;

▪ Remuneration Policy;

▪ Procedure for setting up the remuneration system;

▪ Procedure for discussing and rewarding staff members' annual performance (renewed in 2023 and approved in

2024);

▪ Procedure for organising the adaptation of new staff;

▪ Guidelines for staff development;

▪ Procedure for organising staff selection;

▪ Procedure for the organisation of in-house training;

▪ Guidelines for the planning and development of the pool of key positions.

Since end of 2022 Company has the Violence and Harassment Prevention Policy in place. It foresees measures and principles

for solving cases to ensure that employees do not experience hostile, unethical, humiliating, aggressive, insulting, or

offensive actions that harm the honour and dignity, physical or psychological integrity of employees or which could

intimidate, humiliate employees, or push them into a helpless and powerless position.

In this part of the report, we use the term Company while talking about the leading Company – AB “KN Energies”, who

employs directly >90% of employees who are considered working in KN Group. ~7% work in Brazil and are employed by

“KN Açu Serviços de Terminal de GNL Ltda” (owned by AB “KN Energies” via UAB “KN Global Terminals” and UAB “SGD

SPB”). Other subsidiaries in Lithuania (in “KN Global Terminals”, “SGD terminalas”, and “SGD SPB”) operate mainly as SPVs,

each employing not more than 2 employees. Therefore, the main social impact is related to the activities of the leading

Company – and it sets the goals and principles to be followed in all companies of the KN Group. Relevant data is provided

for the Group according to the main location of employees’ activities. Some more detailed data is provided just for the

main Company (as it is not collected/analysed for smaller ones).

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AB KN ENERGIES SUSTAINABILITY

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EMPLOYEES AND EQUAL OPPORTUNITY

As of 31 December 2023, KN Group had 374 permanent and 2 temporary employees – 347 (345 permanent and 2

temporaries) working in Lithuania and 27 – in KN Açu. The growth of number of employees (data at the end of the year)

compared to the last year was 3.6% due to additional resources required for the business.

EMPLOYEES OF KN GROUP BY THE TYPE OF CONTRACT AND GENDER IN 2022

TOTAL IN GROUP

PERMANENT

EMPLOYEES

TEMPORARY

EMPLOYEES

FULL-TIME

EMPLOYEES

PART-TIME

EMPLOYEES

Working in Lithuania

Total

335 (98% in KN)

329

334

Male

244

239

244

Female

Working in Brazil: KN Açu

Total

Male

Female

EMPLOYEES OF KN GROUP BY THE TYPE OF CONTRACT AND GENDER IN 2023

TOTAL IN GROUP

PERMANENT

EMPLOYEES

TEMPORARY

EMPLOYEES

FULL-TIME

EMPLOYEES

PART-TIME

EMPLOYEES

Working in Lithuania

Total

347

345

346

Male

253

252

Female

Working in Brazil: KN Açu

Total

Male

Female

The detailed average annual number of employees according to categories for years 2022 and 2023 are provided in this

KN’s Consolidated annual report part “Payroll system and remuneration policy”.

The Company is committed to providing equal opportunities for all employees, regardless of gender, age, etc. Nevertheless,

most of the Company's employees (73,8%) still are male. Male to female workers ratio was 2.86 in Lithuania (the most

considerable disproportion among workers) and 5.75 in Brazil. The ratio is mainly influenced by the specific nature of the

Company's business, i.e. women are still less likely to opt for technical engineering and field-based technological work and

the specialities directly related to these activities. To address this challenge, the Company has set the gender balance KPI

for the managerial roles and seeks gender balance in the communication about the successful career path of employees

within the organisation.

In 2023, 26.3% of managerial positions (including members of the

collegial bodies, 15 women in total) in KN in Lithuania were held by

women (in 2022 - 26.78%, in 2021 – 26.6%, in 2020 – 24.56%).

The revised KN strategy 2050 includes the target for gender balance

assurance in managerial positions (> 36% proportion occupied by

women). The goal to increase proportion of women in managing roles to > 36% is set already for 2030. The goal for 2024

is to have 30% or more women in managerial positions to ensure gender balance. To reach this, we plan to invest in

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AB KN ENERGIES SUSTAINABILITY

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women's education, strengthen their self-confidence, and encourage more female candidates participate in Work

selections.

THE NUMBER OF EMPLOYEES IN DIFFERENT POSITIONS AT THE END OF THE YEAR

KN LITHUANIA 2022

KN LITHUANIA 2023

CHANGE 2023/2022

EMPLOYEE CATEGORY

Total

Men

Women

Total

Men

Women

Total

Men

Women

Managers

-6.0%

-5.4%

-7.7%

Specialists

166

175

5.4%

4.3%

6.9%

Workers

119

113

125

120

5.0%

6.2%

-16.7%

Total

335

244

347

253

3.6%

3.7%

3.3%

KN AÇU 2022

KN AÇU 2023

CHANGE 2023/2022

EMPLOYEE CATEGORY

Total

Men

Women

Total

Men

Women

Total

Men

Women

Managers

-16.7%

0.0%

-50.0%

Specialists

5.0%

12.5%

-25.0%

Total

0.0%

-33.3%

The net employee increase gender ratio in KN Lithuania was 3 (9 men compared to 3 women; and 1.7 if excluding changes

due to the end of temporary workers’ contracts). This ratio is similar to the organisation's general men-to-women ratio,

2.7. The net employee decrease gender ratio in KN AÇU was -2 (0 men compared to -2 women), however the company is

too small to draw statistically significant conclusions.

Regarding staff turnover trends by gender (data provided in the tables below), the proportions in Lithuania changed in

2023. Gender disproportion in new employment increased to a men/women ratio of 4.1 (2.07 in 2022, 1.83 in 2021). The

men/women ratio of terminated contracts also increased to 4.57 (2.16 in 2022, 2.95 in 2021).

STAFF TURNOVER BY GENDER IN KN LITHUANIA

2020

2021

2022

2023

New employment, total

Female

Male

Terminated working contracts*, total

Female

Male

* Including employment contracts terminated at the employee's initiative and by the Company's decision.

Staff turnover trends by gender are also being monitored in Brazil – thus, as it is a relatively small company, no statistically

significant conclusions can be drawn.

2021

2022

2023

New employment, total

Female

Male

Terminated working contracts*, total

Female

Male

* Including employment contracts terminated at the employee's initiative and by the Company's decision.

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KN Group monitors employee distribution also according to their work experience, according to age, education. The

average work experience of the employee in the Group is 9.3 years (9.5 in 2022) – the number is highest among workers

(12.4 years, 12.9 years in 2022) and smallest among managers (7.4 years in 2023 and 2022). The difference is quite natural

considering the Company’s specifics – combining the long-term experience of liquid terminals and relatively recent LNG

activities with a need to constantly adapt to changing market conditions and seek and exploit new opportunities. The

distribution of employees according to the length of service by gender in 2023 is provided in the table below.

DISTRIBUTION OF EMPLOYEES ACCORDING TO THE LENGTH OF SERVICE IN KN LITHUANIA IN 2023

Women

Men

Total

% total employees

< 1 yr.

13.54

1-5 yrs.

110

31.70

6-9 yrs.

18.44

10-14 yrs.

13.26

15-19 yrs.

6.34

> 20 yrs.

7.78

> 30 yrs.

8.93

TOTAL

253

347

100

The more detailed information on employees according to their work experience, age, education are provided in this KN’s

Consolidated annual report part “Personnel”. Data tracking ensures that principle that all employees should have equal

opportunities regardless of age would be in the loop of attention within Organization, because diversity, according to this

criterion, could play an important role in the organisation's successful operation and transformation.

Dynamics of the total turnover of KN Group staff in Lithuania:

▪ 2018 – 8.77%

▪ 2019 – 14.45% (at the beginning of the year, operations were reorganised to streamline processes and reduce

staff).

▪ 2020 – 8.92%

▪ 2021 – 17.89% (at the beginning of the year, operations were reorganised to streamline processes and reduce

staff). 22 employees left the organisation as a result of redundancies.

▪ 2022 – 16.67%. 14 employees (7 female, 7 male) left the organisation due to redundancies.

▪ 2023 –11.44% 5 employees (1 female, 4 male) left the organization due to redundancies.

Dynamics of the total turnover of KN Group staff in Brazil:

▪ 2020 – 25%

▪ 2021 – 34%

▪ 2022 – 41.7%

▪ 2023 – 45.8%

The increased supply of relevant job positions in the labour market has influenced staff turnover in Brazil. The turnover of

employees in Lithuania was affected by the voluntary decision of employees to continue their career path beyond the

organisation. Further optimisation of processes to increase efficiency has also contributed to increased staff turnover. The

Company is currently working on employer value proposition (EVP) and will launch new EVP in 2024. More information

about the recruitment process is provided in this KN’s Consolidated annual report part “Employee selection and

recruitment”.

According to the provisions of the KN's collective agreement, when the employment contract is terminated because the

function performed by the employee becomes redundant, at the employee's request, the Company is obliged to pay the

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retraining costs of such an employee (up to 500 euros). In 2023, 1 employee exercised this right (the total retraining amount

paid by the Company was 490 euros).

KN is also monitoring staff turnover related to exercising the right to maternity or paternity leave – we think this is one of

the fundamental employee rights that should be exercised regardless of parents’ gender. This information about employees

in Lithuania is presented in the table below.

EMPLOYEES IN LITHUANIA WHO HAVE TAKEN CHILCARE LEAVE

2023

2022

Women

Men

Women

Men

Use of maternity/paternity leave

Employees entitled to maternity/paternity leave

% of employees who exercised their right to maternity/paternity leave

100%

Employees returning to work after maternity/paternity leave

% of employees returning to work after maternity/paternity leave

25%

100%

Employee retention after parental leave

Employees who returned from parental leave within the year before the

beginning of the reporting period

Among them – are employees who were still working a year after their return

to work

Retention ratio

33%

100%

In Brazil – 3 employees had a right to paternity leave (relatively short in Brazil) in 2023 (3 in 2022); all exercised it and

returned to work after the leave.

COLLECTIVE BARGAINING AGREEMENT

The provisions of the Collective Agreement of the KN apply to all KN employees in Lithuania – permanent and temporary

ones. The agreement aims to create conditions for sustainable economic activity and business development and to

guarantee better working conditions than those provided for in the legislation of the Republic of Lithuania. It covers wages,

working and rest time, training, health and safety, other socio-economic working conditions, and additional benefits.

In 2023, 38 workers in Lithuania benefited from the relevant social guarantees under the collective bargaining agreement

of KN, such as childbirth benefits or payments in the event of the death of a relative (61 workers benefited from the

collective agreement in 2022, 46 in 2021).

The Collective bargaining agreement is in place in KN Açu in Brazil since 2021. It aims to guarantee better working

conditions than those provided for in the legislation of the Republic of Brazil. It covers issues such as wages, working and

rest time, training, health and safety, and other socio-economic working conditions and additional benefits. In 2023, 26

workers in Brazil benefited from the relevant social guarantees under the collective bargaining agreement of KN Açu (26

workers benefited from the collective agreement in 2022, 27 in 2021).

According to the current KN Group practice, workers can lodge complaints about working conditions and infringements of

their rights with the respective trade union directly to the HR unit or anonymously by filling in a form on the website or by

email, or through suggestion boxes in the Company's Terminals (in Lithuania). However, no such complaints were received

in 2023.

LABOUR UNIONS

KN Group recognises the labour union as an equal social partner representing employees and expressing their interests.

Accordingly, the Company enables the members of the trade union committee to combine the management of trade union

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affairs with their primary work obligations. It provides free of charge the necessary premises and essential working tools

for the trade union's activities.

As of 31 December 2023, 119 employees, i.e. 34.3% of all employees of KN Lithuania (2022: 32.3%; 2021: 38.4%; 2020:

40.5%), belonged to the labour union. The number of union members has slightly increased after the last year’s decrease,

because of the implemented Company's labour union and HR department agreement to be more proactive in providing

information about how to enter the union, its role and its activities, targeting new employees who could be interested in

joining the union but may lack information about it.

Meetings of the labour union representatives with the Company's management are organised periodically to discuss

topical issues related to changes in the collective agreement and structural changes in the Company and Company

operations. In 2023, eleven meetings were held (6 in 2022 and 2021) with the labour union representatives. These meetings

included discussion and agreement on the specific decisions, such as revision of the conditions and payments when the

timing of the shift is changing as per Labour Code regulation, revision of the remuneration rate per unit payments, and

update of The Rules of Working Procedure.

In 2023, 3 meetings (1 at Union in Campos and 2 virtual ones) with the labour union and 2 virtual meetings between the

labour union and the employees (3 meetings with the labour union and 2 meetings between the labour union and the

employees in 2022) took place in KN Açu. These meetings included discussion and agreement on specific decisions such

as benefits and employee base salary indexation.

REMUNERATION POLICY

KN Group seeks to create motivating, efficient, fair, transparent, and easy to understand compensation system which aims

to attract, retain, and motivate employees whose skills and work results help the Company to successfully develop and

implement its mission and achieve strategic business objectives. The Company's remuneration policy defines the principles

of determining and paying remuneration and employee incentives. Furthermore, it establishes understandable, fair, and

transparent procedures and aims to encourage employees to achieve Company's strategic goals and create value.

These primary documents regulate the Company's remuneration policy:

▪ Employee remuneration policy approved by the Board of KN;

▪ Procedure for award of bonuses to the top management of AB "KN Energies“ approved by the Board of KN;

▪ Procedure for the design of the remuneration system approved by the CEO of KN;

▪ Procedure for employee performance review and compensation approved by the KN CEO.

As KN is expanding its international activities, it has also adopted and applied compensation and benefits package for

employees working abroad (EXPATS), which provides a range of benefits for employees delegated on long-term business

trips.

The Company aims to ensure the competitiveness of the employees’ pay, feeling of internal justice and remuneration that

does not discriminate against any employee on the ground of sex or any other basis. More information about the

remuneration policy and system including data regarding average monthly salaries at KN and KN Group is provided in this

KN’s Consolidated annual report part “Payroll system and Remuneration policy”.

2023 average monthly salary of all employees of KN Group is 3,114 EUR/month, i.e. 12.5% higher compared to 2022 (in

2022 - 2,768 EUR/month). The change in average monthly salary in the Company was similar (14,2%): in 2023 - 3,209

EUR/month, and in 2022 - 2,809 EUR/month, respectively.

The Company‘s average monthly salary of 2023 compared to 2022 increased due to 63.3% increase in annual bonus paid

(EUR 532.8 thousand). The total annual remuneration fund of the Company in 2023 reached 13,99 million EUR and 14,62

million EUR in the Group.

Principles for determining, paying, and promoting remuneration for members of the Head of the Company (as well as for

members of the Supervisory Board, members of the Board and members of Committees) are determined by the

Remuneration Policy, approved by Extraordinary General Meeting of Shareholders. It was revised during the Meeting on

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20 October 2022, considering the changed state-level regulation regarding the remuneration of the members of collegial

bodies.

The monthly salary of the CEO since August 2022 was EUR 9,600 (until July 2022 – EUR 9,200). Following the Remuneration

policy, the CEO is also eligible to receive an annual bonus depending on the results of the Company and the achievement

of the yearly goals. The maximum compensation in case all goals are achieved consists of 4 monthly salaries. In 2023 CEO’s

variable salary (monthly annual bonus equivalent) was EUR 2960, compared to EUR 767 in 2022.

The ratio of the annual remuneration of the person who earns the most in the Company (Head of the Company) compared

to the average yearly salary of all employees in 2023 was 3,97 (compared to 3.73 in 2022, 4.18 in 2021). The ratio of the

annual total payment of the Head of the Company compared to the median yearly total remuneration of all employees in

2023 was 5,31 (compared to 4,59 in 2022, 5.15 in 2021).

The Remuneration and Nomination Committee (advisory body to the Board) is established in the Company and acts as an

advisory body to the Company's Supervisory Council, making recommendations on the Company's remuneration policy,

proposing to the Company the criteria for assessing the performance of its executives and making other recommendations

relating to remuneration. The Remuneration and Nomination Committee comprises 3 members, of which 1 is independent,

and 2 are delegated members of the Supervisory Council. The members are appointed until the end of the term of office

of the current Supervisory Council.

GENDER PAY GAP

Reducing the gender pay gap is one of our ESG goals. The average monthly remuneration for men in KN Group in 2023

was EUR 3,104 (last year – 2,706), and for women – EUR 3,147 (previous year – 2,795), respectively. The average monthly

remuneration for men in KN Lithuania in 2023 was EUR 3,189 (last year – 2,743), and for women – EUR 3,270 (previous year

– 2,860), respectively.

While comparing average monthly salaries (for example,

the information provided in table below), the unequal

gender distribution between positions in the organisation

and the different Hay levels should be considered.

KN has set a target to reduce the percentage of the pay

gap between female and male positions at the same Hay

level to reduce by >=10% in comparison to last year and

totally reduce gender pay gap to 0% at the end of 2030.

This indicator was equal to 9.25 in 2020, 5.88 in 2021, 3,39

in 2022 and reached 2.9 in 2023 (14% decrease).

THE AVERAGE EMPLOYEE SALARY (GROSS) BY GENDER IN KN AND KN GROUP (NOT ADJUSTED BY HAY LEVELS),

EUR

KN 2022

KN 2023

CHANGE 2023/2022

DIFFERENCE IN

SALARIES

Total

Men

Women

Total

Men

Women

Total

Men

Women

M/W

2023

M/W

2022

Managers

5,621

5.690

5,431

6,771

6,930

6,358

20.46%

21.79%

17.07%

9.00%

4.77%

Specialists

2 745

2,888

2,531

3,221

3,447

2,865

17.34%

19.36%

13.20%

20.31%

14.11%

Workers

1,794

1,824

1,233

2,020

2,049

1,393

12.60%

12.34%

12.98%

47.09%

47.93%

Total

2,765

2,734

2,860

3,209

3,189

3,270

16.06%

16.64%

14.34%

-2.48%

-4.41%

GENDER PAY GAP INDICATOR

9.25

5.88

3.39

2.9

0 1 2 3 4 5 6 7 8 9 10

2020

2021

2022

2023

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KN GROUP 2022

KN GROUP 2023

CHANGE 2023/2022

DIFFERENCE IN

SALARIES

Total

Men

Women

Total

Men

Women

Total

Men

Women

M/W

2023

M/W

2022

Managers

5,501

5,523

5,431

6,508

6,562

6,358

18.31%

18.81%

17.07%

3.21%

1.69%

Specialists

2,646

2,753

2,477

3,054

3,210

2,786

15.42%

16.60%

12.47%

15.22%

11.14%

Workers

1,794

1,824

1,233

2,020

2,049

1,393

12.60%

12.34%

12.98%

47.09%

47.93%

Total

2,728

2,706

2,795

3,114

3,104

3,147

14.15%

14.71%

12.59%

-1.37%

-3.18%

* Differences in specialists’ salaries according to gender could partly be explained by various responsibilities of the position – differences

in Hay levels.

** Differences in workers’ salaries according to gender is significant due to a big disproportion of the number of workers according to

gender – at the end of 2023, 120 men and just 5 women occupied such position – their responsibilities cannot be compared directly, taking

into the account differences in Hay levels.

The ratio of the salary of a standard entry-level employee to the minimum wage in Lithuania is presented in the table below.

While calculating it, entry-level positions are classified as labourers, and the average monthly contractual salary is converted

to full-time equivalent (FTE).

THE RATIO OF THE SALARY OF A STANDARD ENTRY-LEVEL EMPLOYEE TO THE MINIMUM WAGE IN LITHUANIA

2023

2022

CHANGE 2023/2022

All employees

3.82

3.85

-0.7%

Woman

3.89

3.93

-0.8%

Men

3.80

3.82

-0.7%

EMPLOYEE ENGAGEMENT AND SATISFACTION

The Company measures engagement and satisfaction because it believes that colleagues, who are engaged in their work,

find it easier to do it, feel happier, are more creative and therefore add more value by effectively implementing the

Company's strategy and achieving its goals. Employee engagement and satisfaction rates are tracked, and improvement

actions are implemented accordingly in order to ensure that identified issues are addressed properly.

In 2023 a working group from different KN’s

departments has been assembled to develop a plan for

increasing engagement and satisfaction considering the

results of 2022 KN's Employee Engagement and

Satisfaction Survey. It showed that 54% of employees

(61% in 2021) were fully satisfied with their working

environment, the Company and its culture and the

engagement rate was 60% (69% in 2021) (similar level

to the average job satisfaction score for employees of

Lithuanian organisations and engagement rate,

respectively 56% and 59%). Psychological safety was

rated at 66% (compared to 71% in 2021). KN’s Top

executives together with management identified top

ten areas for improvement with action plan and 80% of

it was achieved. Change management and its communication, as well as ensuring work-leisure balance and remuneration

policy, work conditions, update of values were the key issues tackled.

In 2023 Company did not conduct the Engagement and Satisfaction Survey as it purchased access to the digital platform

and innovative tool to measure employee engagement to ensure continuous listening to employees. Engagement survey

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is planned in the first half of 2024 and in the meantime, the Company is measuring quarterly eNPS scores and working on

it. eNPS in 2023 raised 11 points compared to 2022.

DEVELOPMENT OF COMPETENCES

The KN education system is designed to promote the development of employees both independently and through the

learning processes of strategically important knowledge and skills that are part of the curricula. Therefore, all employees

are given the opportunity to participate in the programs. Implementing the KN education system is based on 6 principles:

link with business strategy, cooperation between departments, identification of needs based on assessing employees'

competencies, measurement of learning effectiveness, integration of education with other processes and selection of

appropriate educational tools.

KN encourages the personal development of its employees and provides them with opportunities to improve their

competencies through external and internal training. The Company allocated around 3,7% of its adjusted net profit annually

to professional development (2.5% in 2022). In 2023 besides occupational health and safety training, the focus was kept on

strengthening project management and negotiation competencies and

cooperation between departments to improve the focus on the client. In

2023 KN Talent Leadership long term program was launched. In this

program 30 talents have been participating. For all employees in 2023

the focus to emotional health was kept, therefore and seminars with

specialists on topics such as conflicts, stress management, creating good

internal emotional culture were organized and internal relaxation

sessions were held.

The Company continues to provide the opportunity for a targeted group of project managers to obtain the Prince2

certification in project management. In 2023, more than 50 employees used this opportunity to strengthen their skills in

internal PM trainings, thus helping KN to operate more effectively. In 2023 KN started to prepare company processes map

therefore number of trainings for all employees on process were organized. In addition, the Company is providing the

possibility for employees to be partially reimbursed for their higher education fees, in 2023 one employee applied for this

for eMBA studies.

Total annual training hours in KN Lithuania in 2023 increased a bit due to a bigger number of employees, and due to the

fact that training programs were launched comparing to 2022.

ANNUAL TRAINING HOURS IN KN GROUP

ANNUAL TRAINING HOURS IN

KN LITHUANIA

AVERAGE TRAINING DAYS PER EMPLOYEE IN

KN LITHUANIA

2023

2022

2021

2023

2022

2021

Managers

1,710

1,556

1,497

4.54

3.89

3,40

Specialists

3,921

3,502

4,042

2.80

2.63

2,72

Workers

2,254

2,086

1,946

2.25

2.19

2,02

Total

7,885

7,144

7,485

2.87

2.66

2,59

ANNUAL TRAINING HOURS IN

KN AÇU

AVERAGE TRAINING DAYS PER EMPLOYEE IN

KN AÇU

2023

2022

2021

2023

2022

2021

Managers

297

1.83

6.04

1.42

Specialists

1,243

938

1,102

51.83

5.70

18.00

Total

1,288

1,235

1,136

53.66

47.50

47.33

To ensure a smooth succession process, KN trains employees to take over the leadership of a specific unit temporarily, if

necessary. To this end, management reserve training and succession plans are in place, encouraging employees who are

considered potential future managers to acquire higher qualifications. This measure is also one of the employee motivation

and career planning tools. In 2023, 71 staff members with competencies in 67 different specialities participated in the

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programme to ensure managerial succession. In 2023, the number of internal promotions in the KN was recorded, with 29

colleagues replacing their positions internally (in KN AÇU, 1 person made internal career in 2023 and 1 in 2022)

The Company has conducted a 360-degree feedback study for managers for the last fifth years. Following the method, KN

Managers receive feedback on their behaviour according to the Company’s values and leadership competencies from

people who work with them. Based on survey results, Managers create their Personal development plans and thus grow to

be even better leaders for their teams.

In 2023, the onboarding process for new employees was continued to ensure that new employees who join the Company

integrate as quickly and smoothly as possible into the workforce. The training programme is being updated regularly. In

addition, specific training is provided for employees returning from maternity/paternity leave to ensure a smooth

adaptation process.

Annual employee performance reviews are conducted annually with every employee; it allows not only for evaluating their

performance, progress, and compliance with Company values but also for discussing development needs and other

expectations and setting the goals for the new period.

OCCUPATIONAL HEALTH AND SAFETY

OHS MANAGEMENT AND GOALS

KN seeks to provide a working environment that meets strict standards of safety and well-being. As a terminal operator,

KN provides and maintains a health and safety management system to ensure safety performance based on legislation and

industry best practices, with clear commitments, targets, and responsibilities. The Company's objective is to create an

environment where occupational health and safety risks are controlled to prevent injuries, accidents, and occupational

diseases and to identify, assess and manage risks arising from unsafe conditions, occupational injuries and illnesses related

to work processes or the working environment. It also focuses on educating workers to understand better their role in

reducing negative environmental impacts and that the health and safety of themselves and others are the highest value of

every worker.

The Occupational Health and Safety Management System

(OHS) applies to all professionals working at and maintaining

the terminals operated by KN, whether employed by the

Company or other companies and engaged in developing

international LNG terminal projects.

Legal acts, best industry practices and clear obligations, objectives and responsibilities for the terminal operator regulate

the implementation of measures of this system. OSH requires strong management commitment, employee engagement,

and continuous improvement. The safety and health management system aims to prevent accidents at the workplace and

occupational diseases, to ensure safe and healthy workplaces, eliminate potential hazards and reduce risks to the safety

and health of employees by taking effective prevention and protection measures.

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KN is certified according to the Occupational

Health and Safety Management System standard

ISO 45001:2018. It applies to all activities of KN

terminals in Lithuania, including international

business development. In the end of 2023 DNV

performed a recertification audit of the ISO

certification process to maintain certification of

the management system. The key objective of the

audit was to determine the conformity of the

management system with the standards – ISO

45001:2018, as well as ISO 9001:2015, and ISO

14001:2015, being amongst them.

Nonconformities haven’t been identified during

this audit, some suggestions for the improvement

were made.

In addition, internal audits of the KN management system are carried out by competent employees who can understand

the risks and opportunities associated with the audit principles and the scope of the audit, as well as apply audit criteria,

appropriate principles, procedures, and methods in different audits and know applicable legislation and can ensure that

audits are carried out consistently and systematically. In 2023, 25 internal audits (in 2022 – 13, 2021 – 6) were conducted,

18 of which in the area of safety.

One of the main strategic objectives of KN is the continuous improvement of the occupational safety and health

management system by ensuring proper compliance and improvement of the safety culture to achieve a zero rate of

significant safety incidents and accidents.

KN uses measurable indicators to monitor the safety and health of workers, namely the number of critical incidents, Number

of process safety incidents, Occupational accident frequency rate (LTIR) and Frequency of near misses or potential safety

incidents (IR). In 2023 KN, as the main HSE indicator started to use TRCF (total recordable case frequency) which represents

the total number of fatalities, lost time injuries, alternate work, and other injuries requiring medical treatment. TRCF

provides a comprehensive view of safety incidents, including minor injuries and medical treatments, not just lost time

injuries. It captures a broader spectrum of incidents, allowing organizations to address health and safety risks holistically,

encourages proactive risk management beyond just focusing on lost time injuries, reflects the overall safety performance

more accurately. Together these indicators are used for measuring occupational safety and health management efficiency.

They help KN assess its occupational safety and health (OSH) performance and benchmark itself against other companies

in Lithuania and worldwide.

The Company has set goals related to all four of these indicators – TRCF should not exceed 0.73 in 2024 (< 0.5 on 2030),

the number of Critical and Process safety incidents should be 0 annually, LTIR should reach ≤0.5 in 2024 (≤0.5 in 2030), and

IR should reach ≥80 in 2024 (≥100 in 2030). Respective actions to achieve this are planned.

The goal for TRCF in 2023 was not exceed 0.8 and the goal was achieved – TRCF for 2023 is 0.6.

In 2023, there were no critical incidents in the Company (same as in 2022 and 2021) and three Process safety incidents

(both second level; two incidents in 2022, first and second level). All process safety incidents were investigated, and

corrective measures were provided.

HAZARD IDENTIFICATION, RISK ASSESSMENT AND INCIDENT INVESTIGATION

KN implements an initial risk assessment of workplaces and continual risk assessment of work-related hazards before any

work is planned and carried out. These procedures are implemented using the following means:

▪ Occupational risk assessment, which is carried out at each workplace and repeated as the nature of work changes,

new materials, chemicals, equipment or new processes are being used;

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▪ Permit to work system, which requires assessing risks before any work, implementing means for preparation,

induction to workers and fulfilment of safety measures at work.

Personnel responsible for the preparation, execution and inspection of works are specially instructed and trained according

to relevant formal and informal training programs. Work leaders, executors and inspectors are trained to identify work-

related hazards and hazardous situations, to stop dangerous works and to report such situations using the KN system of

reporting about accidents, near misses and unsafe situations.

In 2023 KN continued the implementation of various measures for the safety of employees, as well as implemented new

measures:

New safety inspection and walk around procedure was introduced, which involved all level employees into safety walk

downs.

“Safety talk” system implemented, with monthly safety talks on selected safety topic with different O&M departments and

shifts.

Continuous improvement on digitalization process of employee internal training and induction continues, the internal

trainings and inductions for most employees is carried out on a digital training platform.

For O&M department workers, special safety information boards have been installed where relevant safety information is

updated periodically.

The “Safety bypass” procedure, focusing on bypasses by OHS specialists and department heads, and standardised safety

inspection questionnaires have been prepared. Following the analysis of bypasses, additional safety measures have been

implemented.

The new Risk Assessment Procedure has been prepared – it defines the Company's professional risk assessments and the

periodic risk assessment of routine and non-routine work. A three-year occupational risk assessment contract was signed

with an independent third party – it allows for prompt occupational risk assessment in the event of changes in working

conditions.

Since 2022, the agreement template with contracting organisations, obliging organisations working in the territory of KN

to provide basic safety indicators and KN to control how safety requirements are met is used. It is important to stress that

rules are also foreseen in which cases (for which offences) the contractor may be deprived of permission to work for KN.

Furthermore, the representatives of the contractors are also obliged to pass a briefing on work safety requirements at our

terminals. Safety obligations provisions are also included in the Code of Ethics for Suppliers which is integrated into the

procurement process of KN.

The change management system implemented in the Company also requires all planned process-related changes to be

evaluated through a risk assessment process. the Procedure for Risk Analysis of Technological Processes and Devices,

specifying the application of various risk assessment methodologies in assessing technological changes is used to properly

ensure that such requirements are met.

Near misses, unsafe conditions or any hazard reporting is an integral part of promoting a safety culture in the organisation.

In 2023, 368 reports were received on near misses or potential safety incidents (IR) (2022 – 304, 2021 – 282). KN fosters a

no-blame culture and awards the most active employees for reporting any noticed hazards or near misses. For those who

seek to be unnoticed, KN provides the possibility to report anonymously.

The investigation of work-related incidents covers the generally accepted eight-stage process of investigation of

accidents/incidents: gathering and analysing the information, identifying the required risk control measures, definition of

investigation methods, formulation of the action plan, final approval of actions taken (including informing third parties),

analysis of lessons learned, implementation of corrective action and measurement of corrective actions effectiveness.

KN health and safety policy state that each employee of KN Group has the right to require the employer to create safe and

healthy working conditions, to install collective protective equipment, and to provide personal protective equipment when

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collective measures do not protect against the effects of risk factors. In addition, an employee may refuse to work when

the employee is untrained to work safely, in case of failure of work equipment or case of emergency, in case of violation of

work instructions and without necessary collective protective equipment or personal protective equipment.

WORK-RELATED INJURIES IN KN LITHUANIA

2023

2022

2021

2020

TRCF (total recordable case frequency)*

0.6

The number and rate of fatalities as a result of work-related injury

The number and rate of high-consequence work-related injuries

The number and rate of recordable work-related injuries

2, LTIR - 0.6

2, LTIR - 0.9

2, LTIR - 0.3

Reports on near misses or potential safety incidents (IR)

368

304

282

The number of hours worked

610,304

595,203

635,892

679,409

Work-related hazards that pose a risk of injury

Work-related ill health or fatalities as a result of work-related ill health

Work-related hazards that pose a risk of ill health

* Indicator started to be tracked from 2023.

WORK-RELATED INJURIES IN KN AÇU

2023

2022

2021

The number and rate of fatalities as a result of work-related injury

The number and rate of high-consequence work-related injuries

The number and rate of recordable work-related injuries

Reports on near misses or potential safety incidents (IR)

101

202

The number of hours worked

41,169

49,518

65,752

Work-related hazards that pose a risk of injury

Work-related ill health or fatalities as a result of work-related ill health

Work-related hazards that pose a risk of ill health

Principal investments in additional occupational safety and health measures in 2023 were dedicated to redesigning various

unsafe workplaces and other measures identified during the investigation of incidents and potential accidents, as well as

employee education. The investments for additional measures in 2023 were around EUR 40 thousand, slightly bigger than

2022 EUR 30 thousand. The most significant improvements in the area were made in 2020-2021.

WORKER PARTICIPATION, CONSULTATION, COMMUNICATION AND TRAINING ON OHS ISSUES

The Company has a special matrix of mandatory training covering the whole organisation. Training needs are determined

by considering legislative requirements, market best practices, job descriptions, occupational risk assessment results, and

investigations into incidents or near misses. Training is free of charge and provided during working hours. Licensed third-

party agents deliver most training, while some are in-house via a digital learning platform. A dedicated training classroom

with computerised workstations is available for employees who do not have a computerised workstation. In 2023 as during

the previous year the Company continued to encourage periodic coaching to be done online.

Company's safety culture is also enhanced by actions, such as

"Safety talks" with production departments that are carried

out once a month under various safety topics. Additional

actions, like safety inspections according to the procedure,

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were implemented in 2023, in total 246 safety walk-arrounds / inspections.

Every bigger department of the Company has an internally elected representative responsible for safety and health issues

(the total member of such representatives in the KN being 9). These representatives (who receive additional health and

safety training) help KN to implement the requirements of employee health and safety in the Company and to improve the

safety culture by:

▪ Cooperating with the Occupational Safety and Health unit and advising the employees of the represented unit or

other employees on health and safety issues within the limits of competence;

▪ Providing suggestions or observations from departments on improving workers’ health and safety, as well as on

the existing processes or procedures, etc.

▪ Setting a positive example and encouraging other department employees to act responsibly (for example, wear

the issued personal protective equipment) and follow the Company’s procedures, instructions, and other

requirements to ensure the health and safety of employees.

▪ Participating in assessing occupational and other potential risks and investigating accidents and incidents.

The Company has also set up an Employee health and safety committee operating on a bilateral basis. It comprises 15

members, including the already mentioned representatives of the employees, representatives of the administration and

the head of the trade union. The committee, by its competence:

▪ Examines the causes and circumstances of accidents at work and occupational diseases; prepares and proposes

preventive measures to avoid accidents at work and occupational diseases;

▪ Considers the state of safety and health of employees in the Company and the results of professional risk

assessment, examines the measures implemented by the employer to ensure the health and safety of employees

and submits related relevant proposals;

▪ Collects information from the health and safety representatives of the employees on compliance with the

requirements of the OHS-related legal acts and how they are met in the Company;

▪ Considers and submits proposals on the procedure for training and instructing employees on the OHS issues;

▪ Examines whether the mandatory health examinations of employees are properly organised, as well as their

results, submits relevant proposals regarding preventive measures to improve the health of employees;

▪ Considers and submits proposals regarding the provision of household, sanitary and hygiene premises, collective

and personal protective equipment and the relevant supervision procedure;

▪ Provides insights to the management on the relevant regulatory legislation and Company’s OHS procedures

related to them;

▪ Prepares proposals amending collective agreements to improve the health and safety of employees at workplaces

or in the Company;

▪ Upon the request of the employee or the management, examines the disagreements regarding the refusal of the

employee to work because of OHS;

▪ Examines other issues related to the health and safety of employees;

▪ Prepares proposals to improve the health and safety of employees at workplaces or in the Company by concluding

collective agreements.

The Employee Health and safety committee meets regularly to discuss relevant issues. There were 3 committee meetings

in 2023, general complaints of employees were considered, workplaces safety improvement needs, the general safety

situation in the Company as well as proposals for work clothes and additional PPE were reviewed, the main safety indicators

were presented and discussed with the Committee members.

EMPLOYEE HEALTH AND WELL-BEING

The Company pays great attention to the health of employees. All employees are provided with supplementary health

insurance, which contributes to the employee's well-being and covers the most frequent health expenses, i.e. outpatient

and inpatient treatment, preventive health check-ups, dental services, etc.

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KN is one of Lithuania’s few companies with a licensed medical facility, which provides emergency first aid, carries out

preventive healthcare services, and controls health risk factors and infections. In addition, Company has a physical medicine

and rehabilitation facility for professional employees. The Company also has cooperation agreements with personal

healthcare centres to provide extended health care for its employee free of charge, as well as additional vaccination and

examination services (including detection of COVID-19 disease).

Relevant numbers concerning activities of KN licensed medical facility in 2023:

▪ 151 employees were consulted (74 in 2022, 244 in 2021);

▪ Outpatient care was provided to 463 employees (194 in 2022, 99 in 2021), of which 64 (20 in 2022, 19 in 2021)

were referred to another medical institution.

▪ Preventive health checks of 226 employees were performed (137 in 2022, 307 in 2021).

▪ 115 employees participated in first aid and hygiene skills training (31 in 2022, 32 in 2021).

▪ Immunoprophylaxis was provided (vaccination against pneumococcal infections, tick-borne encephalitis, typhoid

fever, hepatitis A and B, influenza, tetanus, typhoid fever, yellow fever, and diphtheria) for 159 employees (120 in

2022, 487 in 2021).

▪ Preventive examinations of employee health indicators (determination of blood glucose and cholesterol) were

performed. A control test was performed for 283 employees in Lithuania (15 in 2022, 54 in 2021).

▪ Rehabilitation and health-supporting procedures performed for 279 employees (126 in 2022, 132 in 2021).

▪ Additional testing for COVID-19 disease was carried out for 75 employees (137 in 2022, 185 in 2021).

In 2023 KN continued to strengthen employee skills in providing emergency first aid and enhance their psychological

preparation and resilience in the extreme situations. A training session was organised to ensure necessary knowledge of

first aid or psychological preparation to deal with emergency situations. During the training, the colleagues from the Public

Health Office, the Positive Health Team, together with fire protection and rescue specialists presented various situations to

the colleagues who were divided into groups and told how to deal with them, participants trained how to apply a tourniquet

correctly, to save a sick person, to find ways to deal psychologically with extreme and unpleasant situations, to be able to

maintain good psychological and physical health in everyday life.

In 2023 September KN updated Guidelines for remote work implementing hybrid work model, considering it an important factor for

increasing employee well-being and satisfaction. Company provides a possibility for employees (if their functions allow) to work 1

day per week remotely (the duration can be extended under agreement with direct manager under important circumstances).

The company has a Long-Term Healthy Workplaces Programme, which includes comprehensive measures to create a

healthy working environment. As a part of it, KN supports, and funds sports for its employees – a gym is rented for

basketball and football fans, and funds are allocated for beach volleyball tournaments and dragon boat races.

The Company has already been organising periodic meetings with various interesting people for several years. In 2023

lectures about safety topics for the management employees were conducted also: lecture of the State Labor Inspectorate

"Current issues of labour rights and statistics and causes of accidents in Lithuania" and lecture by lawyer Justas Jankauskas

"Responsibilities of the manager and the company in case of accidents at work".

LOCAL COMMUNITIES AND SOCIAL INITIATIVES

We work to maintain strong and long-lasting relationships with

the local communities where KN operates (focusing on Vitė and

Melnragė communities in Klaipėda) and strive to be a good

business partner through our business initiatives – this is done

through dialogue and strengthening our relationships. We aim to

hear and understand the communities' most pressing concerns,

and we consider the expectations expressed by the communities regarding the mitigation of our Company's impact.

Every year KN implements various initiatives with communities. In 2023 the following activities were carried out:

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▪ The tradition of regular meetings was maintained, and

one regular meeting was held to discuss topics of

interest to the communities and to answer their

questions concerning our activities and impacts;

▪ On International Neighbours' Day, KN contributed to

the local Vitė Community Festival. The Company

provided a dedicated area for children's activities.

▪ During the spring season, we collaborated with the Vitė

community to conduct a collective Clean-Up

Campaign "Darom", addressing the improvement of

public spaces and stadium area access in Klaipėda in

the residential area of Vitė.

▪ The Company contributed to the organisation of the

Melnaragiada, a community festival held in Melnragė

in September.

▪ In November, a special event commemorating the

150th anniversary of Subačius's founding took place in

Subačius, where the Company's liquid energy terminal

is situated. KN made a symbolic contribution, and the

company was represented by Arnoldas Būga, the

Terminal Manager of Subačius.

▪ The Company decorated a Christmas tree in one of the

Melnragė community's main squares for Christmas -

continuing the tradition.

KN also actively engages and supports public communities in different areas – events, education, social support, and others.

In 2023 the Company further bolstered its involvement in Klaipėda's premier public event, the Sea Festival, by endorsing a

segment of the social initiative, the Magdalene Night Run. This run actively advocates for breast cancer prevention

programs. As part of its support, the Company sponsored a concert on the evening of the run.

KN also played a role in an innovative art project hosted at the Lithuanian Embassy in South Korea. In this endeavour, the

Gataveckas brothers, accomplished artists, crafted a striking 26.5-meter interpretation of the FSRU Independence, adorning

the wall of the Lithuanian Embassy in South Korea.

This year, our Company embraced the spirit of philanthropy by redirecting the budget allocated for gifts for our partners

and customers to the Mažojo Princo Akademija, a public institution that takes care of children with developmental

disabilities such as autism. Collaborating with the children, we crafted a Christmas cake recipe in a festive workshop. These

specially created cakes were then shared with our partners and clients, who appreciated our collective effort in spreading

kindness, care, and attention to these special children and were indirectly involved in the social support for the vulnerable

communities.

Furthermore, KN continued the partnership with education institutions in 2023, providing 2 students with the opportunity

to complete their internships in the Company (in 2022 – 9 students had such opportunity). The Company also participated

in the "Future Engineer" event hosted by Klaipėda University, drawing a significant turnout of students and pupils. Dainius

Čiuta, Chief Operations Officer of KN, engaged in a discussion addressing the intricacies of an engineer's role and the

growing demand for engineers in the job market. Being the Company of strategic importance, in the events of the war in

the nearby region, KN continued of having restricted rules concerning site visits – thus, only one site visit for the students

of Lithuanian Maritime Academy was organised and conducted by KN specialists. The company participated in the "Future

Engineer" event hosted by Klaipėda University, drawing a significant turnout of students and pupils. Dainius Čiuta, Chief

Operations Officer of KN, engaged in a discussion addressing the intricacies of an engineer's role and the growing demand

for engineers in the job market.

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Following the Law of Support and Sponsorship regulations, which foresees that support by state-owned enterprises cannot

be provided if the net profit amount of the state-owned enterprise for the reporting financial year is negative (incurred

losses), KN was not entitled and eligible to provide the direct financial support in 2023.

GOVERNANCE

GOVERNANCE PRINCIPLES AND MAIN DOCUMENTS

Given the strategic function of the Company as

well as being a partly (72.47%) state-owned

enterprise and a publicly listed company, KN has

the objective to enhance shareholder value,

respond to stakeholders' interests and represent

best business practices. The Company

continuously strengthens its corporate

governance competencies and implements the

highest governance standards and principles. KN

aims to organise its corporate management and

internal processes to ensure transparency,

efficiency, profitability and sustainability. The

internal control processes and management

practices implemented align with the best

management practice principle and legal requirements.

In their activities, managerial and supervisory bodies of KN observe the Law on Companies, the Law on Securities, the

Articles of Association of the Company, and other applicable legal acts of the Republic of Lithuania, as well as Policies and

other relevant documents of the Company. In addition, the Company also follows good governance practices of the

International Organization for Economic Co-operation and Development (OECD) and the Good Governance Guidelines of

the NASDAQ Stock Exchange, including the Corporate Governance Code for the Companies listed on NASDAQ Vilnius. KN

also complies with Resolution No 1052 of the Government of the Republic of Lithuania of July 14th 2010, on approval of

the Description of the guidelines for ensuring the transparency of activities of state-owned enterprises (from now on – the

Transparency Guidelines). Since 2016 more than ½ of the Supervisory Council and Board members meet independence

requirement. Currently 4 out of 5 Board members are independent, and 2 out of 3 Supervisory Council members are

independent.

Ministry of Energy, representing the biggest shareholder – the Republic of Lithuania - in the Letter of Expectations (March

9th, 2023) also set expectations, amongst others, regarding KN's governance: it should ensure transparency, efficiency and

sustainable development as well as responsible and value-based activities of the Company.

KN Corporate Governance Policy sets out the main methods, requirements and principles of the Company's corporate

governance, as well as the obligations of KN and its subsidiaries in this area. The Stakeholder Policy, which established

principles and guidelines for developing KN's relations with its stakeholders, is another important document regulating the

activities of the Company. Furthermore, the Code of Conduct describes how we work at KN and guides the Company in

our business relationships. It contains KN’s values and sets the standards for how we should behave and make decisions.

In addition, KN applies Sustainability Policy, which guides Company’s sustainability management and activities. The KN

Gift Policy was updated on 08/01/2023, the due diligence procedure of KN Business Partners was updated on 01/03/2024.

According to the Governance Coordination Centre, which compiles

the Good Governance Index of State-Owned Enterprises annually, KN

has been ranked as A for its corporate governance, a slight increase

from its previous rating of A-. The previously identified main areas

for improvement being strategic management and planning have

been enhanced and ranked as A-, with an improvement from rating

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of B. The Company has shown consistency in its transparency dimension, which includes its focus on anti-corruption

practices and sustainability reporting. In 2023 the transparency dimension of KN was evaluated A+, the same as in previous

years.

Information on Management structure (including the composition of various management bodies and their activities) and

compliance with Transparency guidelines and the Corporate Governance Code can be found in the part “Governance

report” of this KN’s Consolidated annual report.

PREVENTION OF ANTI-COMPETITIVE BEHAVIOUR

Currently, the Group's activities can be divided into three main segments: liquid terminals, LNG activities – consisting of

regulated LNG activities (activities with a state interest) and commercial LNG activities (international projects and small-

scale LNG operations). The Management of KN evaluates the financial results of each segment and sets individual strategic

goals.

The regulated LNG activities segment includes the activity of the LNG terminal in Klaipėda, which receives, stores liquefied

natural gas, regasifies, and supplies it to the main gas pipeline. The fixed and variable parts of the price apply to the

terminal's services. They are approved annually by the National Energy Regulatory Council of Lithuania (from now on –

NERC).

The LNG terminal fully ensures the third-party access requirements following EU laws. The terminal's activities are organised

in observance of the Regulations for using the Liquefied Natural Gas Terminal (from now on - Terminal regulations),

adopted after public consultations with market participants and approved by NERC. The terminal's capacities are allocated

to the users on the same conditions, following the public and transparent capacity allocation procedures or Spot capacity

allocation procedures in case free capacities are left.

In September 2022, 4 LNG terminal capacity packages of 6 TWh/year (24 TWh) were allocated to Klaipėda LNG terminal

users from Lithuania, Latvia and Poland for a ten-year period until 2033, starting from January 1st 2023. The renewed LNG

terminal capacity allocation model will allow to allocate around 60% of the total LNG terminal capacity over the next 10

years to long-term contract users. Additionally, in 2023 KN carried out additional capacity allocation procedure for another

9 TWh of terminal capacity each year in 2025–2032, which were equally distributed among 3 companies from Lithuania,

Estonia and Norway. As a result of capacity allocation in 2022 and 2023, full occupancy of the Klaipėda LNG terminal is

ensured until 2033.

Allocating capacity ten years in advance ensures that the market will be able to meet not only the gas demand of Lithuanian

consumers but also transmission to other European countries and storage in the Latvian gas storage facility.

LNG terminal ensures a multiuser environment, i. e. allows several terminal users to use services of LNG terminal

simultaneously based on mandatory borrowing/lending conditions. Detailed information on LNG terminal services and

operating model can be found in the Terminal regulations or on www.kn.lt

On December 30th, 2022, KN, after winning the announced public tender, signed a contract with the Public Institution

Lithuanian Energy Agency for the provision of storage, storage and handling services for light oil products (diesel and

gasoline) owned by the State of Lithuania at the Company's Subačius Liquid Energy terminal. The agreement entered into

force on January 1st 2023 and is valid for 10 (ten) years. With this contract, the Agency ensures the storage and

accumulation of state fuel reserves at the Subačius terminal of the Company following the regulation of the Law on Oil

Products and Oil State Reserves. The preliminary value of the storage, terminal and other services related to the storage

and handling of light oil products is EUR 37.73 million (without VAT) for the entire contract validity period.

PREVENTION OF CORRUPTION AND BRIBERY

KN does not tolerate corruption or its manifestations and is committed to open competition, ethical business conditions

and adequate transparency and openness in its operations. Key documents establishing zero tolerance of corruption are

the Code of Conduct, Procedure for Declaring Private Interests and Managing Conflicts of Interest, Stakeholder Verification

Procedure and Anti-Bribery and Anti-Corruption Policy.

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This Policy expressly and publicly declares rejection of bribery, fraud, extortion, the creation of unofficial accounts, the

execution of unofficial and improperly documented transactions, the recording of fictitious expenses, the use of false

documents and other forms of corruption as referred to in the United Nations Convention against Corruption.

The provisions of the Standard of Conduct and the principle of Zero Tolerance for Corruption as well as procedures to

handle properly private interests and manage conflicts of interest, apply to all employees of the Group, members of the

management and supervisory bodies, third parties acting on behalf of the Company, and KN clients and partners. All

employees of the Company are familiar with the Anti-Bribery and Anti-Corruption Policy and the Code of Conduct and are

committed to complying with their provisions. Appropriate training is also provided to employees.

In 2023, there were no reported cases of corruption in the Company.

No cases related to bribery of foreign officials were registered in the

Company as well.

Gift regulation is another important area related to preventing

corruption and bribery. KN Group has related regulations in the Code

of Conduct and Anti-bribery and Anti-corruption Policy, stating that employees of KN do not accept or offer gifts, including

cash, securities, gift vouchers, various services, etc., which may damage the reputation of KN employees or business partners

or reduce their credibility. Intolerance of gifts due to the positions held and a questionnaire (to assess the acceptability of

the gift or hospitality) are included in the Policy as well. KN has clearly defined procedures for the acceptance of permissible

and impermissible gifts and other benefits – since 2019, a register of gifts, in which all gifts received must be registered,

has been operating.

The KN Gift Policy was updated on 08/01/2023. The policy has been supplemented with a separate clause regarding the

intolerance of receiving gifts from one person on a regular basis. The Policy regulates in detail the implementation of KN

employees' zero tolerance for corruption in the spheres of the appropriate acceptance of gifts from existing and potential

business partners, customers and suppliers, as well as proper provision of gifts to existing and potential business partners,

customers and suppliers. The Policy also establishes the procedure for declaring and registering gifts, except in cases where

regulatory rights Acts prohibit accepting and giving gifts. The value of gifts for representation is EUR 150, following the

regulations of the Law on the Coordination of Public and Private Interests of the Republic of Lithuania.

The Company has control mechanisms to identify, assess and monitor potential corruption risk factors. While assessing

corruption risks, KN analyses the activities and processes of each business segment, compiling a list of corruption risks.

The most relevant risks identified are:

1) Large-scale procurement. The Company makes efforts to ensure a transparent process of preparation of

procurement documents, selection and execution of the procurement method while maintaining confidentiality.

2) Management of oil product handling contracts. The Company aims to ensure transparency in determining the

terms and conditions of such contracts, the management of the contract execution process and customer due

diligence procedures.

Reports are regularly submitted to the Board to manage and mitigate these risks. KN also has a risk event register in the

document management system, contributing to more efficient risk management within the Company.

Once a year, KN performs a special assessment of the likelihood of corruption. In 2023 analysis of separation of

responsibilities of functions in the Company's internal processes was performed. However, due to the changes of KN’s

organisational structure the investigation finalized and results of it are planned to be summarized in the beginning of 2024.

The risk of corruption is also assessed in the context of the development of international projects, considering both external

and internal factors and the level of corruption risk in the country. Additional control measures include due diligence

procedures.

To reduce the likelihood of corruption, increase transparency, and encourage fair business, KN applies due diligence

procedures not only to its employees in Lithuania and Brazil but also to its business partners. The procedure is used before

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the conclusion of the contract. The due diligence procedure requires written confirmation from another party that it accepts

and undertakes to comply with the Anti-bribery and Anti-corruption Policy and Code of Conduct of KN. The anti-corruption

provisions and the commitment to comply with them are also included in cooperation agreements with business partners

(anti-corruption clauses). In order to ensure the prevention of bribery of foreign officials (in transactions with foreign

companies), in accordance with the KN code of ethics, the principles provided for in the anti-bribery and corruption policy,

a due diligence procedure of clients is carried out, during which they are asked to indicate in a questionnaire whether the

client's leading persons are politically influenced persons [PIP] , whether the company or the leading persons have been

prosecuted or have been subject to a pre-trial investigation related to illegal competition, economic crimes or corrupt

behavior under national and foreign law in the last 5 years.

In 2024-01-03 due diligence procedure was updated – new provisions on international sanctions (by EU and US), politically

exposed persons (PEP) and final beneficiaries were included. In 2023, 41 due diligence procedures for new business partners

were carried out.

The internal control system is continuously revised and improved. Employees have the right, and the Company provides

them with the means to report anonymously on the suspected or attempted acts of bribery and corruption or suspected

or actual breaches of the Anti-bribery and Anti-corruption Policy, as well as breaches of the requirements set out in the KN

's internal procedures and the Code of Conduct. Employees are encouraged to report possible cases or manifestations of

corruption via SpeakUp@kn.lt or anonymously using the respective form at www.kn.lt. These channels can be used by the

Company's employees and any other interested parties.

This whistleblowing procedure works across the Group, including the Brazilian subsidiary, and establishes sustainable

principles for the protection and confidentiality of whistle-blowers’. The procedure provides that the assessment of the

information received is the responsibility of the internal audit department of KN, which is functionally subordinate and

accountable to KN’s collegiate management bodies. Also, whistle-blowers can apply directly to the collegial bodies of the

KN (Audit Committee and the Supervisory Board) by emailing SupervisoryBodies@kn.lt. Both channels aim to maximise the

protection of whistle-blowers', the confidentiality of information and whistle-blowers', and ensure that information is

appropriately investigated.

Anti-corruption education training on the topic: "Principles of creating a corruption-resistant environment." Gift Policy' was

conducted in March, 2023 by a representative of the Special Investigation Service. The company's employees got

acquainted with the principles of strengthening the anti-corruption environment and the meaning and purpose of the gift

policy. During the training, employees were given examples of practical situations on how to distinguish a gift from a bribe,

as well as recommendations on what should be paid attention to and assessed before accepting or giving gifts.

In 2023 two notifications of low significance were received via Speak-Up channel: none of the reports related to possible

corruption or fraud, and the Company reacted according to the relevant procedures.

KN has a system for the declaration of private interests. Members of the Company's collegiate management bodies,

managers and employees included in the established and publicly disclosed list of positions and all employees participating

in KN 's public procurement declare their private interests through the publicly available PINREG database of the Chief

Ethics Commission (CEC). The list of positions for declaring interests is constantly reviewed and updated. In 2023, 173 staff

members of KN submitted their declarations in the PINREG database.

KN has the procedure for the Declaration of Private Interests and Management of Conflicts of Interest and a separate Policy

on the Management of Private Interests. This Policy aims to establish the principles and measures for preventing public

and private conflicts of interest in the KN Group by ensuring the proper functioning of the conflict-of-interest prevention

system and creating an environment unfavourable to corruption. The Policy establishes the basic principles of interest

management and measures of conflict-of-interest management, which are applied to all employees of the KN Group and

members of governing and supervisory bodies.

KN follows the Procedure and Policy when setting the requirements for the conduct of its employees or in the event of a

conflict of interest. Staff members are regularly consulted on potential conflicts of interest. Ten consultations on specific

cases of potential conflicts of interest happened in 2023, and five withdrawals by staff members were approved.

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In 2023 The Company did not have any transactions or agreements with the members of its Supervisory Council and the

Board. More information regarding transactions with related parties is presented in the Explanatory note to the Company's

financial statements for 2023.

Before appointing employees, KN takes all reasonable steps to ensure that Company employs persons of good reputation

and trustworthiness, taking into account the functions of the prospective employee and the relevant corruption risks. KN

has approved the list of positions for which applications are subject to screening by the Special Investigation Service of the

Republic of Lithuania). In 2023, at the request of KN, this institution carried out 14 background checks on potential KN

employees.

CORRUPTION PREVENTION MEASURES IN KN

PREVENTION AREA

MEASURES IMPLEMENTED

2023

2022

2021

2020

Impeccable reputation and

reliability of employees

Total inspections

Inspections by the Special Investigation Service

(from total)

59 (+ in 8

Açu)*

49 (+ in 19

Açu)*

Business partners' due

diligence

Inspections, total

Interest management

Official public declarations of private interests

submitted to the PINREG database

Withdrawals

Provided consultations

Conflicts of interest

173

170

163

134

*Since 2022- the measure is also being applied in Açu.

** In 2023 KN also conducted an anonymous survey of KN employees' tolerance for corruption (33% of employees participated, higher

participation rate compared to 2022 with 30%). It revealed that the level of intolerance of corruption in KN is quite high: 96% of employees

would report cases of corruption, i.e. would not tolerate corruption (3% increase compared to 2022 (93%)); 84% of employees know whom

to report corruption to; the number of people who believe that corruption is not widespread in KN remained 99% (in 2022- 99%).

KN’s internal website has a separate dedicated section, "Corruption Prevention". It provides employees with relevant

information related to the process of declaring private interests in the PINREG system, as well as relevant links to internal

documents and procedures related to corruption prevention, implemented anti-corruption measures, links to anti-

corruption training on the Special Investigation Service e-learning platform and training conducted by the Transparency

Academy.

The risk management system within the Company operates efficiently by assessing all corporate functions, establishing a

prioritised list of risks, and regularly reporting to the Board, thereby managing, and mitigating the risks identified. Other

measures implemented in the Company, such as the risk register in the document management system, the streamlining

of the stakeholder verification process, and the periodic audits of the various Company's functions, have also contributed

to the improved rating.

The Company is politically neutral and does not contribute financially to political parties, groups, or politicians. KN adheres

to the Law on Charity and Sponsorship, as well as guidance by SIS, which governs the allocation and provision of the

Company's support for public benefit purposes. The Company has a Procedure for awarding support (publicly available

on www.kn.lt), which sets out the main principles and guidelines for donations, the criteria, and priorities for allocating

support. However, in 2023, KN didn‘t provides financial support.

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PROCUREMENT PRACTICES

KN regularly carries out high-value procurement procedures. When performing the procedure, it is essential to ensure

transparency, corruption prevention, and effective and sustainable use of resources. In addition, KN aims to ensure that

confidential information is not disclosed during the procurement process and that due diligence is carried out on business

partners, service providers or other third parties before contracts are signed.

While planning and implementing procurements and the performance of procurement agreements, KN acts following the

provisions of the Law of the Republic of Lithuania on Procurement by Entities Operating in the Water, Energy, Transport,

and Postal Services Sectors (further – the Law on Public Procurement), other legislation regulating procurement and

applicable to the Company, or follows good commercial practice even then the Law does not apply to specific

procurements. KN has internal procurement standards that meet and even exceed the Law on Public Procurement

requirements.

The planning, conduct and conclusion of procurement are governed by Company’s documents specifically designed to

regulate procurement: the Procurement Procedure, the Procurement Committee Regulations and the Procedure for the

Organisation of Small Value Procurement. KN’s procurement is planned, and the Procurement Summary is published

following the procedure in the Law on Public Procurement. The Company's procurement is usually carried out by the

Procurement Organiser (for low-value procurement) or the Procurement Commission (for higher-value procurement).

All persons involved in the Company's procurement activities, and those who can directly or indirectly influence them, must

sign declarations of impartiality and confidentiality undertakings. To prevent potential conflicts of interest, all employees

of the Company involved in the organisation's procurement processes must declare their private interests through the

publicly available PINREG database of the Chief Ethics Commission system of the Chief Ethics Commission.

The Company makes its procurement contracts publicly available following the procedures laid down by the Law. KN also

prepares and submits to the Public Procurement Service of the Republic of Lithuania a report on procurement procedure

for each procurement carried out (where required by the Law) and a report on purchase contracts for all purchase contracts

concluded in a calendar year.

Since 2021, the Ecocost Procurement Management System has been used to manage the entire procurement process. All

procurement activities are carried out electronically, with all actions recorded and multi-level controls over decision-making

installed. There is also a strong focus on procurement analytics to identify weaknesses in the process and make the

necessary decisions. Daily, more than 10 indicators on ongoing procurement (number of bids; staff occupancy;

cancellations, etc.) are monitored. These indicators are used as a basis for decision-making during the procurement process.

In 2023 continuously from 2022 additional attention was given to increasing the efficiency of processes: the main

procurement procedures were revised, and much attention was paid to improving the competencies of employees who

initiate procurement in the field of procurement planning. For that purpose, various pieces of training were organised, and

methodological materials were prepared.

Since 2023, according to national regulation, all

procurement (100%) has to be green – therefore, KN's goal

is to have 100% of such purchases. In 2023, 100% of KN's

purchases by value met the green procurement criteria

comparing to 50% in 2022. To ensure 100% green

procurement, Company is actively working with current and

possible service providers (conducting market research and consultations), integrating environmental requirements in

planned purchases, and conducting training of procurement organisers and members of procurement commissions on the

establishment and application of green criteria.

Since 2024, KN has approved the Code of Ethics for Suppliers, which is integrated into the procurement process. By applying

this management practice, suppliers are introduced to the main ethical standards and behaviours together with

sustainability implementation practises, which KN expects from suppliers who participate on public procurements and

execute contracts signed with KN.

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ASSET INTEGRITY AND INCIDENT MANAGEMENT

Following the Law on the Protection of Objects Important for Ensuring the National Security of the Republic of Lithuania,

KN is included in the second category list of companies essential for ensuring national security, also liquid energy product

terminals managed by the Company in Klaipėda and Subačius, as well as LNG terminal, are treated as facilities and assets

essential for ensuring national security. The individual requirements are provided in the legal acts aimed at ensuring the

safety of the terminals. And they are followed both in internal procedures and cooperation with the institutions that ensure

safety.

For example, according to the Resolution of the Government of the Republic of Lithuania No. 746 of July 25th 2018, on

establishing protection zones for facilities and assets of national security, a 50-meter protection zone is established from

the territory where the Klaipėda Liquid Energy terminal operates. It should also be noted that to manage the risks associated

with a possible physical breach of the Klaipėda LNG terminal, a 250-meter preventive physical protection zone is set up

around the LNG terminal, where all activities are unrelated to the LNG terminal are prohibited or restricted. The terminal is

guarded by Public Security Service (PSS) officers, who follow their own approved security procedures. Further details on

regulations concerning the safety requirements of the terminals cannot be disclosed due to confidentiality requirements.

Since Russia invaded Ukraine in February 2022, Company has been closely monitoring and analysing the situation, and the

level of protection of the infrastructure managed by KN has been increased accordingly. For example, LNG gas carriers

arriving in Klaipėda are being escorted by the Lithuanian Naval Force and officers of the Lithuanian Police Anti-Terrorist

Operations Unit ARAS. The protection of other KN terminals was also enhanced. We regularly consult and exchange

information with the relevant authorities. The overall threat level is not changed now, as we have no such indications from

the authorities responsible for national security issues.

In the context of the war in the neighbouring region, we also reviewed potential threat scenarios for our operational and

business continuity. We assessed the need for additional measures and implemented them. For example, in 2022, KN

invested about 0.4 million euros in ensuring the Company's operational continuity during extreme situations in energy

security. After reviewing possible energy supply interruption scenarios, we implemented additional measures to guarantee

alternative energy sources to ensure KN's critical functions. Diesel generators were purchased to provide the necessary

electricity to operational processes, boiler burner adaption to combined operation mode was implemented, and emergency

lighting equipment was installed.

In the first half of 2023 KN completed an international tender and

is working with a contractor on the installation of security technical

measures, strengthening the protection of the LNG terminal and

increasing the capabilities of the Public security service officers

guarding the LNG terminal to control underwater threats. The work

is being carried out according to the work schedule stipulated in

the contract. Improving and strengthening security is an ongoing process – tools are improving and new opportunities to

increase security are emerging, requiring constant attention and interagency cooperation. This equipment installed by KN

is a component of the whole system. The acquired equipment will be integrated together with the systems of other

institutions, additionally strengthening the security of the terminal in a complex manner. The price of the concluded

contract is about 1.5 million. EUR.

Various Regulations on the prevention, response, and investigation of industrial accidents that a valid in Lithuania state

that the safe use of hazardous establishments and safety control is the responsibility of the operator of the terminals. The

operator must ensure the safe use of the dangerous establishment, take the necessary measures to prevent accidents and

limit their consequences for the population and the environment. Therefore, prevention of and response to incidents is one

of the key topics for KN.

The internal emergency plans for the LNG and liquid energy terminals are periodically reviewed and updated, training is

carried out, and information on the safety status and preventive measures in place is provided to the authorities at the

required frequency and for communities. In an industrial accident, KN staff and the responsible authorities would respond

following the plans drawn up and agreed upon, and residents would be informed accordingly.

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The Company is constantly investing in safety measures and activities related to employees' readiness for emergencies (by

regularly organising relevant employee training) and measures to increase civil safety. Since 2022, in the context of the

events in Ukraine, KN paid much attention to the review of response processes, communication and information-sharing

practices, and the preparation of employees. Training on resilience was organised with internal discussions about how to

behave during a war, civil safety training was also organised for Vitė and Melnragė community representatives. Safety

information for the public is available at KN’s website: https://www.kn.lt/zmones-ir-tvari-veikla/saugos-informacija-

visuomenei/3945

CYBERSECURITY AND DATA PROTECTION

Cyber risks are the potential for unauthorised access, use, disclosure, disruption, modification, or destruction of data and

systems by cybercriminals or malicious actors. KN manages the country's critical energy infrastructure and is one of the

potential targets of cyber-attacks. Therefore, cyber security is one of the priority areas to ensure the safety of the Company’s

data, processes, infrastructure, and operations.

The National Cyber Security Centre under the Ministry of Defence evaluates the readiness of the most important entities

for cyber defence, gives additional instructions on the essential measures that must be implemented, and provides

intelligence related to preventive cyber defence. The same applies in the case of KN, and Company's management is

responsible for applying relevant measures. KN’s cyber security is governed by the KN Information and Cyber Security

Policy, publicly available on KN’s website, and Information Security Risk Management Guidelines, including organisational

and technical provisions of the Cyber Law of Lithuania. The Company has also set minimal information and cyber security

requirements for third parties. Information can be found following this link: https://www.kn.lt/apie-mus/veiklos-

dokumentai/informacijos-ir-kibernetinis-saugumas/2649

It is important to note that Lithuania has already taken the threats posed by the Eastern neighbourhood seriously, and the

institutions' demands regarding business continuity and cyber security were relatively high even before the war in Ukraine

started. Therefore, KN continuously invested in respective areas to improve Company's resilience to cyber threats. KN's

regular activities in the sphere of cybersecurity include threats intelligence, vulnerability management, security assessments,

protection and detection capabilities, and business continuity management. In addition, employee training on these topics,

following the best cybersecurity practices, is being organised regularly.

At the beginning of Russia’s invasion of Ukraine and during 2023, KN observed a several-fold increase in the flow of

malicious emails and cyber-attacks attempting to compromise the Company’s IT infrastructure. However, no significant

incidents occurred, as preventive measures were applied promptly and appropriately. Furthermore, KN initiated additional

measures to strengthen detection and recovery capabilities. KN does not outsource operational business processes (e.g.,

IT services) to Russian or Belarussian service providers.

KN constantly assesses and improves its internal legislation and processes of personal data protection. Key documents

which define data handling and storage processes and ensuring data privacy in KN are the Personal Data Privacy Policy,

Website Visitor Privacy and Cookie Policy, Guidelines of Personal Data Processing and Personal Data Privacy Policy for

candidates for positions of employees, interns and governing and supervisory bodies.

KN has a dedicated Data Protection Officer who monitors the compliance of KN with all data protection legislation,

including audits, awareness-raising and training of staff involved in data processing operations. The officer also ensures

that the Company receives timely information about its obligations and is in a position to implement them properly.

The Company has sustained its General Data Protection Regulation (GDPR) initiatives by enhancing the quality of personal

data registers in 2023. Policies have been updated to align with the current Company situation, ensuring relevance and

compliance. KN employees were introduced with all updates made to ensure their awareness of actual regulations applied.

Additionally, investments have been made in educating employees about the nature of personal data gathered through

their activities, fostering awareness and understanding. Training on how to manage personal data appropriately is

mandatory for all employees. It is carried out once a year and was implemented in 2023 as well.

In 2023, KN did not receive any complaints regarding improper processing of personal data in any of its operations.

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AB KN ENERGIES SUSTAINABILITY

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GRI INDEX

Statement of use

AB “KN Energies“ has reported the information cited in GRI content index for the period 1st January –

31st December, 2023 with reference to GRI Standards.

GRI 1 used

GRI 1: Foundation 2021

GRI STANDARD

DISCLOSURE

LOCATION

GRI 2: General

disclosures 2021

2-1 Organizational details

General information, p. 57-60

2-2 Entities included in the reporting (partly)

Boundaries of the report, p. 154

2-3 Reporting period, frequency and contact person

At the end of GRI Index

2-6 Activities, value chain and other business relationships

(partly)

About the Company, p. 63-73

2-7 Employees

Employees, p. 105-110

2-16 Communication of critical concerns

Prevention of corruption, p. 195-197

2-19 Remuneration policy (partly)

Remuneration policy, p. 183-184

2-20 Process to determine remuneration (partly)

Remuneration policy, p. 183-184

2-21 Annual total compensation ratio

Remuneration policy, p. 183-184

2-22 Statement on sustainable development strategy (partly)

CEO foreword, p. 61-62

2-26 Mechanisms for seeking advice and raising concerns

Prevention of corruption, p. 195-197

2-27 Compliance with laws and regulations

Compliance, p. 158

2-29 Stakeholder engagement (partly)

Stakeholders, p. 159-161

2-30 Collective bargaining agreements

Collective bargaining agreements p.

182

MATERIAL TOPIC: SUSTAINABILITY MANAGEMENT

GRI STANDARD

DISCLOSURE

LOCATION

GRI 3: Material topics

2021

3-1 Process to determine material topics

Material topics, p. 163-164

3-2 List of material topics

Material topics, p. 163-164

3-3 Management of material topics (partly)

Whole report – in the parts related

to specific material topics

In the tables below additional GRI disclosures for every material topic (not mentioning disclosure 3-3 – management of

material topics – for each topic in the tables once more) are provided.

Where no thematic GRI Standard is relevant or used, only location of information about management of the material topic

is provided.

MATERIAL TOPIC: AIR EMISSIONS

GRI STANDARD

DISCLOSURE

LOCATION

GRI 305: Emissions 2016

305-7 NOx, SOx and other significant air emissions (partly)

Other significant air emissions, p.

170-172

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MATERIAL TOPIC: ENERGY USE

GRI STANDARD

DISCLOSURE

LOCATION

GRI 302: Energy 2016

302-1 Energy consumption inside the organisation (partly)

Energy consumption, p. 169-170

302-4 Reduction of energy consumption (partly)

Energy consumption, p. 169-170

MATERIAL TOPIC: GREENHOUSE GAS EMISSIONS

GRI STANDARD

DISCLOSURE

LOCATION

GRI 305: Emissions 2016

305-1 Scope 1 emissions

GHG emissions, p. 168-169

305-2 Scope 2 emissions

GHG emissions, p. 168-169

305-3 Scope 3 emissions

GHG emissions, p. 168-169

305-4 GHG emission intensity

GHG emissions, p. 168-169

305-5 Reduction of GHG emissions

GHG emissions, p. 168-169

MATERIAL TOPIC: WASTE

GRI STANDARD

DISCLOSURE

LOCATION

GRI 306 Waste 2020

306-1 Waste generation and related impacts (partly)

Waste management, p. 174-176

306-3 Waste generated

Waste management, p. 174-176

306-4 Waste diverted from disposal (partly)

Waste management, p. 174-176

306-5 Waste diverted to disposal (partly)

Waste management, p. 174-176

MATERIAL TOPIC: WATER AND EFFLUENTS

GRI STANDARD

DISCLOSURE

LOCATION

GRI 303 Water and

effluents 2018

303-1 Interaction with water as a shared resource (partly)

Water and sewage, p. 172-174

303-2 Management of water discharge related impacts (partly)

Water and sewage, p. 172-174

303-3 Water withdrawal (partly)

Water and sewage, p. 172-174

303-4 Water discharge (partly)

Water and sewage, p. 172-174

303-5 Water consumption

Water and sewage, p. 172-174

MATERIAL TOPIC: COMPETITIVE REMUNERATION POLICY

GRI STANDARD

DISCLOSURE

LOCATION

GRI 2: General

disclosures 2021

2-19 Remuneration policy (partly)

Remuneration policy, p. 183-184

2-20 Process to determine remuneration (partly)

Remuneration policy, p. 183-184

2-21 Annual total compensation ratio

Remuneration policy, p. 183-184

MATERIAL TOPIC: EMPLOYMENT AND NEW EMPLOYEE HIRES

GRI STANDARD

DISCLOSURE

LOCATION

GRI 401: Employment

2016

401-1 New employee hires and employee turnover

Employees, p. 178-182

401-3 Parental leave

Employees, p. 178-182

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MATERIAL TOPIC: EMPLOYEE COMPETENCE DEVELOPMENT AND TURNOVER

GRI STANDARD

DISCLOSURE

LOCATION

GRI 404: Training and

education 2016

404-1 Average training hours of training per employee (partly)

Development of competences, p.

185-186

404-2 Programs for upgrading skills and transition assistance

Development of competences, p.

185-186 & Employees, p. 178-182

403-3 Percentage of employees receiving regular performance

and development reviews

Development of competences, p.

185-186

MATERIAL TOPIC: EMPLOYEE ENGAGEMENT, EMPOWERMENT AND SATISFACTION

GRI STANDARD

DISCLOSURE

LOCATION

Employee engagement and

satisfaction, p. 185

MATERIAL TOPIC: FREEDOM OF ASSOCIATION AND COLLECTIVE BARGAINING

GRI STANDARD

DISCLOSURE

LOCATION

GRI 2: General

disclosures 2021

2-30 Collective bargaining agreements

Collective bargaining agreement, p.

182

MATERIAL TOPIC: LOCAL COMMUNITIES AND SOCIAL INITIATIVES

GRI STANDARD

DISCLOSURE

LOCATION

GRI 413: Local

communities 2016

413-1 Operation with local community <…> programs (partly)

Stakeholders, p. 159-161

Communication on environmental

impact, p. 166-167

Complaints, p. 167

Consultation on OHS issues, p. 187

Local communities, p. 192-193

Prevention of corruption, p. 195-198

MATERIAL TOPIC: NON-DISCRIMINATION AND EQUAL OPPORTUNITY

GRI STANDARD

DISCLOSURE

LOCATION

GRI 405: diversity and

equal opportunity 2016

405-1 Diversity of governing bodies and employees (partly)

Employees and equal opportunity, p.

178-182

405-2 Ratio of basic salary and remuneration (partly)

Remuneration policy p. 183-184

Gender pay gap p. 184-185

GRI 406:

Nondiscrimination 2016

406-1 Incidents of discrimination and actions taken

Impact management and protection

of human right, p. 176-178

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MATERIAL TOPIC: OCCUPATIONAL HEALTH AND SAFETY

GRI STANDARD

DISCLOSURE

LOCATION

GRI 403 Occupational

health and safety 2018

403-1 OHS management system

Occupational health and safety, p.

187-191

403-2 Hazard identification, risk assessment and incident

investigation

Occupational health and safety, p.

187-191

403-3 Occupational health services (partly)

Occupational health and safety, p.

187-191

403-4 Worker participation, consultation and communication on

OHS issues

Occupational health and safety, p.

187-191

403-5 Worker training on OHS

Occupational health and safety, p.

187-191

403-6 Promotion of worker health (partly)

Occupational health and safety, p.

187-191

403-7 Prevention and mitigation of OHS impacts linked to

business relationships (partly)

Occupational health and safety, p.

187-191

403-9 Work related injuries (partly)

Occupational health and safety, p.

187-191

MATERIAL TOPIC: ASSET INTEGRITY AND INCIDENT MANAGEMENT

GRI STANDARD

DISCLOSURE

LOCATION

GRI 303 Effluents and

waste 2016

303-3 Significant spills

Incidents, p. 188

Additional information on topic

management: Asset integrity and

incident management, p. 199-200

MATERIAL TOPIC: CLIMATE ADAPTATION, RESILIENCE, AND SUSTAINABLE INNOVATION AND

TRANSFORMATION

GRI STANDARD

DISCLOSURE

LOCATION

Strategy and sustainable

transformation, p. 156-157

Climate risks and adaptation, p. 162-

163

MATERIAL TOPIC: COMPLIANCE

GRI STANDARD

DISCLOSURE

LOCATION

GRI 2: General

disclosures 2021

2-27 Compliance with laws and regulations

Compliance, p. 158

MATERIAL TOPIC: CYBER SECURITY AND DATA PROTECTION

GRI STANDARD

DISCLOSURE

LOCATION

Cybersecurity and data protection, p.

200

MATERIAL TOPIC: PAYMENT TO GOVERNMENTS AND TAXES

GRI STANDARD

DISCLOSURE

LOCATION

Taxes, p. 157

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MATERIAL TOPIC: PREVENTION OF ANTI-COMPETITIVE BEHAVIOUR

GRI STANDARD

DISCLOSURE

LOCATION

Prevention of anti-competitive

behaviour, p. 194

MATERIAL TOPIC: PREVENTION OF CORRUPTION

GRI STANDARD

DISCLOSURE

LOCATION

GRI 205: Anti-corruption

2016

205-1 Operation assessed for risks related to corruption (partly)

Prevention of corruption, p. 195-197

205-2 Communication and training (partly)

Prevention of corruption, p. 195-197

205-3 Confirmed incidents and actions taken

Prevention of corruption, p. 195-197

MATERIAL TOPIC: PROCUREMENT PRACTICES

GRI STANDARD

DISCLOSURE

LOCATION

Procurement practises, p. 197

Reporting period for sustainability related matter is aligned with reporting period for financial reporting (1st January - 31rd

December, annually).

Contact person for sustainability related matters and this report:

Živilė Savciakitė, KN Head of Sustainability (z.savickaite@kn.lt)

More information on KN‘s sustainability: www.kn.lt

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ABBREVIATIONS

ABBREVIATION

MEANING

APM

Alternative performance measures

CCS

Carbon capture and storage

CEO

Chief Executive Officer

CO2

Carbon dioxide

comLNG

Commercial LNG activities

D/E

Debt ratio

DSCR

Debt service coverage ratio

European Commission

ESG

Environmental, social, and governance

European Union

FSRU

Floating Storage with Regasification Unit

GHG

Greenhouse gas

GRI

Global Reporting Initiative

HFO

Heavy oil products

Frequency of near misses or potential safety incidents

KLET

Klaipėda Liquid Energy Terminal

KN, Company

AB KN Energies

LET

Liquid Energy Terminals

LNG

Liquified Natural Gas

LNGT

Klaipėda LNG Terminal

Light oil products

LTIR

Occupational accident frequency rate

NERC

National Energy Regulation Council

O&M

Operations and Maintenance

OHS

Occupational Health and Safety Management System

PCI

Project of Common Interest

RAB

Regulated asset base

ROA

Return on assets

ROCE

Return on Capital Employed

ROE

Return on equity

SLET

Subačius Liquid Energy Terminal

ssLNG

Small-scale LNG terminal

TRCF

Total recordable case frequency

USA

United States of America

VAT

Value Added Tax

VOC

Volatile organic compound

WACC

Rate of return on investments of regulated activities