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AB Kauno Energija
Company code 235014830
Raudondvario pl. 84
Kaunas, Lithuania
THE SET OF CONSOLIDATED AND COMPANY
FINANCIAL STATEMENTS FOR 2023 PREPARED IN
ACCORDANCE WITH THE INTERNATIONAL
FINANCIAL REPORTING STANDARDS AS ADOPTED
BY THE EUROPEAN UNION, SUBMITTED WITH THE
CONSOLIDATED ANNUAL REPORT
2
AB KAUNO ENERGIJA
Company code 235014830
Raudondvario pl. 84
Kaunas, Lithuania
Set of consolidated and company financial
statements of 2023
(in thousands euro, unless specified otherwise)
TABLE OF CONTENTS
Page
Management's approval of the financial statements……………………………….
3
SET OF CONSOLIDATED AND COMPANY'S FINANCIAL STATEMENTS
FOR 2023 ............................................................................................................
4 – 53
Statements of financial position ..........................................................................
4 – 5
Statement of profit (loss) and other comprehensive income................................
6 – 7
Statement of Changes in Equity ..........................................................................
8
Cash Flow Statements ........................................................................................
9 – 10
Notes to the set of financial statements…………………………………………….
11 – 53
CONSOLIDATED ANNUAL REPORT ................................................................
54 – 107
3
AB KAUNO ENERGIJA
Company code 235014830
Raudondvario pl. 84
Kaunas, Lithuania
Set of consolidated and company financial
statements of 2023
(in thousands euro, unless specified otherwise)
Management's approval of the financial statements
In accordance with the provisions of Article 23 of the Law on Securities of the
Republic of Lithuania and Disclosure Rules approved by Resolution of the Board of the Bank
of Lithuania No. O3-223 of 13 December 2019, we hereby certify that the individual and
consolidated annual financial statements have been prepared in accordance with
International Financial Reporting Standards as adopted for application in the European
Union. In our opinion, the accounting principles applied are appropriate and the financial
statements give a true and fair view in all material respects in accordance with the
International Financial Reporting Standards adopted for application in the European Union.
The Consolidated Annual Report of 2023 provides a fair review of the development and
performance of the business and the overall position of the Company and the consolidated
entities, together with a description of the principal risks and uncertainties encountered.
We recommend that the Annual financial statements be approved by the General
Meeting of Shareholders.
Kaunas, 28 March 2024
On behalf of the management:
Director General of AB Kauno energija Tomas Garasimavičius
Financial Director of AB Kauno energija, acting as Chief Accountant
Virgilijus Motiejūnas
4
AB KAUNO ENERGIJA
Company code 235014830
Raudondvario pl. 84
Kaunas, Lithuania
Set of consolidated and company financial
statements of 2023
(in thousands euro, unless specified otherwise)
Statements of financial position
Group
Company
Notes
2023-12-31
2022-12-31
2023-12-31
2022-12-31
ASSETS
Fixed assets
Intangible fixed assets
3
249
98
241
98
Property, plant and equipment
4
Land and buildings
6 201
6 468
6 122
6 403
Buildings
134 610
127 521
134 610
127 521
Machinery and equipment
13 824
15 020
13 779
14 975
Vehicles
975
397
975
397
Plant and tools
3 263
2 763
3 217
2 761
Constructions in progress and
prepayments
23 483
13 519
23 483
13 477
Investment property
1 114
1 114
-
-
Total property, plant and
equipment
183 470
166 802
182 186
165 534
Right of use assets
6
1 083
1 141
916
884
Non-current financial assets
Investments in subsidiaries
5
-
-
2 763
2 763
Amounts receivable after one year
128
39
-
-
Other financial assets
7
75
75
75
75
Financial fixed assets, total
203
114
2 838
2 838
Non-current assets, total
185 005
168 155
186 181
169 354
Current assets
Inventories and prepayments
Inventories
8
1 777
2 694
1 429
1 879
Prepayments
1 019
2 162
942
1 851
Total inventories and
prepayments
2 796
4 856
2 371
3 730
Amounts receivable
Short-term deposits
-
2 000
-
2 000
Trade receivables
9
14 437
18 169
13 621
17 978
Other amounts receivable
9
2 755
5 156
2 757
5 130
Amounts receivable within one
17 192
25 325
16 378
25 108
year, total
Cash and cash equivalents
10
8 547
5 550
7 315
4 891
Current assets, total
28 535
35 731
26 064
33 729
Assets, total:
213 540
203 886
212 245
203 083
(continued on the next page)
5
AB KAUNO ENERGIJA
Company code 235014830
Raudondvario pl. 84
Kaunas, Lithuania
Set of consolidated and company financial
statements of 2023
(in thousands euro, unless specified otherwise)
Statements of financial position (continued)
Group
Company
Notes
2023-12-31
2022-12-31
2023-12-31
2022-12-31
EQUITY AND LIABILITIES
Property
Capital
11
74 476
74 476
74 476
74 476
Legal reserve
11
7 447
7 447
7 447
7 447
Other reserves
11
50
3 000
50
3 000
Profit (loss) of the reporting year
4 505
6 356
3 881
6 299
Profit (loss) of the previous year
11 128
4 822
10 869
4 620
Total retained profit (loss)
15 633
11 178
14 750
10 919
Total equity
97 606
96 101
96 723
95 842
Amounts payable and liabilities
Amounts payable after one year
Financial debts
12
54 736
43 949
54 736
43 949
Lease (financial lease)
13
1 121
1 151
950
887
Deferred profit tax liabilities
22
6 516
5 819
6 516
5 819
Grants and subsidies
14
30 850
32 211
30 850
32 211
Employee benefit liabilities
15
385
374
365
363
Amounts payable after one year,
total
93 608
83 504
93 417
83 229
Accounts payable within one
year
Financial debts and leasing
12,13
3 269
2 891
3 265
2 889
Trade debtors
24
14 105
18 548
14 136
18 487
Employee related liabilities
715
695
701
686
Received prepayments
840
773
815
660
Tax payable
804
500
612
435
Employee benefit liabilities
15
163
90
162
89
Other provisions
16
1 652
78
1 652
78
Accrued costs and deferred income
440
337
425
322
Other amounts payable and
liabilities
338
369
337
366
Accounts payable within one
22 326
24 281
22 105
24 012
year, total
Total accounts payable and
liabilities
115 934
107 785
115 522
107 241
Total equity and liabilities
213 540
203 886
212 245
203 083
The following notes to the financial statements are an integral part of these financial statements.
6
AB KAUNO ENERGIJA
Company code 235014830
Raudondvario pl. 84
Kaunas, Lithuania
Set of consolidated and company financial
statements of 2023
(in thousands euro, unless specified otherwise)
Statement of profit (loss) and other comprehensive income
Group
Notes
2023
2022
Operating income
Sales revenue
17
85 048
87 992
Other operating income
19
2 860
1 441
Total operating income
87 908
89 433
Operating expenses
Fuel and purchased energy
(53 778)
(58 119)
Salaries, social insurance
(8 968)
(7 931)
Depreciation and amortisation
(6 682)
(6 447)
Repair and maintenance
(902)
(870)
Change in impairment of receivables
442
111
Taxes, other than income tax
(2 441)
(2 249)
Electricity
(1 628)
(2 537)
Raw materials and goods used
(1 405)
(1 460)
Water
(1 970)
(1 048)
Change in realisable value of inventories and
impairment of fixed assets
318
(44)
Other costs
18
(2 777)
(2 122)
Other operating expenses
19
(486)
(747)
Operating expenses, total
(80 277)
(83 463)
Operating profit (loss)
7 631
5 970
Other interest and similar income
20
694
247
Loss from disposal of securities
21
-
-
Interest and other similar expenses
21
(1 348)
(299)
Income from financing and investment
(654)
(52)
activities, net value
Profit before taxation
6 977
5 918
Income tax
22
(202)
(75)
Deferred income tax income (loss)
22
(697)
15
Profit for the reporting period
6 078
5 858
Other provisions that will/may be reclassified
16
(1 573)
498
subsequently to profit (loss)
Other provisions that will not be reclassified to
profit (loss)
-
-
Total comprehensive income
4 505
6 356
Profit attributable to:
Owners of the Company
6 078
5 858
Non-controlling interests
-
-
Total comprehensive income attributable to:
4 505
6 356
Owners of the Company
Non-controlling interests
-
-
23
0,14
0,14
Earnings per share (EUR)
The following notes to the financial statements are an integral part of these financial statements.
7
AB KAUNO ENERGIJA
Company code 235014830
Raudondvario pl. 84
Kaunas, Lithuania
Set of consolidated and company financial
statements of 2023
(in thousands euro, unless specified otherwise)
Statement of profit (loss) and other comprehensive income (continued)
Company
Notes
2023
2022
Operating income
Sales revenue
17
85 048
87 013
Other operating income
19
1 044
903
Total operating income
86 092
87 916
Operating expenses
Fuel and purchased energy
(53 778)
(57 847)
Salaries, social insurance
(8 494)
(7 798)
Depreciation and amortisation
(6 625)
(6 293)
Repair and maintenance
(872)
(859)
Change in impairment of receivables
442
114
Taxes, other than income tax
(2 381)
(2 182)
Electricity
(1 628)
(2 529)
Raw materials and goods used
(843)
(682)
Water
(1 970)
(1 048)
Change in realisable value of inventories and
impairment of fixed assets
318
(44)
Other costs
18
(2 872)
(2 420)
Other operating expenses
19
(492)
(754)
Operating expenses, total
(79 195)
(82 342)
Operating profit (loss)
6 897
5 574
Other interest and similar income
20
688
250
Loss from disposal of securities
21
-
258
Interest and other similar expenses
21
(1 344)
(296)
Income from financing and investment
activities, net value
(656)
212
Profit before taxation
6 241
5 786
Income tax
22
(90)
-
Deferred income tax income (loss)
22
(697)
15
Profit for the reporting period
5 454
5 801
Other provisions that will/may be reclassified
subsequently to profit (loss)
16
(1 573)
498
Other provisions that will not be reclassified to
profit (loss)
-
-
Total comprehensive income
3 881
6 299
Earnings per share (EUR)
23
0,13
0,14
The following notes to the financial statements are an integral part of these financial statements.
8
AB KAUNO ENERGIJA
Company code 235014830
Raudondvario pl. 84
Kaunas, Lithuania
Set of consolidated and company financial
statements of 2023
(in thousands euro, unless specified otherwise)
Statement of Changes in Equity
Group
Notes
Capital
Legal
Other
Retained
Total
reserve
reserves
earnings
Balance on 31
74 476
7 447
3 000
4 822
89 745
December 2021
Formed reserves
11
-
-
-
-
-
Profit for the reporting
period
-
-
-
5 858
5 858
Other comprehensive
income
-
-
-
498
498
Balance on 31
74 476
7 447
3 000
11 178
96 101
December 2022
Formed reserves
11
-
-
50
(50)
-
Reversed reserves
-
-
(3 000)
3 000
-
Dividends
-
-
-
(3 000)
(3 000)
Profit for the reporting
period
-
-
-
6 078
6 078
Other comprehensive
income
-
-
-
(1 573)
(1 573)
Balance on 31
74 476
7 447
50
15 633
97 606
December 2023
The following notes to the financial statements are an integral part of these financial statements.
Company
Notes
Capital
Legal
reserve
Other
reserves
Retained
earnings
Total
Balance on 31
December 2021
74 476
7 447
3 000
5 367
90 290
Formed reserves
11
-
-
-
-
-
Result of legal merge
with AB Petrašiūnų
katilinė
5
-
-
-
(747)
(747)
Profit for the reporting
period
-
-
-
5 801
5 801
Other comprehensive
income
-
-
-
498
498
Balance on 31
December 2022
74 476
7 447
3 000
10 919
95 842
Formed reserves
11
-
-
50
(50)
-
Reversed reserves
5
-
-
(3 000)
3 000
-
Dividends
-
-
-
(3 000)
(3 000)
Profit for the reporting
period
-
-
-
5 454
5 454
Other comprehensive
income
-
-
-
(1 573)
(1 573)
Balance on 31
December 2023
74 476
7 447
50
14 750
96 723
9
AB KAUNO ENERGIJA
Company code 235014830
Raudondvario pl. 84
Kaunas, Lithuania
Set of consolidated and company financial
statements of 2023
(in thousands euro, unless specified otherwise)
Cash Flow Statements
Group
Company
2023
2022
2023
2022
Cash flows from operating activities
Comprehensive income
4 505
6 356
3 881
6 299
Adjustments to non-cash items:
Depreciation and amortisation
8 615
8 560
8 591
8 360
Write-offs and changes in impairment of
receivables
(442)
(111)
(442)
(114)
Interest income/expense
660
299
656
296
Loss (gain) on sale and write-down of fixed
(16)
(17)
16
(17)
assets and value of shares
Grants and subsidies (amortisation)
(1 361)
(1 778)
(1 361)
(1 291)
Change in realisable value of inventories
(318)
44
(318)
44
and impairment of fixed assets
Change in employee benefits liability
84
(91)
75
(125)
Change in value of lease liability
(56)
71
31
(66)
Profit tax expense
899
60
787
(15)
Change in accruals
103
(172)
103
10
Change in provision liabilities
1 574
(313)
1 574
(499)
Revere of other results of financing and
investing activities
(153)
(247)
(147)
(502)
Adjustment to total non-cash items
9 589
6 305
9 565
6 081
Changes of working capital:
Decrease (increase) in inventories
1 235
(982)
768
(516)
Decrease (increase) in prepayments
1 143
2 245
909
2 204
Decrease (increase) in trade receivables
4 027
(6 529)
4 652
(6 011)
Decrease (increase) in other amounts
2 401
(3 323)
2 373
(3 336)
receivable
Increase (decrease) in long-term trade
(89)
72
-
-
debts
Increase (decrease) in trade debtors and
advances received
(3 205)
7 405
(3 115)
8 276
Decrease (increase) in liabilities related to
employment relations
20
46
15
54
Increase (decrease) in taxes payable
102
(109)
87
(153)
Decrease (increase) in received
67
203
155
196
prepayments
Increase (decrease) in other current
(31)
34
(29)
97
liabilities
Total changes in working capital
5 670
(938)
5 815
811
Net cash flows from operating activities
19 764
11 723
19 261
13 191
(continued on the next page)
10
AB KAUNO ENERGIJA
Company code 235014830
Raudondvario pl. 84
Kaunas, Lithuania
Set of consolidated and company financial
statements of 2023
(in thousands euro, unless specified otherwise)
Cash Flow Statement (continued)
Group
Company
2023
2022
2023
2022
Cash flows from investing activities
Acquisition of intangible fixed assets and
property, plant and equipment
(25 457)
(20 252)
(25 439)
(20 220)
Sale of property, plant and equipment
97
56
5
61
Interest received on overdue receivables
147
252
147
255
Sale (acquisition) of investments
2 000
(2 000)
2 000
(3 539)
Net (used) cash flows from investing
(23 213)
(21 944)
(23 287)
(23 443)
activities
Cash flows from financing activities
Loans received
14 000
14 000
14 000
14 000
Loans repaid
(2 793)
(2 816)
(2 793)
(2 532)
Interest paid
(1 745)
(285)
(1 745)
(284)
Lease payments
(16)
(98)
(12)
(96)
Dividend paid
(3 000)
-
(3 000)
-
Subsidy received
-
1 274
-
1 273
Net cash flows from (used in) financing
6 446
12 075
6 450
12 361
activities
Net increase (decrease) in cash flows
2 997
1 854
2 424
2 109
Cash and cash equivalents at the
beginning of the period
5 550
3 696
4 891
2 782
Cash and cash equivalents at the end of
the period
8 547
5 550
7 315
4 891
(end)
The following notes to the financial statements are an integral part of these financial statements.
11
AB KAUNO ENERGIJA
Company code 235014830
Raudondvario pl. 84
Kaunas, Lithuania
Set of consolidated and company financial
statements of 2023
(in thousands euro, unless specified otherwise)
Explanatory notes to financial statements
1. General information
AB Kauno energija (hereinafter referred to as the Company) is a public limited liability company
registered in the Republic of Lithuania . It’s headquarters address: Raudondvario pl. 84, Kaunas,
Lithuania. Data about the Company is collected and stored in the Registry of Legal Entities.
The Company is engaged in the supply of heat and hot water, production and sale of electricity and
maintenance of collector-tunnels. The Company also provides heating system maintenance services.
The Company was registered on 1 July 1997 following the reorganisation of AB Lietuvos energija.
The Company's shares are traded on the Baltic Additional Trading List of the Nasdaq Vilnius Stock
Exchange.
As at 31 December 2023 and 31 December 2022 the Company's shareholders were:
2023-12-31
2022-12-31
Number of
Number of
held shares,
Ownership
held shares,
Ownership
units
(%)
units
(%)
Kaunas city municipality
39 736 058
92,84
39 736 058
92,84
Kaunas district municipality
1 606 168
3,75
1 606 168
3,75
Jurbarkas district municipality
746 405
1,74
746 405
1,74
Other small shareholders
713 512
1,67
713 512
1,67
42 802 143
100,00
42 802 143
100,00
The Company's authorised capital is equal to EUR 74,475,728.82 and is divided into 42,802,143
ordinary shares with a nominal value of EUR 1.74 each. As at 31 December 2023 and 31 December
2022, the Company had no own shares. As at 31 December 2023 and 31 December 2022, all shares
were fully paid up.
On 31 December 2023 the Company and its subsidiary UAB GO Energy LT form a group (the Group):
Company
Part of the
Profit (loss)
Company's
Company
home
Company-
Cost of
for the
Equity
main
address
owned
investment
reporting
activities
shares
period
Innovative
UAB GO
Savanorių
100 per
energy
Energy LT
pr. 347,
cent.
2 763
620
3 653
projects,
Kaunas
consultations
, lease
During 2022, the Company's shareholding in the Group companies changed as a result of the
reorganisation of AB Petrašiūnų katilinė, which was merged into the Company (Note 5).
The average listed number of employees of the Group in the reporting period was 375 (383 in 2022).
The average list number of employees of the Company in the reporting period was 338 (354 in 2022).
12
AB KAUNO ENERGIJA
Company code 235014830
Raudondvario pl. 84
Kaunas, Lithuania
Set of consolidated and company financial
statements of 2023
(in thousands euro, unless specified otherwise)
1. General information (continued)
Legal regulation
Pursuant to the Law of the Republic of Lithuania on the Heat Sector, the Company's activities are
licensed and regulated by the State Energy Regulatory Council (hereinafter referred to as the
Council). On 26 February 2004 the Council granted the Company a heat supply licence. The licence
is valid for an unlimited period, but may be revoked by an appropriate decision of the Council
depending on compliance with certain conditions. The Council also sets price caps for heat supply.
On 13 September 2018 the Council, by Resolution No. O3E-283, established new components of the
basic heat price for the Company, which were in force during the audited period. In accordance with
the price-setting methodology, the Council recalculates the price components after the first year of
the basic price and the rate is adjusted prospectively. The recalculated components became
applicable on 1 November 2020.
Economic activities
The Company's production capacities consist of the Petrašiūnai power plant, 5 boiler houses in
Kaunas integrated network, 7 regional boiler houses in Kaunas district, 1 in Jurbarkas, 14 isolated
network and 26 local (household) boiler houses in Kaunas city, as well as 8 boiler houses for water
heating in Sargėnai district.
In March 2022 The Petrašiūnų boiler house under the ownership of AB Kauno energija became a
division of the Company. In July 2022, the Petrašiūnai power plant's capacity was reduced due to
environmental requirements.
The total installed thermal capacity of the Company as at 31 December 2023 is approximately 596
MW (of which 53 MW are condensing economizers), electrical, 8.75 MW, including 220 MW thermal
capacity of the Petrašiūnai power plant (of which 17.8 MW is condensing economizer) and 8 MW
electrical capacity, in Jurbarkas 39.4 MW thermal capacity (including 4.4 MW – a condensing
economizer). The total power generation capacity of the Company as a whole is approximately 605
MW (of which 53 MW are condensing economizers).
The Company makes investments based on an assessment of the economic situation, the competitive
environment and the availability of financing. Investment plans are approved by the shareholders and
coordinated by the Board.
The Company's management approved these financial statements on 28 March 2024. The
Company's shareholders have a statutory right to approve these financial statements or disapprove
them and require the management to draft new financial statements.
2.1. Confirmation of Conformity
The separate and consolidated financial statements (hereinafter the "financial statements") have been
prepared in accordance with the International Financial Reporting Standards (IFRS) as adopted by
the European Union (EU) and interpretations thereof. Standards have been issued by the International
Accounting Standards Board (IASB) and interpretations have been issued by the International
Financial Reporting Interpretations Committee (IFRIC).
13
AB KAUNO ENERGIJA
Company code 235014830
Raudondvario pl. 84
Kaunas, Lithuania
Set of consolidated and company financial
statements of 2023
(in thousands euro, unless specified otherwise)
2.2. Basis of preparation of the financial statements
These financial statements are prepared on an historical cost basis, except for financial assets and
liabilities for which changes in fair value are recognised as profit or loss. Historical cost is essentially
based on the fair value of the consideration paid for an asset. These financial statements have been
prepared on a going concern basis, on the assumption that the Company and the Group will be able
to continue in business for the foreseeable future.
The financial year of the Company and other Group companies coincides with the calendar year.
All amounts in these financial statements are recorded and presented in euro (rounded to the nearest
thousand euro, unless otherwise stated) – the functional and presentation currency of the Group and
the Company.
2.3. Application of new and/or amended IFRS International Financial Reporting Interpretations
Committee’s (IFRIC) interpretations
(a) New and/or amended standards and interpretations applicable from 1 January 2023:
The following amended standards issued by the International Accounting Standards Board (IASB)
and adopted by the EU, as well as additions and clarifications to existing standards, are currently in
force and have been applied by the Company and the Group during this year:
• IFRS 17 Insurance Contracts; including Amendments to IFRS 17 (effective for annual periods
beginning on or after 1 January 2023);
• Amendments to IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2:
Disclosure of Accounting policies (effective for annual periods beginning on or after 1 January
2023);
• Amendments to IAS 8 Accounting policies, Changes in Accounting Estimates and Errors:
Definition of Accounting Estimates (effective for annual periods beginning on or after 1 January
2023);
• Amendments to IAS 12 Income Taxes: Deferred Tax related to Assets and Liabilities arising
from a Single Transaction (effective for annual periods beginning on or after 1 January 2023);
• Amendments to IFRS 17 Insurance contracts: Initial Application of IFRS 17 and IFRS 9 –
Comparative Information (effective for annual periods beginning on or after 1 January 2023);
• Amendments to IAS 12 “Income taxes”: International Tax Reform – Pillar Two Model Rules
(effective for annual periods beginning on or after 1 January 2023).
The application of the standards, amendments and interpretations listed above did not materially
affect the financial statements of the Company and the Group.
(b) Standards, amendments to existing standards and interpretations issued by the IASB, adopted
by the EU but not yet in force:
As at the date of these consolidated financial statements, the Company and the Group has not early
adopted the following new and revised IFRS standards, amendments and interpretations that have
been endorsed but not yet effective:
• Amendments to IAS 1 Presentation of Financial Statements: Classification of Liabilities as
Current or Non-current Date; Classification of Liabilities as Current or Non-current – Deferral
of Effective date; Non-current Liabilities with Covenants (effective for annual periods beginning
on or after 1 January 2024);
• Amendments to IFRS 16 Leases: Lease Liability in a Sale and Leaseback (effective for annual
periods beginning on or after 1 January 2024).
The management of the Company and the Group does not expect that the adoption of these
standards, amendments and interpretations will have a material impact on the Company's and the
Group's financial statements in the period of initial application.
14
AB KAUNO ENERGIJA
Company code 235014830
Raudondvario pl. 84
Kaunas, Lithuania
Set of consolidated and company financial
statements of 2023
(in thousands euro, unless specified otherwise)
(c) Standards, amendments to existing standards and interpretations that have not yet entered
into force and have not yet been endorsed by the EU:
Currently, IFRS adopted in the EU are almost identical to standards adopted by the IASB, with the
exception of the standards, amendments to standards and interpretations currently in force which
have not yet been adopted in the EU (dates of validity apply in full to IFRS). The following standards,
amendments and interpretations are set out below:
• Amendments to IAS 7 “Statement of Cash Flows” and IFRS 7 “Financial Instruments”:
Disclosures: Supplier Finance Arrangements (effective for annual periods beginning on or
after 1 January 2024);
• Amendments to IAS 21 “The Effects of Changes in Foreign Exchange Rates”: Lack of
Exchangeability (effective for annual periods beginning on or after 1 January 2025).
The management of the Company and the Group does not expect that the adoption of these
standards, amendments and interpretations will have a material impact on the Company's and the
Group's financial statements in the period of initial application.
2.4. Consolidation principles
Consolidation principles
The consolidated financial statements of the Group include AB Kauno energija and its subsidiaries.
The financial statements of the subsidiaries are for the same reporting period as those of the Parent
Company. The consolidated financial statements are prepared on the basis of uniform accounting
principles for like transactions and other events in similar circumstances.
Businesses acquired or disposed of during the year are included in the consolidated financial
statements from the date of the transfer of control or until the date on which control is lost.
Intercompany transactions, balances and unrealised gains and losses are eliminated on
consolidation. The gross income of subsidiaries is attributable to the owners of the enterprise and to
the non-controlling interest, even if the result of the non-controlling interest is negative.
A subsidiary is an undertaking controlled, directly or indirectly, by its parent undertaking. Typically, a
company is controlled when the Group directly or indirectly owns more than 50 per cent of the
company's share capital carrying the voting rights and/or when it is able to control the financial and
operating activities so as to obtain benefits from its activities. The financial statements of subsidiaries
are included in the consolidated financial statements at the beginning and end of the control dates.
Changes in the Group's equity interest in subsidiaries
Changes in the Group's equity interest in subsidiaries that do not result in a loss of control of the
Group by the subsidiaries are accounted for as equity transactions. The carrying amounts of the
Group's interest and non-controlling interest are adjusted to reflect changes in their respective
interests in subsidiaries. Any difference between the adjustment for the non-controlling interest and
the fair value of the consideration paid or received is recognised directly in equity and attributable to
the owners of the entity.
When the Group loses control of a subsidiary, the gain or loss on disposal is calculated as the
difference between (i) the sum of the fair value of the consideration received and the aggregate of the
fair value of any retained interest; and (ii) the previous carrying amounts of the subsidiary's assets
(including goodwill) and liabilities and non-controlling interests. When a subsidiary's assets are
accounted for by re-measuring the fair value amount and the related gain or loss has been included
in comprehensive income and accumulated in equity, the amounts previously included in other
comprehensive income and accumulated in equity are accounted for in the same way as the disposal
of the related asset (i.e. reclassified to profit or loss or transferred directly to retained earnings, as
specified in the relevant IFRS).
15
AB KAUNO ENERGIJA
Company code 235014830
Raudondvario pl. 84
Kaunas, Lithuania
Set of consolidated and company financial
statements of 2023
(in thousands euro, unless specified otherwise)
2. Summary of significant accounting policies (continued)
2.4. Consolidation principles (continued)
The fair value of the remaining investment in the former subsidiary at the date of the loss of control is
treated as the fair value at initial recognition for subsequent accounting purposes in accordance with
IFRS 9 Financial Instruments, or, if appropriate, as the acquisition cost of the investment in an
associate or jointly controlled entity at initial recognition.
2.5. Investments in subsidiaries
In the statement of financial position of the company, investments in subsidiaries are accounted for
using the acquisition cost method. Dividends received from subsidiaries are recognised in profit or
loss and other comprehensive income.
IAS 36 “Impairment of Assets” applies impairment criteria to determine whether it is necessary to
recognise impairment losses in respect of the Company's investment in a subsidiary. When
necessary, the full carrying amount of an investment (including goodwill) is tested for impairment in
accordance with IAS 36 as a single asset by comparing its recoverable amount (the higher of its value
in use and its fair value less costs to sell) with its carrying amount. Any impairment losses recognised
shall form part of the carrying amount of the investment. Any reversal of an impairment loss is
recognised in accordance with IAS 36 to the extent that the recoverable amount of the investment
subsequently increases.
2.6. Intangible Assets
Intangible assets acquired separately
Intangible assets acquired separately are carried at cost less accumulated amortisation and
accumulated impairment losses. Amortisation is recognised on a straight-line basis over the estimated
useful lives. The useful life and depreciation method are reviewed at each reporting date,
prospectively recording any changes in the estimate assessment. The amortisation calculation shall
be discontinued from the first day of the month following the disposal of the asset or when the total
cost of the acquisition of an intangible asset is transferred to cost or to the value of another asset.
Intangible assets with an indefinite useful life acquired separately are carried at cost less impairment
losses.
Derecognition of intangible assets
An intangible asset is derecognised when it is sold or when no future economic benefit is expected
from the use or sale of the asset. Gains or losses arising from derecognition of an intangible asset,
calculated as the difference between the net disposal proceeds and the carrying amount of the asset,
are recognised in profit or loss when the asset is derecognised.
Licenses
Amounts paid for licenses are capitalized and amortized over the term of validity.
(3 to 4 years).
Software
The new software acquisition costs are capitalized and recognized as an intangible fixed asset if these
costs are not an integral part of the hardware. Software is amortized over a period no longer than 3
years. Costs incurred in order to restore or maintain the future economic benefits that the Company
expects from the originally assessed standard of performance of existing software systems are
recognised as an expense when the restoration or maintenance work is carried out.
16
AB KAUNO ENERGIJA
Company code 235014830
Raudondvario pl. 84
Kaunas, Lithuania
Set of consolidated and company financial
statements of 2023
(in thousands euro, unless specified otherwise)
2. Summary of significant accounting policies (continued)
2.7. Accounting for emission allowances
Emission allowances received shall be accounted for using the net commitment method. Under this
approach, the Group and the Company account for emission allowances at nominal value.
Commitments to acquire additional emission allowances are recognised when they arise (e.g.
commitments are not accounted for on the basis of expected future emissions) and are accounted for
only when the actual emissions of the Group and the Company exceed the amount of available
emission allowances.
Under the net commitment approach, the Group and the Company assess the lack of emission
allowances by comparing the quantity of emission allowances available with the actual annual
emissions.
Sales of emission allowances are recorded at the amount of the sales transaction. Any differences
between the fair value of the sale and the carrying amount of the allowances held shall be recognised
as profit or loss, regardless of whether there is an actual or expected shortfall in the allowances at the
time of the transaction. Where the sale of emission allowances results in an actual shortfall of emission
allowances, the financial position reports shall recognise additional liabilities, including profits or
losses that affect the relevant costs.
2.8. Property, plant and equipment
Property, plant and equipment is carried at acquisition cost, which does not include routine
maintenance costs, less accumulated depreciation and estimated impairment losses, if any. The cost
of acquisition includes the cost of replacing property, plant and equipment when they are incurred,
provided that these costs qualify for the recognition of the asset.
Property classified as construction in progress, under construction for production, supply or
administrative purposes, or for other purposes not yet determined, is carried at acquisition cost less
impairment losses. The cost includes professional fees and capitalised borrowing costs of long run
assets in accordance with the accounting policies of the Group and the Company. Depreciation of
these assets shall begin using the same method of depreciation as for other immovable property when
the property is ready for its intended use.
Depreciation is recognised in such a way that, over the useful life of the asset, its cost (excluding land
and construction in progress) less its residual value is written off on a straight-line basis. The estimated
useful lives, residual values, and depreciation methods are reviewed at each year-end, with any
changes in the accounting estimate accounted for prospectively.
The useful service lives are reviewed every year to ensure that the period of depreciation is consistent
with the expected useful life of the long-term tangible asset.
Depreciation is computed on a straight-line basis over the following estimated useful lives:
Years
Buildings
15 – 50
Investment property
50
Buildings
15 – 70
Machinery and equipment
5 – 20
Vehicles
4 – 10
Plant and tools
3 – 16
Land is not depreciated.
17
AB KAUNO ENERGIJA
Company code 235014830
Raudondvario pl. 84
Kaunas, Lithuania
Set of consolidated and company financial
statements of 2023
(in thousands euro, unless specified otherwise)
2. Summary of significant accounting policies (continued)
2.8. Property, plant and equipment (continued)
An asset is recognised as non-current when it has a useful life of more than one year and the
acquisition cost exceeds EUR 144.81.
Property, plant and equipment are derecognised when they are sold or when no future economic
benefits are expected from the use or sale of the asset. Any gain or loss arising on the sale or write-
down of an item of property, plant and equipment is calculated as the difference between the net
disposal proceeds and the carrying amount of the asset and is recognised in profit or loss in the profit
(loss) statement and other comprehensive income.
Subsequent repair costs are added to the cost of an asset if it is probable that future economic benefits
will flow to the Group and the Company from the expenditure and the cost of the expenditure can be
measured reliably. The carrying amount of the modified portion is derecognised. All other repair costs
are recognised as an expense that affects profit or loss for the period when they are incurred.
Construction-in-progress is stated at cost. This includes the cost of construction, plant and equipment
and other directly attributable costs. Depreciation is not charged on construction in progress until the
asset is placed in service or is ready for use.
Fixed assets for resale
Property, plant and equipment, or groups of saleable assets that consist of assets and liabilities that
are expected to be recovered primarily through sale and not through continuing use, are classified as
held for sale. Immediately before classifying an asset as held for sale, the asset (or parts of a pool of
available-for-sale assets) is measured in accordance with the applicable International Financial
Reporting Standards as adopted for application in the European Union. (Non-current assets held for
sale are accounted for at the lower of their carrying amount and fair value less the cost of selling such
assets).
Impairment losses on assets held for sale measured at the time of initial classification and subsequent
gains and losses related to the revaluation of assets shall be included in profit or loss. Revenue from
the reversal of depreciation is not recognised at a higher amount than accumulated impairment losses.
When property, plant and equipment is recorded as held for sale, depreciation is no longer charged.
2.9. Impairment of property, plant and equipment and intangible assets other than goodwill
At each date of preparation of the statement of financial position, the Group and the Company shall
review the residual value of property, plant and equipment and intangible assets to determine whether
there is any indication that these assets are impaired. If any such indication exists, the Group and the
Company assesses the recoverable amount of the asset in order to be able to assess the impairment
loss (if any). Where it is impossible to assess the recoverable value of assets, the Group and the
Company estimates the recoverable amount in the cash-generating group to which the asset belongs.
When a reasonable and consistent basis of allocation can be identified, the assets of the Group and
the Company are also allocated to separate income-generating groups of assets, or alternatively, they
are allocated to the lowest income-generating group of assets for which a reasonable and consistent
basis of allocation can be identified.
18
AB KAUNO ENERGIJA
Company code 235014830
Raudondvario pl. 84
Kaunas, Lithuania
Set of consolidated and company financial
statements of 2023
(in thousands euro, unless specified otherwise)
2. Summary of significant accounting policies (continued)
2.9. Impairment of property, plant and equipment and intangible assets other than goodwill
(continued)
The recoverable amount is the higher of fair value less costs to sell and value in use. In assessing the
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 conditions, time value of money and the risks
associated with the assets, which was not taken into account in estimating the future cash flows.
If the estimated recoverable amount of the asset (or cash-generating asset group) is less than its
carrying amount of this asset, the carrying amount of the asset is reduced to the recoverable value of
this asset (or cash-generating asset group). Impairment losses are recognised immediately through
profit or loss. The Group and the Company have one group of income-generating assets for the heat
business.
If after the recognition of impairment loss the value of the asset increases, the carrying amount of the
asset (cash-generating asset group) is increased to the newly estimated recoverable amount, but so
that the increase does not exceed the carrying value of the asset (cash-generating asset group) if the
losses due to value impairment in previous years had not been recognized. Reversals of impairment
losses are recognised immediately in profit or loss.
2.10. Investment property
Property, plant and equipment are assets that the Company manages and controls in order to
generate rental income and/or increase the value of these assets. Assets that are used for the
production of goods, services or for administrative purposes, and the sale of which is classified as a
typical activity of the Company, not included in property, plant and equipment. Investment property is
initially valued at acquisition cost, including related transaction costs. Subsequent to initial recognition,
buildings are carried at cost less accumulated depreciation and impairment losses, if any.
Depreciation is calculated on a straight-line basis so as to write off the cost of the asset on a straight-
line basis over the asset's useful life of 8-50 years. Depreciation of investment property is recorded in
the statement of profit or loss and other comprehensive income under operating expenses.
2.11. Financial assets
The Group and the Company classify their financial assets in the following groups:
• financial assets that are measured at fair value in subsequent periods, with the change in fair
value recognised in other comprehensive income or profit or loss; and
• financial assets measured at amortised cost.
The classification depends on the financial asset management model used and the contractual cash
flow terms.
Recognition and initial measurement
Trade receivables are initially recognised when they arise. On initial recognition, all other financial
assets and financial liabilities are recognised when the Group and the Company become a party to
the contractual provisions of the instrument.
19
AB KAUNO ENERGIJA
Company code 235014830
Raudondvario pl. 84
Kaunas, Lithuania
Set of consolidated and company financial
statements of 2023
(in thousands euro, unless specified otherwise)
2. Summary of significant accounting policies (continued)
2.12. Financial assets (continued)
Financial assets (other than trade receivables without a significant financing component) or financial
liabilities are initially measured at fair value plus, if the instrument is not measured at fair value through
profit or loss, transaction costs directly attributable to the acquisition or issue. Trade receivables
without a significant financing component are initially recognised at transaction price.
Classification and subsequent assessment
At initial recognition, financial assets are classified and measured as follows:
• amortised cost;
• at fair value through profit or loss.
Financial assets are not reclassified in subsequent periods unless the Group and the Company
change their financial asset management model. In this case, all related financial assets shall be
reclassified on the first day of the first reporting period following the change in business model.
A financial asset is measured at amortised cost if it meets both of the following criteria and is not
classified as an asset measured at fair value through profit or loss:
• the entity intends to hold the asset for contractual cash receipts;
• contractual cash flows on specific dates include only payments of principal and interest on the
amount due.
Write-off
The carrying amount of a financial asset is written down, in whole or in part, if there is no realistic
prospect of its recovery. This usually occurs when the Group and the Company determine that the
debtor does not have sufficient assets or sources of income to generate sufficient cash flows to repay
the amounts written off. However, financial assets that are written off may be recovered to meet debt
collection requirements imposed by the Group and the Company.
Assessment of significantly increased credit risk
The Group and the Company assess the probability of default at the initial recognition of financial
assets and at each balance sheet date, taking into account whether there has been a significant
increase in credit risk since initial recognition. In order to assess whether there has been a significant
increase in credit risk, the Group and the Company compare the risk of default on assets at the date
of preparation of the statements with the risk of default on initial recognition. In analysing whether
credit risk has increased significantly, the following factors shall be assessed:
• significant changes in the internal credit rating;
• significant changes in the external credit rating (if any);
• actual or foreseeable material adverse changes in the business environment, financial or economic
situation which may materially affect the ability of the customer to meet its obligations;
• actual or anticipated significant changes in the client's performance.
Based on the Group's and the Company's debt recovery statistics, management considers that the
credit risk has increased from the time of initial recognition only if the contractual payments are
delayed by more than 30 days.
20
AB KAUNO ENERGIJA
Company code 235014830
Raudondvario pl. 84
Kaunas, Lithuania
Set of consolidated and company financial
statements of 2023
(in thousands euro, unless specified otherwise)
2. Summary of significant accounting policies (continued)
2.11. Financial assets (continued)
ECL valuation – trade receivables and other contract assets
The Group and the Company apply a simplified approach to the calculation of lifetime expected credit
losses over the lifetime of a loan, using the provisioning matrix for all trade receivables and other
receivables. In order to calculate expected credit losses using the provisioning matrix, trade
receivables and other receivables are classified into separate groups according to the general
characteristics of credit risk. The amounts of each group are analysed on the basis of the number of
days past due and a loss indicator shall be assigned to each group of amounts past due. Loss ratios
are calculated using management's expert judgement using statistical recovery information for the
last 2 years.
For trade receivables that have no significant financing component, an estimated credit loss is
recorded over the entire term of the debt.
Such information shall be adjusted, if necessary, in the light of forward-looking information. The table
below provides information on the expected credit losses calculated for the Group and the Company
for each group of overdue amounts.
As trade receivables and other receivables generally do not include collateral or other credit
protection, the expected loss ratio corresponds to the probability of default.
Trade receivables:
Overdue in days
from
from
from
from
from
from 361
more
Group
Not
1 to 30
31 to
91 to
181 to
271 to
to 720
than
Expected credit
overdue
90
180
270
360
721
0
0
20
50
60
80
90
100
loss rate %
Company
Expected credit
0
0
20
50
60
80
90
100
loss rate %
2.12. Inventories
Inventories are stated at the lower of cost or net realisable value. Net realisable value refers to
the estimated selling price of inventories less any estimated selling costs. The cost of inventories is
calculated using the FIFO method.
The cost of inventories is reduced by write-downs and discounts received from suppliers during the
reporting period and applied to inventories held in stock.
21
AB KAUNO ENERGIJA
Company code 235014830
Raudondvario pl. 84
Kaunas, Lithuania
Set of consolidated and company financial
statements of 2023
(in thousands euro, unless specified otherwise)
2. Summary of significant accounting policies (continued)
2.13. Provisions
A provision is recorded when, as a result of a past event, the Company has a present obligation (legal
or constructive) and it is probable that the Group and the Company will be required to settle the
obligation, and a reliable estimate of the amount of the obligation can be made.
The amount recognised as a provision is the best estimate at the end of the reporting period of the
consideration that will be required to settle the present obligation, taking into account the risks and
uncertainties arising from the obligation. When a provision is valued using the estimated cash flows
to cover a liability, its carrying value is the present value of these cash flows.
Where it is expected that part or all of the economic benefits needed to cover the provision will be
recovered from a third party, the amount receivable is covered by the asset if it is certain that the
compensation will be received and that the amount receivable can be measured reliably.
2.14. Cash and cash equivalents
Money consists of money in bank accounts and in cash, and money on the road. Cash equivalents
are short-term, highly liquid investments that are readily converted to known amounts of cash. The
term of such investments does not exceed three months, and the risk of value changes is very
insignificant.
2.15. Employee benefits
Recognition of post-employment benefits is recognised as an expense when the employees have
performed the service that entitles them to the benefits.
The post-employment benefit liabilities recognised in the statement of financial position reflect the
present value of the defined benefit obligations in the collective agreement, adjusted by unrecognised
actuarial gains or losses and unrecognised past service costs, and reduced by the fair value of the
plan assets. Any assets arising from this calculation may not exceed the cost of unrecognised
actuarial losses and past service plus the present value of repayments and reductions in future plan
contributions.
2.16. Borrowing costs
Borrowing costs that are directly attributable to the acquisition, construction or production of a
qualifying asset the preparation of which for the intended use or sale takes a long time are included
in the cost of the asset until the asset is prepared for the intended use or sale.
Investment income earned on a temporary investment of a specific amount borrowed that has not yet
been used for a qualifying asset shall be deducted from the borrowing costs allowed for capitalisation.
All other borrowing costs are recognised in profit or loss in the period in which they are incurred.
22
AB KAUNO ENERGIJA
Company code 235014830
Raudondvario pl. 84
Kaunas, Lithuania
Set of consolidated and company financial
statements of 2023
(in thousands euro, unless specified otherwise)
2. Summary of significant accounting policies (continued)
2.17. Financial liabilities and equity instruments
The Group and the Company recognise financial liabilities at cost on initial recognition.
The Group and the Company classify financial liabilities into the following categories:
• measured at amortised cost,
• measured at fair value through profit or loss,
• hedging financial instruments.
The Group and the Company classify trade debts, financial debts, leasing liabilities, interest liabilities
and other payables as financial liabilities measured at amortised cost.
Derecognition of financial liabilities
The Group and the Company derecognise financial liabilities when, and only when, the obligations of
the Group and the Company are discharged, cancelled or expire.
2.18. Lease
The Group and the Company are the lessee
At the commencement date, the lessee shall measure the lease liability at the present value of the
lease payments outstanding at that date, including the following:
• fixed charges (including those assimilated to fixed charges) less any rental incentives receivable;
• variable payments that depend on an index or rate initially measured using an index or rate at the
start date;
• the amounts that the tenant should pay under the liquidation value guarantees;
• penalties for terminating the lease if it is assumed that the tenant will exercise its option to terminate
the lease during the lease term.
Rents is discounted using the interest rate provided for in the lease agreement, if that rate can be
easily determined. If that rate cannot be easily determined, the tenant shall use the borrowing rate
calculated by the lessee.
The interest rate specified in the lease is the interest rate that results in the present value of the lease
payments and the unguaranteed residual value being equal to the sum of the fair value of the leased
asset and any initial direct costs incurred by the lessor.
The lease liability is measured at amortised cost using an imputed interest rate consistent with the
discount rate used to discount the lease payments. Interest expense relating to a lease liability is
allocated over the lease term and recognised in profit or loss.
The cost of an asset held under right of use at initial recognition comprises:
• the amount of the initial measurement of the lease liability;
• any lease payments made on or before the commencement date less any lease incentives
received;
• any primary direct costs incurred by the lessee; and
• an estimate of the cost of restoring the asset.
23
AB KAUNO ENERGIJA
Company code 235014830
Raudondvario pl. 84
Kaunas, Lithuania
Set of consolidated and company financial
statements of 2023
(in thousands euro, unless specified otherwise)
2. Summary of significant accounting policies (continued)
2.18. Lease (continued)
Thereafter, the lessee shall measure the right-of-use asset at cost less any accumulated depreciation
and any accumulated impairment losses. If, before the end of the lease period, the ownership of the
leased asset is transferred to the tenant , or if the price of the asset managed under the right of use
indicates that the tenant will exercise the right to purchase, the tenant shall calculate the depreciation
of the asset managed under the right of use from the beginning to the end of the useful life of the
leased asset. Alternatively, the lessee shall calculate the depreciation of the right-of-use asset from
the commencement date to the earlier of: the end of the useful life of an asset held under a right-of-
use arrangement, or the end of a lease term.
Payments relating to short-term leases or leases of low-value assets are recognised as an expense
through profit or loss on a straight-line basis. Short-term leases are considered to be leases with a
term of 12 months or less. Low-value assets include tools and small items of office furniture.
The Group and the Company are the lessor
In transactions where the Company is a lessor, the assessment of whether the concluded Agreement
is a finance or operating lease are carried out on the date of commencement of the lease. For the
purpose of determining the type of lease assignment, all risks and rewards of ownership of the leased
asset are assessed jointly or substantially transferred from the lease. If substantially all the risks and
rewards of ownership of the leased asset are transferred, such leases are treated as finance leases.
Otherwise, as operating leases.
In transactions in which the Company acts as an intermediate Lessor, the sublease shall be classified
on the basis of the right-of-use assets specified in the main agreement.
2.19. Grants and subsidies
Government grants are not recognised until there is sufficient assurance that the Group and the
Company will comply with the requirements associated with them and that the grants will be received.
Government grants are recognised in profit or loss on a systematic basis over the period in which the
Group and the Company recognise the related reimbursement of the costs for which they are
intended. Government grants, the principal condition whereof is that the Group and the Company
should purchase, construct or otherwise acquire non-current assets, are recognised as deferred
income in the statement of financial position and are recognised in a systematic and rational manner
in profit or loss over the useful life of the related assets.
Grants that are received in the form of long-term assets, plant and equipment or intended to purchase,
constructed or otherwise acquire the same, are considered to be asset-related grants. The Company
classifies assets acquired free of charge in this group of grants.
Assets received for no consideration are carried at fair value on initial recognition.
Receivables for reimbursement of expenses or income foregone during the reporting period or prior
period, as well as all other grants not attributable to grants related to assets, shall be treated as grants
that reduce costs. Grants related to revenue are recognised as part of the utilised portion to the extent
that costs are incurred during the period (by reducing the proportion of costs incurred) or to the extent
of the estimated foregone revenue for which the grant is intended to compensate.
The unused balance of the grant is shown in the Grants (deferred income) line of the statement of
financial position.
24
AB KAUNO ENERGIJA
Company code 235014830
Raudondvario pl. 84
Kaunas, Lithuania
Set of consolidated and company financial
statements of 2023
(in thousands euro, unless specified otherwise)
2. Summary of significant accounting policies (continued)
2.20. Income tax
Income tax expense reflects current year tax and deferred tax.
Current year's tax
Tax of the current year is payable based on taxable profit for the year. Taxable profit differs from the
profit reported in the statement of comprehensive income because of the income or expense that is
taxable or deductible in the following year and the income or expense that is never taxable or
deductible. Income tax is calculated using tax rates that have been enacted or substantively enacted
by the balance sheet date. The Group and the Company are subject to a corporate income tax rate
of 15 per cent in 2023 (15 per cent in 2022).
Deferred tax
Deferred tax is recognised on temporary differences between the carrying amounts of assets and
liabilities in the financial statements and the corresponding tax bases used in the computation of
taxable profit. Deferred tax liabilities are generally recognized for all taxable temporary differences
and deferred tax assets are recognized to the extent that it is probable that taxable profits will be
available against which deductible temporary differences can be utilized. Such assets and liabilities
are not recognised if the temporary differences relate to goodwill, or to the initial recognition of assets
or liabilities (other than in a business merger) that are not affected by either taxable or financial profit
at the time they arise (transactions).
Deferred tax liabilities are recognised to offset temporary tax differences. Deferred income tax assets
are recognised for deductible temporary differences only to the extent that it is probable that sufficient
taxable profit will be available to realise the benefit of the temporary differences and is expected to be
realised in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at each statement of financial position date
and reduced to the extent that it is no longer probable that sufficient taxable profits will be available
to allow all or part of the asset to be recovered by the Group and the Company.
Deferred tax assets and liabilities are measured using the tax rates that will apply to the Group and
the Company in the year in which those temporary differences are expected to be recovered or settled,
based on tax rates (and tax laws) that have been or will be approved before the end of the reporting
period. The measurement of deferred tax liabilities and assets reflects the tax consequences that
would follow from the manner in which the Group and the Company expect, at the reporting period,
to recover or to settle the carrying amount of its assets and liabilities.
Current and deferred tax for the period
Current and deferred tax is accounted for in profit or loss unless they relate to items recognised in
other comprehensive income or directly in equity (in other comprehensive income or directly in equity).
In such a case, the tax is also recognised outside profit or loss, or when it arises on initial recognition
of the business combination. In the case of a business combination, the tax effect is included in the
accounting for the business combination.
25
AB KAUNO ENERGIJA
Company code 235014830
Raudondvario pl. 84
Kaunas, Lithuania
Set of consolidated and company financial
statements of 2023
(in thousands euro, unless specified otherwise)
2. Summary of significant accounting policies (continued)
2.21. Basic and diluted earnings per share
The basic and diluted earnings per share shall be calculated by dividing the profit for the reporting
period attributable to shareholders by the weighted average of the ordinary shares issued. There is
no difference between basic and diluted earnings per share.
2.22. Revenue recognition
The Group and the Company recognise revenue to reflect the transfer of the committed goods or
services to the purchasers in an amount that is consistent with the consideration that the entity expects
to receive in exchange for the said goods or services, less value added tax, discounts and rebates.
An entity shall recognise revenue on the basis of this core guiding principle in the following steps:
Step 1: identification of the contract (s) with the buyer – the contract is an agreement between two or
more parties that defines their enforceable rights and obligations.
Step 2: identification of performance obligations under the contract – obligations under the contract
to transfer the goods or services to the buyer. If these goods or services can be distinguished, such
liabilities are treated as operating liabilities, which are accounted for separately.
Step 3: the transaction price is determined – the transaction price is equal to the contracted amount
of consideration that the entity expects to receive in exchange for the goods or services transferred
to the buyer. The transaction price may consist of a fixed amount of consideration paid by the buyer,
but may sometimes also include variable consideration or consideration other than cash. The
transaction price is also adjusted for the time value of money if the contract includes a significant
funding component, as well as for any consideration payable to the buyer.
Step 4: The transaction price is attributable to the contracted performance obligation – as a rule, an
entity attributes the transaction price to each performance obligation on the basis of the relative stand-
alone selling prices of each good or service contracted to be transferred. If data on individual selling
prices are not observable in the market, the entity makes an estimate.
Step 5: revenue is recognised when the entity discharges the performance obligation by transferring
the committed goods or services to the buyer (i.e. when the buyer obtains control of those goods or
services). The amount of revenue recognised is equal to the amount attributed to the settled
performance obligation. An operating liability may be settled at a certain point in time or over a certain
period of time.
Revenue is recognised when the amount of revenue can be measured reliably and it is probable that
the economic benefits associated with the transaction will flow to the Group and the Company, and
when specific criteria have been met for each type of revenue as described below. The Group and
the Company rely on historical performance, taking into account the type of customer, the type of
transaction and the specifics of each arrangement.
26
AB KAUNO ENERGIJA
Company code 235014830
Raudondvario pl. 84
Kaunas, Lithuania
Set of consolidated and company financial
statements of 2023
(in thousands euro, unless specified otherwise)
2. Summary of significant accounting policies (continued)
2.22. Revenue recognition
Revenue is recognised using the methods described below:
Revenue from sales of heat and hot water
Revenue from the sale of heat is recognised on the basis of bills issued to residential customers and
other customers for heat and hot water heating. Consumers are billed once a month according to the
readings of the heat meter. At the end of the period, revenue not invoiced but services rendered is
accrued on an accrual basis.
Income from the sales of goods
Proceeds from the sale of goods are recognized when all of the following conditions are met:
• The Group and the Company transferred ownership control to the buyer;
• The Group and the Company do not maintain either continuing management of goods sold at the
level normally associated with ownership or effective control;
• the amount of such revenue can be measured reliably;
• it is probable that the Group and the Company will obtain the economic benefits associated with
the transaction and the costs incurred or to be incurred in connection with the transaction can be
measured reliably.
Financing elements
The Group and the Company do not have, and do not expect to have, any contracts where the period
between the provision of goods or services and payment by the customer exceeds one year. For this
reason, the Group and the Company do not account separately for the financing element.
Other income
Lease income is recognised on an accrual basis when it is probable that the economic benefits
associated with the transaction will flow to the Group and the Company and can be measured reliably
Interest is recognized as income when it is received.
Dividend income from investments is recognised when the shareholders' right to receive payment is
established (if it is likely that the economic benefits associated with the item will flow to the Group and
the Company and the amount of the income can be measured reliably).
Interest income is recognized when it is probable that the Group and the Company will receive
economic benefits and the amount of revenue can be measured reliably. Interest income is accrued
over the period, according to the outstanding part and the applicable effective interest rate that exactly
discounts estimated future cash receipts through the expected life of the financial asset to that asset
up to the net carrying amount on initial recognition.
2.23. Expense recognition
Expenses are recognised on the basis of the accrual and comparability principles in the reporting
period in which the related income is earned, regardless of the time of spending the cash. In those
cases when costs incurred cannot be directly attributed to the specific income and they will not
generate income during the future periods, they are recognised as incurred.
Amount of costs is usually accounted in the amount of paid and payable, excluding VAT. When long
period of settlement is provided, and interest is not distinguished, the amount of costs is assessed by
discounting the settlement amount at the market interest rate.
27
AB KAUNO ENERGIJA
Company code 235014830
Raudondvario pl. 84
Kaunas, Lithuania
Set of consolidated and company financial
statements of 2023
(in thousands euro, unless specified otherwise)
2. Summary of significant accounting policies (continued)
2.24. Foreign currency transactions
At the end of each reporting period, monetary items denominated in foreign currencies are converted
at the daily exchange rate of that day. Non-monetary items are carried at fair value and denominated
in a foreign currency are converted at the exchange rate at the date of fair value measurement. Non-
monetary units carried at the cost of acquiring a foreign currency are not converted.
The presentation currency shall be the euro (EUR). Operations denominated in foreign currency shall
be converted into euro at the official rate of the European Central Bank on that date. Monetary assets
and liabilities are converted into euro at the exchange rate at the date of the statement of financial
position.
Exchange differences arising from operations in foreign currencies shall be included in profit or loss
at the time when they arise. Gains and losses arising from exchange rate changes in the conversion
of monetary assets or liabilities into euro shall be included in profit or loss when they arise.
2.25. Application of judgements in preparation of financial statements
In preparing the financial statements, management is required to make certain judgements, estimates
and assumptions that affect the amounts of income, expenses, assets and liabilities that are disclosed
and the disclosure of uncertainties at the date of preparation of the report. However, the uncertainty
of these assumptions and estimates may affect the results, which may require significant future
adjustments to the carrying amounts of assets or liabilities.
Estimates and assumptions
The main assumptions and other significant sources of measurement uncertainty that affect the future
at the date of preparation of the statements of financial position and which give rise to material risks
and which may require a material adjustment to the carrying amounts of assets or liabilities in the next
financial year are discussed below:
Property, plant and equipment – useful life
The main assumptions used to determine the useful lives of property, plant and equipment are:
• the expected life of the asset,
• anticipated technical, technological or other obsolescence due to service innovation or changes in
services,
• legal or similar restrictions on the use of assets, such as the date of validity of finance lease
agreements.
Investments in subsidiaries – impairment losses
To assess the recoverability of investments in subsidiaries, the Company's management calculates
the recoverable amount of the investment by discounting the future cash flows of the subsidiaries to
their present value using a weighted average discount rate on capital costs reflecting current market
assumptions about the time value of money (Note 5).
28
AB KAUNO ENERGIJA
Company code 235014830
Raudondvario pl. 84
Kaunas, Lithuania
Set of consolidated and company financial
statements of 2023
(in thousands euro, unless specified otherwise)
2. Summary of significant accounting policies (continued)
2.25. Application of assessments in preparation of financial statements (continued)
Impairment of receivables
The Group and the Company recognise a loss allowance for expected credit losses (ECL) on financial
assets measured at amortised cost as follows: trade receivables, other receivables and accrued
income. Loss ratios are calculated using management's expert judgement using statistical recovery
information for the last 2 years.
In determining whether the credit risk of a financial asset has increased significantly since initial
recognition and in assessing the amount of the ECL, the Group and the Company consider reasonable
and supportable information that is relevant and accessible without excessive cost or effort. This
information includes both quantitative and qualitative data and analysis based on the Group's
historical experience and reasoned credit assessment, including prospective information.
Provisions for losses on financial assets measured at amortised cost are deducted from the total
carrying amount of such assets. The provision for impairment losses is presented in the income
statement and included in operating expenses as an impairment charge.
Deferred profit tax assets
Deferred income tax assets are recognised for all unused tax losses, with a statement of what is
expected to be the tax profit before the losses are offset. Significant management judgements are
required to determine the amounts of deferred income tax assets that may be recognised based on
estimates of the expected future amounts and periods of taxable profits and based on future tax
planning strategies (Note 22).
Fair value of financial instruments
Fair value is the amount for which an asset or service could be exchanged, or a liability settled
between knowledgeable, willing parties in an arm’s length transaction.
Fair value of financial assets and financial liabilities are valued based on quoted market prices,
discounted cash flow models or option pricing models, depending on the circumstances.
In determining the fair value of assets or liabilities, the Company is based on available market data,
as much as possible. The fair values are presented in three levels of the fair value hierarchies on the
basis of the variables used in the valuation methods:
• Level 1: prices quoted at active markets of similar assets or liabilities (unadjusted);
• Level 2: other variables except the quoted prices of assets and liabilities included in Level 1 that
are observed directly (i.e., as prices), or indirectly (i.e., derived from prices);
• Level 3: variables of assets and liabilities not based on the observable market data (non-observable
variables).
Where for the purpose of measuring the fair value of assets or liabilities the variables may be attributed
to the different levels of the fair value hierarchy, the hierarchy level of the fair value to which the entire
fair value established is attributed shall be established on the basis of the lowest level variable material
for the measurement of the entire fair value. The Company recognizes the amounts of the fair value
hierarchy levels transferred to the end of the reporting period in which the change occurred.
29
AB KAUNO ENERGIJA
Company code 235014830
Raudondvario pl. 84
Kaunas, Lithuania
Set of consolidated and company financial
statements of 2023
(in thousands euro, unless specified otherwise)
2. Summary of significant accounting policies (continued)
2.26. Contingencies
Contingent liabilities are not recognised in the financial statements. They are disclosed unless the
possibility of an outflow of resources generating economic benefits is small.
A contingent asset is not recognised in the financial statements but is disclosed when an inflow of
economic benefits is probable.
2.27. Subsequent events
Post-reporting events that provide additional information about the situation of the Group and the
Company at the date of preparation of the statements of financial position (adjusting events) are
reflected in the financial statements. Events after the date of the balance sheet that are not corrective
events, are described in the notes when they are significant.
2.28. Offsetting and comparative information
When preparing the financial statements, assets and liabilities, income and expenses are not offset
unless the specific International Accounting Standards specifically require such offsetting.
2.29. Segment reporting
Segment information shall be reported in the same manner as other internal reporting to the chief
operating decision maker. The chief operational decision maker responsible for allocating resources
and assessing the performance of the segments is the Board, which takes strategic decisions.
The activities of the Group and the Company are carried out in a single segment, therefore, these
financial statements do not provide additional disclosures about the segments.
30
AB KAUNO ENERGIJA
Company code 235014830
Raudondvario pl. 84
Kaunas, Lithuania
Set of consolidated and company financial
statements of 2023
(in thousands euro, unless specified otherwise)
3. Intangible fixed assets
Movements in intangible fixed assets during the reporting period and prior periods:
Group
Company
Acquired rights and
Acquired rights and
software
software
Acquisition value:
Balance on 31 December 2021
1 563
1 562
Acquisitions
84
84
Disposals, writes-off
-
-
Balance on 31 December 2022
1 647
1 646
Acquisitions
8
-
Transfers out of construction in
progress and prepayments
205
205
Disposals, writes-off
9
9
Balance on 31 December 2023
1 869
1 860
Amortization:
Balance on 31 December 2021
1 486
1 485
Amortisation per year
63
63
Disposals, writes-off
-
-
Balance on 31 December 2022
1 549
1 548
Amortisation per year
71
71
Disposals, writes-off
-
-
Balance on 31 December 2023
1 620
1 619
Book value:
Balance on 31 December 2021
77
77
Balance on 31 December 2022
98
98
Balance on 31 December 2023
249
241
The amortisation charge for intangible assets is included in operating expenses in statement of profit
(loss) and other comprehensive income.
Part of the Company's fixed intangible assets with an acquisition value of EUR 1,436 thousand as at
31 December 2023 was (on 31 December 2022: EUR 988 thousand) was fully amortised, but still
used in the business operations.
31
AB KAUNO ENERGIJA
Company code 235014830
Raudondvario pl. 84
Kaunas, Lithuania
Set of consolidated and company financial
statements of 2023
(in thousands euro, unless specified otherwise)
4. Property, plant and equipment
Details of the Group's and Company's property, plant and equipment:
Constructio
Land
Machine
ns in
Invest
Group
and
Buildin
ry and
Vehicles
Plant
progress
ment
Total
buildin
gs
equipm
and tools
and
propert
gs
ent
prepayment
y
s
Acquisition value:
Balance on 31
17 222
209 657
62 581
1 912
13 596
8 089
1 444
314 501
December 2021
Acquisitions
25
544
1 309
14
23
17 992
-
19 907
Sold and written off
assets
-
(102)
(236)
(10)
-
-
-
(348)
Transfer to
intangible assets
-
-
-
-
-
-
-
-
Reclassifications
280
10 262
903
73
1 044
(12 562)
-
-
Impairment losses (-
)
10
6
-
1
-
-
-
17
Balance on 31
17 537
220 367
64 557
1 990
14 663
13 519
1 444
334 077
December 2022
Acquisitions
-
-
115
25
2
25 349
-
25 491
Sold and written off
assets
(3)
(69)
(3 443)
(8)
(1 350)
-
-
(4 873)
Reclassifications
94
12 450
717
744
1 175
(15 180)
-
-
Transfer to
intangible assets
-
-
-
-
-
(205)
-
(205)
Impairment losses (-
)
(20)
(6)
-
-
-
-
-
(26)
Balance on 31
17 608
232 742
61 946
2 751
14 490
23 483
1 444
354 464
December 2023
Accumulated depreciation:
Balance on 31
11 107
87 847
47 067
1 467
11 599
-
171
159 258
December 2021
Depreciation during
the year
374
4 901
2 440
142
555
-
33
8 445
Reclassifications
(412)
158
257
(1)
1
218
221
Sold and written off
assets
-
(60)
(227)
(15)
(255)
-
(92)
(649)
Balance on 31
11 069
92 846
49 537
1 593
11 900
-
330
167 275
December 2022
Depreciation during
the year
341
5 355
2 028
186
610
-
-
8 520
Reclassifications
-
-
-
-
-
-
-
-
Sold and written off
assets
(3)
(69)
(3 443)
(3)
(1 283)
-
-
(4 801)
Balance on 31
11 407
98 132
48 122
1 776
11 227
-
330
170 994
December 2023
Book value:
Balance on 31
6 115
121 810
15 514
445
1 997
8 089
1 273
155 243
December 2021
Balance on 31
6 468
127 521
15 020
397
2 763
13 519
1 114
166 802
December 2022
Balance on 31
6 201
134 610
13 824
975
3 263
23 483
1 114
183 470
December 2023
32
AB KAUNO ENERGIJA
Company code 235014830
Raudondvario pl. 84
Kaunas, Lithuania
Set of consolidated and company financial
statements of 2023
(in thousands euro, unless specified otherwise)
4. Property, plant and equipment (continued)
Machi
Constructi
Land
nery
Plant
ons in
Company
and
Buildin
and
Vehicles
and
progress
Investment
Total
buildin
gs
equip
tools
and
property
gs
ment
prepaymen
ts
Acquisition value:
Balance on 31
15 616
208 754
57 418
1 586
13 529
8 072
-
304 975
December 2021
Acquisitions
-
604
1 755
14
21
18 261
-
20 655
Sold and written off
assets
-
(102)
(236)
(20)
-
-
-
(358)
Assets acquired in the
reorganisation
1 531
654
4 043
106
22
-
-
6 356
Reclassifications
280
10 262
928
87
1 299
(12 856)
-
-
Impairment losses (-)
10
6
-
1
-
-
-
17
Balance on 31
17 437
220 178
63 908
1 774
14 871
13 477
-
331 645
December 2022
Acquisitions
-
-
73
20
-
25 346
-
25 439
Sold and written off
assets
(3)
(69)
(3 443)
(3)
(1 350)
-
-
(4 868)
Reclassifications
68
12 450
743
744
1 130
(15 135)
-
-
Transfer to intangible
assets
-
-
-
-
-
(205)
-
(205)
Impairment losses (-)
(10)
(6)
-
-
-
-
-
(16)
Balance on 31
17 492
232 553
61 281
2 535
14 651
23 483
-
351 995
December 2023
Accumulated depreciation:
Balance on 31
9 885
87 406
43 155
1 141
11 533
-
-
153 120
December 2021
Depreciation during the
year
333
4 902
2 323
130
555
-
-
8 243
Depreciation of assets
acquired in a
reorganisation
816
349
3 236
106
22
-
-
4 529
Sold and written off
assets
-
-
219
-
-
-
-
219
Balance on 31
11 034
92 657
48 933
1 377
12 110
-
-
166 111
December 2022
Depreciation during the
year
339
5 355
2 012
186
607
-
-
8 499
Sold and written off
assets
(3)
(69)
(3 443)
(3)
(1 283)
-
-
(4 801)
Balance on 31
11 370
97 943
47 502
1 560
11 434
-
-
169 809
December 2023
Book value:
Balance on 31
5 731
121 348
14 263
445
1 996
8 072
-
151 855
December 2021
Balance on 31
6 403
127 521
14 975
397
2 761
13 477
-
165 534
December 2022
Balance on 31
6 122
134 610
13 779
975
3 217
23 483
-
182 186
December 2023
The amounts of the Group's and the Company's depreciation expenses were included in operating
expenses in the statement of profit (loss) and other comprehensive income (depreciation and
amortisation and other expenses).
Part of the Group's property, plant and equipment with an acquisition value of EUR 34,694 thousand
as at 31 December 2023 (on 31 December 2022: EUR 35,085 thousand), EUR 34,694 thousand for
the Company, was fully depreciated (on 31 December 2022: EUR 35,085 thousand), but still used in
business operations.
The Group and the Company have recorded assets not yet ready for use of EUR 438 thousand in the
plant and equipment group as at 31 December 2023 (on 31 December 2022: EUR 313 thousand).
33
AB KAUNO ENERGIJA
Company code 235014830
Raudondvario pl. 84
Kaunas, Lithuania
Set of consolidated and company financial
statements of 2023
(in thousands euro, unless specified otherwise)
4. Property, plant and equipment (continued)
On 31 December 2023 and 31 December 2022 the Group's and the Company's construction in
progress consists mainly of the reconstruction and overhaul of boiler plants and heat supply networks.
As at 31 December 2023, the Group property, plant and equipment with a residual value of EUR 8
548 thousand (on 31 December 2022: EUR 11,945 thousand) and the Company's EUR 8,548
thousand (on 31 December 2022: EUR 8,548 thousand) was pledged to banks as collateral for the
loans (Note 12).
5. Investments in subsidiaries and loans to group companies
Legal merger
In order to simplify the Group's structure, in November 2021, the Company's Management Board
prepared the Reorganisation Terms and Conditions, the preparation whereof was approved at the
Extraordinary General Meeting of Shareholders of AB Kauno energija held on 25 November 2021 and
on 26 November 2021 by decision of the sole shareholder of AB Petrašiūnų katilinė . The shareholders
of both companies have decided to reorganise the companies by merger.
On 2 March 2022 AB Petrašiūnų katilinė, 100% of whose shares were owned by the company, was
merged into AB Kauno energija, in accordance with Article 2.97(3) of the Civil Code of the Republic
of Lithuania, pursuant to the Reorganisation Terms and Conditions and the shareholders' decision
approved on 15 December 2021.
The authorised capital of AB Kauno energija remained unchanged after the reorganisation and
amounts to EUR 74 476 thousand. The shareholder's property and non-property rights of the company
have not changed either.
Carrying
Subsidiary
Less net
amount of
data as at 2
investment
assets
March 2022
acquired in
the merger
Long term tangible assets
1 828
-
1 828
Assets of deferred income tax
89
-
89
Inventories, raw materials
23
-
23
Advances paid
3
-
3
Cash and cash equivalents
187
-
187
Owners equity
(245)
992
747
Grants, subsidies
(446)
-
(446)
Provisions
(9)
-
(9)
Trade and other debtors
(1 430)
-
(1 430)
The result of the legal merger, a loss of EUR (747) thousand, was recorded in the Company's
Statement of Changes in Equity in 2022.
34
AB KAUNO ENERGIJA
Company code 235014830
Raudondvario pl. 84
Kaunas, Lithuania
Set of consolidated and company financial
statements of 2023
(in thousands euro, unless specified otherwise)
5. Investments in subsidiaries and loans to group companies (continued)
Movements in investments in subsidiaries:
Group
Company
2023
2022
2023
2022
At the beginning of the year
-
-
2 763
3 498
-
-
-
-
Acquisition of subsidiaries/capital increase
Impairment adjustment for subsidiaries
-
-
-
257
Legal merger
-
-
-
(992)
At the end of the year
-
-
would increase annually by the amount of the planned annual inflation.
2 763
2 763
As a result of the impairment testing carried out at 31 December 2022, the impairment of the
investment in UAB GO Energy LT of EUR 257 thousand recognised in prior periods was reversed.
factor of 1%. When forecasting cash flows, the Company also predicted that the forecasted costs
The cash flow projections used in the calculations are based on the 2022 results of UAB GO Energy
LT, long-term business plans, signed contracts and management expectations. The going concern
value (cash flows over a period of more than five years) was calculated by applying a constant growth
2023-12-31
2022-12-31
Investments in
subsidiaries
Acquisi
tion
price
Impairment
Book
value
Acquisi
tion
price
Impairment
Book
value
UAB GO Energy
LT
2 763
-
2 763
2 763
-
2 763
Total:
2 763
0
2 763
2 763
0
2 763
Loans to the companies of the group of companies
As at 31 December 2023 and 31 December 2022, the Company has not granted credit facilities.
35
AB KAUNO ENERGIJA
Company code 235014830
Raudondvario pl. 84
Kaunas, Lithuania
Set of consolidated and company financial
statements of 2023
(in thousands euro, unless specified otherwise)
6. Right of use assets
Movements of assets held under usufruct during the reporting period and previous periods:
Group
Company
Right of use assets
Right of use assets
Acquisition value:
Balance on 31 December 2021
1 351
1 137
Recognition of the right of use asset
-
-
Disposals, write-offs (change in
value)
(96)
(96)
Balance on 31 December 2022
1 255
1 041
Recognition of the right of use asset
-
-
Disposals, write-offs (change in
value)
(137)
(24)
Balance on 31 December 2023
1 118
1 017
Amortization:
Balance on 31 December 2021
144
131
Amortisation per year
52
43
Disposals, write-offs (change in
value)
(82)
(17)
Balance on 31 December 2022
114
157
Amortisation per year
24
21
Disposals, write-offs (change in
value)
(103)
(77)
Balance on 31 December 2023
35
101
Book value:
Balance on 31 December 2021
1 207
1 006
Balance on 31 December 2022
1 141
884
Balance on 31 December 2023
1 083
916
7. Other financial assets
Other financial assets consist of unquoted ordinary shares. As at 31 December 2023 and 31
December 2022, it consisted of 75 460 units. Shares in UAB Kauno miesto paslaugų centras. The
Company generated a net profit of EUR 53 thousand in 2022 and EUR 216 thousand in 2023.
Group
Company
Other financial assets:
2023-12-31
2022-12-31
2023-12-31
2022-12-31
Financial assets accounted at fair
value through profit or (loss)
75
75
75
75
Value of loans to subsidiaries
-
-
-
-
75
75
75
75
36
AB KAUNO ENERGIJA
Company code 235014830
Raudondvario pl. 84
Kaunas, Lithuania
Set of consolidated and company financial
statements of 2023
(in thousands euro, unless specified otherwise)
8. Inventories
Group
Company
2023-12-31
2022-12-31
2023-12-31
2022-12-31
Technological fuels
1 162
1 602
1 162
1 602
Spare parts
731
1 515
383
700
Materials
333
346
333
346
To
be
deducted:
write-down
to
net
2 226
3 463
1 878
2 648
(449)
(769)
(449)
(769)
realisable value at the end of the period
Carrying amount of inventories
1 777
2 694
1 429
1 879
The write-down of the Group's and the Company's inventories to net realisable value as at 31
December 2023 amounted to EUR 449 thousand (on 31 December 2022: EUR 769 thousand). The
change in the write-down of inventories to net realisable value in 2023 and 2022 is included in the
Group's and the Company's statements of profit (loss) and other comprehensive income under the
item of costs of changes in the realisable value of inventories and fixed assets.
The Group and the Company respectively made impairment losses of EUR 0 thousand and reversals
of impairment losses of EUR 320 thousand during the reporting period.
9. Amounts receivable within one year
Change in impairment of doubtful receivables in 2023 and 2022 in the Group's and the Company's
statements of profit (loss) and other comprehensive income included in the item of impairment
charges on receivables. Impairment of doubtful receivables is measured at expected credit losses.
Group
Company
2023-12-31
2022-12-31
2023-12-31
2022-12-31
Trade receivables
18 799
22 995
17 943
22 764
To be deducted: expected credit losses
(4 362)
(4 826)
(4 322)
(4 786)
14 437
18 169
13 621
17 978
Change in the Group's and Company's expected credit losses on trade receivables:
Group
Company
Balance on 31 December 2021
4 944
4 934
Recognised (reversed) probable credit losses
(80)
(110)
Written off
(38)
(38)
Balance on 31 December 2022
4 826
4 786
Recognised (reversed) probable credit losses
(400)
(400)
Written off
(64)
(64)
Balance on 31 December 2023
4 362
4 322
During 2023, the Group and the Company wrote off bad debts of EUR 64 thousand and EUR 64
thousand, respectively (in 2023: EUR 38 thousand and EUR 38 thousand).
The Group's and the Company's receivables from customers are interest-free and normally have a
maturity of 30 days or individually agreed.
37
AB KAUNO ENERGIJA
Company code 235014830
Raudondvario pl. 84
Kaunas, Lithuania
Set of consolidated and company financial
statements of 2023
(in thousands euro, unless specified otherwise)
On 31 December 2023 and 31 December 2022 the Group's and the Company's other receivables
consisted of taxes receivable from the State, debt owed by municipalities for compensation to low-
income families, receivables for inventories sold (scrap metal, heating system equipment) and
services rendered (collector maintenance services, etc.).
Other receivables of the Group and the Company consisted of:
Group
Company
2023-12-31
2022-12-
2023-12-31
2022-12-
31
31
Taxes
725
550
725
550
Amount of VAT receivable
92
2 570
92
2 570
Other
2 213
2 351
2 215
2 325
To be deducted: expected credit
(275)
(315)
(275)
(315)
losses
2 755
5 156
2 757
5 130
Movement in impairment in value of other receivables of the Group and the Company:
Group
Company
Balance on 31 December 2021
315
315
Recognition of expected credit losses
-
-
Balance on 31 December 2022
315
315
Recognised (reversed) expected credit
(40)
(40)
losses
Balance on 31 December 2023
275
275
The Group's and the Company's other receivables are interest-free and are generally due within 30
to 45 days.
No impairment is taken on unmatured receivables as management considers the risk that debtors will
not be able to meet their obligations to be low.
10. Cash and cash equivalents
Group
Company
2023-12-31
2022-12-31
2023-12-31
2022-12-31
Cash on the road
700
619
700
619
Cash in the bank
7 847
4 931
6 615
4 272
8 547
5 550
7 315
4 891
Funds in the Group’s bank accounts with a balance of EUR 1,073 thousand at 31 December 2023
(EUR 1,480 thousand on 31 December 2022) and the Company's EUR 1,073 thousand (on 31
December 2022: EUR 1,480 thousand) are pledged to banks as collateral for loans (Note 12).
38
AB KAUNO ENERGIJA
Company code 235014830
Raudondvario pl. 84
Kaunas, Lithuania
Set of consolidated and company financial
statements of 2023
(in thousands euro, unless specified otherwise)
11. Changes in equity
Statutory
The statutory reserve is required under the legislation of the Republic of Lithuania. At least 5% of net
profits, calculated in accordance with International Financial Reporting Standards, must be transferred
to the reserve annually until it reaches 10% of the authorised capital. The statutory reserve may not
be distributed as dividends but can be used to cover future losses.
Other reserves
By the resolution of shareholders of 27 April 2023, the Company cancelled the other reserves (EUR
3,000 thousand), allocated EUR 3,000 thousand from the profit for the payment of dividends and
created a reserve of EUR 50 thousand for charity.
Annual allowances
No annual payments were made in 2022 and 2022.
Dividends
In 2023, a dividend of EUR 3,000 thousand was paid by the resolution of shareholders (0 .07 EUR per
share).
12. Financial debts
All loans of the Group and the Company are accounted for and repaid in euro. At the end of the year,
the weighted average interest rate on outstanding loans (as a percentage) was:
Group
Company
2023-12-31
2022-12-31
2023-12-31
2022-12-31
Long-term
4,41
2,39
4,41
2,39
On 7 August 2020, the Company signed a EUR 55 million investment financing agreement with the
European Investment Bank. The signing of the agreement was approved by the Extraordinary General
Meeting of Shareholders of AB Kauno energija on 4 August 2020. On 19 September 2023, a loan
tranche of EUR 14 million was taken out.
In 2023, EUR 405 thousand of interest expense was capitalised.
Group
Company
2023-12-31
2022-12-31
2023-12-31
2022-12-31
Long-term
financial
debts
54 736
43 949
54 736
43 949
(loans):
Payable between 2 and 5
22 506
17 414
22 506
17 414
years
Payable after 5 years
32 230
26 535
32 230
26 535
Current portion of long-term
3 231
2 769
3 231
2 769
loans
57 967
46 718
57 967
46 718
39
AB KAUNO ENERGIJA
Company code 235014830
Raudondvario pl. 84
Kaunas, Lithuania
Set of consolidated and company financial
statements of 2023
(in thousands euro, unless specified otherwise)
12. Financial debts (continued)
Details of the Group’s and Company's loans as at 31 December 2023:
Balance
To be
Amount,
as at
repaid in
Credit institution
Date of
thousands
Maturity
2023.12.31
2024,
contract
EUR
, in
thousand
thousand
EUR
Ministry of Finance
s EUR
1
of the Republic of
2010-04-09
2 410
2034-03-15
1 030
95
Lithuania *
Ministry of Finance
2
of the Republic of
2010-10-26
807
2034-03-15
423
38
Lithuania *
3
EIB**
2020-08-07
12 000
2036-08-18
11 547
906
Ministry of Finance
4
of the Republic of
2014-01-15
793
2034-12-01
458
41
Lithuania *
Ministry of Finance
5
of the Republic of
2014-03-31
7 881
2034-12-01
4 549
414
Lithuania *
6
EIB**
2020-08-07
15 000
2035-08-24
11 750
1 000
7
AB SEB bank
2016-12-22
4 127
2024-11-30
210
210
8
EIB**
2020-08-07
14 000
2037-08-24
14 000
527
9
EIB**
2020-08-07
14 000
2038-09-29
14 000
-
57 967
3 231
* Ministry of Finance; ** European Investment Bank.
AB SEB bankas has determined that the Company must comply with the net financial debt to EBITDA
ratio set for the quarter, which must not exceed 4.5. Under the loan agreements, the Company's equity
ratio (total equity/total assets) must be at least 35%. The European Investment Bank's requirements
also stipulate that the Company must comply with both of these indicators.
On 31 December 2022 and 31 December 2023, the Company has complied with the terms of the
aforementioned agreements.
Loan agreements contain certain restrictions. The Company may not grant dividends, issue and/or
obtain new loans, make grants, sell or lease mortgaged assets without the written consent of the
banks. The consent of AB SEB Bank for the payment of dividends has not been requested or obtained,
but no sanctions have been applied by AB SEB Bank for non-compliance with this obligation.
The Group's and the Company's immovable property (note 4), funds in bank accounts (note 10) and
land leases were pledged to banks as collateral for loans.
40
AB KAUNO ENERGIJA
Company code 235014830
Raudondvario pl. 84
Kaunas, Lithuania
Set of consolidated and company financial
statements of 2023
(in thousands euro, unless specified otherwise)
13. Lease
Finance leases and lease liabilities of the Group and the Company:
Group
Company
2023-12-31
2022-12-31
2023-12-31
2022-12-31
Within one year
22
68
22
68
After one year
-
19
-
19
Total, financial lease obligations
22
87
22
87
Lease liabilities are accounted for
as:
– short-term
16
54
13
52
– long-term
1 121
1 132
950
868
Total lease liabilities
1 137
1 186
963
920
The Group's and the Company's assets leased under lease agreements consist of land with a lease
term of 26 to 99 years.
In accordance with IFRS 16, the Group and the Company recognised depreciation and interest costs
associated with the lease in question, rather than operating lease costs. For the 12-month period
ended 31 December 2023, the Group recognised depreciation costs of EUR 24 thousand and lease
interest of EUR 28 thousand, the Company recognised depreciation costs of EUR 21 thousand and
lease interest of EUR 24 thousand.
14. Grants and subsidies
Group
Company
2023-12-31
2022-12-31
2023-12-31
2022-12-31
Opening balance at the
beginning of the reporting
period
32 211
32 715
32 211
32 229
Received during the period
-
1 274
-
1 273
Amortization
(1 361)
(1 778)
(1 361)
(1 291)
Closing balance at the end of the
reporting period
30 850
32 211
30 850
32 211
During 2023, the Group has accrued depreciation (amortisation) grants of EUR 1,354 thousand relating
to property, plant and equipment and EUR 7 thousand relating to costs (in 2022 – EUR 1,771 thousand
and EUR 7 thousand), The Company – EUR 1,354 thousand and EUR 7 thousand respectively (EUR
1,284 thousand and EUR 7 thousand in 2022).
41
AB KAUNO ENERGIJA
Company code 235014830
Raudondvario pl. 84
Kaunas, Lithuania
Set of consolidated and company financial
statements of 2023
(in thousands euro, unless specified otherwise)
15. Employee benefit liability
Every worker who leaves their job and has reached retirement age is entitled to receive between 0.5
and 2 months' salary, in accordance with the laws of the Republic of Lithuania and the Collective
Agreement.
The Group's and the Company's employee benefits liability were as follows:
Group
Company
2023
2022
2023
2022
Employee benefit liability at the beginning
of the period
464
587
452
577
Paid
(95)
(101)
(95)
(101)
Formed
179
(22)
170
(24)
Employee benefit liability at the end of the
period:
548
464
527
452
Long-term portion
385
374
365
363
Short-term portion
163
90
162
89
When calculating long-term employee benefits, the Group and the Company assessed the mortality
rate in Lithuania, discount rate, retirement age, age and turnover of employees, salary growth, inflation
rate and other factors. The key assumptions used to determine the planned benefit obligation of the
Group and the Company are set out below:
2023-12-31
2022-12-31
Discount rate, %
3,407
1,728
Employee turnover rate, per cent
9,803
9,019
Planned annual salary increase
4.9 per cent.
8.50 per cent.
The actuarial gains and losses related to these liabilities are presented under the item of operating
expenses, remuneration and social security and in the Statements of Financial Position under the
current portion of the liability for long-term employee benefits and the liability for employee benefits.
16. Other provisions
The Company formed a provision of EUR 577 thousand as of 30 June 2021 to ensure reserve
capacity, part of which has been returned to customers as of 2022, for a total of EUR 498 thousand
returned during 2022. The remainder was repaid in 2023. As at 31 December 2023, the Company
has made an additional provision of EUR 1,573 thousand to cover the differences in the actual cost
of electricity, purchased heat, fuel and production included in the price of heat sold and actually
incurred, i.e. to cover future price reduction liabilities.
42
AB KAUNO ENERGIJA
Company code 235014830
Raudondvario pl. 84
Kaunas, Lithuania
Set of consolidated and company financial
statements of 2023
(in thousands euro, unless specified otherwise)
17. Sales income
The Group and the Company are engaged in the supply of thermal energy, maintenance of building
heating and hot water supply systems, electricity generation, and other activities. These activities are
closely interlinked and, for management purposes, the Group and the Company are considered to be
organised in a single segment – the supply of thermal energy.
The Group's and the Company's activities are seasonal, with the majority of revenue generated during
the heating season, which starts in October and ends in April.
Sales revenues by the Group and the Company activities are presented below:
Group
Company
2023
2022
2023
2022
Heat supply
78 660
81 338
78 660
81 458
Hot water supply
5 467
5 742
5 467
4 643
Maintenance of hot water metering devices
551
487
551
487
Maintenance of collectors
348
348
348
348
Maintenance of heating and hot water
17
17
17
17
systems in buildings
Cooling supply
5
10
5
10
Sale of tradable emission allowances
-
50
-
50
85 048
87 992
85 048
87 013
Sales revenues by consumer groups of the Group and the Company are presented below:
Group
Company
2023
2022
2023
2022
Residents
63 047
65 124
63 047
65 236
Other users
9 561
8 846
9 561
8 846
Budgetary organisations financed from the
state budget
5 705
6 044
5 705
6 044
Budgetary organisations financed from
municipal budgets
3 856
4 203
3 856
4 203
Institutions financed by territorial sickness
funds
2 313
2 182
2 313
2 182
Industrial users
566
1 593
566
502
85 048
87 992
85 048
87 013
43
AB KAUNO ENERGIJA
Company code 235014830
Raudondvario pl. 84
Kaunas, Lithuania
Set of consolidated and company financial
statements of 2023
(in thousands euro, unless specified otherwise)
18. Other costs
Group
Company
2023
2022
2023
2022
Maintenance of collectors
362
362
362
362
Consulting Services
255
181
255
181
Equipment inspection and testing
205
234
205
234
Losses
179
-
179
-
Ash recovery costs
173
173
173
173
Sponsorship
143
53
143
53
Debt collection costs
141
91
141
91
Information Technologies costs
123
80
123
80
Money collection costs
122
126
122
126
Employee-related costs
119
118
119
118
Invoicing costs
111
98
111
98
Membership fee
111
97
111
97
Insurance
107
49
107
49
Maintenance of fixed assets and related
102
86
102
86
services
Costs for advertising
93
35
93
35
Transport costs
91
104
91
104
Rental of equipment and machinery
58
56
58
56
Communication costs
54
32
54
32
Audit costs
33
23
33
23
Other costs
195
124
290
422
2 777
2 122
2 872
2 420
19. Other operating income and expense
Group
Company
2023
2022
2023
2022
Other operational incomes
Inventories sold
1 247
213
238
213
Miscellaneous services rendered
1 075
987
284
449
Profit from the sale of fixed assets
14
11
14
11
Other
524
230
508
230
2 860
1 441
1 044
903
The Group and the Company lease real estate, supply technical water, perform maintenance of
heating equipment and provide transport services.
Group
Company
Other operational expenses
2023
2022
2023
2022
Cost of miscellaneous services rendered
(173)
(306)
(173)
(306)
Inventories sold
(111)
(214)
(111)
(214)
Cost of previous periods
(73)
(30)
(73)
(30)
Sale of fixed assets, write-off
(23)
(119)
(23)
(119)
Other
(106)
(78)
(112)
(85)
(486)
(747)
(492)
(754)
44
AB KAUNO ENERGIJA
Company code 235014830
Raudondvario pl. 84
Kaunas, Lithuania
Set of consolidated and company financial
statements of 2023
(in thousands euro, unless specified otherwise)
20. Other interest and similar income
Group
Company
Default interest received on overdue
2023
2022
2023
2022
receivables
466
228
466
228
Interest
228
19
222
22
694
247
688
250
21. Loss on sale of securities, interest and other similar charges
Group
Company
2023
2022
2023
2022
Interest
(1 347)
(299)
(1 343)
(296)
Impairment of non-current financial assets
-
-
-
258
Interest / penalties
(1)
-
(1)
-
(1 348)
(299)
(1 344)
(38)
22. Income tax
As at 31 December 2023 and 31 December 2022, deferred income tax assets and liabilities were
accounted for using the 15 per cent rate. All changes in deferred income tax are accounted for in the
Group's and Company's statements of profit (loss) and other comprehensive income.
The reported income tax expense for the year can be reconciled with the income tax expense resulting
from the application of the regulatory corporate income tax rate to profit before tax:
Group
Company
2023
2022
2023
2022
Profit before tax
6 977
5 661
6 241
5 786
Income tax (expense) calculated at the
statutory rate
(1 046)
(849)
(936)
(849)
Effect of permanent and temporary
844
774
846
849
differences on current year's income tax
Effect of permanent and temporary
(671)
46
(671)
46
differences
Change in unrecognised deferred income
(26)
(31)
(26)
(31)
tax assets
Adjustment of income tax for previous
-
-
-
-
periods
Deferred income tax (income) costs
(899)
(60)
(787)
15
recorded in the profit (loss) statement
45
AB KAUNO ENERGIJA
Company code 235014830
Raudondvario pl. 84
Kaunas, Lithuania
Set of consolidated and company financial
statements of 2023
(in thousands euro, unless specified otherwise)
22. Income tax (continued)
Group
Company
2023
2022
2023
2022
Components of income tax expense
Income tax expenses (costs) of the reporting
(202)
(75)
(90)
-
year
Deferred profit tax expense (income)
(697)
15
(697)
15
Income (expense) from income taxes
recognised in the statement of comprehensive
income
(899)
(60)
(787)
15
Effective corporate tax rate (%)
12,89
1,06
12,61
-0,26
All changes in deferred income tax are accounted for in the Group's and Company's profit (loss)
statement. As at 31 December 2023, deferred income tax consisted of:
Group
Company
2023
2022
2023
2022
Deferred income tax assets
Tax losses
3 441
3 647
3 441
3 647
Accruals
160
69
160
69
Change in value of assets
716
833
716
833
Investment allowance
-
5
-
5
Deferred income tax assets
4 317
4 554
4 317
4 554
Deferred profit tax liabilities
Depreciation differences
(10 833)
(10 373)
(10 833)
(10 373)
Revaluation of assets transferred to a subsidiary
-
-
-
-
Deferred profit tax liabilities
(10 833)
(10 373)
(10 833)
(10 373)
Deferred profit tax, net value
(6 516)
(5 819)
(6 516)
(5 819)
Deferred tax assets arising from tax losses are recognised because the Group's and the Company's
management expects that they will be realised in the foreseeable future, taking into account forecasts
of taxable profits.
23. Basic and diluted earnings per share
The Group's basic and diluted earnings per share calculations are presented below:
Group
Company
2023
2022
2023
2022
Profit for the reporting period
6 078
5 858
5 454
5 801
Number of shares (thousands), beginning of
period
42 802
42 802
42 802
42 802
Number of shares (thousands), end of period
42 802
42 802
42 802
42 802
Weighted average number of ordinary shares
42 802
42 802
42 802
42 802
in issue (thousands)
Basic and diluted earnings per share
0,14
0,14
0,13
0,14
(EUR)
46
AB KAUNO ENERGIJA
Company code 235014830
Raudondvario pl. 84
Kaunas, Lithuania
Set of consolidated and company financial
statements of 2023
(in thousands euro, unless specified otherwise)
24. Financial assets and liabilities and risk management
Credit risk
The Group and the Company are not exposed to significant concentrations of credit risk as they deal
with a large number of customers.
Group
Company
Number of unique clients (units)
2023-12-31
2022-12-31
2023-12-31
2022-12-31
Natural persons
120 348
119 493
120 152
119 301
Other legal entities
3 797
3 454
3 704
3 378
Legal entities financed from municipal and
state budgets
561
658
559
648
124 706
123 605
124 415
123 327
Receivables due from customers of the Group and the Company by customer groups:
Group
Company
Customer distribution (thousand EUR)
2023-12-31
2022-12-31
2023-12-31
2022-12-31
Natural persons
13 538
16 808
13 524
16 794
Other legal entities
3 551
3 513
2 710
3 297
Legal entities financed from municipal and
state budgets
1 710
2 674
1 709
2 673
Recognition of expected credit losses
(4 362)
(4 826)
(4 322)
(4 786)
14 437
18 169
13 621
17 978
As at the date of the financial statements, for trade and other receivables that are neither past due
nor impaired, management believes that there is no indication that the debtors will not meet their
payment obligations as the receivable balances are under constant control. The Group and the
Company consider that the maximum exposure is the amount of trade and other receivables less any
impairment losses recognised at the statement of financial position date (Note 9).
Cash and cash equivalents in banks rated on a long-term basis *:
Group
Company
2023-12-31
2022-12-31
2023-12-31
2022-12-31
AA-
4 015
2 077
4 015
2 077
A+
3 770
2 795
2 538
2 136
A
19
-
19
-
Unrated bank
43
59
43
59
7 847
4 931
6 615
4 272
*- external borrowing ratings by Standard & Poor's agency.
The credit risk arising from the Group's and the Company's other financial assets consisting of cash
and cash equivalents translates to The Group's and the Company's potential credit risk from the
default of the counterparties, with the maximum potential exposure being equal to the carrying amount
of these instruments.
47
AB KAUNO ENERGIJA
Company code 235014830
Raudondvario pl. 84
Kaunas, Lithuania
Set of consolidated and company financial
statements of 2023
(in thousands euro, unless specified otherwise)
24. Financial assets and liabilities and risk management (continued)
The Group and the Company have no financial instruments accounted at fair value. The Group's and
the Company's financial assets are mainly current and therefore their carrying amount is considered
to approximate fair value. The Group's and the Company's long-term financial liabilities bear interest
at rates that are periodically reviewed in accordance with market conditions and are therefore
considered to approximate their fair value. The classification of financial instruments by level within
the fair value hierarchy in 2023 and 2022 is presented below:
Group 2023-12-31
Level of the fair value hierarchy
Total book
Assets
Level 1
Level 2
Level 3
value:
Other financial assets
-
-
75
75
Trade receivables
-
-
14 437
14 437
Other amounts receivable
-
-
2 755
2 755
Cash and cash equivalents
-
-
8 547
8 547
Total financial assets
-
-
25 814
25 814
Liabilities
Financial debts and leasing
-
(59 126)
-
(59 126)
Trade debts and other current liabilities
-
-
(16 535)
(16 535)
Total financial liabilities
-
(59 126)
(16 535)
(75 661)
Company 2023-12-31
Level of the fair value hierarchy
Total book
Assets
Level 1
Level 2
Level 3
value:
Other financial assets
-
-
75
75
Trade receivables
-
-
13 621
13 621
Other amounts receivable
-
-
2 757
2 757
Cash and cash equivalents
-
-
7 315
7 315
Total financial assets
-
-
23 768
23 768
Liabilities
Financial debts and leasing
-
(58 951)
-
(58 951)
Trade debts and other current liabilities
-
-
(16 550)
(16 550)
Total financial liabilities
-
(58 951)
(16 550)
(75 501)
Group 2022-12-31
Level of the fair value hierarchy
Total book
value:
Assets
Level 1
Level 2
Level 3
Other financial assets
-
-
75
75
Short-term deposits
2 000
2 000
Trade receivables
-
-
18 169
18 169
Other amounts receivable
-
-
5 156
5 156
Cash and cash equivalents
-
-
5 550
5 550
Total financial assets
-
-
30 950
30 950
Liabilities
Financial debts and leasing
-
(47 991)
-
(47 991)
Trade debts and other current liabilities
-
-
(19 332)
(19 332)
Total financial liabilities
-
(47 991)
(19 332)
(67 323)
48
AB KAUNO ENERGIJA
Company code 235014830
Raudondvario pl. 84
Kaunas, Lithuania
Set of consolidated and company financial
statements of 2023
(in thousands euro, unless specified otherwise)
24. Financial assets and liabilities and risk management (continued)
Company 2022-12-31
Level of the fair value hierarchy
Total book
value:
Assets
Level 1
Level 2
Level 3
Other financial assets
-
-
75
75
Short-term time deposits
2 000
2 000
Trade receivables
-
-
17 978
17 978
Other amounts receivable
-
-
5 130
5 130
Cash and cash equivalents
-
-
4 891
4 891
Total financial assets
-
-
30 074
30 074
liabilities
Financial debts and leasing
-
(47 725)
-
(47 725)
Trade debts and other current liabilities
-
-
(19 253)
(19 253)
Total financial liabilities
-
(47 725)
(19 253)
(66 978)
Interest rate risk
The Group's and the Company's long-term loans, other than those with the Ministry of Finance of the
Republic of Lithuania, are at variable interest rates (3 months EURIBOR). The Group and the
Company are exposed to interest rate risk.
The Company's long-term loans, with the exception of loans received from the Ministry of Finance of
the Republic of Lithuania, have a variable interest rate, which depends on EURIBOR fluctuations.
Liquidity risk
Liquidity risk is the risk that the Company or the Group will not be able to meet its financial obligations
when they fall due. Liquidity risk is very low as the Group and the Company are both active in state-
regulated heat supply activities. Heat generators have a 30-day settlement period. The contractual
maturity of the Group's and the Company's financial liabilities to banks and suppliers based on
undiscounted payments:
Up to 3
3 months
From 1
After 5
Group
On demand
months
to 1 year
to 5
years
Total
years
Amounts receivable
-
17 192
-
128
-
17 320
Cash and cash
-
8 547
-
-
-
8 547
equivalents
Trade debtors
-
(14 105)
-
-
-
(14 105)
Loans received
-
(808)
(2 423)
(12 084)
(42 652)
(57 967)
Finance lease
-
(9)
(29)
(64)
(1 057)
(1 159)
2023-12-31
-
10 817
(2 452)
(12 020)
(43 709)
(47 364)
49
AB KAUNO ENERGIJA
Company code 235014830
Raudondvario pl. 84
Kaunas, Lithuania
Set of consolidated and company financial
statements of 2023
(in thousands euro, unless specified otherwise)
24. Financial assets and liabilities and risk management (continued)
Up to 3
3 months
From 1
After 5
Company
On demand
months
to 1 year
to 5
years
Total
years
Amounts receivable
-
16 378
-
-
-
16 378
Cash and cash
-
7 315
-
-
-
7 315
equivalents
Trade debtors
-
(14 136)
-
-
-
(14 136)
Loans received
-
(808)
(2 424)
(12 084)
(42 651)
(57 967)
Finance lease
-
(9)
(26)
(48)
(902)
(984)
2023-12-31
-
8 741
(2 450)
(12 132)
(43 553)
(49 394)
Up to 3
3 months
From 1
After 5
Group
On demand
months
to 1 year
to 5
years
Total
years
Amounts receivable
-
25 325
-
39
-
25 364
Cash and cash
-
5 550
-
-
-
5 550
equivalents
Trade debtors
-
(18 548)
-
-
-
(18 548)
Loans received
-
(692)
(2 077)
(7 080)
(36 869)
(46 718)
Finance lease
-
(30)
(91)
(231)
(921)
(1 273)
2022-12-31
-
11 605
(2 168)
(7 272)
(37 790)
(35 625)
Up to 3
3 months
From 1
After 5
Company
On demand
month
to 1 year
to 5
years
Total
years
Amounts receivable
-
25 108
-
-
-
25 108
Cash and cash
-
4 891
-
-
-
4 891
equivalents
Trade debtors
-
(18 487)
-
-
-
(18 487)
Loans received
-
(692)
(2 077)
(7 204)
(36 745)
(46 718)
Finance lease
-
(30)
(89)
(223)
(665)
(1 007)
2022-12-31
-
10 790
(2 166)
(7 427)
(37 410)
(36 213)
Foreign currency risk
All purchases, sales and financial debts of the Group and the Company are denominated in euro,
therefore, there is no significant foreign currency risk.
Capital management
The main objective of capital management is to ensure that the Group and the Company meet the
external capital requirements and that they maintain appropriate capital ratios in order to sustain their
business and maximise the benefits for shareholders.
The Group and the Company manages its capital structure and makes adjustments to it in the light of
changes in economic conditions and in accordance with their operational risk characteristics. In order
to maintain or change the capital structure, the Group and the Company may issue new shares, repay
the capital to the shareholders. There were no changes to the capital management objectives, policy
or process as of 31 December 2023 and 31 December 2022.
50
AB KAUNO ENERGIJA
Company code 235014830
Raudondvario pl. 84
Kaunas, Lithuania
Set of consolidated and company financial
statements of 2023
(in thousands euro, unless specified otherwise)
24. Financial assets and liabilities and risk management (continued)
The Law on Joint-Stock Companies of the Republic of Lithuania requires that the Group's and the
Company's shareholders' equity shall not be less than 50% of its share capital. The Group and the
Company meet the requirements of the Law on Companies of the Republic of Lithuania with respect
to equity capital. There are no other externally imposed capital requirements for the Group and the
Company.
The Group and the Company measure capital using the ratio of liabilities to equity. Equity consists of
ordinary shares, reserves and retained earnings attributable to equity holders of the parent company.
The Group's and the Company's management have not set a specific target ratio for the ratio of liability
to equity, however, the following current indicators are considered to be sufficiently good performance
indicators:
Group
Company
2023-12-31
2022-12-31
2023-12-31
2022-12-31
Non-current liabilities (including deferred
93 608
83 504
93 417
83 229
taxes and grants and subsidies)
Current liabilities
22 326
24 281
22 105
24 012
Liabilities, total:
115 934
107 785
115 522
107 241
Equity
97 606
96 101
96 723
95 842
Ratio of liabilities* to equity (%))
118,78
112,16
119,44
111,89
*Liabilities include all non-current (including deferred income tax liability and grants (deferred income))
and current liabilities.
Market risk
External risk factors affecting the Group's and the Company's core business: the economic crisis,
rising fuel prices, unfavourable legislation and regulations from the government and other authorities,
local government decisions, pricing policies for products sold, inflation and the general economic
downturn reducing the income of heat consumers, cyclical nature of operations, environmental
requirements.
To mitigate risks, the Company applies a risk management model that includes risk identification,
assessment, management and monitoring. An additional debt administration plan on the management
of potential consumer insolvency risks has been prepared and implemented. The planned plan of
additional measures is consistently implemented on a monthly basis, with good results and above
projections.
25. Commitments and contingencies
The contingent liability is disclosed in subsequent events (note 27).
Leases and contracts for the purchase of works
The Group's and the Company's future obligations under the purchase contracts in force as at 31
December 2023 amount to EUR 24,307 thousand and EUR 22,229 thousand.
Guarantees
On 31 December 2023 the Group and the Company have granted guarantees in the amount of EUR
20 thousand.
51
AB KAUNO ENERGIJA
Company code 235014830
Raudondvario pl. 84
Kaunas, Lithuania
Set of consolidated and company financial
statements of 2023
(in thousands euro, unless specified otherwise)
26. Related party transactions
The parties are considered to be related if one party can control the other party or has significant
influence over the other party in making financial or operational decisions.
In 2023 and 2022, the Group and the Company did not have any significant transactions with other
companies controlled by Kaunas City Municipality, except for the purchase or provision of utility
services. Transactions with Kaunas City Municipality and companies controlled by Kaunas City
Municipality were carried out at market prices. A list of countries related to Kaunas City Municipality
can be found here:
http://www.kaunas.lt/administracija/struktura-ir-kontaktai/pavaldzios-imones-ir-istaigos/.
In 2023 and 2022, the Group's and the Company's transactions with Jurbarkas City Municipality,
Kaunas City Municipality and companies financed and controlled by Kaunas City Municipality, and their
debts and liabilities as at the end of the periods were as follows:
31 December 2023
Purchases
Sales
Amounts
Amounts
Kaunas City Municipality,
receivable
payable
companies financed and fully
1 930
9 028
1 141
467
managed by it
Jurbarkas district municipality
19
282
1
4
31 December 2022
Purchases
Sales
Amounts
Amounts
Kaunas City Municipality,
receivable
payable
companies financed and fully
1 234
8 345
3 105
253
managed by it
Jurbarkas district municipality
15
292
14
3
Sales include the amounts of reimbursements for housing heating costs, cold water and sewage costs,
and hot water costs for financially challenged residents.
The Group and the Company have made an impairment allowance of EUR 253 thousand as at 31
December 2023 (on 31 December 2022: EUR 253 thousand) in respect of receivables from
companies financed from municipal budgets. Receivables are not secured by collateral or other
instruments and will be settled in cash. No guarantees have been obtained for receivables.
On 31 December 2023 and 31 December 2022 the Company's transactions with subsidiaries and the
balances at the end of the period were as follows:
UAB Kauno miesto paslaugų
Purchases
Sales
Amounts
Amounts
centras
receivable
payable
31 December 2023
25
-
-
3
31 December 2022
6
-
-
3
Amounts
Amounts
UAB GO Energy LT
Purchases
Sales
receivable
payable
31 December 2023
1 963
138
19
225
31 December 2022
426
162
65
83
UAB GO Energy LT provides real estate management services to AB Kauno energija and participates
in unregulated energy development projects together with its parent company.
52
AB KAUNO ENERGIJA
Company code 235014830
Raudondvario pl. 84
Kaunas, Lithuania
Set of consolidated and company financial
statements of 2023
(in thousands euro, unless specified otherwise)
26. Related party transactions (continued)
Management's salary and other benefits
On 31 December 2023 The Group's and the Company's management consists of 2 and 1 (31
December 2022: 2 and 1) persons, respectively, the Management Board consists of 5 and 5 persons
and the Supervisory Board consists of 3 and 3 persons.
Group
Company
2023-12-31
2022-12-31
2023-12-31
2022-12-31
Wages and salaries charged to
the management
136
103
130
97
The Management Board
78
75
78
75
The Supervisory Board
44
-
44
-
Calculated compensations of
employee benefits
-
-
-
-
During 2023 and 2022, there were no loans, guarantees, other disbursements or accruals to the
management of the Group and the Company, or transfers of assets.
27. Subsequent events
On 2024-01-264, the State Energy Regulatory Council (hereinafter referred to as the VERT), when
deciding on the determination of the constituents of the basic price of heat and the constituents of hot
water of AB Kauno energija, decided that EUR 2,515.62 thousand awarded from Kaunas Clinics of
the Hospital of the Lithuanian University of Health Sciences Kaunas Clinics (hereinafter referred to as
the Kaunas Clinics) by the ruling of the Court of Appeal of Lithuania of 2021-03-04 No. e2A-151-
370/2021 and compensation of EUR 570.04 thousand paid on the basis of the settlement agreement
of 2021-05-25 , approved by the Kaunas District Court on 2021-06-02 for reserve thermal capacity for
the period from 2019-06-01 to 2021-02-28, must be returned to consumers. Considering that AB
Kauno energija has already returned EUR 498.17 thousand, in the opinion of VERT, the remaining
amount of the refund to consumers is EUR 2,587.50 thousand.
The Board of AB Kauno energija, when setting the level of heat production and/or supply income for
the first year of validity of the base level of heat production and/or supply income, decided on 2024-
01-31 not to include the compensation received from Kaunas Clinics for reserve power. Such a
decision was made taking into account the fact that the Company incurred EUR 576.6 thousand
expense in provision of reserve power service of Kaunas Clinics. By the decision of the Board of the
Company of 2021-06-22 No 2021-9-1, an additional component reducing the price by 0.08 ct/kWh
was already established. During the period of application of this additional component from 2022-01-
01 to 2022-04-30, AB Kauno energija returned EUR 498.17 thousand. It should be noted that AB
Kauno energija amount payable to consumers, i.e. EUR 576.6 thousand is calculated in accordance
with the methodology for determining the compensation for reserve capacity approved by Order No
1-22 of the Minister for Energy of the Republic of Lithuania of 2009-11-26, i.e. in accordance with the
legislation.
53
AB KAUNO ENERGIJA
Company code 235014830
Raudondvario pl. 84
Kaunas, Lithuania
Set of consolidated and company financial
statements of 2023
(in thousands euro, unless specified otherwise)
27. Subsequent events (continued)
In the light of the above and the fact that VERT, despite the arguments put forward by AB Kauno
energija, adopted Resolution No. O3E-141 on 9 2024-02-09 “On setting the level of heat production
and/or supply income of AB Kauno energija for the first year of validity of the base level of heat
production and/or supply income”, and on 2024-02-23 adopted Resolution No. O3E-213 “On unilateral
determination of the level of heat production and/or supply income of AB Kauno energija for the first
year of the base level of heat production and/or supply income”, where the amount to be refunded to
consumers amounts to 2 587.50 thousand euro, AB Kauno energija filed a complaint with the Regional
Administrative Court on 2024-02-26 regarding the annulment of part of the VERT resolutions.
The management of the Group and the Company have assessed that there is no legal basis for this
claim and therefore the amount in question has not been included in the formed difference provision
(Note 16).
On March 26, 2024, the Company entered into a credit agreement with AB SEB Bank to finance
working capital. According to this agreement, a 5 million euro overdraft limit has been approved for a
12-month period. As of the financial reporting date, the overdraft limit has not been utilized.
There have been no other events after the reporting date that could have a material effect on the
financial statements or that should be disclosed in the financial statements.
***
AB Kauno energija
Code of legal entity 235014830
Raudondvario av. 84
Kaunas, Lithuania
AB KAUNO ENERGIJA CONSODATED ANNUAL
REPORT OF THE YEAR 2023
AB KAUNO ENERGIJA CONSOLIDATED SEMIANNUAL REPORT OF THE YEAR 2023
55
CONTENTS
1. Reporting period of the consolidated annual report ................................................................................ 56
2. Companies composing the group of companies and their contact details .............................................. 56
3. Nature of core activities of the companies composing the group of companies ..................................... 57
4. Issuer’s agreements with credit institutions ............................................................................................. 57
5. Trade in securities of companies composing the group of companies in regulated markets .................. 57
6. Overview of the condition, performance, and development of the group of companies ......................... 58
6.1. Overview of the condition, performance, and development of the group of companies ......................... 58
6.2. Description of exposure to key risks and uncertainties the company confront with and their impact on
activity results ................................................................................................................................................... 61
7. Analysis of financial and non-financial performance results, information related to environmental issues
63
8. References and additional explanations .................................................................................................. 69
9. Significant events after the end of the reporting period ........................................................................... 69
10. Plans and forecasts of activities of the group of companies ................................................................... 69
11. Information on research and development activities ............................................................................... 70
12. Information on own shares acquired and held by the issuer ................................................................... 72
13. Information on the aims of financial risk management, hedging instruments in use ............................... 72
14. Information on the issuer’s subsidiary undertakings ............................................................................... 72
15. Structure of authorized capital ................................................................................................................. 72
16. Data on shares issued by the issuer ....................................................................................................... 73
17. Information on the issuer’s shareholders................................................................................................. 75
18. Employees ............................................................................................................................................... 77
19. Procedure for amending the issuer’s statutes ......................................................................................... 79
20. Issuer’s management bodies ................................................................................................................... 79
21. Information on significant agreements ..................................................................................................... 83
22. Information on agreements of the issuer and its managerial body members or employees ................... 84
23. Information on major transactions with related parties ............................................................................ 84
24. Information on harmful transactions concluded on behalf of the issuer during the reporting period ...... 84
25. Information on compliance with the governance code of companies and the company’s corporate social
initiatives and policies ....................................................................................................................................... 84
26. Data on publicised information ................................................................................................................ 84
Annex 1 – AB Kauno Energija Remuneration Report for 2023.......................................................................86
Annex 2 – Company’s report on the compliance with the Governance Code for the companies listed on the
Stock Exchange Nasdaq Vilnius.............…………………………………………………….……............……... 88
AB KAUNO ENERGIJA CONSOLIDATED ANNUAL REPORT OF THE YEAR 2023
56
1. Reporting period of the Consolidated Annual Report
Reporting period for which the AB Kauno Energija Consolidated Annual Report has been prepared is
January 1, 2023 – December 31, 2023.
2. Companies consisting the Group of companies and their contact details
AB Kauno Energija (hereinafter – the Company or the Issuer) prepares both the Company’s and the
Consolidated Financial Statements. The group of companies (hereinafter referred to as the Group) consists
of AB Kauno Energija and its subsidiary – UAB GO Energy LT in which the Issuer directly controls 100 per
cent of the shares.
Main details of the Company:
Name of the Company: AB Kauno Energija
Legal-organizational form: Public Limited Liability Company
Headquarters’ address Raudondvario av. 84, 47179 Kaunas
Code of legal entity: 235014830
Telephone (8 37) 305 650
Fax (8 37) 305 622
E-mail: info@kaunoenergija.lt
Webpage www.kaunoenergija.lt
Registration date and place August 22, 1997, Kaunas, Order No 513
Register manager State Enterprise Centre of Registers Kaunas Branch
VAT payer code LT350148314
Main information about the subsidiaries:
Company name UAB Go Energy LT
Legal-organizational form Limited Liability Company
Headquarters’ address Savanorių pr. 347, 49423 Kaunas
Code of legal entity 303042623
Telephone (8 37) 305 693
E-mail kent@kaunoenergija.lt
Registration date and place April 16, 2013, Kaunas
Register manager State Enterprise Centre of Registers Kaunas Branch
AB KAUNO ENERGIJA CONSOLIDATED ANNUAL REPORT OF THE YEAR 2023
57
3. Nature of core activities of the companies composing the group of companies
The nature of core activities of the Group is manufacture and rendering of services. The Company is the parent
company of the Group. The Company generates and supplies heat to consumers (for the purposes of heating
and hot water production) in the cities of Kaunas and Jurbarkas and in Kaunas district Akademija town, Ežerėlis
town, Domeikava village, Garliava town, Girionys village, Neveronys village, Raudondvaris village, (hereinafter
referred to as Kaunas district).
Also, following provisions of the Law on Heat Sector, the Company supplies hot water (is engaged in hot
domestic water supplier activities) from May 1, 2010 for consumers in the cities of Kaunas and Jurbarkas and
Kaunas district, who chose the Company as a hot water supplier. As of December 31, 2023, the Company
supplied hot water to 897 residential buildings in Kaunas, Kaunas district and Jurbarkas city.
In addition, the Company maintains engineering structures (collectors – manifolds) and operates heat and
electricity production facilities. The Group and the Company carries out a supervision of indoor heat and hot
water supply systems, maintenance of heat unit equipment, repairs of heat units and other heating equipment,
provides premises rental services under agreements. The Group and the Company are engaged in licensed
activity in accordance with the licenses held. On February 26, 2004 the National Commission for Energy
Control and Prices (hereinafter – the Commission) issued a heat supplier licence to the Company. The licence
is valid indefinitely. Maintenance of indoor heat and hot water supply systems is pursued following the
provisions of Article 20 of The Law on Heat Sector of the Republic of Lithuania.
The vision of the Group and the Company is to be an innovative, competitive, and added value for shareholders
creating Company engaged in heat and cooling generation and their centralized supply, maintenance of indoor
heating and hot water systems.
Values of the Group and the Company:
• More than 50 years of experience in heat production and supply.
• Responsibility towards consumers for reliable heat and hot water supply.
• High qualification of employees allowing to reach the highest efficiency indicators.
• Ability to apply innovative solutions in everyday activities.
Strategic goals of the Group and the Company:
AB Kauno Energija is the most advanced and innovative district heating (hereinafter – DH) company in
Lithuania.
Principled guidelines of Company’s heat economy strategy are as follows:
• Increase of safety and reliability of heat supply – the Company intends to formulate an expert
assessment of safety / vulnerability of heat supply system, to implement update and modernization
of system of parameters data transfer, collection and evaluation, to implement optimization of the
network hydraulic mode and increase of speed of parameters reaction / change, to reconstruct and
optimize sections of termofication pipelines and elements (average age of DH pipelines reaches
approximately 30 years), to implement update and development of the system of DH network water
reserve – emergency replenishment, to implement technical solutions and / or use a good practice
increasing reliability and safety, ensuring stability of thermofication mode;
• to actively participate in formation of policy of Kaunas city supply with heat and in increase of
Company’s desirability and in expansion of district heating market.
• formation of good practice and its publicizing.
4. Issuer’s agreements with credit institutions
On September 13, 2018 the Issuer Service Agreement was signed with AB SEB Bankas (company code
112021238, Gedimino pr. 12, Vilnius).
5. Trade in securities of companies composing the Group of companies in regulated
markets
20,031,977 (twenty million thirty-one thousand nine hundred seventy-seven) of the Issuer’s ordinary
registered shares (VP ISIN code LT0000123010) with the total nominal value equal to EUR 34,855,639.98
(thirty-four million eight hundred fifty-five thousand six hundred thirty-nine euro and 98 cents) were listed in
the secondary trade list of Nasdaq Vilnius Baltic stock exchange as of December 32023. The beginning of
listing of the Company’s shares is December 28, 1998.
AB KAUNO ENERGIJA CONSOLIDATED ANNUAL REPORT OF THE YEAR 2023
58
6. Overview of the condition, performance, and development of the Group of companies
6.1. Overview of the condition, performance, and development of the Group of companies
In 2023, the company's focus was on achieving its strategic objectives by providing innovative, efficient, safe,
economical, and sustainable heating solutions.
The company's financial and non-financial objectives are to ensure the safety and reliability of its core
activities; improve production efficiency; enhance the efficiency of the heat transmission system; improve
access to district heating; and utilize modern, innovative tools and methods for organizing and managing
heat supply and operations.
The "Development Strategy of AB Kauno energija for the period of 5 years, covering the years 2022–2026,
by implementing the directions of development of the energy sector" was approved by the Company's
Supervisory Board on 11 July 2022. A summary of the strategy is available on the Company's website at a
specific address: https://www.kaunoenergija.lt/apie-bendrove.
The Company covers a major part of heat production and supply market in the cities of Kaunas and
Jurbarkas and Kaunas district. Company’s generation capacities consist of Petrašiūnai power plant, 5 boiler-
houses in Kaunas integrated network, 7 district boiler-houses in Kaunas district, 1 boiler-house in Jurbarkas
city, 14 boiler-houses of isolated networks and 26 local gas burning boiler-houses in Kaunas city (25 of them
are gas burned and 1 of them – burned with pellets), also 8 local water heating boiler-houses in Sargėnai
catchment. Total Company’s power generation capacity is 579.91 MW (including 53.02 MW of
condensational economizers’ capacities; 2.4 MW of absorption heat pump).
30 per cent of heat supplied to consumers in the year 2023 was produced in Company’s heat production
facilities. The rest of required quantity of heat was purchased from independent heat producers (hereinafter –
IHP) in monthly auctions, according to legal acts. Starting from May 2018 an electronic heat purchasing
auctions are arranged by the Energy Stock Exchange operator UAB Baltpool. Electronic auctions are carried
out in accordance with the Regulations of the Heat Auctions approved by the National Energy Regulatory
Council. The Schedule of the Procedure and Conditions for the Purchase of Heat from Independent Heat
Producers, the Methodology for Determining Heat Prices, the Rules for the Provision of Information on
Energy, Drinking Water Supply and Wastewater Treatment, Sewage and Surface Water Treatment
Companies, a Summary of Conditions of Usage of Heat Transfer Networks, and a schedule of the Procedure
for Publicly Disclosed Information were changed respectively.
Fuel used by the Company for heat production in the year 2023 is presented in Chart 1.
Chart 1
The Company purchased heat during the year 2023 from 10 IHP in Kaunas and Kaunas district as follows:
from UAB Kauno Termofikacijos Elektrinė, UAB Idex Taika, UAB Idex Taika Elektrinė, UAB Lorizon Energy,
UAB Ekoresursai, UAB Aldec General, UAB Idex Biruliškių, UAB “Ekopartneris”, UAB Foksita and UAB
Kauno Kogeneracinė Jėgainė. Total purchases consisted of 961 thousand MWh of heat, i.e., 70 per cent of
heat supplied to the.
23.91
21.10
33.40
12.75
14.14
75.84
78.61
64.40
84.33
84.81
0.25
0.29
2.20
2.92
1.05
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2019 y. 2020 y. 2021 y. 2022 y. 2023 y.
Fuel structure, per cent
Natural gas Solid biofuel Biogas and other fuels
AB KAUNO ENERGIJA CONSOLIDATED ANNUAL REPORT OF THE YEAR 2023
59
Amounts of heat purchased from IHP and produced with Company’s equipment during the period of the
years 2019–2023 are presented in chart 2, thousand MWh:
Chart 2
The Company supplied this produced and purchased heat with integrated and local heat supply networks to
4,263 businesses and organizations as well as to 120,152 households, in total – to 124,415 consumers
(objects by addresses) as of December 31, 2023.
Chart 3
Investments
Investments are made in accordance with Company’s investment plan for the year 2023, which has been
approved by decision No T-121 of Kaunas City Municipality Council of March 28, 2023 “Regarding
investment plan of AB Kauno Energija for the year 2023 and its financing” (hereinafter – Investment plan).
The Company makes investments based on an assessment of the economic situation, the competitive
environment and the availability of financing. Investment plans are approved by the Board of Directors and
coordinated by the Kaunas City Municipal Council.
The Company implements trunk pipeline replacement projects, optimizes pipeline diameters, connects new
objects to the DH network and modernises heat production facilities according to Investment plan.
515.6
442.4
483.8
396.8
417.3
847.6
869.4
1104.7
1017.1
961.3
0
200
400
600
800
1 000
1 200
1 400
1 600
1 800
2019 y. 2020 y. 2021 y. 2022 y. 2023 y.
Heat purchase and production, thous.MWh
Heat productions in own facilities Heat purchsased from IHP
96.57%
3.43%
Repartition of Company's heat consumers by groups
Units of residential households (inhabitants)
Other consumers
AB KAUNO ENERGIJA CONSOLIDATED ANNUAL REPORT OF THE YEAR 2023
60
In 2023, the company is carrying out work in the Šilainiai, Vilijampolė, Eiguliai, Dainava, Petrašiūnai, and
Gričiupis districts, planning to renew 11 km of old pipelines and expand the network in Kaunas LES and
Panemunė.
The company has reduced heat losses in the upgraded sections of main pipelines by slightly more than 27%
in 2023. The largest heat savings were achieved in Šilainiai, Vilijampolė and Dainava districts. About 74% of
the total district heating network in Kaunas has already been upgraded.
The company has successfully implemented another modernisation project, which has increased the
efficiency of the biofuel boiler plant at the Petrašiūnai power plant. This was accomplished using a 2.4 MW
absorption heat pump with a second stage smoke condensing economiser. After the implementation of the
modernisation project, the efficiency of the biofuel boiler plant was raised by about 10%. Even more purified
smoke, predominantly water vapour, is now discharged into the environment as a result of the installation of
a second-stage smoke condensing economiser. According to current research, they contain extraordinarily
low amounts of particulate matter, only 20 mg/m3.
The dynamics of consumers’ heating capacities connections to Company’s DH network and disconnections
from them in 2019–2023 is shown in Chart 4.
Chart 4
Dynamics of consumer’s connections and disconnections
A total capacity of objects disconnected from DH network in 2023 was approx. 1.28 MW. Disconnection of
heat equipment from centralized heat supply networks and the change of heating method is pursued
following the order determined by the Civil Code of the Republic of Lithuania, the Law on Heat Sector of the
Republic of Lithuania, the Law on Construction of the Republic of Lithuania and sub statutory legal acts
implementing these Laws.
Company’s investments by funding sources of the years 2019–2023 are presented in Chart 5.
0.31
0.95
0.35
0.26
1.28
14.63
14.14
7.12
25.21
29.60
0
5
10
15
20
25
30
35
2019 y. 2020 y. 2021 y. 2022 y. 2023 y.
Capacities disconnected, MW Capacities connected, MW
AB KAUNO ENERGIJA CONSOLIDATED ANNUAL REPORT OF THE YEAR 2023
61
Chart 5
6.2. Description of exposure to key risks and uncertainties the Company confront with and their
impact on activity results
External risk factors affecting the Company’s core business:
• Increase in competition between heat producers in Kaunas.
• Increase in final (i.e., including all expenditures) price of natural gas and biofuel.
• Ever-changing legal environment.
• Heat production pricing policies.
Competition environment risk factors.
To operate effectively and reliably in creation the added value for shareholders, the Company is facing
threats specific to the sphere of its activity, but also takes advantage of opportunities to work efficiently and
effectively by exploiting the available potential. One of the biggest threats that the Company may face is a
relatively high price for heat purchased from IHP, who are ranked as private business units committed to
profit generation. Purchase of heat is pursued following valid law and the Description of procedure for
purchase of heat from independent suppliers of heat approved by NERC. In turn, the Company invests
extensively in modernization and construction of its own manufacturing facilities, to reduce the comparative
costs of heat production. Thus, it takes advantage of the regulatory environment and reduces the energy
purchase price.
Together with coming of new IHP the Company faced additional technical, economical, legal and other
issues that need to be solved: management of heat supply network and balancing of power of these
producers in case of emergency stop of them, retaining of optimum working parameters of the network,
regulation, change and applying of heat purchase from IHP order.
Commercial risk factors
The Company is a major supplier of the heat produced centrally to the city of Kaunas, part of Kaunas district
and the city of Jurbarkas. To retain this market, it is necessary to implement modern and efficient heat
production technologies in own production facilities and to focus on production at the lowest cost, benefiting
from private differences of different types of fuel.
Company’s heat sales are directly dependent on heat demand, i.e., heat consumption, which is mostly
affected by the average outdoor air temperature, the amount of investment of consumers in energy-saving
and rational use of heat and the pace of development of the heat sales.
Changes in fuel prices and the price of heat, produced by IHP have an impact on cost of Company’s heat
and electricity production.
12.11
3.88
2.69
10.08
13.46
1.08
10.54
6.83
10.13
12.02
8.80
6.92
4.50
0,11
0,02
21.99
21.34
14.02
20.32
25.50
0
5
10
15
20
25
30
0
5
10
15
20
25
30
2019 y. 2020 y. 2021 y. 2022 y. 2023 y.
Implementation of investments by funding sources, million
euro
Company funds Loans Different funds Total
AB KAUNO ENERGIJA CONSOLIDATED ANNUAL REPORT OF THE YEAR 2023
62
Company’s performance is affected by the decrease in sales due to reduced and further decreasing heat
demand (in pursuance of residential buildings renovation and by installing a heat saving equipment), due to
consumer’s disconnections from DH network (due to the various reasons). Risks can be mitigated by
Company’s current and further investments in heat and electricity production facilities, using renewable
energy sources, reducing heat production expenditures and the price of heat, purchased from IHP as well as
the price of heat supplied for consumers, and continually reasonably informing customers on the benefits of
DH network systems (safety, reliability, correlation with one sort of fuel, fuel conversion, local pollution
sources in residential areas, total environmental pollution, etc.) in comparison with autonomous heating.
Operational risk
During the year 2023 consumers’ debts consisted of EUR 4.7 million. Despite a significant increase in heat
prices between 2022 and 2023 due to fuel price increases, the level of overdue debts has not increased. To
recover these debts as soon as possible, the Company actively uses a variety of legal debt management
measures, such as pre-trial actions, judicial recovery, and cooperation with law Companies. In addition,
when a debt becomes big, a restriction of heat supplies is applied as a prevention measure (if there are
technical possibilities and according to the law).
On January 2, 2018 the Kaunas Unified Service Center “Mano Kaunas” started its operations in Statybininkų
str. 3, Kaunas, at the premises of UAB Kauno Švara. Here residents can get immediate information /
consultation about Kaunas city services provided by municipality owned companies – AB Kauno Energija,
UAB Kauno Švara, UAB Kauno Autobusai, UAB Kauno Butų ūkis, UAB Kauno Gatvių Apšvietimas and UAB
Kauno Vandenys, as well as conclude contracts, pay invoices, requests, certificates, etc.
Activities of the Company are cyclical. During the heating season (October – April) a major operating income
is earned. During the non-heating season, the Company’s revenues are at their lowest since only heat for hot
water is used. In addition, during the non-heating season, the Company incurs more costs because it must
prepare for the upcoming heating season, i.e., to carry out the repairs and reconstruction of heat supply
networks and heat production facilities.
Legal conformity risk
Energy activities are governed by the Law on Heat Sector, the Law on Energy, the Law on Electricity, the
Law on Natural Gas, the Law on Drinking Water Supply and Wastewater Management, Government
resolutions, Heat supply and consumption rules, Methodology of heat prices and payments for heat of NCC
and other legislation. Their amendments affect the heating industry.
With new amendments of articles 2, 3, 20, 22, 28, 31, and 32 of the Law on Heat Sector No XI-1608 of the
Republic of Lithuania that came in affect from November 1, 2011 in accordance with Article 7, the heat and
hot water prices may not include any costs related with the indoor building heating (including heat units), and
hot water systems. In implementing the legislation, from November 1, 2011 all these costs directly reduce the
profit of the Company.
Legal conformity risk is a risk of increase in losses and (or) loss of prestige, an (or) decrease in confidence,
which can be determined by the external environment factors (for example, violation of external legal acts,
non-compliance of requirements of supervising institutions, etc.) or internal factors (for example, violation of
internal legal acts and ethical standards, cases of employee’s abuse, etc.).
Technical and process factors
The biggest process risks are related to the condition of heating systems. Modernization rate of them is
determined by lack of funds – it is necessary to reconstruct more than 13.5 km of pipelines per year to
condition of age of heat supply system and the minimum investments should consist of approximately 6
million euros. Hydraulic testing identifies their weakest points. Every year, about 200 points where cracks
occur are identified during the tests. Upon discovery of defects, pipes are exposed and promptly repaired.
DH network is reconstructed in the most worn-out sections of district heating. New industrially (polyurethane
foam insulation in polyethylene shell) insulated pipes not requiring concrete channels are mounted in the
reconstructed sections of the heat supply network. Heat loss is very low in reconstructed sections (process
level), while the pipelines no longer pose a threat of rupture and ensure reliable heat supply to consumers.
AB KAUNO ENERGIJA CONSOLIDATED ANNUAL REPORT OF THE YEAR 2023
63
One of the technical risk factors for heat generation facilities is their age. Some of heat generation facilities
are already renewed now. Every year boiler repairs, and preventive work is carried out during the non-
heating season. They are necessary to ensure secure heat supplies and reliability, i.e., securing of heat
production facilities and fuel reserves.
More detailed information on Company’s production facilities modernization is provided in chapters on
operations and development.
Ecological factors
With respect to the Company, they may be divided into those affecting the Company and affected by the
Company’s operations.
In order not to adversely impact the environment and comply with the pollution limits, vibration and noise
values, the Company is guided by the requirements of the Kyoto Protocol, the Helsinki Commission
(HELCOM) and environmental constraints of Helsinki Convention, as well as the European Parliament and
Council Directive 2001/80/EB of regulating energy emissions and Lithuanian environmental normative
document LAND 43-2013 for the use of natural resources, and releases and emissions of air pollutants to the
environment in its activities. Main sources of pollution of the Company: burning fossil fuel in the Company's
heat sources, production of heat and wastewater used in the industrial processes.
The Company pays taxes for atmospheric and water pollution. If allowable emission rate limits or annual
limits are exceeded, the Company would pay the fines under the applicable laws of the Republic of
Lithuania. The Company was not imposed any penalties in the year 2023.
Main Company’s emission reduction measures: modernization of heat generation facilities, heat transfer loss
reduction by replacing the existing pipes with the pipes with polyurethane foam insulation, installation of new
technology and improvement of existing technological equipment, use of less polluting fuels, and continuous
emission monitoring.
Additional efforts by the company to reduce CO2 emissions:
• Green procurement. We choose suppliers not only on the basis of the price and the quality of goods,
services or works, but also on the basis of the reduced impact they have on the environment.
• The Company is currently implementing an environmental management system (ISO 14001:2015). It
assists in the systematic management of the direct and long-term environmental impact of the activities and
consistently addresses the relevant environmental issues of the Company. With this system in place, we will
be able to increase green procurement.
• We are renewing our fleet of vehicles giving preference to electric and hybrid cars. We have purchased
13 electric cars.
• We sort waste generated in production and administrative activities and transfer it to waste managers in
accordance with the established procedure. We have also removed rubbish bins in the offices in the
administration building and dispose rubbish in the sorting bins in the common corridors. This encourages
employees to recycle and has reduced the amount of bins and bags (plastics) used.
• The company is taking the initiative to inform the public about energy-saving measures in order to reduce
air pollution. We regularly raise the awareness of the public by writing informative articles about renewable
energy sources, their benefits for nature and people, informing what modern technologies are used by our
company and how they contribute to climate change mitigation.
• Employees of the Company are also encouraged to come to work with less polluting vehicles, to
cooperate as much as possible and to travel to work with a single vehicle for several colleagues.
7. Analysis of financial and non-financial performance results, information related to
environmental issues
Company’s sales revenue of the year 2023 was EUR 85,048 thousand and in comparison, with the year
2022 decreased by 2.3 per cent (in the year 2022 it consisted of EUR 87,013 thousand). Sales revenue of
the Group of the year 2023 was EUR 85,048 thousand (in the year 2022 it consisted of EUR 87,992
thousand).
AB KAUNO ENERGIJA CONSOLIDATED ANNUAL REPORT OF THE YEAR 2023
64
The average price of heat sold decreased by 2.0 percent (in the year 2023 it was 6.99 ct/kWh, and in the
year 2022 – 7.13 ct/kWh).
Comparison of financial indicators of the Group of the year 2023 with the indicators of the years 2019–2022
is presented in Table 1.
Table 1
No
Indicator of the Group
2019
2020
2021
2022
2023
1
Revenue from sales, thousand euros
54,649
42,030
50,963
87,992
85,048
1.1
Including: Heat energy
49,711
37,147
47,125
81,338
78,660
1.2
Cooling supply
0
0
2
10
5
1.3
Maintenance of indoor heating and hot
water supply systems, heating
substation facilities
12
11
12
17
17
1.4
Income from the maintenance of
collectors
251
268
348
348
348
1.5
Hot water supply including cold water
price
3,228
2,935
3,014
5,742
5,467
1.6
Income from maintenance of hot water
meters
422
433
456
487
551
1.7
Revenue from the sale of trading
emission allowances
1,025
1,236
6
50
0
2
Profit, thousand euros
933
-152
72
6,356
4,505
3
EBITDA (earnings before interest,
taxes, depreciation and amortization
and other non-cash expense items),
thousand euros
7,372
8,262
6,488
12,350
13,553
4
Profitability of core business, per cent
(operating profit / operating sales) *
100
1.2
-5.7
-0.6
6.6
8.7
5
Net profitability, per cent (net profit /
operating sales) *100
1.7
-0.4
0.1
7.11
5.1
6
Assets, thousand euros
154,096
162,903
179,934
203,886
213,540
7
Equity, thousand euros
89,829
89,673
89,745
96,101
97,606
8
Return on equity (ROE), per cent
(net profit / average equity) *100
1.1
-0.2
0.1
6.9
4.7
9
Return on assets (ROA), per cent
(net profit / average assets) *100
0.6
-0.1
0.0
3.6
2.2
10
Debt ratio (liabilities /assets)
0.42
0.45
0.50
0.37
0.40
11
Debt-to-equity ratio (liabilities / equity)
0.7
0.8
1.0
0.8
0.9
12
General liquidity ratio (short-term
assets / short-term liabilities)
1.03
0.86
1.33
1.47
1.28
13
Quick ratio ((short-term assets-
inventory) / short-term liabilities)
0.92
0.75
1.23
1.36
1.20
14
Net earnings per share (net profit /
average weighted number of shares in
issue)
0.02
0.01
0.00
0.14
0.14
15
Last share market price of the year
/net profit /number of shares at year-
end (P / E ratio)
45.97
-232.31
656.89
7.44
6.5
16
Share capital, thousand euros
74,476
74,476
74,476
74,476
74,476
17
Share capital-to-assets ratio
0.49
0.46
0.41
0.37
0.35
18
Dividend pay-out ratio (dividend per
share / earnings per share)
0.0
0.0
0.0
0.5
AB KAUNO ENERGIJA CONSOLIDATED ANNUAL REPORT OF THE YEAR 2023
65
Comparison of financial indicators of the Company of the year 2023 with the indicators of the years 2019–
2022 is presented in Table 2.
Table 2
No
Indicator of the Company
2019
2020
2021
2022
2023
1
Revenue from sales, thousand euros
54,659
42,036
50,981
87,013
85,048
1.1
Including: Heat energy
49,721
37,153
47,133
81,458
78,660
1.2
Cooling supply
0
0
2
10
5
1.3
Maintenance of indoor heating and hot
water supply systems, heating
substation facilities
12
11
12
17
17
1.4
Income from the maintenance of
collectors
251
268
348
348
348
1.5
Hot water supply including cold water
price
3,228
2,935
3,024
4,643
5,467
1.6
Income from maintenance of hot water
meters
422
433
456
487
551
1.7
Revenue from the sale of trading
emission allowances
1,025
1,236
6
50
0
2
Profit, thousand euros
747
57
457
6,299
3,881
3
EBITDA (earnings before interest,
taxes, depreciation and amortization
and other non-cash expense items),
thousand euros
6,514
7,882
6,322
11,797
12,762
4
Profitability of core business, per cent
(operating profit / operating sales) *
100
0.7
-2.8
0.2
6.2
8.0
5
Net profitability, per cent (net profit /
operating sales) *100
1.4
0.1
0.8
7.2
4.5
6
Assets, thousand euros
151,595
161,250
178,654
203,083
212,245
7
Equity, thousand euros
89,776
89,833
90,290
95,842
96,723
8
Return on equity (ROE), per cent
(net profit / average equity) *100
0.87
0.07
0.43
6.61
4.0
9
Return on assets (ROA), per cent
(net profit / average assets) *100
0.5
0.0
0.2
3.0
1.9
10
Debt ratio (liabilities /assets)
0.41
0.44
0.49
0.37
0.40
11
Debt-to-equity ratio (liabilities / equity)
0.7
0.8
1.0
0.8
0.9
12
General liquidity ratio (short-term
assets / short-term liabilities)
1.07
0.91
1.36
1.40
1.18
13
Quick ratio ((short-term assets-
inventory) / short-term liabilities)
0.95
0.80
1.27
1.33
1.11
14
Net earnings per share (net profit /
average weighted number of shares in
issue)
0.02
0.02
0.01
0.14
0.13
15
Last share market price of the year /
net profit / number of shares at year-
end (P / E ratio)
57.3
619.5
103.49
7.51
7.0
16
Share capital, thousand euros
74,476
74,476
74,476
74,476
74,476
17
Share capital-to-assets ratio
0.49
0.46
0.42
0.37
0.35
18
Dividend pay-out ratio (dividend per
share / earnings per share)
0.0
0.0
0.0
0.5
The more detailed analysis of financial indicators of the Group and the Company is provided in the
Consolidated and Company’s financial statements for the year 2023.
AB KAUNO ENERGIJA CONSOLIDATED ANNUAL REPORT OF THE YEAR 2023
66
Preventing corruption
The purpose of the Company's Corruption Prevention Policy is to set out the key principles and requirements
for the prevention of corruption in the Company and its subsidiaries and guidelines for ensuring compliance
with them.
The Company is committed to the highest standards of business ethics and advocates free and fair trade,
open competition and ethical conditions, in accordance with the legislation of the Republic of Lithuania. The
Company adheres to and follows the Kaunas City Municipality Corruption Prevention Action Plan 2023-2025.
Anti-corruption obligations cover the following areas: compliance with legal provisions and standards of
conduct; disclosure of information, transparent accounting; prohibition of influence peddling and bribery;
conflicts of interest; nepotism and cronyism; gifts and hospitality; donations; donations; purchases and sales;
abuse of office/office; selection/evaluation of staff; confidentiality.
Environmental impact on operations
The Company’s performance can be affected by changes in sales turnovers caused by changed heat
demand, which can be caused by consumer investments in the renovation of buildings, heat saving and
rational consumption, average higher of lower outdoor temperature during the heating season, changes in
fuel prices, heat purchase price from IHP.
Company’s reconstructed heat production facilities changing fossil fuel to biofuel will make a serious
competition with their costs of production to IHP, operating in Kaunas.
The dynamics of heat price of the Company in the years 2019–2023 is provided in Chart 6.
Chart 6
Constituents of Company’s heat price structure of December of the years 2019–2023 are provided in Chart
7.
4.57
3.55
3.63
7.13
6.99
0
1
2
3
4
5
6
7
8
2019 y. 2020 y. 2021 y. 2022 y. 2023 y.
Average price of heat, supplied by AB Kauno energija,
ct/kWh
AB KAUNO ENERGIJA CONSOLIDATED ANNUAL REPORT OF THE YEAR 2023
67
Chart 7
The prices of heat and hot water are calculated and approved in accordance with the Methodology for the
determination of heat prices, approved by the resolution of NERC No. O3-96 of July 8, 2009. Constituents of
a base heat price are determined for a period of 3-5 years. In the case of regulated pricing services
(products), the mechanism of long-term prices applies to heat pricing, i.e., for the base period, the base heat
price (price constituents) is determined, which is adjusted for the second and subsequent years by setting
the recalculated heat price (price constituents).
On September 25, 2020 the NERC determined unilaterally by the Resolution No. O3E-880 the heat price
constituents of AB Kauno Energija for the second year of validity of the basic heat price. The constant
constituent of the heat price, valid until October 30, 2020 amounted to 1.81 ct/kWh, and the new constant
constituent that entered into force from November 1, 2020 and is currently in force is 1.88 ct/kWh.
Chart 8
The Company recalculates values of heat price variable constituents and final heat prices every month,
considering changes in prices of fuel and purchased heat.
2.58
1.55
2.98
7.1
4.98
1.81
1.81
1.88
1.88
1.88
0
1
2
3
4
5
6
7
8
9
10
2019.12 2020.12 2021.12 2022.12 2023.12
Structural constituents of the heat price, ct/kWh
Variable component Constant component
Current Expenses of
repair and
maintenance; 0.17
Depreciation
(amortization); 0.42
Personnel
expenses; 0.64
Return on
Investments; 0.47
Tax expenses; 0.12
Expenses of sales
and marketing; 0.01
Administrative
expenses; 0.02
Financial
expenses; 0.02
Other distributable
expenses; 0.01
Heat price constant constituent, euro ct/kWh
AB KAUNO ENERGIJA CONSOLIDATED ANNUAL REPORT OF THE YEAR 2023
68
Details of variable heat price constituent valid on December 2023 are provided in Chart 9.
Chart 9
Information related to environmental issues
In carrying out their activities, the Group and the Company seek to prudently use natural resources, install
fewer polluting technologies, and follow the environmental legislation and apply preventive measures to
minimize the negative impact on the environment.
Waste management
The Group and the Company have organized the waste collection, sorting, and disposal of them to waste
managers, i.e., to licensed waste management businesses. In 2023, the Group and the Company disposed
for recycling 598.6 tons of various waste (absorbents, filter materials, packages containing hazardous
chemicals or that are contaminated with them, paper and carton, insulation materials containing asbestos,
used tyres, bituminous mixes, batteries and accumulators, fluorescent lamps, concrete, iron, and steel. The
Company successfully transferred 1451.3 tonnes of production waste ash from the Ežerelis and Nemunas
boiler house and the Petrašiūnai power plant to be used as a by-product for the production of road base mix
and fertilization of plantation forests, in accordance with the agreed by-product plans with the Environmental
Protection Agency.
Wastewater management
In accordance with the schedule agreed with the Environmental Protection Agency (EPA), the Group and the
Company constantly monitor that the effluent discharges from stationary sources are within the permissible
limits set out in the integrated pollution prevention and control permits.
Air pollution
The measurement laboratory of stationary air pollution sources of the Group and the Company, in
possession with the permit issued by the EPA and following the schedule agreed with EPA, continuously
monitors the emissions to the atmosphere from stationary sources to would not exceed the permissible limits
established in integrated pollution prevention and control permits. Company’s Šilkas, Ežerėlis, Girionys and
Noreikiškės boiler-houses, and starting from 2015 – Inkaras boiler-house and Petrašiūnai power-plant use
biofuel, thus reducing atmospheric pollution.
The comparison of the amount of pollutants emitted into the atmosphere in 2023 from the Company’s
stationary facilities with the amount of the years 2019–2022 is presented in table 3 below.
Fuel for
technology;
26.46%
Expenses of
purchased heat;
54.38%
Expenses of
transfer
technological
losses; 16.46%
Electric energy for
technology; 2.50%
Expenses of heat,
used for self
purposes; 0.21%
Heat price variable constituent in December 2023, per cent
AB KAUNO ENERGIJA CONSOLIDATED ANNUAL REPORT OF THE YEAR 2023
69
Table 3
Period
Particulates, t
Nitrogen
oxides, t
Carbon
monoxide, t
Sulphur
dioxide, t
Hydrocarbons, t
Other
pollutants, t
2023
56.7076
839.7873
171.0513
22.1036
0.5971
1.5198
2022
51.5130
159.8142
796.3571
60.3571
2.0144
0.3117
2021
72.9579
196.5479
781.2462
158.4375
1.2315
0.2966
2020
98.6841
217.8864
884.9974
102.9845
1.1430
0.2801
2019
86.0888
253.4443
1090.2436
0.2746
1.1978
0.4313
Cyclones for smoke cleaning from particulates are installed in Šilkas, Ežerėlis, Girionys, Noreikiškės, Inkaras
boiler-houses and Petrašiūnai power-plant. Their working efficiency is checked every year. The Company is
involved in the greenhouse gas emissions trading system.
8. References and additional explanations
Main financial data of the Group and the Company are provided in the Consolidated and Company’s
Financial Statements of AB Kauno Energija for the year 2023.
The financial statements are prepared in accordance with the International Financial Reporting Standards as
adopted by the European Union and their interpretations. Standards have been issued by the International
Accounting Standards Board and interpretations have been issued by the International Financial Reporting
Interpretations Committee.
Internal control over consolidated statements
When preparing its consolidated financial statements, the Company combines the itemised financial
statements of the Company and its subsidiaries, by summing up the items of assets, liabilities, equity,
revenue, and expenses. Afterwards, it eliminates the book value of the Company’s investment in the
subsidiary and Company’s share of equity in the subsidiary; amounts on balance sheets, transactions,
income and expenses inside the Group (for this purpose, it prepares a reconciled report of all transactions,
income and expenses for the period); difference in depreciation of contribution in kind measured at market
value as compared to its book value.
For composing of the consolidated financial statements of the Group, the financial statements of the
Company and subsidiaries are composed for the same date.
It’s controlled if the accounting policy of the Company and its subsidiaries for accounting of similar
transactions is the same. The subsidiaries’ income and expenses are included into the Consolidated
Financial Statements as of the date of acquisition.
9. Significant events after the end of the reporting period
After the end of the reporting period, there were no significant events other than those disclosed in the financial
statements.
10. Plans and forecasts of activities of the group of companies
As investments allow continual business development and profitability, the aims of the Group’s and the
Company’s investment program for the year 2023 is further increase in volumes of heat production and
effectiveness, expansion of heat selling market, through increase of use of biofuel for heat production,
development of heat transmission and distribution increasing safety and reliability, developing services of
maintenance of engineering systems and further improvement of consumers services quality.
AB KAUNO ENERGIJA CONSOLIDATED ANNUAL REPORT OF THE YEAR 2023
70
In compliance with the provisions of the plan for the facilities on the implementation of the National
Renewable Energy Development Strategy, in order to implement the Company’s key business objectives
and the provisions of the National Energy Independence Strategy related to the assurance of technical
requirements for reliability of heat facilities and heat supply networks, to guarantee the quality keeps apply to
consumers, Kaunas city municipality decided to approve Company’s investment plans with the decision No.
T-121 “Regarding Investment Plans of AB Kauno Energija for the Year 2023 and Their Financing” on March
28, 2023.
In 2023 the implementation of Company’s investment program will involve further modernization of boiler-
houses owned by the Company automating the production process and installing condensational
economizers; reconstruction of heat networks; replacement of heat meters. It’s important to notice, that
implementation of these measures will allow to reduce losses of heat transmission and to perform
optimization of heat supply to the consumers and to ensure heat supplies reliability.
11. Information on research and development activities
Company’s representatives are constantly invited to work in committees of preparation of Energy
Engineering studies programs of Kaunas University of Technology and in groups of external and self-
evaluation. Working in these groups and committees Company’s representatives analyse aims of programs
and goals of studies, composition of training plans, appropriateness of staff, material basis, process, and
evaluation of studies, as well as program management. Performing external and self-evaluation, committees
apply recommendations for improvement of program structures and implementation process, to satisfy the
needs of employers and to meet the requirements of national and European legal acts in the field of higher
education.
The Company, which supplies district heating to Kaunas, responding to the changes of the warming climate,
enters a new district cooling market, which is still poorly tested in Lithuania. District cooling is the production
and supply of district cooling by converting heat energy into cool and using the existing district heating
infrastructure. One of the latest technologies to produce cooling from heat is absorption heat pumps. During
a rather sophisticated technological process in them, heat energy is converted into cool, which is supplied to
the premises by other devices. One of such absorption heat pumps was also acquired by the Company.
The first project of the Company entering the cooling supply market is two refrigerating machines with a total
power of 1576 kW, which will supply the Mokslo Sala science museum, being built on the island of Nemunas
in Kaunas, with cooling facilities. The coolness of the Mokslo Sala island, with an area of 11.5 thousand
square meters, will be produced by absorption heat pumps. This innovative technology, which is still in its
infancy in Lithuania, converts the heat energy from the heat network's cogeneration water into cooling
through a rather complex technological process. An important factor is that absorption-type machines do not
use greenhouse gases. The Aleksotas Innovation Industrial Park (AIPP) project in Kaunas includes plans for
the installation of absorption pumps to generate heat from the city to keep it cool. The cooling equipment has
already been implemented in the Basketball House in Kaunas Old Town and an apartment building in
Kęstučio Street in the city centre.
Kaunas became Lithuania's first city to effectively install the breakthrough Internet of Things (IoT) network
LoRa. The company created and customised one of the world's most popular IoT solutions to the demands
of residents and businesses. Remote metre reading, filling of waste containers, parking lot occupancy, tree
growth monitoring, and fire protection are just a few of the many uses of IoT. LoRa (Long Range) is an ultra-
low-power wireless networking technology that uses radio waves to gather and transmit data from smart end
devices such as hot water metres. Currently, this innovation has been successfully implemented and
developed in 177 countries around the world. The major objectives for implementing the IoT network are to
enhance customer service by providing smart remote reading hot water metres, removing the need for
consumers to manually write off and declare metre readings, and to increase the efficiency of regulating the
parameters of heating networks. Apartment buildings who have chosen Kauno energija as their hot water
supply receive free smart metres. The LoRa network in Kaunas is intended to suit the demands of not just
the heat supplier, but also other enterprises in the city providing maintenance or other services.
The company has set a goal to completely eliminate the use of natural gas in heat production with gas
consumption to be halved in the next three years to only 5% of total energy consumption for heat production.
This will increase the use of green heat from biofuels and reduce CO2 emissions, helping to achieve the
Company's long-term goals of supplying more consumers with cheaper biofuel-based heat, reducing CO2
emissions and enabling new customers to connect to the city's heat network.
AB KAUNO ENERGIJA CONSOLIDATED ANNUAL REPORT OF THE YEAR 2023
71
Minimising gas consumption will help achieve the Company's long-term goals: to supply more consumers
with cheaper biofuel-based heat through more optimal utilisation of Kaunas Energy's heat production
capacity; reducing emissions of CO2, which contribute to the greenhouse effect; enabling new customers to
connect to the city's heat network.
In 2023, the Company will undertake a significant heat network infrastructure development project,
connecting Panemunė to the Kaunas city integrated network. The Company's three gas-fired boiler plants in
Panemunė accounted for approximately 22% of the Company's total gas consumption during the 2021–2022
heating season.
In Kaunas, some consumers who are located far from the common district heating network receive heat from
individual gas boilers that are installed in their buildings by the Company. The Company has evaluated the
feasibility of connecting each of these buildings to the common district heating network, but in cases where it
is not economically viable, gas boilers will be replaced by heat pumps. Heat pumps have an advantage over
gas boilers because they are more efficient and do not emit CO2 into the environment when producing heat.
The Company has made consistent investments in solar power plants and Organic Rankine Cycle (ORC)
power plants to reduce the annual cost of electricity that is heavily used for heat generation and supply. The
ORC turbines in the biofuel boilers will generate electricity using steam from an organic liquid.
In the period 2021–2022, solar photovoltaic power plants will be installed in Kaunas city and district, with a
combined capacity of 600 kW. The power plants will be installed on the roofs of Petrašiūnai power plant,
Plento g. 28, and Smetonos al. 65A boiler house in Kaunas city, and on the roofs of Neveronys and
Raudondvaris boiler houses in Kaunas district. The total investment for this project is almost EUR 394.2
thousand, with EUR 123.6 thousand coming from the Environmental Project Management Agency (EPA).
In 2023, an additional 4 photovoltaic solar power plants with a total capacity of 360 kW will be installed on
the roofs of the buildings. Two more solar power plants on the roofs of the Silko and Inkaro boiler houses
and two solar parks by 2024, the total capacity of the Company's solar power plants will reach more than 2.3
MW. A 350 kW ORC power plant to be installed at the Petrašiūnai elektrine plant by 2025.
Kaunas is some of the greenest cities in Lithuania, placing a lot of emphasis on seeking and implementing
sustainable solutions. In order to use the green waste generated during the maintenance of city parks,
forests and squares as efficiently as possible, the raw material created after pruning trees and shrubs is
converted into biofuel used to produce city heat. The municipality no longer has to worry about how to collect
that waste, where to transport it and what to do with it. Meanwhile, the company no longer needs to purchase
some of the biofuel; they can produce it themselves. In 2022, while maintaining green areas in Kaunas,
6,183 tons of biofuel were obtained. It was used to produce 17,500 MWh of heat, sufficient to heat and
provide hot water to 45 apartment blocks. This has helped Kaunas residents save EUR 0.6 million a year.
In 2023, Kaunas' gift to Ukraine was a mobile diesel boiler plant with a capacity of 0.9 MW, which the State
Emergency Situations Service will use to produce heat and hot water. The mobile diesel boiler plant,
assembled by the Kauno energija group, is conveniently transportable to locations where there is the
greatest need for heat at the time. It is capable of heating up to 10 and supplying hot water to 35 old multi-
story buildings, each containing 80 apartments. The boiler plant is fully automated with a remote control,
parameter monitoring, signalling, and emergency reporting system, thus, constant personnel are not required
for its operation. The mobile boiler plant units are designed and assembled to fit into a standard maritime
metal container, which can be conveniently and quickly transported to locations with the greatest heat
demand at that moment.
The donated boiler plant is decorated with the inscription “WARM. Win the War. Stay Warm” and the flags of
Ukraine and Lithuania, conveying an emotional message to Ukrainians that Lithuania and Kaunas are
standing with them, supporting them in the war and believing in Ukraine's victory. The idea for the drawing
was developed by the creative agency Milk Agency, and the implemented by Karolis Grubis.
The transportation costs of the boiler plant travelling to Lviv are financed by the European Union and the
Ministry of Transport and Communications of the Republic of Lithuania.
In August 2023, the company's festival Transformations took place for the first time, relocating to the historic
Petrašiūnai power station for cultural events. The most anticipated highlight of the festival is the installation of
Lithuanian artists created specifically for these industrial spaces, which was installed in a 17-metre high
space, featured a photo exhibition titled Energy Flow and an unveiled sculpture called Eglišakis (author: Ivas
Stonys).
AB KAUNO ENERGIJA CONSOLIDATED ANNUAL REPORT OF THE YEAR 2023
72
12. Information on own shares acquired and held by the Issuer
The Company does not hold the shares of its own. The Company’s subsidiaries have not purchased any of
the Company’s shares. Neither the Company nor its subsidiaries purchased or sold own shares during the
reporting period.
13. Information on the aims of financial risk management, hedging instruments in use
All relevant information on this issue is provided in Explanatory Notes 2.11, 24 to the Consolidated and
Separate Financial Statements for the year 2023 of AB Kauno Energija.
14. Information on the Issuer’s subsidiary undertakings
The name of Company’s subsidiary UAB Kauno Energija NT was changed by the decision of company’s
shareholders. Starting from August 19, 2020 the name of the company is UAB GO Energy LT. Other details
of the company remain unchanged, all concluded contracts remain valid.
The authorised capital of UAB GO Energy LT registered in the Register of Legal Entities on December 31,
2023 is 2,762,958 euros and it is divided into 95,406 ordinary registered shares with par value of 28.96 euros
each.
UAB GO Energy LT has no holdings directly or indirectly managed in other companies.
Activities of UAB GO Energy LT include the real estate development, management, leases, purchase, and
sale.
As of December 31, 2023, company UAB GO Energy LT had 28 employees.
Comparison of financial indicators of UAB GO Energy LT for the year 2023 with the indicators of the years
2019–2022 is provided in Chart 10.
Chart 10
15. Structure of authorized capital
The authorised capital of the Company registered in the Register of Legal Entities of the Republic of
Lithuania as of December 31, 2023 is EUR 74,475,728.82 (seventy-four million four hundred seventy-five
thousand seven hundred twenty-eight euros and 82 cents).
Structure of authorized share capital of the Issuer by types of shares is specified in Table 4.
126
123
3
139
125
13
738
607
111
1,646
983
411
3,932
3,201
620
0
500
1000
1500
2000
2500
3000
3500
4000
4500
Turnover from sales Sales costs Comprehensive income
Activity results of GO Energy LT, thous. euros
2019 y. 2020 y. 2021 y. 2022 y. 2023 y.
AB KAUNO ENERGIJA CONSOLIDATED ANNUAL REPORT OF THE YEAR 2023
73
Table 4
Type of shares
Number of
shares, units
Nominal
value,
euros
Total nominal
value, euros
Municipal share
in the authorised
capital, per cent
Share of private
shareholders in
the authorised
capital, per cent
Ordinary nominal
shares
42,802,143
1.74
74,475,728.82
98.33
1.67
16. Data on shares issued by the Issuer
The authorised capital of AB Kauno Energija was registered on May 18, 2015 by the decision of General
Meeting of Shareholders held on April 28, 2015 and amounts to EUR 74,475,728.82 (seventy-four million
four hundred seventy-five thousand seven hundred twenty-eight euros and 82 cents) and it is divided to
42,802,143 (forty-two million eight hundred and two thousand one hundred forty-three) ordinary shares of
par value of 1.74 euros each.
There are no limitations on the transfer of securities.
Main characteristics of shares released into free circulation of securities (as of December 31, 2023).
Securities registration No A01031430
ISON code of securities LT0000123010
Number of shares 20 031 977 ordinary nominal shares
Nominal value EUR 1.74
Total nominal value of shares EUR 34,855,639.98
Main characteristics of shares issued and registered for non-public trading (as of December 31, 2023).
ISON code of securities LT0000128407
Number of shares 22,770,166 ordinary nominal shares
Nominal value EUR 1.74
Total nominal value of shares EUR 39,620,088.84
History of trade in Company’s securities in the years 2019–2023 is provided in Table 5.
Table 5
Indicator
2019
2020
2021
2022
2023
Opening price, euro
1.01
0.98
0.82
1.11
0.89
Highest price, euro
1.32
1.03
1.19
1.12
1.14
Lowest price, euro
0.905
0.77
0.80
0.76
0.87
Last price, euro
0.98
0.925
1.11
0.89
0.91
Circulation, units
40,868
89,524
147,659
64,193
97,113
Circulation, million euro
0.04
0.07
0.15
0.06
0.09
Historical data on share prices (in euro) and turnovers in the years 2019–2023 is provided in Chart 11.
AB KAUNO ENERGIJA CONSOLIDATED ANNUAL REPORT OF THE YEAR 2023
74
Chart 11
Comparison of Company’s share price with the index of own sector (utility services) and OMX Vilnius index is
given in Chart 12.
Chart 12
AB KAUNO ENERGIJA CONSOLIDATED ANNUAL REPORT OF THE YEAR 2023
75
17. Information on the Issuer’s shareholders
The number of Company’s shareholders as of December 31, 2023 was 751.
Information on Shareholders of the Issuer who owned more than 5 per cent of the authorised capital of the
Company registered on May 18, 2015 (42,802,143 ordinary nominal shares) as of December 31, 2023 is
provided in Table 6 and Chart 13.
Table 6
Full name of shareholder
(company name, type,
headquartered dress, code)
Number of ordinary
nominal shares
owned by the
shareholder, units
Owned
share in
the
authorised
capital, per
cent
Share of votes
carried by
owned shares.
per cent
Share of votes
owned by the
shareholder
together with
acting entities,
per cent
Kaunas City Municipality
Laisvės al. 96, 44251 Kaunas
Code 111106319
39,736,058
92.84
92.84
-
Other shareholders
3,066,085
7.16
7.16
-
Total:
42,802,143
100
100
-
Chart 13
The distribution of the Company’s shareholders by groups at the end of the reporting period is presented in
Table 7.
92.84%
3.75%
1.74%
1.67%
Structure of shareholders as of December 31, 2023
Kaunas city municipality Kaunas district municipality
Jurbarkas district municipality Other shareholders
AB KAUNO ENERGIJA CONSOLIDATED ANNUAL REPORT OF THE YEAR 2023
76
Table 7
Group
Number of shares
owned by the group,
pcs.
Available share of
the authorized
capital, per cent of
the total number of
shares
Local authorities
42 088 631
98.33
Households
500 720
1.17
Other shareholders
212 792
0.50
Total
42 802 143
100
17.1. The shareholders, who owned more than 5 per cent of the shares (20,031,977 ORS) issued for public
trading (reg. No. A01031430, VP ISIN code – LT0000123010) as of December 31, 2023 are listed in Table 8.
Table 8
Name
Type of shares
Number of
shares,
units
Total
nominal
value of
shares,
euros
Percentage of
shares from
those
released into
the public
circulation
Share of
the
authorise
d capital
(%)
Kaunas City Municipality
Laisvės al. 96, 44251
Kaunas
Code 111106319
Ordinary
registered
shares
16,965,892
29,520,652
84.69
39.64
Kaunas District Municipality
Savanorių pr. 371, 49500
Kaunas,
Code 111100622
Ordinary
registered
shares
1,606,168
2,794,732
8.02
3.75
Other shareholders
Ordinary
registered
shares
1,459,917
2,540,256
7.29
3.41
Total:
20,031,977
34,855,640
100
46.80
17.2. The shareholders, who owned more than 5 per cent of the shares (22,770,166 ORS) issued for non-
public trading (VP ISIN code – LT0000128407) as of December 31, 2023 are listed in Table 9.
Table 9
Name
Type of
shares
Number of
shares,
units
Total
nominal
value of
shares,
Euro
Percentage of
shares from
those released
into the public
circulation
Share of
the
authorise
d capital
(%)
Kaunas City Municipality
Laisvės al. 96, 44251
Kaunas
Code 111106319
Ordinary
registered
shares
22,770,166
39,620,089
100
53.20
None of the shareholders of the Issuer holds any special rights of control. The rights of all shareholders are
the same; they are specified in article 4 of the Law on Companies of the Republic of Lithuania. The number
of shares carrying votes at the General Meeting of Shareholders of the Company is 42,802,143 units.
The Company has not been notified on the limitations of voting rights or any other mutual agreements of
shareholders which may limit the transfer of securities and / or voting rights.
AB KAUNO ENERGIJA CONSOLIDATED ANNUAL REPORT OF THE YEAR 2023
77
In 2019, the dividends from the profit of the year 2018 were allocated and paid to the shareholders of the
Issuer. Dividend per share was 0.025 euro, in total – 1.070 million euro. The profit was allocated to the
statutory reserve, other reserves, and bonuses for employees. A total of 0.05 million euros was allocated for
sponsorship.
In 2020, no dividends from the profit of 2019 were allocated and paid to the Issuer’s shareholders.
In 2021, no dividends from the profit of 2020 were allocated and paid to the Issuer’s shareholders.
In 2022, no dividends from the profit of 2021 were allocated and paid to the Issuer’s shareholders.
In 2023, the dividends from the profit of the year 2022 were allocated and paid to the shareholders of the
Issuer. Dividend per share was 0.07009 euro, in total – 3.0 million euro. A total of 0.05 million euros was
allocated for sponsorship.
18. Employees
372 employees were employed in the Group as of December 31, 2023. Changes in the number of
employees of the Group in year 2019–2023 are provided in Table 10.
Table 10
Actual number of
employees
Group
31/12/2019
Group
31/12/2020
Group
31/12/2021
Group
31/12/2022
Group
31/12/2023
Total:
402
365
379
383
372
management
3
3
3
2
2
specialists
214
203
212
203
189
workers
185
159
164
178
181
Changes in number of employees of the Company in year 2019–2023 are provided in Table 11.
Table 11
Actual number of
employees
Company
31/12/2019
Company
31/12/2020
Company
31/12/2021
Company
31/12/2022
Company
31/12/2023
Total:
389
354
350
353
344
management
1
1
1
1
1
specialists
210
200
197
189
178
workers
178
153
152
163
165
Education of employees of the Group as at the end of the reporting period.
Table 12
No
Education
Group
31/12/2019
Group
31/12/2020
Group
31/12/2021
Group
31/12/2022
Group
31/12/2023
1
Secondary incomplete
3
1
1
1
1
2
Secondary
139
124
176
150
140
3
College
59
49
38
34
38
AB KAUNO ENERGIJA CONSOLIDATED ANNUAL REPORT OF THE YEAR 2023
78
No
Education
Group
31/12/2019
Group
31/12/2020
Group
31/12/2021
Group
31/12/2022
Group
31/12/2023
4
Higher
201
191
164
198
193
Total:
402
365
379
383
372
Education of employees of the Company as at the end of the reporting period.
Table 13
No
Education
Company
31/12/2019
Company
31/12/2020
Company
31/12/2021
Company
31/12/2022
Company
31/12/2023
1
Secondary incomplete
3
1
1
1
1
2
Secondary
135
121
156
135
125
3
College
57
47
38
34
37
4
Higher
194
185
155
183
181
Total:
389
354
350
353
344
Company’s management pays a lot of attention on increase in work efficiency, working conditions
improvement, supply with latest working tools, professional development, planning of internal activities and
control implementation, also for improvement of consumer service quality. Executive and professional
qualification levels suit their positions, and work experience and practical knowledge of subject of other
employees makes them possible to work in their positions.
To increase work efficiency, the Company conducts an annual work performance evaluation of structural
units’ managers, the main goal of which is to evaluate the employee’s qualifications and abilities of functions
performance assigned in job regulations, to properly evaluate employees' activities, provide feedback on the
goals execution in order to increase employee loyalty, satisfaction with conducted work, encouraging them to
improve. The result of this process is information allowing better coordination of the Company's activities and
for encouraging employees to improve their working activities.
The Company actively cooperates with educational institutions and enables high school students to apply
theoretical knowledge and gain practical skills. When there is a need for new employees, the most active and
best students are given the opportunity to get a job in the Company.
The salary of employees of the Issuer consists of the constant part of salary, variable part of salary, benefits
and allocations paid according to the Labour Code of the Republic of Lithuania and other laws, Collective
agreement of the Company, and bonuses. Bonuses are paid from net profit, if the General Meeting of
Shareholders allocates part of the profit for the bonuses of the Company employees.
The collective agreement provides for special rights and obligations of the issuer's employees or part of
them. In accordance with the Company's new Collective agreement effective from 1 January 2019 and
subsequent amendments there to:
1. For continuous employment within the Company employees are granted additional paid leave.
2. The record of service of employees who worked in Lithuanian energy system companies and who
were redeployed to the Company according to the corporate employer agreement, i.e., when the transfer
was carried out according to the Labour Code or the Law on Employment Contract, is considered
uninterrupted and those employees are granted an additional paid leave for an uninterrupted record of
service within the Company.
3. At the agreement of the employer and employee, the employee may be granted unpaid leave for
family related issues and other important reasons.
4. Company’s employees are entitled to additional paid leave.
The employer obligates:
1. To ensure the conditions of preventive health check and, if necessary, to provide free health services
at the Company’s occupational health unit.
2. In the event of the death of an employee, the Company grants a benefit in the amount of 4 minimum
monthly salaries of the Republic of Lithuania (hereinafter referred to as the MMS), free transport, or covers
transport costs (the benefit is granted to the person burying the deceased);
AB KAUNO ENERGIJA CONSOLIDATED ANNUAL REPORT OF THE YEAR 2023
79
3. In the event of the death of the employee's close relative (parent (adoptive parent), child (adoptive
child) or spouse), the Company grants the employee an MMS benefit, free transport or covers transport
costs;
4. In the event of the birth of one or more children, the Company grants the employee a gift in the
amount of 50 per cent MMS for each child;
5. Upon registration of the marriage, the employee is granted a gift in the amount of 50 per cent MMS;
6. A cash gift of EUR 50 is granted when an employee reaches the age of 25, 35, 45, 55, 65, and a
cash gift of EUR 100 when the employee reaches the age of 20, 30, 40, 50, 60, 70;
7. In other cases, when the employee needs financial support (in case of losses due to natural disasters
and other reasons beyond the control of the employee), the Company grants a benefit of up to 3 MMS;
8. In the event of a serious illness or accident, a benefit of up to 5 MMS is granted. The sickness benefit
is paid once a year (within 12 months).
19. Procedure for amending the Issuer’s Statutes
The Statutes of the Issuer say that the General Meeting of Shareholders of the Company has the exceptional
right to amend the Statutes other than the exceptions provided in the Law on Companies of the Republic of
Lithuania. The resolution on the amendment of the Company’s Statutes 2/3 qualified majority of votes of the
members participating in the meeting of shareholders is needed.
The Statutes of the Company were amended on August 10, 2023 by the decision of the General Meeting of
Shareholders. The new wording of the Statutes was registered on August 28, 2023 in the Register of Legal
Entities of the Republic of Lithuania. It can be found on Company’s website at www.kaunoenergija.lt.
20. Issuer’s management bodies
According to the Statutes of the Company, the management bodies of the Company include the General
Meeting of Shareholders, a collegial management body – the Supervisory Board, a collegial management
body – the Management Board, and a sole management body – General Director.
Decisions of the General Meeting of Shareholders made on the issues within the competence of the General
Meeting of Shareholders provided for in the Statutes of the Company are binding to its shareholders, the
Supervisory Board, the Management Board, and the General Director, and to other employees of the
Company.
All persons who are the shareholders of the Company on the date of the General Meeting of Shareholders
have the right to attend the Company’s General Meeting of Shareholders personally or by proxy or be
represented by persons with whom they had entered into the agreement on the transfer of the voting right.
The record date of the meeting of the Company is the fifth working day before the General Meeting of
Shareholders or the fifth working day before the repeat General Meeting of Shareholders. A person attending
the General Meeting and entitled to vote shall provide a document which is a proof of his personal identity
and sign the registration list of the Meeting of Shareholders. A person who is not a shareholder shall
additionally provide a document attesting to his right to vote at the General Meeting of Shareholders.
5 (five) General Meeting of Shareholders were convoked in the year 2023. Company’s General Manager and
the Chief Finance Officer attended them. Issuers’ shareholders can ask questions and can get answers or
explanations from Company’s managers and speakers.
The collegial management body – Supervisory Board is elected by the General Meeting of Shareholders
according to the procedure specified in the Law on Companies of the Republic of Lithuania. The Supervisory
Board consists of 3 (three) members. The Supervisory Board is elected for a term of 4 (four) years. The
Supervisory Board elects the chairman of the Supervisory Board from among its members. The General
Meeting of shareholders may remove from office the entire Supervisory Board or its individual members
before the expiry of the term of office of the Supervisory Board. Where individual members of the
Supervisory Board are elected, they shall be elected only until the expiry of the term of office of the current
Supervisory Board.
General
Meeting of
Shareholders
Supervisory
Board
Management
Board
General
Director
AB KAUNO ENERGIJA CONSOLIDATED ANNUAL REPORT OF THE YEAR 2023
80
The Supervisory Board elects and dismisses the Management Board members and supervises the activities
of the Board and the General manager of the Company; submits its comments and proposals to the General
Meeting of Shareholders on the Company’s operating strategy, set of annual financial statements, draft of
profit / loss allocation and the annual report of the Company as well as the activities of the Board and the
General Manager of the Company; submits proposals to the Board and the General Manager of the
Company to revoke their decisions which are in conflict with laws and other legal acts, the statutes of the
Company or decisions of the General Meeting of Shareholders; addresses other issues assigned to the
scope of powers of the Supervisory Board by decisions of the General Meeting of Shareholders regarding
the supervision of the activities of the Company and its management bodies. The Supervisory Board shall
not be entitled to assign or delegate the functions assigned to the scope of its powers by the Law on
Companies of the Republic of Lithuania and the statutes of the Company to other bodies of the Company.
The Supervisory Board, following the resolution No. 1K-18 of August 21, 2008 of the Securities Commission
of the Republic of Lithuania “Regarding The Requirements For Audit Committees”, as well as “Guidelines For
The Application Of Requirements For Audit Committees” which were approved by the decision of the
Securities Commission of November 28, 2008 approves the internal rules of procedure for forming the Audit
Committee and elects the Audit Committee members.
The Supervisory Board of the Company approved on May 21, 2019 a new wording of the internal rules of
procedure of the Audit Committee of the Company.
The Management Board is a collegial management body of the Company. The Management Board is
comprised of 3 (three) members. The Management Board is elected for the period of 4 (four) years by the
Supervisory Board. The Supervisory Board can remove from office the entire Management Board or its
individual members before the expiry of their term. If individual members of the Management Board are
elected, they shall serve only until the expiry of the term of office of the current Management Board. The
Management Board elects the chairman of the management Board from among its members.
The General Manager is the manager of the Company. The manager of the Company is a sole person
management body of the Company organising its activities. Authority and responsibilities of the
administration members of the Company are established by the order of the General Manager.
20.1. Data on the committees in the Company
The members of Audit Committee appointed by the decision No. 2023-4 of the Supervisory Board of October
13, 2023:
Full name
Position
Beginning of term
End of term*
Mr. Mindaugas Šimkus
Independent member of Audit
Committee
October 13, 2023
April 26, 2027
Ms. Violeta
Kavaliauskienė
Independent member of Audit
Committee
October 13, 2023
April 26, 2027
Ms. Edita Girdvilienė
Member of Audit Committee
October 13, 2023
April 26, 2027
* The term of office of the Audit Committee coincides with the term of office of the Supervisory Board of the
Company.
In carrying out its activities, the Audit Committee follows the internal rules of procedure of the Company’s
Audit Committee approved by decision No 2019-4 of May 21, 2019 of the meeting of the Supervisory Board
of the Company. The Audit Committee performs its functions provided for in article 52 of the Law on Audit of
the Republic of Lithuania.
20.2. Information on the members of the Company’s Supervisory Board:
Members of the Supervisory Board of the Company:
AB KAUNO ENERGIJA CONSOLIDATED ANNUAL REPORT OF THE YEAR 2023
81
Full name
Position
Beginning of term
End of term
Mr. Antanas Etneris
Chairman of the Supervisory
Board
June 29, 2023
April 26, 2027
Mr. Mindaugas Bičkauskas
Member of the Supervisory Board
June 29, 2023
April 26, 2027
Mr. Pranas Rakauskas
Member of the Supervisory Board
June 29, 2023
December 12,
2023
Company’s Supervisory Board comprised of two independent members and of one member of Kaunas City
Municipality administration, as he partially represents the controlling shareholder, i.e., Kaunas City
Municipality, holding 92.84 per cent of the Company’s voting shares.
5 session of the Supervisory Board was held during the year 2023. More than ½ of the members of the
Supervisory Board attended all sessions.
Mr. Antanas Etneris
Mr Antanas Etneris, main occupation - director of UAB Wisewood (code 302527538, Ringuvos str. 74, LT-
45245 Kaunas), director of UAB Mana Grupė (code 303991865, Kruonio str. 16, Kaunas), director of UAB
Airhotel (code 302598948, Oro Uosto str. 2, Karmėlava, LT-54460 Kaunas distr.), member of the Board of
UAB Stoties Turgus, member of the Board of UAB Kauno Vandenys.
Holds no shares of the company. Holds the shares of the companies UAB Wisewood, UAB Mana Ranga,
UAB Mana Grupė, UAB Airhotel, UAB Dramart, UAB Ukraineičių 4, UAB Vėjo Dukra, UAB Plėtros Fondas,
UAB Aguonų Projektai, LLC My Group.
During the reporting period, the member of the Supervisory Board was remunerated EUR 21.0 thousand.
Mr. Mindaugas Bičkauskas
Main occupation - Director of UAB Urbo bankas Vilnius branch (code 112027077, Pamėnkalnio str. 40, LT-
01114 Vilnius).
Holds no shares of the company. Holds the shares of the companies AB Šiaulių bankas, AB Apranga, AB
Linas Agro, AB Vilkyškių pieninė, AB Litgrid.
During the reporting period, the member of the Supervisory Board was remunerated EUR 16.1 thousand.
Mr. Pranas Rakauskas
Elder advisor of Kaunas City Municipality Administration (management of legal entities and optimization of
their activities), director of UAB Sinera, Member of the Board of PI Kaunas Region Waste Management
Centre”, Chairman of the Board of Gardeners' Association Vandenis.
Holds no shares of the company.
During the reporting period, the member of the Supervisory Board was remunerated EUR 7.2 thousand.
Members of the Supervisory Board of the Company until 27 April, 2023:
Mrs. Rūta Šimkaitytė-Kudarauskė
Head of the Legal and Consulting Department of Kaunas City Municipality (company code 111106319,
Laisvės av. 96, LT-44251 Kaunas); Director of UAB Centrinis Knygynas (company code 133607044, Laisvės
av. 81, LT-44297 Kaunas).
Holds no shares of the Company. No interest in the capital of other Lithuanian companies.
Mr. Saulius Lazauskas
Main occupation - General Director of UAB Kauno Švara (company code 132616649, Statybininkų str. 3, LT-
50124 Kaunas), Member of the Board of UAB Kauno Vandenys, Member of the Board of PI Kaunas Region
Waste Management Centre”.
Holds no shares of the Company. No interest in the capital of other Lithuanian companies.
AB KAUNO ENERGIJA CONSOLIDATED ANNUAL REPORT OF THE YEAR 2023
82
Mr. Justas Limanauskas
Director of the budgetary institution Parkavimas Kaune (company code 134929849, Puodžių str. 24-1, LT-
44295 Kaunas); director of the budgetary institution “S. Dariaus and S. Girėno Aerodromas” (company code
135087311, Veiverių str. 132, LT-46337 Kaunas).
Holds no shares of the company. No interest in the capital of other Lithuanian companies.
Mr. Konstantinas Pesenka
Member of the Management Board of UAB Windex Group (code 303522864, Draugystės str. 17-1, Kaunas),
chairman of the Management Board of UAB Kauno Vandenys.
Holds no shares of the Company. No interest in the capital of other Lithuanian companies.
Mr. Mindaugas Šimkus
Main occupation - Head of economics of UAB Vičiūnų Grupė (code 303211678, V. Krėvės av. 97, LT-50369
Kaunas), member of the Board of UAB Kauno Švara, member of the Board of UAB Kauno Vandenys.
Holds no shares of the Company. No interest in the capital of other Lithuanian companies.
20.3. Information on the members of the Company’s Management Board
Members of Company’s Management Board:
Full name
Position
Beginning of term
End of term
Nerijus Mordas
Chairman of the Management Board
July 13, 2023
April 26, 2027
Algimantas Stasys Anužis
Member of the Management Board
July 13, 2023
April 26, 2027
Giedrius Kazlauskas
Member of the Management Board
July 13, 2023
April 26, 2027
14 sessions of Company’s Management Board were held in the year 2023. More than 2/3 members of the
Management Board attended all the sessions.
Mr. Nerijus Mordas
Chief finance officer of UAB Vičiūnų Grupė (code 303211678, V. Krėvės av. 97, LT-50369 Kaunas). Member
of Company’s Management Board since June 1, 2015 until April 27, 2023 and since July 13, 2023.
Holds no shares of the Company. No interest in the capital of other Lithuanian companies.
Mr. Nerijus Mordas charged EUR 29.2 thousand of remuneration under agreement of activity of member of
the Management Board. No bonuses estimated, nor any assets were transferred or guarantees issued
during the reporting period.
Mr. Algimantas Stasys Anužis
Member of the Council of Kaunas Chamber of Commerce, Industry and Crafts, president of Lithuanian
Veterans Basketball League.
Member of Company’s Management Board since June 1, 2015 until April 27, 2023 and since July 13, 2023.
Holds no shares of the Company. No interest in the capital of other Lithuanian companies.
Mr. Algimantas Stasys Anužis charged EUR 20.2 thousand of remuneration under agreement of activity of
member of the Management Board. No bonuses estimated, nor any assets were transferred or guarantees
issued during the reporting period.
Giedrius Kazlauskas
UAB „Laustiga“ (code 135456025, Ukrainiečių str. 4, LT-45234 Kaunas).
Member of Company’s Management Board since July 13, 2023.
Holds no shares of the Company. No interest in the capital of other Lithuanian companies.
Mr. Giedrius Kazlauskas charged EUR 11.8 thousand of remuneration under agreement of activity of
member of the Management Board. No bonuses estimated, nor any assets were transferred or guarantees
issued during the reporting period.
AB KAUNO ENERGIJA CONSOLIDATED ANNUAL REPORT OF THE YEAR 2023
83
Members of Company’s Management Board until 27 April, 2023:
Mr. Paulius Keras
Deputy Director of Kaunas city municipality (code 111106319, Laisvės av. 96, LT-44251 Kaunas). Member of
the Management Board of the Company since May 21, 2019 until 27 April, 2023.
Holds no shares of the Company. No interest in the capital of other Lithuanian companies.
Mr. Paulius Keras charged EUR 8.5 thousand of remuneration under agreement of activity of member of the
Management Board. No bonuses estimated, nor any assets were transferred or guarantees issued during
the reporting period.
Mr. Karolis Šiugžda
Lawyer of UAB Vičiūnų Grupė (code 303211678, V. Krėvės av. 97, LT-50369 Kaunas), lawyer of UAB
Groward Group (code 302764932, V. Krėvės av. 97, LT-50369 Kaunas).
Member of Company’s Management Board since May 21, 2019 until 27 April, 2023.
Holds no shares of the Company. No interest in the capital of other Lithuanian companies.
Mr. Karolis Šiugžda charged EUR 8.5 thousand of remuneration under agreement of activity of member of
the Management Board. No bonuses estimated, nor any assets were transferred or guarantees issued
during the reporting period.
20.4. Information on the General Manager and Chief accountant of the Company:
Mr. Tomas Garasimavičius
General Director of the Company from March 30, 2020. Education - higher university, Vilnius University in
2003, Bachelor of Political Science, Vilnius University in 2005, Master of Political Science, Creighton
University, USA 2005, Master of Political Science. Workplaces during the last 10 years and positions: Head
of the Sustainable Energy Development Division of Energetikos Agentūra, PI (June 2010 – December 2012),
Adviser to the Prime Minister of the Republic of Lithuania on Energy (December 2012 – December 2016),
Member of the Supervisory Board of UAB Lietuvos Energija (July 2013 – July 2017), Member of the
Nomination and Remuneration Committee of the Supervisory Board of UAB Lietuvos Energija (July 2013 –
July 2017), Member of the Risk Management Supervisory Committee of the Supervisory Board of UAB
Lietuvos Energija (September 2013 – July 2017), Member of the Support Fund Council of UAB Lietuvos
Energija (September 2014 – September 2017), Adviser to the Prime Minister of the Republic of Lithuania on
Energy and the Environment (January 2017 – March 2018), Adviser to the Mayor of Kaunas city on Energy
(June 2018 – March 2020).
Holds no shares of the Company. No interest in the capital of other companies.
Rita Plančiūnienė
Chief Accountant of the Company from 14 March 2021 to 4 January 2024. Education – higher university
degree, Vytautas Magnus University, Master's degree in Accounting and Finance. Workplaces in the last 10
years, and job positions: Chief Accountant at UAB Agrochema since 2011, Chief Economic and Financial
Officer at UAB Agrochema since November 2013, Chief Financial Officer at UAB Agrochema plius since
December 2018, Chief Financial Officer at UAB Doresta from April 2021 to March 2022.
Company’s General Manager and the Chief Accountant charged 182.22 thousand euros of remuneration in
the year 2023, and the average amount per member is 91.11 thousand euros. No other assets had been
transferred; no guarantees granted.
21. Information on significant agreements
There are no significant agreements that would come into force, change or termination in case of change in
controls of Issuer (their impact as well, except cases when due to the character of agreements the disclosure
of them would make a significant harm).
AB KAUNO ENERGIJA CONSOLIDATED ANNUAL REPORT OF THE YEAR 2023
84
22. Information on agreements of the Issuer and its managerial body members or
employees
There are no agreements of the Issuer or its managerial body members or employees (which provide for
compensation in case of their resignation or termination of employment on no grounds or in case their
employment is terminated due to changes in controls of the Issuer).
23. Information on major transactions with related parties
There were no larger individual transactions. More detailed information is provided in the Note 25 of the
Explanatory Notes to the Financial Statements.
24. Information on harmful transactions concluded on behalf of the Issuer during the
reporting period
There are no harmful transactions concluded on behalf of the Issuer during the reporting period (not
complying with the Company's objectives, normal market conditions, detrimental to the interests of
shareholders and other interest groups etc.) which were or are likely to have an adverse effect on the
Issuer's activities and (or) performance in the future, as well as information on transactions entered into in a
conflict of interest between the Issuer’s management, controlling shareholders or other related parties'
obligations to the Issuer and their private interests and (or) other duties.
25. Information on compliance with the Governance Code of Companies and the
Company’s corporate social initiatives and policies
Information on compliance with the corporate governance code is provided in Annex 2 to this Annual Report.
Annual reports on the Company’s corporate social initiatives and policies are announced on the Company’s
website.
26. Data on publicised information
In performing its obligations under the applicable legislation regulating the securities market, the Issuer has
announced the following information starting from January 1, 2023 over the GlobeNewswire news distribution
service, in which notices are disseminated within the European Union. This information was also posted on
the website of the Issuer. All the information is available on website of Nasdaq Vilnius
(http://www.nasdaqbaltic.com/market/?lang=lt) and Issuer’s website (http://www.kaunoenergija.lt).
AB KAUNO ENERGIJA CONSOLIDATED ANNUAL REPORT OF THE YEAR 2023
85
Title
Announcement
category
Language
Time
Update: Convening the Extraordinary General Meeting of
Shareholders of “Kauno Energija” AB
General
meeting of
shareholders
EN, LT
20/03/2024
07:54
Kauno energija, AB. Regarding information published in the
media
Notification on
material event
EN, LT
19/03/2024
10:02
Convening the Extraordinary General Meeting of
Shareholders of “Kauno Energija” AB
General
meeting of
shareholders
EN, LT
08/03/2024
08:22
Activity results of 12 months of the year 2023
Interim
information
EN, LT
26/02/2024
15:50
Regarding the resignation of member of the Supervisory
Board
Notification on
material event
EN, LT
13/12/2023
07:12
Business activity results of the 9 months of the year 2023
Interim
information
EN, LT
27/11/2023
16:27
Resolutions of the Extraordinary General Meeting of
Shareholders of AB Kauno Energija
General
meeting of
shareholders
EN, LT
06/10/2023
15:37
AB Kauno Energija half-yearly report and unaudited
financial statements for the 1 half of the year 2023
Interim
information
EN, LT
25/09/2023
16:00
Convening the Extraordinary General Meeting of
Shareholders of “Kauno Energija” AB
General
meeting of
shareholders
EN, LT
07/09/2023
09:41
Resolutions of the Extraordinary General Meeting of
Shareholders of AB Kauno Energija
General
meeting of
shareholders
EN, LT
10/08/2023
16:00
Business activity results of the 1 half of the year 2023
Notification on
material event
EN, LT
01/08/2023
16:00
Convening the Extraordinary General Meeting of
Shareholders of “Kauno Energija” AB
General
meeting of
shareholders
EN, LT
19/07/2023
16:00
Resolutions of the Extraordinary General Meeting of
Shareholders of AB Kauno Energija
General
meeting of
shareholders
EN, LT
29/06/2023
16:00
Convening the Extraordinary General Meeting of
Shareholders of “Kauno Energija” AB
General
meeting of
shareholders
EN, LT
05/06/2023
16:00
Activity results of the 1 quarter of the year 2023
Interim
information
EN, LT
02/05/2023
16:00
Audited annual information of AB Kauno Energija for the
year 2022
Annual
information
EN, LT
27/04/2023
16:05
Dividend payment ex-date of AB Kauno Energija
Notification on
material event
EN, LT
27/04/2023
16:00
Resolutions of the General Meeting of Shareholders of
AB Kauno Energija
General
meeting of
shareholders
EN, LT
27/04/2023
16:00
Convocation of General Meeting of Shareholders of
AB Kauno Energija, agenda and the resolution projects
General
meeting of
shareholders
EN, LT
05/04/2023
16:00
Activity results of 12 months of the year 2022
Interim
information
EN, LT
03/02/2023
12:00
Resolutions of the Extraordinary General Meeting of
Shareholders of AB Kauno Energija
General
meeting of
shareholders
EN, LT
11/01/2023
12:35
86
Annex 1
AB KAUNO ENERGIJA
REMUNERATION REPORT FOR 2023
GENERAL INFORMATION ON THE REMUNERATION REPORT
The Remuneration Report of AB Kauno Energija (hereinafter – the Company) has been prepared for the
reporting financial period of 2023, which coincides with the calendar year. The Remuneration Report
(hereinafter - the Report) was prepared in accordance with the Law on Financial Statements of Entities of the
Republic of Lithuania, the Remuneration Policy of AB Kauno Energija (hereinafter - the Remuneration Policy)
and other legal acts.
On April 27, 2023 the General Meeting of Shareholders approved the Remuneration Policy of AB Kauno
Energija. This Remuneration Policy applies to the General Director and members of the Management Board
and Supervisory Board of the Company insofar as it relates to the payment of monetary remuneration for
activities in the management and / or supervisory bodies of the Company. The Remuneration Report shall
include information on remuneration of each member of the management and supervisory bodies,
information on other (un) received benefits, other data.
INFORMATION ON THE REMUNERATION RECEIVED BY MEMBERS OF THE MANAGEMENT AND
SUPERVISORY BODIES
According to the Remuneration Policy approved by the Company’s General Meeting of Shareholders, the
specific remuneration is paid only to the Company’s General Director, Supervisory Board and members of
the Management Board.
Report on the remuneration of the Company’s General Director in 2023
The remuneration accrued and paid to the Company’s General Director during 2023, determined by the
Management Board, complied with the remuneration forms provided for in the Remuneration Policy (Item
3.1). The amount of remuneration for the General Director of the Company was determined by the decision
of the Management Board No. 2022-25-2 of December 15, 2022. As a reward for excellent performance,
remarkable efforts in carrying out the assigned duties and initiatives, by the decision No 2023-8 as of 24 April
2023, the Management Board of the Company granted a bonus equal to his three months average salary.
The General Director of the Company was paid with EUR 129.8 thousand remuneration during 2023 (a fixed
part of the remuneration 73.5 thous. Eur, salary supplement 31.1 thous. Eur, bonus 25.2 thous. Eur) (the
General Director started working for the Company on March 30, 2020).
The Head of the Company – the General Director - did not receive any remuneration from the companies
referred to the group of companies, as defined in the Law on Consolidated Financial Statements of
Companies of the Republic of Lithuania. The salary of the Head of the Company was paid in accordance
with the procedure, scope and terms provided for in the Employment Contract, the General Director did not
receive other property benefits during 2023, including the award of shares or other transactions in favour of
and in the interests of the Head.
Report on the remuneration of the members of the Supervisory Board of the Company in 2023
The Company has 3 (three) independent members of the Supervisory Board (5 (five) members until 27 April
2023). During 2023 the Company accrued EUR 44.3 thousand to independent members of the Supervisory
Board under activity agreements. The average EUR 14.8 thousand per one independent member of the
Supervisory Board per year. The members of the Supervisory Board did not receive payments from the
subsidiaries. Information on the remuneration of each individual member of the Supervisory Board is
provided in the Annual Report.
Report on the remuneration of the members of the Management Board of the Company in 2023
The Company has 3 (thre) independent members of the Management Board (4 (four) members until 27 April
2023). During 2023 the Company accrued EUR 78.2 thousand to independent members of the Management
Board under activity agreements. The average EUR 11.4 thousand per one independent member of the
87
Management Board per year. The members of the Management Board did not receive payments from the
subsidiaries. Information on the remuneration of each individual member of the Management Board is
provided in the Annual Report.
No bonuses were paid to the members of the Company’s Supervisory board and Management Board.
During the reporting period, no guarantees or sureties were given to the members of the Supervisory Board,
Management Board and the Head of the Company, no assets or other property rights were transferred, no
other benefits were received from the Company.
Members of the Supervisory Board and Management Board, the General Director of the Company and
members of the Audit Committee have no significant material obligations to the Company (Issuer), just as the
Company (Issuer) has no obligations to these persons.
Guarantees and sureties and / or other measures to secure the fulfilment of the obligations of the Head of
the Company, members of the management bodies and Supervisory Board were not granted on behalf of
the Issuer during 2023, the Issuer did not grant loans and Company shares to these persons.
The remuneration paid to the Head of AB Kauno Energija, members of the Management Board and the
Supervisory Board in 2023 complied with the principles, grounds and conditions approved in the
Remuneration Policy.
FINAL PROVISIONS OF THE REMUNERATION REPORT
The Report approved by the Management Board of the Company is submitted to the General Meeting of
Shareholders, which decides whether to approve the Remuneration Report or not. Such (non) approval does
not release the Management Board from the responsibility for the decision taken.
The Remuneration Report for 2023 is an integral part of the Consolidated Annual Report and is published on
the website of the Company http://www.kaunoenergija.lt and www.nasdaqomxbaltic.com in accordance with
the procedure established by legal acts.
88
Annex 2
PLLC KAUNO ENERGIJA, PURSUE THE GOVERNANCE REPORT
PLLC Kauno Energija (hereinafter – the Company), following Article 21 paragraph 3 of the Law on Securities
of the Republic of Lithuania and item 24.5 of the Listing Rules of PLLC NASDAQ Vilnius, discloses its
compliance with the Corporate Governance Code for the Companies, whose securities are traded on the
regulated market, as approved by the NASDAQ Vilnius PLLC, and its specific provisions and
recommendations. If any of the provisions or recommendations of the Codex are not respected due to any
reasons, the explicable information is provided herein.
Summary of the Corporate Governance Report:
Specifics of the Company’s activities:
The Company is listed on the secondary list of the Nasdaq Vilnius Stock Exchange starting from December
28, 1998.
The main activities of the Company are production, rendering of services. The Company is the parent company
of the Group consisting of LLC GO Energy LT. The Company produces and supplies heat to consumers (for
heating and hot water preparation purposes) in the cities of Kaunas and Jurbarkas and in the Kaunas district
(Akademija, Ežerėlis, Domeikava, Garliavos, Girioniai, Neveronys, Raudondvaris).
Company’s governance structure:
- The Company’s managing bodies consists of the Management Board, elected for the 4 years term of office,
and the General Manager, elected by the Management Board (for further information on the Issuer's governing
bodies and the composition of the committees please refer to the Article 20 “Issuer's bodies” of this
Consolidated Annual Report). The Management Board’s and the manager’s activities are concentrated on the
fulfilment of the Company’s strategic objectives taking count of the shareholders’ equity value increase.
- A supervisory body – the Supervisory Board acts in the Company.
The Management Board and the general Manager acts in close cooperation seeking to obtain the maximum
benefit for the Company and its shareholders. The Management Board periodically reviews and assesses
Company’s activity results.
- The Chairman of the Management Board of the Company is not and was not the Head of the Company. The
duties he holds or held in the past shall not prevent independent and impartial supervision.
- The members of the Management Board elected by the General Meeting of Shareholders are independent
and act for the benefit of the Company and its shareholders.
- The Audit Committee acts in the Company. 1 independent member act in this committee. There are no
nomination and remuneration committees in the Company.
Accountability to the Company's shareholders:
- Information on the General Manager, composition of the Supervisory and Management Boards, members
education, work experience, competence and participation in activities of other companies is disclosed and
constantly updated in Company’s periodical reports as well as website.
- The Company discloses all regulated information through PLLC Nasdaq Vilnius news distribution system.
This ensures access to the broadest public in the Republic of Lithuania and other EU countries.
The information shall be provided simultaneously in Lithuanian and English. The company publishes the
information before or after the trading session of PLLC Nasdaq Vilnius. The Company shall not disclose
information that may affect the price of the issued securities in the form of comments, interviews or in any
other manner until such information is made public through the news distribution system of PLLC Nasdaq
Vilnius.
89
- All shareholders of the Company have equal access to and participate in the decision-making process
important for the Company.
The procedures for convening and conducting general meetings of shareholders shall comply with the
provisions of the legal acts and shall provide equal opportunities for shareholders to participate in the meeting,
to acquaint themselves in advance with draft resolutions and decision-making materials, as well as to ask.
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 shareholders have equal access to the
information and / or documents provided
for in legal acts and participate in making
important decisions for the Company.
The Company provides information
through the Nasdaq Vilnius Stock
Exchange Central Regulated Information
Base in Lithuanian and English
simultaneously. The information is
published immediately at once, thus
ensuring the simultaneous provision of
information to all.
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
The authorized capital of the Company
consists of ordinary registered shares,
which grant equal voting, ownership,
dividend and other rights to all
shareholders of the Company.
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 enables investors to
familiarize themselves with the rights
granted by the new or already issued
shares well in advance.
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
According to the Statutes of the
Company, important transactions, such
as decisions on the execution,
assignment, lease, pledge and mortgage
of long-term assets the book value of
which exceeds EUR 3 million, an
approval of General Meeting of
Shareholders or Supervisory Board must
be received
Due to extremely important transactions,
such as the transfer of all or almost all the
Company's assets, the Company would
be guided by the Law on Companies of
the Republic of Lithuania and other legal
acts establishing requirements for the
approval of such transactions.
1.5. Procedures for convening and
conducting a General Meeting of
Shareholders should provide shareholders
with equal opportunities to participate in the
Yes
All shareholders of the Company are
informed about the date, place and time
of the General Meeting of Shareholders
in accordance with the established
90
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.
procedure in advance, in accordance with
the terms established by legal acts,
announcing the General Meeting of
Shareholders, agenda, and draft
resolutions in the Central Regulated
Information Base of PLLC Nasdaq
Vilnius Stock Exchange. The Company
specifies the date of the General Meeting
of Shareholders and may propose draft
resolutions in the Notice of the General
Meeting of Shareholders to be convened
on the Company's website
www.kaunoenergija.lt In the notice of
the convention of the General Meeting of
Shareholders, the Company shall indicate
when the shareholders may supplement
the agenda of the General Meeting of
Shareholders and propose draft
resolutions.
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
The documents prepared for General
Meeting of Shareholders including draft
resolutions of the meeting are available
not later than 21 day prior the date of
General Meeting of shareholders as
required by the Law on Joint stock
companies. The documents placed on the
website of NASDAQ Vilnius security
exchange and the Company website are
available in Lithuanian and English
languages. Resolutions accepted by the
General Meeting of Shareholders
including financial reports, the audit
report, annual report, amendments of the
Statutes etc. are announce in Lithuanian
and English languages are announced via
the central base of regulated information
of NASDAQ Vilnius security exchange
and the Company website
www.kaunoenergija.lt
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
The shareholders of the Company have
the right to participate in the General
Meeting of Shareholders both personally
and through a representative, if the
person has the appropriate authorization
or the contract of transfer of voting rights
concluded with him/her in accordance
with the procedure established by legal
acts, as well as the conditions for the
shareholders to vote by filling in the
General voting bulletin as provided by
the Law on Companies of the Republic of
Lithuania.
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
No
The Company does not comply with the
provisions of this recommendation as
there is no possibility to ensure the
security of the information transmitted
91
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.
and it is not possible to identify the
person who participated and voted.
1.9. It is recommended that the notice on the
draft decisions of the General Meeting of
Shareholders being 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.
Yes
When announcing the General Meeting
of Shareholders, and if the agenda of the
General Meeting of Shareholders
includes the issue of electing new
members of the collegial body or electing
the audit firm, it shall disclose in the draft
resolutions the nominations of the
proposed new members of the collegial
body and the proposed election
Company.
Information about the candidates to the
members of the collegial body shall be
provided in advance by publishing this
information on the Nasdaq Vilnius Stock
Exchange website, on the website of
PLLC Kauno Energija,
www.kaunoenergija.lt, or by publishing
it to the shareholders participating in the
General Meeting during the meeting if
the shareholders, whose shares give at
least 1/20 of all votes, propose an
additional candidate during the meeting.
In its annual and six-month interim
report, the Company publicly informs
about the positions held by the collegial
body, work experience and education.
1.10. Members of the company’s collegial
management body, heads of the
administration
1
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
Members of the Company's collegial
body and heads of administration
participate in the General Meetings of
Shareholders. Proposed nominees for
members of the collegial body are also
present if possible, if the election of new
members is included on the agenda of the
General Meeting.
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
1
For the purposes of this Code, heads of the administration are the employees of the company who hold top level management
positions.
92
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
According to the knowledge of the
Company all the members of the
Supervisory Board are acting in good
faith in the interests of the Company
following the Company’s but not the own
interests or interests of the third persons.
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 Company's Supervisory Board in its
work aim to behave honestly and
impartially with all the Company's
shareholders and by the knowledge of the
Company, there was no such kind of the
contrary case. The Chairman of the
Company's Supervisory Board and the
Chairman of the Management Board
harmonizes and coordinates interaction
with Company’s General Manager and in
the name of Supervisory and
Management Boards communicates with
shareholders, informs the shareholders
about the Company’s strategy, activity
and other essential questions.
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 Board of the Company
acts impartially when taking decisions
that are significant for 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
2
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
According to the information available to
the Company, all members of the
Supervisory Board act in the best
interests of the Company and
shareholders, are guided by the interests
of the Company and not by themselves or
by third parties, trying to maintain their
independence in decision making.
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 longterm
interests of the Company and its
shareholders, which may give rise to
reputational, legal or other risks.
Yes
In exercising its competence to supervise
the activities of the Company's
management bodies, the Supervisory
Council performs the duties specified in
the recommendation and submits its
opinion on tax planning issues.
2
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.
93
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
Based on the Company’s opinion, the
Supervisory Board are provided with
sufficient resources, including their right
to get all the necessary information,
especially from the employees of the
Company.
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
Pursuant to the Law on Companies of the
Republic of Lithuania, the Supervisory
Board is elected, and the qualification of
its members is 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 reelection for a new
term in office in order to ensure necessary
development of professional experience.
Yes
The Supervisory Board is elected for the
term of 4 (four) years. The term of office
of members on the Supervisory Board is
the maximum term of office prescribed
by the Lithuanian Law on Companies.
A General Meeting of Shareholders may
remove from office both the entire
Supervisory Board and individual
members thereof before the end of their
term of office.
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 Chairman of the Company's
Supervisory Board and the CEO of the
Company is not the same person.
The members of the Supervisory Board
and the Chairman have not been
members of the Management Board of
the Company or the CEO of the
Company.
2.2.4. Each member should devote enough
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
Yes
Members of the Supervisory Board are
active participants of the meetings of the
collegial body and devote enough time to
perform their duties as members of the
collegial body. In 2023 there were 5
(five) Supervisory Board’s meetings, and
all of them were attended by more than
94
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.
2/3 of all the members of the Supervisory
Board.
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, even though 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 the candidates to the
Company's Supervisory Board members
(as well as information on the candidate's
compliance with the independence
requirements) is provided to the General
Meeting of Shareholders in accordance
with the Law on Companies of the
Republic of Lithuania (see commentary
on recommendation 1.9).
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
Remuneration is paid for the work on the
Supervisory Board to its members, by
decision of the General Meeting of
Shareholders in accordance with the Law
on Companies of the Republic of
Lithuania. The members of the
Supervisory Board are not remunerated
for their performance and participation in
the meetings.
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.
No
There was no practice of assessment of
the activity of Supervisory Board at the
Company and of informing shareholders
about that up to now because the
controlling shareholder who proposes
candidates to the Supervisory Board
exhaustively knows the experiences and
competences of each candidate.
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 Company's Management Board
carries out the duty of implementation of
the Company's strategy approved by the
Company's Supervisory Board.
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
Yes
As the Supervisory Board is formed in
the Company, the Management Board
performs the functions of the Company's
95
the Statutes 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 consider the needs of the
Company’s shareholders, employees and
other interest groups by respectively striving
to achieve sustainable business development
collegial management body. The
obligation to consider the Company, the
shareholders, the employees and other
interest groups is established in the
agreement on performance of the
Management Board signed by each
member of the Management 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 Management Board ensures that the
laws and Company internal policies
applicable to the Company and its entire
group are respected. The Company also
operates a risk management and control
program. Risk management is carried out
by the management of the Company.
3.1.4. Moreover, the management board
should ensure that the measures included into
the OECD Good Practice Guidance
3
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 a policy of internal
control and business ethics. The
Company has adopted a Business Ethics
Policy that clearly and publicly declares
a negative attitude towards bribery and
corruption. The provisions of this policy
apply to all employees, agents,
intermediaries, suppliers and
subcontractors of the Company.
3.1.5. When appointing the manager of the
Company, the Management Board should
consider the appropriate balance between the
candidate’s qualifications, experience and
competence.
Yes
When appointing the CEO of the
Company the Management Board
considers the balance of his/her
qualifications, experience and
competence as well as the opinion of the
Company's Supervisory Board.
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 members of the Management Board
are elected by the Supervisory Board of
the Company. The members of the
Management Board of the Company are
qualified and competent to perform their
functions, having a long experience in
management.
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
Yes
Information about candidates to the
Company’s Management Board is
provided to the shareholders together
with the documents of the shareholders’
meeting following the requirements of
3
Link to the OECD Good Practice Guidance on Internal Controls, Ethics and Compliance: https://www.oecd.org/daf/anti-
bribery/44884389.pdf
96
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. If 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.
the Law on Public Limited Liability
Companies of the Republic of Lithuania.
Shareholders may see the documents
prior the meeting. Information about the
members of the Management Board
(names, education, qualifications,
professional experience, participation in
the activities of other companies, other
important professional obligations) is
provided in the periodical reports.
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
All new members of the Management
Board are familiarized with their duties,
Company structure and activities.
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 members of the Management Board
are elected for a 4-year term. The number
of terms is unlimited. Members of the
Management Board are elected by the
General Meeting of Shareholders.
Shareholders who nominate and vote for
the Management Board follow their own
approach, which candidates are best to
represent the interests of the
shareholders.
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 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.
Yes
The Chairman of the Company’s
Management Board hasn’t been the
General Manager of the Company. His
current or past position is not an obstacle
for independent and impartial
supervision.
3.2.6. Each member should devote enough
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
Each member of the collegial body fulfils
his/her functions properly: actively
participates at the meetings of collegial
body and devotes enough time to perform
his / her duties as a member of the
collegial body. The quorum of each
meeting was regulated so the
Management Board would be enabled to
accept decisions constructively.
In 2023, 14 meeting of the Management
Board had been held. All the meetings
were attended by more, than 2/3
members of the Management Board.
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
Yes
Al the members of the Management
Board are independent.
97
be independent
4
, 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.
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
Remuneration is paid for the work on the
Management Board to its members, by
decision of the General Meeting of
Shareholders in accordance with the Law
on Companies of the Republic of
Lithuania. The members of the
Management Board are not remunerated
for their performance and participation in
the meetings.
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
noncompete 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
By the Company’s information, all
Management Board members should act
in good faith, with care and responsibility
for the benefit and in the interests of the
Company and its shareholders. They are
guided by the Company’s interests but
not their own or any third parties seeking
to maintain their independence in
decision-making, and they do not accept
any unjustified privileges that would
compromise their independence.
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.
No
There was no practice of assessment of
the activity of Management Board at the
Company and of informing shareholders
about that up to now because the
controlling shareholder who proposes
candidates to the Management Board
exhaustively knows the experiences and
competences of each candidate.
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
Yes
Legal acts, Statutes and rules of
procedure governing activities of the
Company’s Supervisory and
4
For the purposes of this Code, the criteria of independence of the members of the board are interpreted as the criteria of unrelated
persons defined in Article 33(7) of the Law on Companies of the Republic of Lithuania.
98
in order to attain benefit for the Company and
its shareholders. Good corporate governance
requires an open discussion between the
Management Board and the Supervisory
Board. The Management Board should
regularly and, where necessary, immediately
inform the Supervisory Board about any
matters significant for the Company that are
related to planning, business development,
risk management and control, and
compliance with the obligations at the
Company. The Management Board should
inform he Supervisory Board about any
derogations in its business development from
the previously formulated plans and
objectives by specifying the reasons for this.
management bodies lay down the
principles and procedure of cooperation
between Supervisory and management
bodies of the Company and ensure that
management and Supervisory bodies
cooperate to attain the greatest possible
benefit to the Company and its
shareholders.
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
The Company follows the order foreseen
in the work regulations of the
Supervisory Board and the Management
Board and the information about the
convened meeting is presented in
advance together with an agenda and all
the necessary information and documents
related to the meeting agenda.
The Supervisory Board and the
Management Board meeting agenda may
be changed or added during the meeting,
in the presence of all members of the
collegial body, or when there is an urgent
need to deal with Company’s certain key
issues.
4.3. Members of a collegial body should be
notified of the meeting being convened in
advance so that they would have enough 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
According to the Company’s Statutes and
the working procedure regulations of the
Supervisory Board and the Management
Board, the members of the collegial body
and persons that are invited to such
meetings, are informed of them in
advance. They are also provided with all
the information and materials, needed to
examine the questions, presented in the
agenda.
4.4. In order to coordinate the activities of the
Company’s collegial bodies and ensure
effective decision-making process, the chairs
of the Company’s collegial supervision and
management bodies should mutually agree
on the dates and agendas of the meetings and
close cooperate in resolving other matters
related to corporate governance. Meetings of
Yes
The chairmen of Company's Supervisory
and management bodies coordinate dates
of the meetings, their agendas and
cooperate in solving other issues of
corporate governance. The Chairman of
the Management Board and members of
the Management Board are invited to the
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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.
meetings of the Supervisory Board of the
Company.
Principle 5: Nomination, remuneration and audit committees
5.1. Purpose and formation of committees
The committees formed at the Company should increase the work efficiency of the Supervisory Board
or, where the Supervisory Board is not formed, of the Management Board which performs the
Supervisory functions by ensuring that decisions are based on due consideration and help organise
its work in such a way that the decisions it takes would be free of material conflicts of interest.
Committees should exercise independent judgment and integrity when performing their functions
and provide the collegial body with recommendations concerning the decisions of the collegial body.
However, the final decision should be adopted by the collegial body.
5.1.1. Taking due account of the company-
related circumstances and the chosen
corporate governance structure, the
supervisory board of the company or, in cases
where the supervisory board is not formed,
the management board which performs the
supervisory functions, establishes
committees. It is recommended that the
collegial body should form the nomination,
remuneration and audit committees
5
.
Yes/No
The Audit Committee is formed by the
Supervisory Board from March 31, 2009
and the term of office of this committee
coincides with the term of office of the
Company's Supervisory Board.
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/No
The Audit Committee is an independent,
and objective committee carrying out the
functions of supervision, analysing,
evaluation and consultation in order to
improve General organization and create
value added. The main function of the
Committee is systematic and versatile
evaluation, as well as encouragement of
better risk management, and enough
control and maintenance procedures
resulting in submission of
recommendations to the Management
Board and management regarding
implementation of the objectives and
tasks, risk management procedure and
internal control functioning.
The nomination and remuneration
committees are not formed at the
Company. As the Management Board of
the Company is composed of competent
members and they perform their
activities efficiently, the Company does
5
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).
100
not currently see the need for other
committees.
5.1.3. In the cases established by the legal
acts the functions assigned to the committees
formed at companies may be performed by
the collegial body itself. In such case the
provisions of this Code pertaining to the
committees (particularly those related to their
role, operation and transparency) should
apply, where relevant, to the collegial body
as a whole.
Not applicable
The Management Board of the Company
does not perform the functions assigned
to the Audit Committee.
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 consists of 3
members, two of whom are independent,
with at least 5 years of experience in
accounting, with relevant experience in
finance and accounting in listed
companies.
The Chairman of the Management Board
is not a member of the Committee.
5.1.5. The authority of each committee
formed should be determined by the collegial
body itself. Committees should perform their
duties according to the authority delegated to
them and regularly inform the collegial body
about their activities and performance on a
regular basis. The authority of each
committee defining its role and specifying its
rights and duties should be made public at
least once a year (as part of the information
disclosed by the Company on its governance
structure and practice on an annual basis). In
compliance with the legal acts regulating the
processing of personal data, companies
should also include in their annual reports the
statements of the existing committees on
their composition, the number of meetings
and attendance over the year as well as the
main directions of their activities and
performance.
Yes
The Audit Committee follows the
regulations of the Committee approved
by the Supervisory Board. These
Regulations establish the rules defining
the rights and duties of the Audit
Committee, the size of the Audit
Committee, the period of membership of
the Audit Committee, the requirements
for the education, professional
experience and independence principles
of the members of the Audit Committee.
The Audit Committee annually submits
an annual activity report to the General
Meeting of Shareholders, announcing the
composition of the Committee, the
number of meetings and the attendance of
the members, describing the work
performed and presenting the results.
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 members of the collegial body take
decisions at the meetings of their
members, but in certain cases the
committee invites the head of the
Company and the responsible employees
of the Company to attend its meetings,
who are responsible for the areas of
activity of the issues under discussion.
The Chairman of the Audit Committee is
also provided with the opportunity to
communicate with the shareholders.
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5.2. Nomination committee
5.2.1. The key functions of the nomination
committee should be the following:
1) to select candidates to fill vacancies in the
membership of Supervisory and management
bodies and the administration and
recommend the collegial body to approve
them. The nomination committee should
evaluate the balance of skills, knowledge and
experience in the management body, prepare
a description of the functions and capabilities
required to assume a particular position and
assess the time commitment expected;
2) assess, on a regular basis, the structure,
size and composition of the Supervisory and
management bodies as well as the skills,
knowledge and activity of its members, and
provide the collegial body with
recommendations on how the required
changes should be sought;
3) devote the attention necessary to ensure
succession planning.
No
The Nomination Committee is not
formed in the Company.
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.
No
See article 5.2.1
5.3. Remuneration committee
The main functions of the remuneration
committee should be as follows:
1) submit to the collegial body proposals on
the remuneration policy applied to members
of the Supervisory and management bodies
and the heads of the administration for
approval. Such policy should include all
forms of remuneration, including the fixed
rate remuneration, performance-based
remuneration, financial incentive schemes,
pension arrangements and termination
payments as well as conditions which would
allow the Company to recover the amounts or
suspend the payments by specifying the
circumstances under which it would be
expedient to do so;
2) submit to the collegial body proposals
regarding individual remuneration for
members of the collegial bodies and the
heads of the administration in order to ensure
that they would be consistent with the
Company’s remuneration policy and the
evaluation of the performance of the persons
concerned;
No
There is no Remuneration Committee in
the Company.
The Company has implemented a
remuneration policy that includes all
forms of remuneration, including fixed
salary, performance-based benefits and
severance payments. The Company is
approved by the Company's management
in coordination with the Trade Union
Committee operating in the Company.
102
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
6
.
Yes
The Audit Committee follows the
regulations of the Audit Committee
approved by the Supervisory Board of the
Company.
The Audit Committee carries out
independent, objective monitoring,
investigation, evaluation and advisory
activities to improve the Company's
performance and create added value.
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
All members of the Committee are
provided with detailed information on the
specific accounting, financial and
operational characteristics of the
Company and, upon request, information
on the execution of important
transactions.
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 Audit Committee decides on the
participation of other persons in its
meetings and, if necessary, the Audit
Committee invites the head of the
Company and the responsible employees
of the Company to its meetings, who are
responsible for the areas of activity of the
issues under consideration. The
Chairman of the Audit Committee is also
provided with the opportunity to
communicate with the shareholders.
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 is informed about
the work performed by the Internal
Auditor and receives conclusions about
the research performed. Each year, the
Audit Committee receives reports from
external auditors describing all
relationships between the independent
auditor and the Company and its group.
5.4.5. The audit committee should examine
whether the Company complies with the
applicable provisions regulating the
possibility of lodging a complaint or
reporting anonymously his/her suspicions of
potential violations committed at the
Company and should also ensure that there is
a procedure in place for proportionate and
independent investigation of such issues and
appropriate follow-up actions.
Yes
The Company has provided employees
with the opportunity to submit
complaints or anonymous reports about
violations committed in the Company,
however the Company has not received
such complaints or reports during the
reporting period.
6
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.
103
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 analyses and
evaluates the Company's annual and
semi-annual financial statements, makes
recommendations to the Management
Board for their approval, together with its
activity reports for that period.
Principle 6: Prevention and disclosure of conflicts of interest
The corporate governance framework should encourage members of the Company’s supervisory and
management bodies to avoid conflicts of interest and ensure a transparent and effective mechanism
of disclosure of conflicts of interest related to members of the supervisory and management bodies.
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
Members of the Company's management
bodies behave in such a way that there is
no conflict of interest with the Company.
During the reporting period, there is no
known conflict of interest between the
Company and the member of its
management body.
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/no
The Company has implemented and
operates a remuneration policy approved
by the Company's management, but it is
not published on the Company's website.
The Company will follow the
recommendations of Principle 7 when the
respective laws and other legal acts of the
Republic of Lithuania are adopted.
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 has implemented a
remuneration policy that includes all
forms of remuneration, including fixed
salary, performance-based benefits and
severance payments. This procedure is
approved by the management of the
Company in agreement with the Trade
Union Committee.
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
See article 3.2.8
7.4. The remuneration policy should provide
enough information on the policy regarding
termination payments. Termination
Yes
Termination benefits shall be granted in
accordance with the provisions of
Chapter 5 of the Labour Code of the
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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.
Republic of Lithuania and the provisions
of the Collective Agreement in the
Company.
7.5. If the financial incentive scheme is
applied at the Company, the remuneration
policy should contain enough 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.
No
The Company does not apply a system of
financial incentives.
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.
No
See article 7.1.
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.
No
See article 7.1.
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 corporate governance framework
assures the rights of stakeholders that are
protected by law are respected. The
Company applies a Corporate Contract
8.2. The corporate governance framework
should create conditions for stakeholders to
105
participate in corporate governance in the
manner prescribed by law. Examples of
participation by stakeholders in corporate
governance include the participation of
employees or their representatives in the
adoption of decisions that are important for
the Company, consultations with employees
or their representatives on corporate
governance and other important matters,
participation of employees in the Company’s
authorized capital, involvement of creditors
in corporate governance in the cases of the
Company’s insolvency, etc.
with employees, and the contract is
signed by the CEO and Trade Union.
The Company pursues the maximum
possible transparency in its relations with
all stakeholders and the compliance with
the highest ethical requirements and
principles – in its activities, because
honest and open business activities are
one of the key elements of impeccable
business reputation.
The Company takes into account the
changing customer needs, constantly
improving its operational processes,
empowering employees, taking care of
the safety and health of its employees,
seeking to maintain a close relationship
with investors and ensure information
accessible to all, continuously updating
the information and posting it in the
“Investors” section of its website.
8.3. Where stakeholders participate in the
corporate governance process, they should
have access to relevant information.
8.4. Stakeholders should be provided with the
possibility of reporting confidentially any
illegal or unethical practices to the collegial
body performing the Supervisory function.
Principle 9: Disclosure of information
The corporate governance framework should ensure the timely and accurate disclosure of all
material corporate issues, including the financial situation, operations and governance of the
Company.
9.1. In accordance with the Company’s
procedure on confidential information and
commercial secrets and the legal acts
regulating the processing of personal data,
the information publicly disclosed by the
Company should include but not be limited
to the following:
Yes
The information contained in this
recommendation shall be disclosed in the
annual and semi-annual reports of the
Company in accordance with the
requirements of legal acts regulating data
processing and confidential information
procedures. This information is
published on the website of PLLC
Nasdaq Vilnius. Stock Exchange and on
the Company's website.
9.1.1. operating and financial results of the
Company;
9.1.2. objectives and non-financial
information of the Company;
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;
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;
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;
106
9.1.6. potential key risk factors, the
Company’s risk management and
supervision policy;
9.1.7. the Company’s transactions with
related parties;
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.);
9.1.9. structure and strategy of corporate
governance;
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.
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
The Company discloses information on
the Company’s and the Group’s
consolidated results. The information is
disclosed in the consolidated annual
report and consolidated financial
statements.
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
The information specified in the
recommendation is presented in the
Company's annual and semi-annual
reports. The Company will implement
the recommendations of Principle 7 once
the legislation governing is adopted.
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
The Company discloses all regulated
information through the news
distribution system of PLLC Nasdaq
Vilnius. This ensures that it is accessible
to the widest possible public. The
information is simultaneously available
in Lithuanian and English. In addition,
the Company publishes information
before or after the Nasdaq Vilnius trading
107
session so that all shareholders and
investors of the Company have equal
access to information and make
appropriate investment decisions. The
Company shall not disclose information
that may affect the price of the securities
issued by it in the comments, interviews
or other ways until such information is
made public through the Central
Regulatory Information base.
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
An independent audit Company performs
auditing of the Company’s and its
subsidiaries individual and consolidated
(the group) annual financial reports in
accordance with International
Accounting Standards applicable in the
EU. An independent auditing Company
also evaluates conformity of annual
report to the audited 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.
Yes
The Management Board proposes an
audit Company to the General Meeting of
Shareholders.
10.3. If 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
Information on remuneration to the audit
Company is made public in the decisions
of the General Meeting of Shareholders.
The audit firm provides non-audit
services only with the approval of the
Audit Committee. In 2023, the audit firm
did not receive any remuneration for the
non-audit services provided.