Consolidated Annual Report, Consolidated and the Company’s Financial Statements
Prepared in Accordance with the International Financial Reporting Standards as
Adopted by the European Union, and Independent Auditor’s Report for the Year Ended
31 December 2023
Annual Report
Table of Contents
CHAIRMAN’S STATEMENT ..................................................................................................................................... 3
CEO’S STATEMENT ................................................................................................................................................... 4
CONSOLIDATED ANNUAL REPORT OF EPSO-G AND THE GROUP COMPANIES FOR 2023 ................ 6
1 GENERAL INFORMATION ON EPSO-G GROUP COMPANIES ..................................................................... 6
1.1 Holding company EPSO-G ................................................................................................................................................................................................................................ 9
1.2 Litgrid ......................................................................................................................................................................................................................................................................... 9
1.3 Amber Grid ........................................................................................................................................................................................................................................................... 10
1.4 Baltpool ................................................................................................................................................................................................................................................................. 11
1.5 Tetas ....................................................................................................................................................................................................................................................................... 13
1.6 Energy Cells ......................................................................................................................................................................................................................................................... 13
2 OPERATING AND REGULATORY ENVIRONMENTS ................................................................................... 15
2.1 Operating Environment ................................................................................................................................................................................................................................... 15
2.2 Regulatory Environment ................................................................................................................................................................................................................................. 16
2.3 Pricing of Regulated and Other Services .................................................................................................................................................................................................. 18
2.4 Other Important Factors .................................................................................................................................................................................................................................. 21
3 OPERATIONAL STRATEGY AND ITS IMPLEMENTATION PROGRESS................................................... 24
3.1 Operational Strategy ........................................................................................................................................................................................................................................ 25
3.2 Progress in Implementing the Strategy .................................................................................................................................................................................................... 27
3.3 Operational and Financial Goals .................................................................................................................................................................................................................. 29
3.4 Summary of Significant Infrastructure Projects ...................................................................................................................................................................................... 30
3.5 Ten-year Grid Development Plans, Planned Investments ................................................................................................................................................................. 33
4 PERFORMANCE REVIEW .................................................................................................................................. 36
4.1 Performance Indicators .................................................................................................................................................................................................................................... 36
4.2 Consolidated Financial Performance Indicators ..................................................................................................................................................................................... 39
4.3 Research and Development Activities ....................................................................................................................................................................................................... 49
4.4 Significant Events of the Reporting Period .............................................................................................................................................................................................. 52
4.5 Membership in Organisations ....................................................................................................................................................................................................................... 58
4.6 Transactions with Related Parties .............................................................................................................................................................................................................. 60
5 COMPLIANCE AND RISK MANAGEMENT AND AUDIT .............................................................................. 62
5.1 Risk Management Framework ...................................................................................................................................................................................................................... 62
5.2 Key Risks and Their Management ............................................................................................................................................................................................................... 63
5.3 Sustainability Risk Management .................................................................................................................................................................................................................. 66
5.4 Climate Change Risks ...................................................................................................................................................................................................................................... 67
5.5 Compliance Management ............................................................................................................................................................................................................................... 68
5.6 Anti-corruption Activities and Interest Management........................................................................................................................................................................... 68
5.7 Management of Interests ................................................................................................................................................................................................................................ 69
5.8 Information on the Internal Audit ................................................................................................................................................................................................................ 70
5.9 Information on the External Audit ............................................................................................................................................................................................................... 71
6 SHAREHOLDERS AND DIVIDENDS ............................................................................................................... 73
6.1 Shareholders ........................................................................................................................................................................................................................................................ 73
6.2 Dividends .............................................................................................................................................................................................................................................................. 73
6.3 Dividend Policy ................................................................................................................................................................................................................................................... 74
6.4 Ratings ................................................................................................................................................................................................................................................................... 74
7 GOVERNANCE REPORT .................................................................................................................................... 76
7.1 Articles of Association of EPSO-G .............................................................................................................................................................................................................. 76
7.2 Supervisory and Management System and Functions of EPSO-G ................................................................................................................................................. 77
7.3 General Meeting of Shareholders of EPSO-G ........................................................................................................................................................................................ 78
7.4 The Board of EPSO-G ...................................................................................................................................................................................................................................... 78
7.5 The Remuneration and Nomination Committee of EPSO-G ............................................................................................................................................................. 85
7.6 The Audit Committee of EPSO-G ................................................................................................................................................................................................................ 88
7.7 Chief Executive Officer ..................................................................................................................................................................................................................................... 90
7.8 Additional information on the Chairman of the Board, the Manager, the Chief Financial Officer and the Head of the Internal Audit ................ 91
7.9 Operating Policies .............................................................................................................................................................................................................................................. 92
7.10 Functional Area Governance ....................................................................................................................................................................................................................... 93
7.11 Performance Assessment and Results of the Activities of the Collegial Supervisory and Management Bodies ...................................................... 93
EPSO-G ANNUAL REPORT FOR 2023
7.12 Information on Compliance with the Code of Conduct .................................................................................................................................................................... 93
7.13 Information on Compliance with Transparency Guidelines ............................................................................................................................................................ 93
8 REPORT ON THE IMPLEMENTATION OF THE REMUNERATION POLICY ............................................. 95
8.1 Formation and Monitoring of the Remuneration and Nomination Policy ..................................................................................................................................... 95
8.2 Remuneration Policy ......................................................................................................................................................................................................................................... 96
8.3 Employee Performance Assessment.......................................................................................................................................................................................................... 96
8.4 Employees ............................................................................................................................................................................................................................................................ 97
8.5 Information on Remuneration ....................................................................................................................................................................................................................... 97
8.6 Information on Remuneration of Collegial Members ........................................................................................................................................................................... 99
8.7 Legal disputes and uncertainties .............................................................................................................................................................................................................. 101
9 INFORMATION ON SPECIAL OBLIGATIONS .............................................................................................. 103
9.1 PSO funds administration activities ......................................................................................................................................................................................................... 103
9.2 Implementation of the functions of the project executor for the installation of a physical barrier at the border with Belarus ........................... 104
10 SUSTAINABILITY (NON-FINANCIAL DISCLOSURE) REPORT ............................................................. 107
10.1 Environment ................................................................................................................................................................................................................................................... 111
10.2 Social responsibility..................................................................................................................................................................................................................................... 121
10.3 Governance ..................................................................................................................................................................................................................................................... 134
11 DISCLOSURES UNDER THE EU TAXONOMY REGULATION ................................................................ 140
11.1 Disclosures under the European Union Taxonomy Regulation .................................................................................................................................................. 140
11.2 Identifying Taxonomy-eligible activities ............................................................................................................................................................................................. 142
11.3 Accounting Policies ..................................................................................................................................................................................................................................... 153
11.4 Revenue under the EU Taxonomy ......................................................................................................................................................................................................... 156
11.6 Operating expenditure under the EU Taxonomy (OpEx) .............................................................................................................................................................. 159
ANNEX 1. GRI INDEX LIST .................................................................................................................................. 161
ANNEX 2. DISCLOSURES IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE TASK FORCE
ON CLIMATE-RELATED FINANCIAL DISCLOSURES (TCFD) ..................................................................... 163
ANNEX 3. INFORMATION ON COMPLIANCE WITH TRANSPARENCY GUIDELINES ........................... 164
ANNEX 4. NOTIFICATION BY EPSO-G ON COMPLIANCE WITH THE CODE OF CORPORATE
GOVERNANCE FOR COMPANIES LISTED ON NASDAQ VILNIUS ............................................................ 167
12. CONSOLIDATED AND THE COMPANY’S OF FINANCIAL STATEMENTS ........................................ 191
12.1 Consolidated and the Company’s Statement of Financial Position .......................................................................................................................................... 191
12.2 Consolidated Statement of Comprehensive Income ...................................................................................................................................................................... 192
12.3 Parent’s Statement of Comprehensive Income ................................................................................................................................................................................ 193
12.4 Consolidated and the Company’s Statements of Changes in Equity ....................................................................................................................................... 194
12.5 Consolidated and the Company’s Statements of Cash Flows.................................................................................................................................................... 195
12.6 Notes to the Consolidated and the Company’s Financial Statements .................................................................................................................................... 196
13. RESPONSIBILITY STATEMENT, INDEPENDENT AUDITORS REPORT .............................................. 249
13.1. Responsibility Statement ......................................................................................................................................................................................................................... 249
13.2. Independent Auditors Report ................................................................................................................................................................................................................. 250
EPSO-G ANNUAL REPORT FOR 2023
3
CHAIRMAN’S STATEMENT
Dear all,
Tectonic shifts across the globe demand us to be responsive and adaptive to a
dynamic environment. Last year, we placed greater emphasis on strengthening
Lithuania’s energy security. The date on which the electricity grid of all three
Baltic States will implement synchronisation with Western Europe has been
officially announced, the winner of first Baltic offshore wind farm tender has been
announced, and the integration into European Green Hydrogen Network has been
initiated.
Late last year, a critical phase was reached that will help shape the energy future.
Together with international consultancy DNV and in partnership with the Ministry
of Energy, Lithuanian industry, energy companies and experts, we have
developed a transformation study, i.e. scenarios for the future, which will guide
us on our path to Lithuania’s energy independence. This study will be used by the
Ministry of Energy in updating the Lithuanian Energy Independence Strategy
(NEIS), the long-term strategies of the EPSO-G Group and its companies, and in
modelling the main transformation scenarios for the LT100 Study.
Last year, we focused our efforts at streamlining and developing our business. We have entered into an important strategic
partnership agreement: European Energy Exchange (EEX), the leading energy exchange, acquired a 66% shareholding in a
regional gas exchange GET Baltic from the Group company Amber Grid. Amber Grid holds the remaining 34% of the shares. The
main objective of the transaction is to strengthen the Baltic and Finnish gas markets and foster integration into the pan-European
gas trading markets, ensuring greater liquidity and more competitive gas prices.
The EPSO-G’s sustainability-linked bond issue has received international recognition. Such first-ever issue in the Baltic States
was recognised as the most important event on the Baltic capital market at the Nasdaq Baltic Market Awards in New York. This
puts on an even stronger path of sustainable development and the achievement of climate impact reduction targets set.
The shareholder's expectation is that the Group will become an energy competence hub. Thus, last year we continued our efforts
to strengthen the maturity of the organisational culture and to foster pride in working on energy projects of common Lithuanian
interest. Global energy transformation also calls us to change. We have therefore strengthened functional governance, increased
the Group’s integrity through functions, and enhanced cooperation. The Group companies are in the process of reviewing
competences of their Boards.
The EPSO-G Group companies continued to strengthen Lithuania’s energy security by supporting their colleagues in Ukraine.
Some companies engaged in delivery of infrastructure much needed in a war-torn country, while teams in other companies
introduced a smaller-scale initiatives. I am particularly proud of the personal initiatives of our employees to help Ukraine.
I extend sincere thanks to all the employees of the EPSO-G Group companies who focus daily efforts on strengthening Lithuania’s
energy independence and ensuring energy security.
Robertas Vyšniauskas,
Chairman of the Board of EPSO-G
EPSO-G ANNUAL REPORT FOR 2023
4
CEO’S STATEMENT
Dear all,
2023 was a year of adaptation to a dynamic environment for the EPSO-G Group,
Lithuania and our entire region. We focused on energy security by implementing
strategic projects, taking historic steps in the offshore energy development,
boosting domestic electricity generation from renewable energy sources to record
levels, and outlining the directions for Lithuania’s Energy Vision to 2050.
An important milestone has been reached on the synchronisation of the electricity
grid of Baltic States with Western Europe by February 2025. Already in April, the
isolated operation of the Lithuanian electricity system was successfully tested,
confirming the electricity system’s ability to operate independently in isolated
mode and connect to the Continental European electricity network. The country
received a critical equipment ensuring system reliability: synchronous condensers
of several hundred tons have been successfully delivered and are being installed
at the Telšiai and Alytus substations. Later on, the Baltic electricity transmission
grid operators signed an agreement with the Heads of Government on the
synchronisation date. All the steps of the synchronisation project continue to forge a strong path towards Lithuania’s energy
independence.
The largest grid-integrated energy storage system in Europe was launched in 2023 to ensure the country’s energy security. The
Group company Energy Cells provides isolated operating reserve service ensuring the Lithuania’s energy system security at a
capacity of 200 MW. After the completion of the synchronisation project battery parks will also speed up the smooth integration
of solar and wind power plants into the overall system.
Domestic electricity generation is boosted by the active development of renewable energy sources (RES). At the end of 2023, the
capacity of solar and wind power plants connected to the grid exceeded 2.3 GW, or 50% more than in 2022. Last year, the largest
solar farm in the Baltics with permitted generation capacity of 65 MW was connected to Litgrid’s transmission grid. In 2023,
electricity generation in Lithuania grew by one third, which was the highest volume since 2010, and RES plants reached record
levels by generating 67% of the country’s total electricity. The development of RES does not stop there: at the end of 2023, Litgrid
had letters of intent signed with the developers for 3.5 GW wind farms, and 3.9 GW solar farms. Given the existing commitments
of developers and the projected RES development in ESO’s distribution grid, the total RES volumes can reach 10-12 GW by 2030.
Lithuania is also starting to embrace offshore wind energy: the developer of a 700 MW wind farm in the Baltic Sea was announce
in 2023. The second tender was announced in January 2024. These projects will enhance the country’s energy security, while
offshore wind farms alone will be able to meet up to half of Lithuania’s current energy needs.
While natural gas consumption in Lithuania continues to decline, international gas flows are growing. Biogas has been fed into
the transmission grid, marking a historic event for Lithuania. In the near future, volumes of these RES are expected to increase in
the transmission grid.
Lithuania is making proactive steps to engage in the Green Hydrogen Programme and become part of the European Green
Hydrogen Network. Pre-Feasibility Study for the Nordic-Baltic Hydrogen Corridor has been launched with help from the Group
company Amber Grid and other regional natural gas TSOs. The goal of the Nordic-Baltic Hydrogen Corridor project is to create
the connection between green energy production regions in Northern Europe with the main consumption centres in Central
Europe.
The success of the Group’s stock exchanges has also been of great importance to Lithuanian citizens and businesses. We brought
about changes to strengthen the companies which are important for the energy industry. Last year, the turnover of Baltpool
biomass exchange nearly tripled.
Launched last year, the strategic partnership has created more and better services for market participants: in May 2023, a 66%
shareholding in a regional gas exchange GET Baltic were sold to European Energy Exchange (EEX). The Group company Amber
Grid will hold the remaining 34% of the shares and will continue to support the further development of the gas business in the
GRI 2-23
GRI 3-3
EPSO-G ANNUAL REPORT FOR 2023
5
dynamic Baltic Sea region.
At the end of 2023, we introduced to the public our policies for strengthening national energy independence. The vision making
basis for the update of the National Energy Independence Strategy (NEIS) presents potential scenarios for the country to become
the hub for green technology development. These scenarios would guide the implementation of energy projects, the development
of strategic partnerships and the creation of a basis for the integration of different sectors. The special focus will also remain on
the competences of the Group’s employees with the aim of becoming the energy hub of the future.
The Group’s companies have placed a strong emphasis on financial and operational sustainability, not only to ensure energy
security, but also to create returns for shareholder and society. The Group’s key operating and financial indicators show stable
returns that ensure financial sustainability. After a periodic review for EPSO-G, the rating agency Moody’s Investors Service
affirmed its Baa1 credit rating with a stable outlook.
In 2023, the EPSO-G Group’s investments in the projects strengthening Lithuania’s energy independence were record high and
amounted to EUR 243 million or almost 39% more than in 2022. Investments in the electricity transmission grid grew 2.7-fold
and amounted to EUR 153.6 million. Part of them have also been concentrated on the modernisation of existing infrastructure to
ensure the reliability of transmission grid and uninterrupted power transmission.
The Group places particular emphasis on strengthening the competences of its employees and empowering teamwork, especially
given the expectation for the Group, as an energy competence hub, to create value. Results of the Employee Engagement Survey
revealed that the Group’s overall score (74%) was above the average for both Lithuanian (64%) and international companies
operating in Lithuania (65%), and several percentage points above the average for state-owned enterprises (68%).
I extend sincere thanks to my colleagues, the Board, the shareholder and the shareholder’s representatives of all the Group
companies, as well as other partners for successful joint efforts. For 2024, I wish we all team up for challenges that will further
strengthen Lithuania’s energy independence.
Mindaugas Keizeris,
CEO of EPSO-G
GRI 3-3
GRI 2-23
EPSO-G ANNUAL REPORT FOR 2023
6
CONSOLIDATED ANNUAL REPORT OF EPSO-G AND THE GROUP
COMPANIES FOR 2023
The consolidated report of the holding company EPSO-G and the Group companies was prepared for the 12 months period ended
on 31 December 2023.
1 GENERAL INFORMATION ON EPSO-G GROUP COMPANIES
Company name
EPSO-G UAB
Legal form
Private limited company
Date and place of
incorporation
25 July 2012, the Register of Legal Entities of the Republic of Lithuania
Company code
302826889
Registered office address
Laisvės ave. 10, LT-01103 Vilnius
Telephone
+370 685 84866
Email
info@epsog.lt
Website
www.epsog.lt
Issued capital
EUR 189,631,000
Sole shareholder
The Republic of Lithuania, the property and non-property rights of which are implemented
by the Ministry of Energy of the Republic of Lithuania
EPSO-G is a 100 % state-owned Group of energy transmission and exchange companies. The rights and obligations of EPSO-G
holding shareholder are implemented by the Ministry of Energy of the Republic of Lithuania.
The main activity of the EPSO-G Group is to ensure uninterrupted, stable electricity transmission through high voltage grids and
natural gas transportation through high-pressure pipelines, and efficient management, maintenance, subcontracting and
development of these transmission systems. The Group also manages and develops the biofuel, natural gas and timber trade
platforms designed to ensure competition in the market of energy resources and roundwood. It also carries out electricity
subcontracting projects and provides infrastructure operation services for low, medium and high voltage grid operators.
All the companies belonging to the EPSO-G Group are responsible for effective and timely implementation of the projects of
energy transmission and exchange infrastructure development that are important for the state by contributing to the
implementation of the goals set in the National Energy Strategy thus creating a sustainable long- term value for the shareholder
– the State of Lithuania, people and the economy of the country.
As at 31 December 2023, the EPSO-G Group (the Group) consisted of the holding company EPSO-G UAB (EPSO-G or the
Company), five directly controlled companies of the Group (LITGRID AB (Litgrid), Amber Grid AB (Amber Grid), BALTPOOL UAB
(Baltpool), TETAS UAB (Tetas), Energy Cells UAB (Energy Cells). EPSO-G and the Group companies also hold shares in GET
Baltic UAB, Baltic RCC OÜ and TSO Holding AS.
GRI 2-1
GRI 2-2
GRI 2-3
EPSO-G ANNUAL REPORT FOR 2023
7
* Baltic RCC OÜ is the Baltic electricity transmission system operator established in 2022 to provide services ensuring safety and reliability of the electricity system and to
coordinate between the transmission grid operators of the Baltic region.
TSO Holding AS is the minority shareholder of Norwegian company Nord Pool Holding that holds 34% of shares in the company. Nord Pool Holding holds 100% of shares in the
Nord Pool electricity exchange, which provides the electricity exchange services in Central and Western Europe, the United Kingdom, Nordic and Baltic countries. The exchange
provides electricity trading services, as well as clearing and settlement services. In 2022, EPSO-G increased its interest in the shareholding of TSO Holding to 39.6%.
*
**
EPSO-G Group
EPSO-G ANNUAL REPORT FOR 2023
8
Name
Amber Grid AB
LITGRID AB
BALTPOOL UAB
TETAS UAB
Energy Cells UAB
Legal form
Public limited
company
Public limited
company
Private limited
company
Private limited
company
Private limited
company
Date and
place of
incorporation
11 June 2013, the
Register of Legal
Entities of the
Republic of Lithuania
16 November 2010,
the Register of Legal
Entities of the
Republic of Lithuania
10 December 2009,
the Register of Legal
Entities of the
Republic of Lithuania
08 December 2005,
the Register of Legal
Entities of the
Republic of Lithuania
26 January 2021, the
Register of Legal
Entities of the
Republic of Lithuania
Company
code
303090867
302564383
302464881
300513148
305689545
Registered
office address
Laisvės ave. 10,
LT- 04215 Vilnius
Karlo Gustavo Emilio
Manerheimo st. 8,
LT- 05131 Vilnius
Žalgirio st. 90,
LT-09303 Vilnius
Senamiesčio st. 102B,
LT- 35116 Panevėžys
Ozo st. 12A-1,
LT-08200 Vilnius
Telephone
+370 5 236 0855
+370 707 02171
+370 5 239 3157
+370 45 504 670
+370 659 00748
Email
info@ambergrid.lt
info@litgrid.eu
info@baltpool.eu
info@tetas.lt
info@energy-cells.eu
Website
www.ambergrid.lt
www.litgrid.eu
www.baltpool.eu
www.tetas.lt
www.energy-cells.eu
Nature of
activities
Natural gas
transmission system
operator
Electricity
transmission system
operator
Energy exchange
operator,
administrator of the
funds of services of
public interest
Specialised services of
maintenance, repair
and installation of
transformer
substations and
distribution points,
works of testing and
tests, design of energy
objects
Providing the
electricity
transmission system
operator with the
electricity reserve
guarantee service
required for the
isolated operation of
electricity system
Shares held
by EPSO-G
96.6%
97.5%
67.0%
100.0%
100.0%
EPSO-G ANNUAL REPORT FOR 2023
9
1.1 Holding company EPSO-G
EPSO-G UAB is a holding company with the objective of the sole shareholder – the Ministry of Energy of the Republic of Lithuania
– to create a group of energy transmission system and exchange operators providing advanced, efficiently managed and
generating long-term benefits to shareholders, which ensures the implementation of the strategic Lithuanian energy interests
and contributes to the expansion of the State’s competitiveness and building the public well-being.
By implementing the activities outlined in the National Energy Independence Strategy (NEIS) and the Letter of Expectations of
the Shareholder, the holding company establishes the strategic goals and tasks of the Group and its constituent companies,
supervises their implementation, identifies and manages operational risks and implements measures to increase the efficiency of
the Group companies. The holding company also lays down the operating rules that are in line with a good business practice and
coordinates the activities of the companies which are part of the Group in the fields of audit, human resources, risk management,
social responsibility, innovation, communication and in other fields increasing operational transparency and accountability in order
to create sustainable and long-term value for Lithuania’s people and business.
The uniform good corporate governance practice of the EPSO-G Group is implemented in accordance with the Corporate
Governance Policy, joined by the companies of the Group, and by the direct involvement of the representatives nominated by the
holding company in the work of the boards of the subsidiaries.
The holding company EPSO-G carries out its supervisory and control functions with the help of these measures:
• By making decisions in its subsidiaries within the competence of the General Meeting of Shareholders, thus ensuring
interconnection among policies, objectives, targets and measures;
• By nominating the employees of EPSO-G to the Boards of the companies of the Group, thus ensuring the targeted
implementation of the goals set by the shareholder, coordinating the operating strategies of the subsidiaries of the Group with
the directions of the Group’s strategy;
• By organizing and carrying out the activities of the Audit Committee, thus ensuring the transparency, control and accountability
of the decisions made in the Group;
• By organizing and carrying out the activities of the Remuneration and Nomination Committee, thus ensuring equal principles
of nomination and remuneration in the Group;
• By setting up a centralized Group-wide internal audit that is accountable to the Audit Committee and the Board of the
Company and is not subordinate to the administration of the companies;
• By adopting the Group’s policies that regulate various areas of activity, thus implementing good sustainable development
practices in the Group;
• By drafting representative, standardised documents that unify the activities of the Group companies;
• By implementing functional mentoring of activities in the Group;
• By providing consulting services to the companies of the Group.
For more details please refer to www.epsog.lt
1.2 Litgrid
Litgrid is the electricity transmission system operator, which ensures reliable electricity transmission and the balance of electricity,
manages and operates the high-voltage electricity transmission grid and the direct-current interconnectors LitPol Link and
NordBalt. The company oversees the development of the transmission grid and the electricity market, coordinates electricity flows
and maintains the stable operation of the country’s energy system.
In line with the long-term goals identified in the National Energy Independence Strategy, the most important activity areas and
responsibilities of Litgrid are the following: maintenance of the country’s electricity infrastructure and its integration with the
Western and Northern European electricity infrastructure; development of the electricity market and participation in the creation
of a single electricity market of the Baltic and European countries; and integration of the electricity systems of Lithuania and
continental Europe for synchronous operations.
Services provided by Litgrid:
• Electricity transmission over high voltage (110 and 330 kV) electrical installations. The transmission system operator (TSO)
transmits electricity from producers to consumers that are connected to the transmission grid, and to the operators of the
distribution grid. Electricity transmission is an activity regulated by the State. The main activities of the TSO include the
EPSO-G ANNUAL REPORT FOR 2023
10
management of the high voltage electricity transmission grid and securing reliable, effective, high-quality, transparent and
safe transmission of electricity.
• Ancillary (previously known as system) services to maintain reliable system functioning. The TSO Litgrid purchases from
energy generating companies the services for the capacity reserve assurance at the electricity generation facilities, reactive
power and voltage management, and emergency, disruption prevention and response services, and provides consumers with
system services. The capacity reserve is needed when electricity production suddenly and unexpectedly falls or its
consumption increases.
• Trade in imbalance and balancing electricity to ensure a balance between production and consumption. The TSO organises
trade in imbalance electricity, buys and sells imbalance electricity that is necessary to ensure the country’s electricity
production and consumption balance. Balancing electricity is electricity that is bought and/or sold on instruction of the
transmission system operator as electricity necessary for performing the function of balancing the country’s electricity
consumption and production. The TSO organises trading in balancing electricity by auction. Litgrid, together with Estonian and
Latvian operators, organizes a common Baltic balancing energy market, in which the single Baltic balancing is managed, and
balancing energy is traded on equal terms and conditions.
• Services under public service obligation (PSO) scheme. These are the services that ensure and enhance the national energy
security and promote integration and use of electricity produced from renewable energy sources. The list of PSO services,
their providers and procedures for the provision of PSO services are approved by the Government of the Republic of Lithuania,
or an institution authorised by it, having regard to the public interests in the electricity sector. PSO funds are funds that are
paid to the providers of PSO services. Litgrid provides the following PSO services: connection of power generation equipment
that uses wind, biomass, solar energy, or hydropower to the transmission grid as well as the transmission grid’s optimisation,
development and/or reconstruction related to the acceptance and transmission of electricity generated by producers that use
renewable energy sources; balancing of electricity produced from renewable energy sources connected to the transmission
grid for which the measure to promote the exemption from balancing responsibilities is intended.
• Technical maintenance, operation and management services for high voltage direct current connections.
For more details, please refer to www.litgrid.eu
1.3 Amber Grid
Amber Grid is a natural gas transmission system operator, responsible for the natural gas transmission and operation of trunk
gas pipelines, secure and reliable operation and development of gas transmission system. Amber Grid also administers the
National Register of Guarantees of Origin for gas produced from renewable energy sources (RES).
The company’s mission is to provide efficient and reliable gas transmission, facilitating competition in the gas market and the
development of renewable energy sources.
The transmission system managed by Amber Grid consists of a grid of nearly 2,300 km of main gas pipelines, two gas compressor
stations, gas distribution stations, gas metering stations, anti-corrosion equipment for gas pipelines, data transmission and
communication systems, and other assets attributed to the transmission system.
The Lithuanian gas transmission system is interconnected with the natural gas transmission systems of Latvia, Poland, Belarus
and the Kaliningrad region of the Russian Federation, the Klaipėda LNG terminal, the distribution systems of the Lithuanian
distribution system operators, and the systems of consumers connected directly to the transmission system.
Services
Amber Grid provides system users, other operators and participants of the gas market with natural gas transmission services in
the territory of Lithuania: it transmits gas to domestic consumers, as well as transports natural gas to Latvia, Poland and
Kaliningrad District of the Russian Federation.
The company renders the following services to the system users, other operators, the participants of the gas market:
GRI 2-1
GRI 2-6
GRI 2-23
EPSO-G ANNUAL REPORT FOR 2023
11
• Gas transmission in the territory of Lithuania;
• Gas flow balancing in the transmission system;
• Administration of the funds intended for the installation of the LNG terminal, its infrastructure and connections, and for the
constant operating costs, and for the compensation of the reasonable costs of supply of the necessary amount of liquefied
natural gas of the appointed supplier;
• Administration of the register of guarantees of origin of gas produced from RES.
Customers
Amber Grid's customers are large Lithuanian industrial companies and medium-sized Lithuanian business companies, electricity
and district heating generation companies. It also provides natural gas transmission services to Baltic and third country energy
and natural gas supply companies.
As at 31 December 2023, 127 users accessed the company’s system (2022: 122). The company’s system users are electricity,
heating generation companies, large industrial companies plants connected to the gas transmission network, gas suppliers, etc.
GET Baltic
Amber Grid holds 34% of shares in the GET Baltic gas exchange. GET Baltic, a part of the EEX gas exchange, undertakes and
develops gas exchange trade in Lithuania, Latvia, Estonia and Finland. For more details, please refer to www.getbaltic.lt
For more details, please refer to www.ambergrid.lt
1.4 Baltpool
Baltpool is the operator of the Energy Exchange and the administrator of the Timber Exchange, which, by organising the trading
of biofuels, heat and timber and administering the Timber Exchange, creates a level playing field for market participants to
purchase biofuels and timber and to supply heat to consumers under competitive conditions, while ensuring the best possible
benefits for consumers and returns for the State. The Company also administers the public service obligation funds in the
electricity sector (hereinafter referred to as PSO funds) in compliance with a special obligation by Government of the Republic of
Lithuania. Further information is provided for in section “9.1 PSO funds administration activities”.
Since 1 January 2022, Baltpool has been acting as the manager of the Renewable Energy Fuel Units (REUs) metering system,
and by the Law of 15 December 2022 implementing Regulation (EU) 2022/1854 the company was also entrusted with the task
of collecting funds of part of the surplus market revenue received from electricity producers that meet the established legislative
requirements in the period from 1 December 2022 until 30 June 2023, and to collect a solidarity contribution from companies
operating in crude oil, natural gas, coal and oil refining sectors, calculated in accordance with the procedure established by the
aforementioned Regulation (EU) 2022/1854 and the Law implementing Regulation (EU) 2022/1854 from the taxable profit share
of such entities for the tax year beginning in 2023 (hereinafter jointly referred to as Emergency Response Funds). The emergency
costs (including the set profit margin) incurred by Baltpool in performing the functions of the administrator of emergency response
funds will be reimbursed from the collected Emergency Response Funds in accordance with the procedure established by
legislation. From 1 May 2023, the company has also been delegated the implementation of a voluntary national scheme to ensure
that biomass fuels meet sustainability and greenhouse gas emission reduction criteria.
The target set for the company is to create equal and transparent conditions for market participants to trade in biofuel and timber
products, as well as thermal energy, and thus create conditions for the formation of prices that reflect the relationship between
supply and demand. The objective of the administration of the PSO funds is to ensure the proper and legal collection, payment,
recovery and administration of the PSO funds in strict compliance with the statutory requirements (further information on specific
targets for such activities is provided in section “9.1 PSO funds administration activities”). By administering emergency response
funds, Baltpool contributes to the objectives of the European Union and the Republic of Lithuania to mitigate the impact of high
energy prices on consumers.
The Biofuels Exchange currently has more than 600 participants from Lithuania, Latvia, Estonia, Poland, Finland, Sweden,
Denmark, Germany, Bulgaria, Spain and the UK.
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Baltpool customers by activities carried out:
• The customers in the activity of the biofuel exchange are the biofuel buyers (district heating companies, independent heat
generating entities and other companies using in their activity the biofuel products traded in the exchange) and biofuel
suppliers (manufacturers and suppliers of wood pellets and chips);
• Timber sellers, specifically the State Forestry Enterprise and its territorial subdivisions, are the key customers in the activity
of timber auction organising. Timber buyers are the companies using timber products in their activity: from timber processing
companies to biofuel supply companies.
• The most important customers in the activity of heat auction organising are heat supply companies, which are obliged to buy
the necessary quantity of heat from independent heat suppliers at heat auctions and independent heat suppliers connected
to the heat supply systems and sell heat at the auction.
• The customers in the activity of administration of the PSO funds are the electricity consumers, which as per the valid legal
regulation must pay the PSO funds for the electricity consumed by them. The PSO funds are collected from the electricity
consumers connected to the electricity distribution grid through the distribution grid operator. The consumers connected to
the electricity grid managed by the transmission system operator transfer the PSO funds directly to the administrator. The
Company’s customers are also energy companies providing services of public interest in accordance with the procedure
established by the legislation, such as electricity generation from renewable energy sources supported by the PSO funds, as
well as companies providing other services directly or indirectly related to the energy and/or public security of the state, safety
and reliability of the electricity system, reduction of the negative impact of the electricity sector on the environment,
diversification of energy resources, and other objectives of sustainable development of the electricity sector provided for by
the legislation.
• The customers of REUs administration activities are fuel suppliers operating in the country, who are obliged to register with
the Renewable fuel accounting units system and to declare data on the fuel supplied to the market and used by drivers,
according to its type, origin and energy value.
• The customers of the Emergency Response Fund Management activities are electricity generators and companies active in
the crude oil, natural gas, coal and oil refining sectors.
For more details, please refer to www.baltpool.eu
In accordance with the legislation regulating the administration of the PSO funds, the administrator of the PSO funds is
compensated only for the costs incurred for this activity, preventing profit from this activity.
Balance of PSO funds*, EUR thousand
2023
2022
Change
+/-
%
Administered PSO funds receivable
33,427
27,953
5,474
20
Balance of PSO funds
35,571
132,554
-96,983
-73
68,998
160,507
-91,509
-57
Short-term financial debts
-
-
-
-
PSO funds payable
12,636
-
12,636
100
VAT payable
0
1,196
-1,196
-100
Accrued PSO funds payable
56,362
159,311
-102,949
-65
68,998
160,507
-91,509
-57
*The accounting of PSO funds must be kept separate from the company’s operating activities. PSO funds are not the property of the administrator.
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1.5 Tetas
The principal activity of the company Tetas is construction and operation of electrical equipment up to 400 kV voltage:
construction, reconstruction, maintenance and repair of power lines, switchgears and substations up to 400 kV, power
transformers and other facilities. The company carries out construction work; building and erecting building structures, installing
power supply and distribution equipment, laying power grids, and installing electrical engineering systems in buildings.
Tetas also carries out the construction of power grids: construction, maintenance and reconstruction of new 0.4-110 kV cable
lines; connection of new electricity consumers' electrical equipment to the grid, including the installation of power grids on the
consumer's property; configuration and launching/adjustment of relay protection and automation (RPA) systems. One of Tetas'
newer activities is the design and contracting of photovoltaic solar plants for the B2B segment (AC and DC parts). The company
helps customers to prepare the documentation and permits needed for the construction of power plants, and carries out the
commissioning and launching of solar power plants.
The company is well established in the market as a provider of unique testing and diagnostic services for electrical equipment.
Tetas’ laboratory tests electrical equipment, cables, safety equipment, chemical analysis of transformer oil and chromatographic
analysis of oil for dissolved gases (hydrogen, methane, acetylene, ethylene, ethane, carbon monoxide, carbon dioxide, oxygen,
nitrogen), and tests wind farms.
The company has a design services division that ensures the delivery of highly intellectual and value-added services.
For more details, please refer to www.tetas.lt
1.6 Energy Cells
The principal role of Energy Cells, the operator of the energy storage system, is to ensure the provision of the isolated standby
power system operation service to Litgrid, the transmission system operator. Energy cells provides this service at a full planned
capacity of 200 MW from October 2023.
The system of electricity storage facilities managed by the company consists of four battery farms with an equal capacity of 50
MW and power of 50 MWh each in Vilnius, Šiauliai, Alytus and Utena districts. The operation of the system consisting of four
battery farms is monitored without interruption (24/7) from a control centre in Vilnius. In the event of disruptions in the
transmission system grid, the energy storage system can automatically, within 1 second, respond to the transmission system
operator Litgrid’s need to ensure the security and stability of the electricity system by injecting or withdrawing power into or out
of the grid within 1 second, thereby helping to regulate the frequency of the transmission system’s grid. Once activated, the
instant energy reserve service would continue to be available until the start up of power generation sources of the other market
participants.
Additionally, Energy Cells carries out the function of reducing the cost of technological losses incurred by Litgrid, the transmission
system operator, as provided for in the Law on Synchronisation of the Republic of Lithuania.
The Energy Cells’ battery storage system was installed in 2021–2023 by a consortium of Siemens Energy and Fluence. On the
basis of Joint Activity, the companies implementing the project won an international public tender (announced in January 2021)
for the purchase of system installation services and energy storage technologies. According to the signed EUR 109 million worth
contract, the consortium will provide warranty and maintenance service for 15 years after the system is switched on.
Energy Cells has been granted EUR 87.6 million to install the energy storage system under the NextGenerationEU plan of the
EU’s recovery and resilience facility (RRF) “Next Generation Lithuania”.
The Lithuanian Law on Synchronisation provides that Energy Cells will have to provide the isolated standby power system
operation service and thus help to ensure reliable, stable and user-friendly operation of the Lithuanian power system until the
synchronisation with the continental European network. After synchronisation, the battery farms will be available for transfer
(subject to qualifying offer/s) to market players meeting national security and other government requirements to provide other
services to and contribute to the integration of energy produced from RES.
For more details, please refer to www.energy-cells.eu
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OPERATING AND REGULATORY
ENVIRONMENT
2
2.1 Operating environment
2.2 Regulatory environment
2.3 Pricing of regulated and other services
2.4 Other important factors
EPSO-G ANNUAL REPORT FOR 2023
15
2 OPERATING AND REGULATORY ENVIRONMENTS
2.1 Operating Environment
Compared to 2022, 2023 was a more stable year for the energy sector. The activities and results of the EPSO-G Group companies
were greatly affected by the challenge for all of Europe that started in 2021 and got more intense when Russia started the war
in Ukraine – record high electricity and natural gas prices, which stabilised in 2023. In 2023, the average electricity price for 2023
in the Lithuanian trading zone on the Nord Pool power exchange remained below 100 EUR/MWh, whereas the average monthly
price of natural gas on GET Baltic exchange ranged between a high of 67,93 EUR/MWh in January 2023 to a low of 36.31
EUR/MWh, which was recorded in June 2023.
The improvements in the energy market (compared to 2022) were due to the re-orientation of the European Union (EU) supply
chain, which allowed to purchase more natural resources from countries other than Russia. In 2022, efforts to terminate trade
with Russia, particularly in natural gas, lead to very high energy prices for European countries due to the lack of sufficiently
developed alternative supply routes. However, the development of new import routes, such as new LNG terminals, as well as
energy saving measures, helped to stabilise natural gas prices, which, in turn, had an effect on electricity prices.
A more stable energy market and greater preparedness, enabled the EU countries with natural gas storage facilities to meet the
EU’s requirement to fill their gas storage facilities to at least 90% of capacity as early as in August 2023, i.e. ahead of the
November 1 deadline. This ensured better preparation for the winter season and periods with low wind and solar generation.
However, even with all these measures in place, energy prices still remain high compared to the rate that prevailed for many
years until 2021.
Looking at the Nord Pool power exchange data, the electricity price in Lithuania’s price zone in 2023 (EUR 94.44/MWh) was 2.5
times (59%) lower compared to the price in 2022 (EUR 230.23/MWh), representing the highest annual price of electricity in
Lithuania in the last 10 years.
In 2023, the trends were similar in Latvia and Estonia - the wholesale electricity market price averaged 93.89 EUR/MWh and
90.79 EUR/MWh, respectively. Compared to 2022, when it was recorded at 226.91 EUR/MWh and 192.82 EUR/MWh,
respectively, the price decreased by 58.7 and 53%, respectively. In Swedish Zone 4, with which Lithuania is interconnected by
NordBalt, the price was recorded at 64.88 EUR/MWh, and compared to 2022 (152.1 EUR/MWh), it decreased by 57.3%. In 2023,
the average monthly electricity price in Lithuania did not exceed the price of EUR 117.28/MWh in September, when unscheduled
repairs to the power interconnection with Sweden took place. Compared to 2022, in Lithuania, the monthly electricity price
reached its peak in August with 480.39 EUR/MWh.
In response to Russia's aggression against Ukraine in March 2022, operators of the Baltic electricity transmission system reduced
the bandwidth of system connections with Russia. From May 2022, the import of electricity from Russia was completely stopped,
and from June, the Baltic countries took steps to independently ensure the balance of the system by refusing the acquisition of
these services from Russia. And in 2023, Lithuania and the other Baltic States did not import and energy from Russia.
The overall availability of interconnections with Sweden (NordBalt) and Poland (LitPol Link from the trading capacity granted) to
the market was 92.79% and 98.19%, respectively. Scheduled works - the annual repair of NordBalt and the implementation of
synchronization projects with continental European network – had the greatest influence on the availability of the
interconnections. The availability of NordBalt was also significantly affected by the lengthy unscheduled repairs in September.
In 2023, the annual amount of electricity transmitted by Litgrid to the
country’s needs was by 6.9% lower compared to 2022 and amounted
to 9.5 TWh (2022: 10.2 TWh). Electricity consumption decreased due
to household and business savings and the growth of consumers
generating electricity from renewable sources connected to the
distribution grid.
In 2023, 9.8 TWh of electricity or 13% less than in 2022 (11.2 TWh)
was imported to Lithuania, exported from Lithuania - 2.86 TWh or 8%
more than in 2022 (2.65 TWh). The growth in export was driven by
declining consumption in Lithuania and increased production of RES
due to rapid development of RES generation capacity in the country. Sweden further remained Lithuania’s largest source of
electricity imports with 5 TWh imported in 2023 (the same as in 2022). The largest electricity exports were to Poland (1.69 TWh
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in 2023 compared to 1.89 TWh in 2022). The export to Latvia almost tripled: from 0.13 TWh in 2022 to 0.37 TWh in 2023. This
was due to summer droughts limiting generation in hydropower plants on the Daugava River and capacity shortage at the Estonia-
Finland and Latvia-Estonia interconnections.
Amber Grid’s transmission system, as in the last few years, had provided
large amounts of natural gas by ensuring the country's energy and at the
same time national security. According to the data of Amber Grid, a total of
61.2 TWh of natural gas or by 4.4% less than in 2022 (64 TWh) was
transported through the gas transmission system of Lithuania in 2023. The
slight decline in transport was influenced by the drop in natural gas
consumption in Lithuania and other countries in the region in 2023.
In 2023, Lithuania consumed 14.9 TWh of natural gas or 4% less than in
2022 (when the country's gas demand reached 15.6 TWh). The decrease
reflected saving measures and still relatively high natural gas prices, as
well as a warmer than usual weather in 2022/2023. Also in 2023, gas
consumption for district heating and in fertiliser production decreased.
In 2023, 19.1 TWh of gas was transferred for the needs of the Baltic countries and Finland, i.e. 3.8% more than in 2022 (when
18.4 TWh was transferred). In 2023, 85% (31.9 TWh) of all gas transported to the system was supplied through Klaipėda LNG
terminal, the main source of gas supply to Lithuania and other Baltic countries. The flow from Latvia accounted for almost 7%
(2.5 TWh), from Poland - 9% (3.3 TWh). In 2023, the first biomethane producer was connected to the natural gas transmission
system in Lithuania: it produced 47 GWh of green gas in Lithuania.
As of 1 April 2022, after Lithuania stopped importing Russian gas, only natural gas intended for the Kaliningrad Region is
transported through the Lithuania-Belarus connection. The gas transit in the Kaliningrad Region in 2023 amounted to 24 TWh
and was 2.5% higher than in 2022, when 23.4 TWh of gas was transferred via Lithuania to the Kaliningrad Region.
By utilizing the created gas transmission infrastructure and meeting the needs of the region, Lithuania has become an important
gas transmission partner for neighbouring countries. The provision of gas to other countries is also beneficial as it increases the
utilization of gas transmission infrastructure and this allows for better gas transmission prices to be applied to users of the
transmission system.
According to the Bank of Lithuania’s macroeconomic projections published in December 2023, Lithuania’s GDP is expected to
grow by 1.8% in 2024, 3.1% in 2025 and 3.3% in 2026.
2.2 Regulatory Environment
The activities and strategic directions of the EPSO-G Group are significantly influenced by legislative initiatives, changes in the
regulation of energy markets and strategic planning documents at national and EU level:
• At national level, the most important strategic planning documents influencing the EPSO-G Group’s activities are: the updated
National Energy Independence Strategy (NEIS) approved by the Parliament of the Republic of Lithuania in 2018 and the
National Energy and Climate Plan (NECP) approved in 2020 and submitted to the European Commission. NEIS has set
ambitious goals that will greatly contribute to the Energy Union, the United Nations 2030 Agenda for Sustainable
Development, the goals set in the Paris Agreement and the implementation of objectives of 2030 EU climate and energy
policies. They aim to increase the share of renewable energy sources (including biomethane and other RES-produced gases)
in the country’s total final energy consumption: by 2030 - 45%, and from 2050 - 80%. At the end of 2023, the revision of
NEIS was initiated and the process is coordinated by the Ministry of Energy.
• In the EU context, the umbrella of the European Green Deal covering a wide range of economic sectors is of a great importance
for the EPSO-G Group. The Green Deal sets the target that by 2050 climate neutrality will be achieved in Europe, while by
2030, CO
2
emissions will be reduced by 55% compared to 1990. In the scope of the Green Deal, the presented strategies for
the Energy System Integration, Hydrogen and Offshore Wind directly influence the plans of the companies of the Group (first
of all, transmission system operators) and the long-term goals set for them, put focus on the importance of new technology
integration and cross- sectoral initiatives. Further information on national hydrogen initiatives is provided for in section “2.4
Other important factors”.
EPSO-G ANNUAL REPORT FOR 2023
17
• In the EU context, the package of the EU legislative proposals published by the European Commission in 2021 to decarbonise
the EU gas market by facilitating the uptake of renewable and low- carbon gases, including hydrogen, reducing methane
emissions, and ensuring security of energy supply for all European citizens, is also crucial and potentially having a significant
impact on the EPSO-G Group and, in particular, Amber Grid. In March 2023, the EU Council established a preliminary position
(the so-called “Common Approach”) on the legislative package, and, on 8 December 2023, the EU Council and the European
Parliament reached an agreement on the draft text of the package. In turn, this is likely that this package will be adopted in
2024.
• In 2023 and 2022, in response to Russia’s war in Ukraine, the situation in energy markets and global disruptions in them, high
energy prices, EU-wide regulations, documents and various proposals were adopted. For example, the Council Regulation
(EU) 2022/1854 on an emergency intervention to address high energy prices was adopted in October 2022, and the EU
decisions on the reduction of gas demand by 15%, the requirements to store sufficient (80-90% of storage filling level) gas
quantities in gas storage facilities were adopted in mid-2022. In December 2022, the Council Regulation (EU) 2022/2578
establishing a market correction mechanism to protect Union citizens and the economy against excessively high prices was
adopted. In December 2023, EU ministers reached a political agreement on the latter Regulation (EU) 2022/2578, as well as
on two other, i.e. the Council Regulation (EU) 2022/2576 enhancing solidarity through better coordination of gas purchases,
reliable price benchmarks and exchanges of gas across borders which was adopted in December 2022, and the Council
Regulation (EU) 2022/2577 laying down a framework to accelerate the deployment of renewable energy which was adopted
in December 2022, by extending the period of application for one more year, until, respectively, 31 January 2025, 31 December
2024 and 30 June 2025.
• To continue on with the EU initiatives and to avoid significant variations in electricity prices in the future, the EU’s Electricity
Market Design (EMD) reform was launched in 2023. In July 2023, the European Parliament voted overwhelmingly in favour
of changes to the EU’s Internal Electricity Market Regulation and Directive as part of the Electricity Market Design package.
Trilogue negotiations continued from September 2023 until 22 December 2023, when the European institutions agreed on a
final compromise version of the draft EMD text (made public on 19 December 2023). The approval of the new EMD package
is expected to take place in 2024. These changes will have impact on both the Group’s operations and decisions of Litgrid and
Energy Cells.
• In October 2023, the Directive (EU) 2023/2413 of the European Parliament and of the Council on Renewable Energy Sources
(RED III) was adopted, which amended and/or repealed the previous directives and regulations, as regards the promotion of
the use of energy from renewable energy sources. The Directive (EU) 2023/2413 (RED III) was adopted to raise the share of
renewable energy in the EU’s overall energy consumption to 42.5% by 2030 with an additional 2.5% indicative top up to
allow the target of 45% to be achieved. Each member state will contribute to this common target. It will also have an impact
on the EPSO-G Group’s operations.
• In October 2023, the revised Directive (EU) 2023/1791 of the European Parliament and of the Council on energy efficiency
entered into force, making it binding for EU countries to collectively ensure an additional 11.7% reduction in energy
consumption by 2030, compared to the 2020 reference scenario projections developed for 2030. The annual energy savings
target has been increased from at least 0.8% (2021-2023) to at least 1.3% in 2024-2025, and to at least 1.5% in 2026-2027.
It also requires an increase in annual energy savings of at least 1.9% from 2028, compared to 2020. Although the Directive
(EU) 2023/1791 does not have a direct effect on the EPSO-G Groups activities, it is likely to have an impact on the Group’s
decisions and activities.
Aspects related to the funding of traditional energy activities important for the EPSO-G Group:
• Recently, the funding of traditional energy activities related to fossil fuels has become more complicated. The EU-level criteria
(Taxonomy Regulation), based on which the aim is to fund only green energy investments, e.g. adaptation of natural gas
transmission network for the transport of hydrogen and other renewable and low-carbon gases, were provided.
• The exemption is applied to attract private funds for investments aimed at projects related to natural gas (cogeneration energy
production based on natural gas) and nuclear energy as the transition fuel until 2030.
After the distribution of sustainability-related bonds of EPSO-G in June 2022 and the listing of the Company’s bonds on the
Nasdaq Vilnius stock exchange, the obligation to disclose non-financial information related to environmental, social and
governance indicators (ESG) came into force according to the current EU Non-Financial Reporting Directive. From 1 January 2024,
EPSO-G (not limited to other possible obligations arising from EU regulation) will be required to disclose non-financial information
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under the new EU Corporate Social Responsibility Directive, which was adopted in 2022. The Sustainability Report have to be
prepared in accordance with European Sustainability Reporting Standards (ESRS), approved on 22 December 2023. Some of the
disclosures will be subject to verification and approval by an independent auditor. Some of the disclosures will be subject to
verification and approval by an independent auditor.
2.3 Pricing of Regulated and Other Services
Electricity and natural gas transmission, and electricity storage activities carried out by the EPSO-G Group companies, as well as
the activities of energy and gas market operators are licensed. The licenses grant exclusive rights to render the services of
transmission and market operators in the territory of the Republic of Lithuania.
The operators of electricity and natural gas transmission systems, as well as the designated storage system operator, which are
part of the EPSO-G Group companies, are exclusive in Lithuania entitled to provide these services. They operate under the
conditions of a natural monopoly and therefore prices of their activities are state regulated. The tariffs charged for the energy
resources belonging to the EPSO-G Group and set by gas market operators on trading exchanges are coordinated with the
regulatory authority. The regulatory function and the supervision of the performance of the licensed activity in Lithuania is carried
out by the National Energy Regulatory Council (hereinafter the “Council” or “NERC”).
The financial performance of the regulated EPSO-G Group companies, the allocation of necessary operating costs, investments
to ensure the reliability of electricity and gas transmission systems, as well as the possibility of financing strategic projects with
own or borrowed funds depend on the decisions taken by the regulatory authority.
The prices of the transmission of electricity and natural gas, including the prices for the isolated operation reserve service of the
designated storage system operator, are regulated by establishing price and/or revenue caps. The allowed level of revenue
consists of the reasonable required costs, including a return on investment that meets the criterion of reasonableness. The specific
service prices that are within the established revenue caps are set by the service providers (operators), while the Council after
verification and establishment that they have been calculated in accordance with the Council pricing and/or tariff requirements
set out in the methodologies (procedures) of operators for calculating prices and/or revenue caps and that they do not discriminate
against consumers and are not erroneous, shall approve them.
The price and/or revenue caps of electricity and natural gas transmission are set for the regulatory period of five years (the period
duration may be changed by a reasoned decision of the Council). They may be adjusted in the presence of significant changes of
one or several factors, in accordance to which they were established, including the factors of the scope of services, inflation, taxes
and other objective factors independent of the operators. The caps of the electricity transmission prices may be adjusted maximum
twice a year, while the caps of natural gas prices - once a year. For the designated storage system operator, there is no regulatory
period, taking into account the specific characteristics of its operations.
From 1 January 2023, the transmission prices for electricity and natural gas transmission set by the transmission system operators
and approved by the Council for 2023, as well as Litgrid’s ancillary services acquisition component to the transmission service
price (prior to the amendments to the Law on Energy, which became effective on 1 January 2022 - the system services price)
(hereinafter referred to as the ancillary services price) for 2023 came into force.
Baltpool’s biofuel trading fee at biomass exchange set by the Council in August 2020, applicable from 1 September 2020, by
extending the application of the price rate, which was applicable before 1 September 2020, only after conversion into other energy
units, as well as other Baltpool fees were valid in 2023.
The fees of GET Baltic natural gas exchange services agreed with the Council in December 2015 were valid in 2023.
In 2023, Amber Grid’s revenue cap for 2024 and prices for 2024 were adjusted accordingly. In 2023, the electricity transmission
price cap set for 2024 for the new regulation period of 2022-2026 for Litgrid and, respectively, prices set (in 2023) for 2024 were
also adjusted. Additionally, the price for the Litgrid’s ancillary services for 2024 was set and the price cap set for Energy Cells for
2024 was adjusted.
Price rates of regulated activities of Amber Grid and Litgrid
The average price of transmission services charged by Amber Grid to Lithuanian consumers in 2023 increased by 39% to
1.39 EUR/MWh, compared to the average price in 2022, and returned to the level of 2021 (when it was 1.40 EUR/MWh). The
change in the price in 2023 is due to the Council's approval of an almost 59% increase in the cap on the revenue from natural gas
EPSO-G ANNUAL REPORT FOR 2023
19
transmission activities in 2023, which was mainly due to the increase in the transmission system's technological costs as a result
of the significant increase in gas prices. It was also influenced by lower adjustments returned to the market for excess revenue
collected in 2021 and higher compensation to Poland for the implementation of the GIPL project of common interest. The
relatively moderate (compared to the revenue cap) price change in 2023 was due to the opening of the new gas interconnector
between Lithuania and Poland (GIPL) and to the strong regional demand for access to Lithuania’s gas transmission system due
to the war in Ukraine caused by Russia, and the higher gas flows projected for 2023.
Litgrid’s average electricity transmission service price of 0.654 ct/kWh, approved in 2023, was 4.4% lower than in 2022
(0.684 ct/kWh). This change was mainly driven by Litgrid’s permitted revenue from transmission services in 2023 lower by
approximately 5.7% than the one set by the Council (a factor reducing the price cap). This was mainly due to the fact that under
the Council decision, a part of the accumulated congestion management revenue (EUR 142.3 million) was used to reduce the
transmission prices, thus amortizing the potentially significant increase in the permitted revenue and electricity transmission prices
in 2023. The forecasted amount of electricity to be transferred to Lithuanian consumers that was lower by 1.5% (than forecasted
prices for 2022) also had an impact (a factor reducing the price cap).
The non-differentiated component (price) of ancillary services of 0.239 ct/kWh, approved by the Council in October 2022, was
applied in 2023, and was 59% lower than the one applied in the period 1-31 July 2022 (0.589 ct/kWh) and 7.2 times lower than
the one applied since 1 August 2022 (1.723 ct/kWh). In 2023, this change was mainly driven by the fact that the costs of the
tertiary reserve (which is no longer applicable) are no longer forecasted for 2023, a significant correction was made due to higher
revenue and lower costs in 2021, the one-time deviation in 2022 is no longer relevant from 2023 due to the extraordinary
recalculation made in mid-2022 because of natural gas price change. During the extraordinary recalculation, the change of EUR
65 million in the cost of the isolated system operation assurance service was included from mid-2022 due to a significant change
in the price of natural gas independent of the market participant (Ignitis). All this led to the fact that, even with the share of Energy
Cells, the costs included in the price of ancillary services for 2023 by the Council amounted to approximately EUR 27.1 million,
when normally, for example, for 2021, or from early 2022 until the recalculation from mid-2022, they used to reach EUR 80 or
68 million, respectively.
On 29 May 2023, the Council approved the natural gas transmission service prices set by Manager of Amber Grid on 22 May
2023. These prices are effective from 1 January 2024.
It has been confirmed that the average price of gas transmission services for Lithuanian consumers in 2024 will increase by 7%
to 1.49 EUR/MWh compared to the average price applicable in 2023 (1.39 EUR/MWh). The change in the price for 2024 is due
to a 4.4% increase in the cap on natural gas transmission revenue approved by the Council for 2024, driven by an increase across
all the categories of operating costs. The revenue cap was reduced by refunds to the market (repayment of unplanned excess
revenue for 2021-2022, according to the regulatory principles) and by the share of the previously established compensation to
Poland for the implementation of the GIPL project of common interest, which in 2024 is significantly lower than in 2023. The
prices in 2024 are also influenced by the fact that 66.2 TWh of natural gas is planned to be transported through the Lithuania’s
gas transmission system in 2024, which is 1% less than estimated when setting prices for 2023.
Given the establishment of a common tariff area between Lithuania and FINESTLAT (Latvia, Estonia and Finland) and the
introduction of the Inter-TSO Compensation (ITC) mechanism (in October 2022, the Chairs of the Baltic and Finnish National
Regulatory Authorities agreed to postpone the interconnection of the Baltic-Finnish natural gas market to October 2024 at the
earliest, since, as announced by the Council, the change in the geopolitical situation in 2022 has led to fundamental changes in
the natural gas market, as a result of which the intersystem compensation mechanism, which was created on the basis of other
assumptions about the functioning of the market, no longer corresponded to the current situation and could not provide benefits
to all participating parties), the public consultations on the price methodology for the services provided by Amber Grid and the
preliminary prices for the years 2024-2028, the changes in Amber Grid’s transmission price structure are expected in the future.
If a decision on the establishment of a common tariff area and the introduction of the ITC mechanism is taken, the related public
consultation would be published at a later stage.
On 29 September 2023, the Council approved the adjusted price cap of Litgrid’s electricity transmission service for 2024 to
1.329 ct/kWh, which, compared to the 2023 cap (0.654 ct/kWh), is 103% higher. This change was mainly driven by decision to
use accumulated congestion management income to reduce increase in the transmission price in 2023. Excluding the impact of
the use of accumulated congestion management income, the price cap in 2024 is 32% lower than in 2023. The electricity
transmission volumes to Lithuanian consumers in 2024, which was projected to be around 15% lower (than forecasted prices for
2023) also played a role (as a factor reducing the price cap).
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As of 1 January 2024, the approved average non-differentiated electricity transmission price also increased, respectively, by 103%
to 1.329 ct/kWh.
In October 2023, the non-differentiated component (price) of ancillary services of 1.3091 ct/kWh was approved the Council for
2024. The price set for 2024 is 5.5 times higher than the price in 2023 (0.239 ct/kWh), but approx. 1.3 times less than the price
in H2 2022 (1.723 ct/kWh). The main reasons for the change in 2024 (compared to 2023): the price forecast for 2023 was too
conservative, because costs of the electricity generating facilities availability service in 2023 (compared to the forecast for the
2023 price) almost tripled.
The following Baltpool and GET Baltic tariffs (excluding VAT) have been continued and/or introduced from 2023:
Baltpool regulated and licensed activities
In 2023, the biofuel exchange trading fee for transactions where biofuel was supplied in Lithuania is EUR 41.27 per 1,000 MWh
(excluding VAT). This price, set by a decision adopted by the Council in August 2020 and applicable as from 1 September,
corresponds to a price of EUR 0.48/tonne applicable until 1 September 2020, when it was extended as from 1 September 2020,
and converted into other units, i.e., MWh. Timber exchange fee of 0.12% of the value of timber sales and purchases made in EMPS
(Electronic Timber Trading System) in 2023.
The heat auction segment trading fee of EUR 15.65 per 1,000 MWh, which was set for the specified amount of heat on 1
December 2021, was applicable in 2023.
The fee of the settlement system for fuel from renewable energy sources (FRES) of EUR 0.017 per thousand FRES settlement
units, which was set on 15 January 2022, was also applicable in 2023.
Baltpool unregulated activities
In 2023, the fee of trading on the biomass exchange, when biofuels are supplied outside Lithuania, was 0.5% of the transaction
value.
The following fees were applicable in 2023 and effective from 10 July 2023: a direct agreement fee of 0.5% of the agreed value
of the biofuel actually delivered under the direct (OTC) agreement; and an annual fee of EUR 2,500 (excluding VAT) for the use
of the e-commerce system for information purposes.
Detailed information on the fees of services provided by Baltpool, including data reporting, is published on Baltpool’s website.
GET Baltic
Annual membership fee for 2023 was a fixed fee for a calendar year of EUR 5,000/year for Plan No 1 and EUR 0/year for Plan
No 2.
In 2023, variable trading fee for the amount of a product purchased and/or sold on the exchange was EUR 0.08/ MWh for Plan
No 1 and EUR 0.12/MWh for Plan No 2 (the above fees are the fees approved by the decision of the Council as of December 2015
and applicable from 2016).
Detailed information on the fees of other services provided by GET Baltic (including REMIT data provision services, data exchange
services, etc.) is published on GET Baltic’s website.
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Energy Cells
The activities of Energy Cells, as the designated energy storage
system operator (hereinafter - DSO), during the period of the DSO
designation - until the completion of the synchronisation of the
interconnection of the electricity system of the Republic of
Lithuania with the electricity grids of continental Europe, including
the prices of the services are regulated by the state.
The price of the Energy Cells’s isolated operation reserve service of
EUR 4.78/MW/hour (excluding VAT) was applicable in 2023 – it
was included in the acquisition component of Litgrid’s ancillary
services to the Transmission Service Price approved by the Council
for 2023. The 2023 price was in line with the price cap for the
Energy Cells’s isolated operation reserve service approved by the
Council in November 2022, which is EUR 4.78/MW/hour (excluding
VAT).
The price of EUR 4.19/MW/hour (excluding VAT) for isolated operation reserve service is applied from 1 January 2024, which is
in line with the adjusted price cap for the Energy Cells’s isolated operation reserve service approved by the Council in November
2023, which is EUR 4.19/MW/hour (excluding VAT), i.e. 12% lower than the price cap set in 2023. Consequently, the Council set
12% lower level of allowed revenue (EUR 7.37 million) for Energy Cells in 2024, compared to 2023 (EUR 8.37 million). The main
reason for the drop in the price of isolated operation reserve service: the costs of Energy Cells related to the purchase of electricity
are projected to be lower in 2024 compared to the costs used in determining the service price in 2023 (EUR 1.03 million in 2024,
EUR 3.03 million in 2023).
2.4 Other Important Factors
In early 2023, the Council carried out an assessment of the hedging potential of the electricity futures market in the Lithuanian
trading zone and published a public consultation on 17 February 2023. At the Council meeting held on 29 June 2023, a decision
was taken to oblige Litgrid to ensure the possibility for wholesale electricity market participants to purchase long-term inter-
zonal hedging products. The same obligation was imposed on the Swedish transmission system operator by the Swedish Energy
Markets Inspectorate by the decision of 17 August 2023.
In March 2023, the Council approved Litgrid’s updated description of the procedures for the use of the transmission grid. Together
with other Government and Council decisions adopted early in 2023, they have led to another major step in the development of
RES. In particular, it enabled to maximize the use of the existing grid infrastructure, by connecting a 100% solar, wind and storage
capacities simultaneously to the available grid capacities.
The assessment also identified Lithuania’s expected consumption, storage and export potential for 2030 (9.4 GW). Generation
management regulations for exceeding Lithuania’s needs and capabilities will be provided, enabling more flexible measures to
ensure the security of the grid and outlining further development of commercial solar power plants (with capacity exceeding 2
GW).
Connecting energy storage facilities will be increasingly important for future grid management. In preparing for these actions, the
decisions adopted at the beginning of 2023 also provided for indirect incentives for solar and wind projects by facilitating the
reservation of grid capacity, given the commitment to simultaneously develop storage facilities. The incentive has brought results
with almost 300 MW of grid capacity reserved for storage facilities during the year.
In March 2023, facilitating conditions were adopted allowing independent suppliers to start operating in the electricity balancing
market. Consequently, at the end of 2023, the Group companies (representatives of Litgrid and EPSO-G) joined the working group
established in October 2023 by order of the Minister of Energy of the Republic of Lithuania on improving the regulation of power
pooling activities.
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In July 2023, the Ministry of Energy of the Republic of Lithuania prepared and submitted for the approval to the Government of
the Republic of Lithuania the Development of the Hydrogen Sector in Lithuania 2023-2030 draft guidelines, focusing on
strengthening energy independence by developing domestic RES and prioritizing green hydrogen. This is the first document
regulating the development of the hydrogen sector in Lithuania and providing strategic directions for the development of the
hydrogen sector in Lithuania by 2030 and by 2050.
In 2023, public consultations were held on the standard terms and conditions of the transmission, balancing and imbalance service
contracts. New electricity transmission contracts concluded by Litgrid with market participants will come into effect on 1 May
2024. One of the main developments – electricity production and consumption in Lithuania will be accounted for every 15 minutes,
instead of every hour. The transition to a 15-minute interval stems from the provisions of the Commission Regulation (EU)
2017/2195 of 23 November 2017 establishing a guideline on electricity balancing (hereinafter the “Balancing Guidelines”). The
approval and entry into force of the amendments to the imbalance and balancing service contracts is expected in 2024.
In 2023, the Council approved the Electricity Cross-Border Capacity Allocation Methodology for the exchange of Balancing
Capacity in Baltic Capacity Calculation Region in accordance with Article 41(1) of the Guideline on Electricity Balancing. This
methodology sets out the rules and principles for Baltic TSOs for allocation of inter-zonal capacity for balancing capacity
exchanges and reserve sharing once the Baltic balancing capacity market is operational in early 2025.
In 2023, the Baltic TSOs submitted a revised proposal/methodology for the Baltic balancing capacity market pursuant with
Articles 33(1) and 38(1) of the Guideline on Electricity Balancing to the Baltic national regulatory authorities for approval. The
methodology describes common Baltic balancing market rules, which enable Baltic balancing service providers to participate in
the common Baltic balancing market. The Baltic Regulatory Authorities assessed the methodology and reached a consensus on
its adoption. The proposal will be translated into Lithuanian and is expected to be approved in Q1 2024.
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OPERATIONAL STRATEGY AND
PROGRESS IN IMPLEMENTING THE
STRATEGY
3.1 Operational strategy
3.2 Progress in implementing the Strategy
3.3 Operational and financial goals
3.4 Summary of significant infrastructure projects
3
EPSO-G ANNUAL REPORT FOR 2023
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3 OPERATIONAL STRATEGY AND ITS IMPLEMENTATION
PROGRESS
EPSO-G has a key role to ensure a smooth and reliable Lithuania’s transition to the energy system integrating high volumes of
RES, enabling decarbonisation of the sector, initiating system interconnection projects and facilitating climate-neutral energy
exchanges.
We will enable security,
integration, and transformation of
the Lithuanian energy sector.
MISSION
To enable sustainable
and efficient
energy exchange.
Implementation of the mission, pursuit of the vision and all activities of the EPSO-G Group are based on
the fundamental human and professional values: professionalism, cooperation, and progress.
We strive for every employee in
the Group to be recognized and
be able to grow as a professional
in their field of activity. We
understand what an important
role professional knowledge,
hands-on experience and
continuous learning play in terms
of the results of the Group and
ensuring continuity of activity.
PROFESSIONALISM
PROGRESS
Openness to new business
practices and ideas promotes the
creation, renewal,
implementation of meaningful
changes and leads us forward.
COOPERATION
We emphasize sincere and
constructive cooperation with each
other which makes it possible to
pursue the goals set in a concerted
manner.
VISION
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3.1 Operational Strategy
EPSO-G has a key role in implementing the transformation of the Lithuanian energy sector to ensure a smooth and reliable
Lithuania’s transition to the energy system integrating high volumes of RES, enabling decarbonisation of the sector, initiating
system interconnection projects and facilitating climate-neutral energy exchanges.
EPSO-G’s activities are seen through the platform’s business model with the following key features: enabled value-creating
interactions between suppliers and customers; an open, participatory infrastructure for those interactions and common rules.
The axis of the strategy is the creation of value for interested parties - customers, producers and suppliers, the shareholder, society
and employees. Therefore, the Group’s activities create a sustainable, transparent ecosystem based on uniform standards, which
facilitates the exchange between producers/suppliers and customers, and creates value for society through the empowerment of
sustainable energy choices and its contribution to the country’s competitiveness.
EPSO-G’s strategy until 2030 has been prepared with respect to the letter on the state objectives and expectations for EPSO-G,
which was approved by the order of the Minister of Energy, and is updated annually with reference to market changes, regulatory
changes and other relevant factors.
The Group’s commitments and unifying mission are identified for each stakeholder. The Group's strategic directions are formulated
and the objectives to be achieved until 2030 are determined with respect to the long- term vision of EPSO-G, i.e. to enable security,
integration, transformation of the Lithuanian energy sector.
To producers /
suppliers
To customers
To shareholders
To society
To each other
Commitment
Develop a credible
and transparent
platform, where it is
easy and fast to
enable energy
products on a liquid
market
Develop a credible
and transparent
platform providing
a wide range of
energy options at
competitive prices
To ensure a balanced
and integrated energy
exchange system
To promote climate-
neutral energy
choices for the long-
term economic
Competitiveness of
Lithuania
To build an open
and progressive
team living the
energy future
Strategic direction
A liquid regional
market and
infrastructure
attractive for
investment in
production
Created customer-
focused
organisation that
creates new
opportunities
Integrated
development of
Lithuania’s energy
system
A targeted reduction
in the environmental
impact of activities
and energy systems
adapted to the
decarbonisation of
the energy sector
Recognised as
future energy
leaders in the
region
Strategic objectives
• Ensure reliable and stable operation of
transmission systems
• Respond to customer needs and create a
customer-focused organization
• Implement strategic projects on time
and to the agreed scope
• Ensure a sustainable
return for the
shareholder
• Ensure efficient
management of
transmission systems
• Increase the integrity
of the Lithuanian
energy system
• Reduce the
environment impact
and adapt
transmission
systems for RES
integration
• Create an
engaged and
progressive
organization
Strategic performance
indicators
• AIT – 0.93 min., ENS – 27.25 MWh;
(values not higher than those set by the
Council for the respective year)
• Number of unplanned interruptions due
to operator responsibility - 0,
• Duration of unplanned interruptions due
to operator responsibility - 0
• Implementation of strategic projects on
time and in the expected scope according
to the project portfolio
• Customer satisfaction index (GCSI) ≥80
The average price of energy transmission
services for the needs of Lithuanian
consumers (EUR/MWh) ≤ for the average
• ROE not lower than
the one set by the
Government of the
Republic of Lithuania;
• Net Debt-to-EBITDA
Ratio at the end of the
period <6.3
• Implemented cross-
sectoral systems’
integration projects
(cumulative indicator -
such as P2G, P2H) – 3
until 2030.
• Actual OpEx
(excluding tax costs)
• Reduction of GHG
emissions generated
by the Group's
activities by 2/3
compared to 2019.
• The electricity
transmission grid
was prepared for
the integration of
9.4 GW of RES in
Lithuania
• The capacity
created in the gas
system for the
integration of RES
• Engagement of
the Group
employees ≥72%
• Up to 15.5% of
the Group’s
revenue structure
consists of
revenue from
unregulated
activities and
foreign markets
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EPSO-G ANNUAL REPORT FOR 2023
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in the region (LV, EE, FI, PL (electricity
TSO: and SE))
(EUR/year)
/transmission service
OpEx set by the
Council (excluding tax
costs)
(EUR/year)≤100%
• Actual CapEx
(EUR/year) / planned
CapEx (EUR/year), 90-
110%
gas (with
guarantees of origin)
in the volume of 1.6
TWh.
Key results on the way
to 2030
• Synchronization
with CEN was
implemented
• After the
completion of GIPL,
capacities are sold
through PL and LT
exchanges
• 200 MW energy
storage facilities
were installed
• Preparations for
offshore RES
integration are
complete
• Operating system
services market of
the Baltic countries,
later the Baltic Sea
region
• The Centre of
Renewable
Energy was
established and
formed
• The system of
guaranteeing the
origin of green gas
(including
hydrogen)
common with
other European
countries is
functioning
smoothly
• A data-driven
ecosystem was
created
• The
infrastructure for
railway
electrification is
ready
• Sustainable return to
the shareholder
• Cross-sectoral
systems integration
projects were
implemented (P2G,
P2H)
• Lithuania's national
REDII implementation
scheme active
• Electricity
transmission grid
prepared for RES
integration of 9.4
GW in Lithuania
• The gas system
was adapted for
hydrogen
transportation
• Plans for reducing
the environmental
impact of the Group
companies are
consistently
implemented
• Measures
necessary for the
implementation of
the "Anti-Astravets"
Law were
implemented under
the competence
• Programs for
improving the
employer's image
and ensuring
equal
Opportunities
were
implemented.
• Maturity of the
data-driven
organization was
achieved
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3.2 Progress in Implementing the Strategy
To consumers: a consumer-oriented organization to create new opportunities.
Increasing customer satisfaction is one of the EPSO-G Group’s strategic goals, contributing to the streamlined implementation of
EPSOG Strategy to create a customer-oriented organization. Group-wide customer satisfaction surveys under a unified
methodology were conducted for the third time in 2023. Attended by 211 customers using services of Amber Grid, Baltpool,
Litgrid and Tetas.
Global Customer Satisfaction Index (GCSI) and Net Promoter Score (NPS) methodologies were used to analyse the EPSO-G
Group’s customer satisfaction with the services provided, meeting customer expectations, and their willingness to recommend
these services to others. The Group’s corporate indices according to the GCSI methodology ranged from 68 to 83. The Group’s
strategy has a long-term goal of ensuring that the Customer Satisfaction Index of the Group’s companies is ≥80, i.e. that the
companies' performance is among the market leaders. The survey results showed that, as in 2022, the companies with the highest
customer satisfaction ratings (>80) were Baltpool, Litgrid and Amber Grid, while Tetas improved its ratings by five points from
63 to 68. In terms of the NPS performance, Tetas score improved by as much as 18% points, although it remained negative. A
slight decline in NPS scores is observed for other Group companies (Amber Grid, Litgrid and Baltpool), respectively, from 7.2 to
4 pp.
In Lithuania's pursuit of ambitious renewable energy objectives and the implementation of the Breakthrough Package, as well as
taking into account the tense geopolitical situation, the role of transmission operators in enabling the green transformation
becomes extremely relevant. In 2023, in the basis the RES developers' commitments, capacity of RES connected to the electricity
system (distribution and transmission grid) reached 2.336 GW. Renewable energy projects with more than 11.4 GW capacity are
expected to be connected by 2030. The 200 MW energy storage system project, completed in 2023, will contribute to the
smoother integration of RES. Its main goal is to ensure the national security of the electricity system after launch and to provide
flexibility services after 2025 at a later stage.
The intensive development of energy production from renewable energy sources, the current and future challenges of balancing
the electric grid and integration into the electric energy transportation system create opportunities for the development of green
hydrogen (produced from renewable electric energy) Power-to-Gas technology.
The gas transmission system operator Amber Grid by strengthening its positions in the field of hydrogen research and
development, in 2022, joined the largest hydrogen initiative in Europe - European Hydrogen Backbone. In the same year, the
Nordic-Baltic Hydrogen Corridor project was launched with six united countries: Finland, Estonia, Latvia, Lithuania, Poland and
Germany that will study the possibilities of green hydrogen production and transmission in the region. In 2023, the tender for a
feasibility study on the hydrogen corridor was launched. The regional study for hydrogen blending was completed in August
2023. It is likely that the ratio for blending in the transmission system will be set within the optimal range of 2-5%, and the
investments needed to adapt the system will be estimated, given the results of the study and the EU legislation to be adopted.
The Group places a great deal of importance on the preparation for the opening of market-relevant data and increasing digitization
maturity. In 2023, the pilot data of electricity transmission system operator were opened under the pilot data opening plan. In
addition, the maturity of data management in the Group companies was further increased. The value created by the Group’s
services and a wider range of options for making selections from more sources (e.g. regional integration of the gas market after
the implementation of the GIPL), suppliers, services (e.g. adaptation of the gas transmission system for hydrogen transportation,
trade in certificates of origin, preparation of electricity infrastructure for railway electrification) will contribute to the well-being of
the population, the creation of a climate-neutral energy system, and at the same time (through competitive energy prices) the
increase of the competitiveness of the national economy.
To producers and suppliers: a developed liquid regional market and an infrastructure attractive for investment
in energy production
One of the key strategic objectives will aim at maintaining a high level of reliability in transmission systems and digitizing
technological assets. This is relevant for all participants of the platform, the key stakeholders identified. Accordingly, we see
transmission reliability indicators annually set by the Council as strategic objectives. In the electricity sector, the indicators of AIT
(average interruption time, in minutes) and ENS (energy not supplied, kWh) did not exceed acceptable values in 2023 and
accounted for 0.835 and 23,232 MWh accordingly. In 2023, there were no unplanned interruptions the gas sector which would
be the transmission system operator’s responsibility.
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During the period of implementation of the strategy, it is important to improve long-term system development planning to reduce
transmission grid capacity constraints by ensuring efficient implementation of international connections, internal network
development projects, and connection of new generating sources and new users.
To society: targeted reduction of the environmental impact of activities and energy systems adapted to the
decarbonisation of the energy sector
The Group’s target is a 50% reduction in greenhouse gas emissions (GHG) from its operations by 2030. The Scope 3 emissions
inventory took place at the Group level. In 2023, the Group was working on aligning GHG targets with the Science-Based Target
Initiative (SBTI) standard.
According to our assessment, the Group companies play an important role in enabling the streamlined transformation of the
Lithuanian energy sector into a system based on green energy. RES integration management while ensuring system stability is
an important challenge for which the Group is getting ready by identifying priority areas for new competencies required to acquire
and by preparing for the integration of large volumes of offshore wind, the development of systems of guarantees of origin to
facilitate the exchange of energy from RES, and the connection of biomethane and hydrogen producers. The adaptation of the
Lithuanian gas transmission system to hydrogen transportation will be pursued, which is a strategically important and complex
task with regard to the EU Hydrogen Strategy and the Strategy for Energy System Integration.
To each other: recognized regional future energy leaders
The EPSO-G Group having an extensive know-how on international projects employs a large number of highly qualified staff.
The development of a sustainable employer-employee partnership aims to strengthen and further nurture corporate governance
and energy competencies that will be relevant to the strategic goals relating to the implementation of strategic projects under
the NEIS, decarbonisation, cross-sectoral integration of energy systems, to remain competitive in order to significantly increase
the share of the Group’s revenue from unregulated activities and the expansion of foreign markets and sustainable growth of
regulated activities.
In 2023, the Group Executives’ Committee was formed, changes to the operating model in the identified functional areas have
been introduced using matrix management. From 2023, a new Group’s employee remuneration and motivation system is in place,
with the aim of better performance and more active contribution of employees to the Company's goals, the promotion of innovative
solutions and the attraction and retention of qualified employees.
Results of the Engagement survey has revealed that the EPSO-G group result (74%) has substantially exceeded that of Lithuania
(64%), state owned enterprises (65%) and international companies operating in Lithuania (68%) results.
To the shareholder: an integrated development of the entire Lithuanian energy system
The Group’s strategy emphasises the need to create favourable conditions for the connection of green energy producers to the
infrastructure managed by the Group, i.e. to prepare the system for blending biomethane and hydrogen, to adapt the electricity
transmission system for further development of offshore and onshore wind and solar energy.
In addition, it is important to promote the integration of different sectors to achieve an optimal balancing of the system. Together
with the partners, pilot demonstration projects were further implemented to integrate the electricity and district heating sectors
(power-to-heat) and to connect a hydrogen producer (in a pilot environment) to the transmission system (power-to-gas). Such
cooperation of different economic sectors in energy, both domestically and in the region, will allow optimal use of the available
infrastructure, reduce the need to limit RES energy in the future, and increase the overall efficiency of the system.
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3.3 Operational and Financial Goals
Based on the operational directions stated in the Letter of Expectations of the Shareholder and approved in the strategy of EPSO-
G, the Board set the following operational goals for the Company for 2023.
No
Annual goal
Target indicator
Weight of
the goal
Assessme
nt of goal
achieveme
nt
1
Implementation of the
CEN synchronisation
programme
1 New synchronous condensers installed in the electricity
system of the Republic of Lithuania in Telšiai and Alytus
2 The isolated operation of the Lithuanian electricity system
(LES) was tested by 22 April
3 An automatic generation management system (AGM) was
installed by 31 December
4 Preparation for accelerated synchronisation in 2024
25%
14.5%
2
Enabling energy
transformation
1. The project outputs foreseen in the project plan for the
winter offshore wind farm have been achieved on time and to
the extent foreseen
2. Litgrid RES centre is fully operational and provides up-to-
date data to the market
3. Hydrogen programme implemented as planned
4. Preparation of the Lithuanian energy system transformation
study
20%
18%
3
Growth and
development
1. Increase in profitability of contracting activities
2. Small battery pilot project initiated
3. Development of new unregulated activities
20%
8%
4
Financial and operational
sustainability
1. Maintain a rating of at least investment grade: adjROE ≥
8.5% ajdEBITDA ≥ 60 million EUR
2. Group’s GHG targets are aligned with the SBTi standard
25%
23.5%
5
Enabling an effective
group organisational
structure
At least three functions operate on a matrix basis Group-wide
10%
10%
The Chief Executive Officer of EPSO-G is accountable to the Board for the achievement of the goals set. The Company’s financial
and non-financial goals are identical to those of the CEO of EPSO-G. The Board of the holding company carries out an annual
assessment of the achievement of the objectives.
The goals set for the holding company EPSO-G, according to the Board, were met by 74% in 2023.
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3.4 Summary of Significant Infrastructure Projects
3.4.1 Preparation of the Power Grid for a Synchronous Operation with the Continental European Network
One of the fundamental directions of the implementation of the National Energy Independence Strategy of the Republic of
Lithuania is the connection of the electricity system of the Republic of Lithuania to the European continental network for operation
in a synchronised mode (hereinafter the “Synchronisation”). Following a full-fledged integration of Lithuania into the European
electricity system in 2025, the European system management standards will be introduced in the electricity sector ensuring
management of electricity flows based on market principles and participation in maintaining the system’s frequency.
Synchronous work with the continental European network will ensure:
• Reliable operation of energy systems and secure transmission of
electricity;
• Combined actions for facility maintenance and grid development planning;
• Common rules for the management of energy systems – grid codes that
will be applied equally in all European Union countries
• Availability to electricity from Western European energy systems.
The Government of the Republic of Lithuania approved the list of the energy
projects carried out in implementing the synchronisation of the electricity
system. Litgrid is responsible for the implementation of 19 out of 21 projects
included in the list.
More information on synchronization projects is available on Litgrid website.
Programme investments:
The total funded investment value of the Synchronization Program for the three Baltic countries is up to EUR 1,650 million. This
project is included in the list of Projects of Common Interest of the European Commission.
In 2022, the Ministry of Energy of the Republic of Lithuania announced that it was aiming for the Baltic countries to synchronize
their electricity grid with Western Europe earlier than planned. On 3 August 2023, the Prime Ministers of Lithuania, Latvia, and
Estonia signed a joint declaration committing to synchronise the Baltic States’ electricity grids with Western Europe no later than
by February 2025. The projects of the Synchronisation Programme ensuring the security of the electricity system must be finalised
by the expected date of synchronisation.
The financing of the Synchronisation Programme has been granted under the Connecting Europe Facility (CEF) for the period
2021-2027 in the field of trans-European energy infrastructure.
The amount planned to fund the entire Synchronisation Programme in Lithuania is approximately EUR 724 million
1
. The total CEF
financing for the Synchronisation Programme in Lithuania amounts to nearly EUR 460 million. The previously initiated projects
received funding of EUR 23.5 million from the EU Structural Funds. The remaining is financed by Litgrid.
Program implementation progress
For the purpose of the implementation of synchronization goals, under the Resolution No 918 Plan for the Actions and Measures
of the Electricity System Synchronisation Project of 4 September 2019 approved by the Government of the Republic of Lithuania
(the “Plan for the Actions and Measures of the Synchronisation Project” or the “PAM”), the majority of actions and measures of
the PAM with the implementation term expiring in 2023 were implemented, including the implementation of the isolated
operation testing plan of the electricity system of the Republic of Lithuania, which was carried over from 2022 for objective
reasons.
At the end of the reporting period, 8 projects were implemented, and another 11 projects provided for in the program are under
process. In 2023, the first phases of the construction of the 330 kV overhead transmission lines Darbėnai-Bitėnai and Kruonio
PSHP-Bitėnai under work contracts were completed; the contract works of other phases were initiated, including the construction
of 330 kV power transmission line Vilnius-Neris, 330 kV Darbėnai and Mūša switchyards, and further reconstruction of
330/110/10 kV Neris transformer substations; synchronous condensers were delivered to Lithuania and installed at the Telšiai
and Alytus substations; the Neris synchronous condenser’s design works were carried out. In the construction project of Harmony
GRI 2-6
EPSO-G ANNUAL REPORT FOR 2023
31
Link maritime interconnection, following final proposals received at the beginning of 2023 from the participants in the
procurement for the cable and converters, in 2023, the decision was made to abandon the procurement due to the prices which
were too high and unacceptable for the contracting authorities. As part of the project concept review, the Harmony Link onshore
interconnection was considered and selected as the main alternative at the end of 2023, which is currently under the development.
In 2023, strategic power system management projects were be carried out: the isolated operation of the Lithuanian electricity
system was successfully tested by 22 April; the projects for installation of Automatic Generation Management (AGM) completed
at the end of the year. Procurement for the upgrade of the control system for NordBalt interconnector has been launched.
Following the failure of the procurement of the Frequency Stability Assessment System (FSAS) and Estonia's refusal to participate
in the joint procurement of the system, the project’s concept has been re-considered with a view to completing before the expected
Synchronisation date.
The state of completion of the synchronization strategic projects program at the end of 2023 was 70%.
3.4.2 Enhancement of Latvia-Lithuania Interconnection (ELLI)
In 2023, Amber Grid completed the project by enhancing the capacity of
the Kiemėnai gas metering station and reconstructing the gas pipeline at
the Panevėžys gas compressor station. The project in Latvia was also
completed and included the reconstruction of the main gas pipeline. Once
completed, the project has enhanced the capacity of Latvia-Lithuania
interconnection, secured safe and reliable gas supply and ensured more
effective utilisation of the infrastructure and a better integration of the
Baltic gas markets. It also provided better conditions for the utilisation of
the Latvian
Inčukalns
underground gas
storage facility. The
project promoters were Amber Grid and the Latvian transmission system
operator Conexus Baltic Grid AS.
Investments
The total investment amount of the project was EUR 10.2 million, of which
EUR 4.7 million - in the territory of Lithuania. The project was financed by
EU funds under the instrument Connecting Europe Facility (CEF), Amber
Grid was allocated up to EUR 2.1 million. The project was also jointly financed by Amber Grid and Conexus Baltic Grid AS.
3.4.3 Lithuanian Electricity Storage Facilities System Project
The 200 MW and 200 MWh capacity energy storage system is
essential to ensure the security, stability of Lithuania’s energy system
and its ability to operate in isolated mode. The energy storage system,
which will provide Lithuania with an instantaneous electricity reserve
of isolated mode until synchronisation with the continental European
network, after the synchronisaition will be available for use for the
integration of energy produced from renewable sources.
Energy Cells installed and integrated into Lithuania’s energy system
(in Vilnius, Šiauliai, Alytus and Utena) a system of four 50 MW and 50
MWh battery farms.
Project implementation progress
• Due to disruptions in the supply of equipment caused by the war in Ukraine, as well as the actions of the project contractor,
the end of the project implementation period has been postponed to 2023 after coordination with the project funding
institutions.
EPSO-G ANNUAL REPORT FOR 2023
32
• On 10 January 2023, the statements on the completion of construction of transformer substations in Šiauliai, Alytus and Vilnius
were obtained.
• On 22 April 2023, the battery system in Utena took part in the isolated operation test of the Lithuanian electricity system.
• The battery storage system underwent tests in all four farms from June to August 2023.
• Energy Cells took over the ownership of the farms: in Utena on 25 August 2023, in Šiauliai on 15 September 2023, in Alytus
on 27 September 2023, and in Vilnius on 28 September 2023.
• The Council issued permissions to generate electricity from the storage facilities: in Utena on 30 June 2023, in Šiauliai on 22
September 2023, in Alytus on 22 September 2023, and in Vilnius on 5 October 2023.
• The isolated operating reserve service was launched on 6 October 2023 at full 200 MW capacity.
Investments
The total investment amount of the project is about EUR 95 million, the largest share of which (83.3%) is funded through the
Recovery and Resilience Facility.
3.4.5 Preparation for the Offshore Wind Farm Tenders
Lithuania's offshore wind farms are among of the most important
Lithuanian energy independence projects. After the installation, farms
will significantly increase the production of electricity from renewable
energy sources, thus reducing Lithuania's dependence on electricity
imports.
Two offshore wind farms, which will begin to operate in 2028 in the
exclusive economic zone of the Republic of Lithuania in the Baltic Sea
near Palanga with a capacity of approximately 1.4 GW, is expected to
generate up to 6 TWh of green electricity per year, which would meet
up to a half of Lithuania’s current electricity demand. The offshore wind
farm is also expected to attract almost EUR 3 billion in investments and create at least 1.3 thousand new jobs.
The area designated for the 700 MW offshore wind farm (Phase I - Spring Tender) in the Baltic Sea is approximately 120 km
2
.
The farm will be about 36 kilometres from the shore.
The area designated for the 700 MW offshore wind farm (Phase II - Winter Tender) in the Baltic Sea is approximately 136.39
km
2
. The farm will be about 30 kilometres from the shore.
In cooperation with the Ministry of Energy of the Republic of Lithuania and the Lithuanian Energy Agency, EPSO-G implements
preparations for Winter Tender: carries out necessary assessments, studies and procedures to ensure adequate preparation for
the development of offshore wind farms.
Project implementation progress
• In 30 March 2023, the National Energy Regulatory Council (hereinafter the “Council”) launched the first farm developer
selection procedure. In October, a successful candidate was announced.
• On 25 May 2023, geotechnical seabed site surveys were carried out, the results were made available to the public.
• On 23 October 2023, the conclusion on Environmental Impact Assessments (EIA) of the planed economic activity was
obtained.
• On 6 October 2023, wind speed tests were completed, the results were made available to the public.
• On 16 November 2023, the Concept of the Infrastructure Development Plan and Report of the Strategic Environmental
Assessment were presented to the public.
In 2023, preparations were made for the second tender (Winter) which was announced on 15 January 2024. EPSO-G and Litgrid
provide technical-consultative assistance for the tender process and farm development.
Investments
The project is funded by the European Union funds and/or the by the Recovery and Resilience Facility for 2021‒2027 and the
state budget of the Republic of Lithuania. The value of the project is EUR 15,5 million.
GRI 2-6
EPSO-G ANNUAL REPORT FOR 2023
33
3.4.6 Project Management Function in the Group Companies
Centralized control of projects of special national importance and other projects implementing the Government's strategy is
carried out in the EPSO-G Group. The centralized project monitoring, control and project management methodological functions
of EPSO-G ePMO (enterprise Project Management Office) team enabled to ensure the provision of objective information on the
status and progress of the above strategic projects, to solve the risks and problems arising in the projects.
In 2023, all the Group companies updated and approved project management methodological documents, improved their
competence in the field of project risk management. An assessment of project management maturity was carried out at group
level, recommendations were developed for improving project management maturity.
3.5 Ten-year Grid Development Plans, Planned Investments
3.5.1 Natural Gas Transmission System Operator’s Ten-Year Grid Development Plan
In accordance with the provisions of the Law on Natural Gas of the Republic of Lithuania, every two years, but not later than by 1
July of the current year, Amber Grid, the gas transmission system operator, shall prepare and submit to the Council a ten-year
network development plan based on existing and forecast supply and demand after having consulted the relevant stakeholders.
The network development plan shall contain efficient measures in order to guarantee the adequacy of the system and the security
of supply.
In June 2022, Amber Grid prepared the Ten-Year Network Development Plan (2022-2031) and submitted it for the NERC
approval. The total amount of investments in the gas transmission system development projects over the next ten years is
expected to reach EUR 264 million. The gas consumption in Lithuania is expected to remain stable over the next ten years, besides,
there will be a possibility to transport gas towards new directions – through Poland-Lithuania interconnection. Given the
geopolitical situation, the gas flows through the Klaipėda LNG terminal and cross-border interconnection points with Latvia and
Poland are expected to grow. The Network Development Plan also sets out the main directions for the development of the
transmission system, including a focus on innovation and the development of green energy.
On 6 September 2022, the Council gave its consent for publishing the Ten-Year Network Development Plan (2022-2031)
prepared by Amber Grid. The plan also containing investment justification (requirement) is available on Amber Grid’s website, in
section “Infrastructure development” at
https://ambergrid.lt/doclib/gir0ivqhcugbxz4ezdhs65rgjdjb5x68.
In 2024, the ten-year gas network development plan is scheduled to be updated by preparing the plan for the period of 2024-
2033.
3.5.2 Electricity Transmission System Operator’s Ten-Year Grid Development Plan
In accordance with the provisions of the Law on Electricity of the Republic of Lithuania, Litgrid, the transmission system operator,
shall, every two years, but not later than by 1 July of the current year, shall submit to the Council a ten-year plan for the
development of transmission grids based on existing and planned energy supply and demand in the electricity system. The grid
development plan shall include an assessment of current and future electricity supply and demand, findings of the probabilistic
adequacy assessment of the electric power system, efficient measures for ensuring the adequacy of the system capacities and
security of supply.
In 2022, Litgrid prepared the 10-year Plan for the 400-110 kV Grid of the Lithuanian Power System (2022-2031), which also
contains a EUR 2 million investment justification (requirement). The Plan is available in Litgrid’s website, in section “Grid
Development”, at https://www.litgrid.eu/uploads/files/dir618/dir30/dir1/12_0.php.
In 2024, the ten-year electricity grid development plan is scheduled to be updated by preparing the plan for the period of 2024-
2033.
3.5.3 Planned Infrastructure Investments
Given the said updates of the ten-year grid development plan of the gas and electricity transmission operators in 2024 and the
2050 long-term strategy of the EPSO-G Group (2035), intended to clarify the EPSO-G Groups strategic directions to 2050 (2035),
which will also potentially determine the EPSO-G Group’s investments over the next decades (10 years), the EPSO-G Group’s
GRI 2-6
EPSO-G ANNUAL REPORT FOR 2023
34
investment strategy was planned to be updated in 2024 and published early in 2025 (inclusive), at the time of adopting the
updated strategies of the EPSO-G Group companies.
The updated EPSO-G’s business strategy to 2030 (EPSO-G Strategy 2030) was approved by the EPSO-G Board in 2024 and
provides for the following investments in gas, including hydrogen, electricity transmission and storage infrastructure (which, as
mentioned above, will be updated):
Comments:
1. There may be errors in the electricity transmission operators’ share of investments (distribution of synchronisation and
restoration/modernisation investments) due to the (non)assignment of projects to synchronisation projects (e.g. the reconstruction of the
330 kV Neris transformer substation is assigned to synchronisation).
2. For the ELLI project, the approx. EUR 4 million is planned to be invested in 2023 (the total investment of the Lithuanian part of the project,
including amounts up to 2023).
3. For the project to install energy storage system (200 MW), the amount indicated comprise investments planned for 2023 (the total
investment amount for the project for 2022-2023 is around EUR 101 million, which was agreed with the Council in October 2022).
4. Investment in Nordic-Baltic Hydrogen Corridor, a cross-border H2 infrastructure corridor, have not been assessed. The amount of the
investment will be estimated upon the completion of the feasibility study.
Investments in 2023-2030, EUR million
Sources of investment financing in 2023-2030
GRI 2-6
EUR 2,5
bln.
PERFORMANCE REVIEW
4.1. Performance Indicators
4.2. Consolidated Financial Performance Indicators
4.3 Research and Development Activities
4.4. Significant Events of the Reporting Period
4.5 Membership in Organisations
4.6. Related Party Transactions
4
EPSO-G ANNUAL REPORT FOR 2023
36
4 PERFORMANCE REVIEW
4.1 Performance Indicators
In 2023, the financial performance of the EPSO-G Group was largely impacted by the gas and electricity prices which were well
below those included in the tariff, causing a decline in the costs of acquisition of gas and electricity for technological and own
needs.
The geopolitical situation relating to Russia’s war in Ukraine, and economic tension had a significant adverse impact on energy
transmission flows, thereby resulting in decline in energy and gas consumption levels in Lithuania, however, gas transporting
flows towards the directions of Lithuania-Latvia increased.
The volume of electricity transmitted via high voltage transmission grid to households and businesses during the period was 9.5
terawatt hours (TWh), which was 6.9% less compared to the same period in 2022. Electricity consumption decreased due to
household and business savings, the growth of consumers generating electricity from renewable sources connected to the
distribution grid.
By supervising and operating the electricity transmission system, Litgrid met target indicators of electricity transmission reliability
and, compared to 2022, improved them. The average interruption time (AIT) indicator was 0.84 min., of which 0.10 min. were for
reasons attributable to the transmission system operator’s (TSO) responsibility (2022: 1.29 and 0.36 min., respectively). The
energy not supplied (ENS) indicator was 23.23 MWh, of which 2.67 MWh were for reasons attributable to the transmission
system operator’s (TSO) responsibility (2022: 38.69 and 10.62 MWh, respectively). As required by the Council, the AIT indicator
during the year shall not be higher than 0.934 minutes, whereas the ENS indicator shall not be higher than 27.251 MWh.
In 2023, an overall availability of the interconnections with Sweden and Poland NordBalt and LitPol Link was 98.2% and 98.3%,
respectively. Scheduled works - the annual repair of NordBalt and the implementation of synchronization projects with continental
European network – had the greatest influence on the availability of the interconnections. NordBalt availability was limited due
to fault repair works.
Based on the electricity TSO’s data, the permitted generation capacity of solar power plants connected to Lithuania’s electricity
transmission and distribution grid increased by 538 MW (from 570 MW to 1108 MW) in 2023, while the permitted generation
capacity of wind power plants increased by 265 MW (from 963 MW to 1228 MW). The total generation capacity from solar and
wind resources increased by 803 MW, from 1533 MW to 2336 MW. The capacity of other renewable energy sources (biomass,
biofuels, hydropower) increased by 98 MW (from 99 MW to 197 MW). The total change for all types of renewable energy was
901 MW (from 1,632 MW to 2,533 MW).
2023 was a historic year for green energy in Lithuania. For the first time, the share of electricity generated by renewable energy
plants accounted for around 67% of the total electricity generated in the country. In 2022, 60% of the country’s electricity (2021:
48%) was generated by renewable energy plants.
The increase in the number of renewable power plants connected to the transmission and distribution grids has led to a significant
increase in the amount of clean energy produced by both wind and solar power plants. Compared to 2022, clean energy
production in Lithuania's wind farms has increased by 67% (2021: 11%), and in solar farms by 131% (2021; 74%). The latter is
due to the rapid addition of new prosumers.
Lithuania is an important gas transmission hub for neighbouring countries. A total of 61.2 TWh of natural gas was transported
through the gas transmission system of Lithuania in 2023, of which 19.1 TWh was delivered through Latvia to the Baltic States
and Finland, and 3.2 TWh in the direction of Poland.
Gas demand in Lithuania has remained stable over the last two years. In 2023, the gas transmission operator delivered to the
Lithuanian consumers 14.9 TWh of natural gas or 4% less than in 2022 (15.6 TWh). The level of gas consumption was influenced
by the warm weather last winter, high gas prices in the first months of the year and a significant decrease in gas use for fertiliser
production and urban heating.
In 2023, the Klaipėda LNG terminal, the main source of gas supply to Lithuania and other EU countries, accounted for 85% or
31.9 TWh of the total gas transported into the system, compared to 79% or 32.1 TWh in 2022. The flow from Latvia accounted
for almost 7% (2.5 TWh), from Poland - 9% (3.3 TWh).
EPSO-G ANNUAL REPORT FOR 2023
37
As Lithuania discontinued gas imports from Russia with effect from 2022, the Lithuania-Belarus interconnection is used solely for
transporting gas to the Kaliningrad Region. The gas transit in the Kaliningrad Region in 2023 amounted to 23.9 TWh (2022: 23.4
TWh).
Following the connection of the first biomethane plant to the gas transmission system in 2023, 47 gigawatt hours (GWh) of green
gas produced in Lithuania with guarantees of origin were injected into the system in the second half of the year. The import of
biomethane produced in EU countries and meeting sustainability criteria started at the end of 2022, bringing the total amount of
biomethane imported into Lithuania in 2023 to 40 GWh with guarantees of origin recognised in Lithuania.
Key performance indicators of the EPSO-G Group
2023
2022
Change
2021
+/-
%
Electricity
Volume of electricity transmitted, GWh
9,526
10,234
-708
-6.9%
10,936
ENS (energy not supplied), MWh*
2.67
10.62
3.36
AIT (average interruption time), min. *
0.10
0.36
0.11
ENS (energy not supplied), MWh**
23.23
38.69
20.51
AIT (average interruption time), min. **
0.84
1.29
0.69
NordBalt availability, %***
92.8%
98.3%
97.3%
LitPol Link availability, %***
98.2%
98.3%
87.5%
Natural gas
Volume of natural gas transported to the domestic
exit point, GWh
14,912
15,576
-664
-4.3%
24,136
Volume of natural gas transported to the adjacent
transmission systems, GWh****
46,322
48,213
-1,891
-3.9%
28,595
Number of unplanned gas transmission outages due
to operator’s responsibility
0
0
0
-0%
0
Total duration of unplanned gas transmission
interruptions due to the operator's responsibility,
hours and minutes
0
0
0
0%
0
Biofuels
Biofuels sold on energy exchange to Lithuanian
market, GWh
6,426
6,359
67
1.1%
5,630
Biofuels sold on energy exchange to foreign
markets, GWh
1,653
397
1,256
316.4%
72
* Only for the causes falling within the scope of responsibility of the operator.
** * For all reasons (including force majeure and external factors).
*** Overall availability of LPL/NB interconnection – availability of interconnection at both sides, Lithuania and the other country.
**** Transmission systems in Latvia, Poland and the Kaliningrad Region of the Russian Federation.
In 2023, the traded volume of biofuel on Baltpool energy exchange increased by 19.6%: the traded volume was almost 8.1 TWh
in 2023, compared to 6.8 TWh in 2022.
On the energy exchange, there were in total 8.5 thousand transactions for the value of almost EUR 204 million. Biofuel production
growth stemmed to a large degree from increased activity in Estonian and Latvian markets. The major players in the biofuel
markets of these countries satisfied part of their needs through participation in biofuel exchanges. 2023 was a year of steady
price declines in the Lithuanian biofuels market. From the start of the year, biofuel price went down by almost 42%. Over the 10-
year history of exchange, there has never been such an annual price drop.
GRI 2-6
GRI 2-26
EPSO-G ANNUAL REPORT FOR 2023
38
On the Company’s heat auction data management system, there were transactions on purchase-sale of heat of more than 5.6
GWh (2022: of more than 5 GWh), whereas on the e-auction system for timber, there were in total 7.6 thousand transactions for
almost 3 million st of timber (2022: 4.1 thousand transactions for 1.9 million st of timber).
GRI 2-6
GRI 2-26
EPSO-G ANNUAL REPORT FOR 2023
39
4.2 Consolidated Financial Performance Indicators
Financial performance
indicators, EUR million
2023
2022
Change
2021
+/-
%
Revenue
478.9
589.9
-111.0
-18.8
362.9
Operating costs
9
442.0
636.6
-194.6
-30.6
318.1
EBITDA
1
101.3
-11.4
112.7
N/A
79.6
Adjusted EBITDA
2
59.2
63.6
-4.4
-6.9
65.2
Net profit
53.8
-42.5
96.3
N/A
39.8
Adjusted net profit
2
24.0
24.7
-0.7
-2.7
27.8
Cash flows from operating
activities (FFO)
3
100.7
-27.7
128.4
N/A
65.1
Investments
4
243.1
175.2
67.9
38.8
112.2
Financial ratios
EBITDA margin
5
21.1%
-1.9%
21.9%
ROE (LTM), %
20.1%
-17.0%
15.8%
Adjusted ROE (LTM), %
9.0%
9.9%
11.0%
Balance sheet KPIs, EUR
thousand EUR thousand
As at 31
December 2023
As at 31
December 2022
As at 31
December 2021
Assets
1,078.5
1,425.7
-347.2
-24.4
962.6
Non-current assets
756.2
706.5
49.7
7.0
651.8
Current assets
322.3
515.5
-193.2
-37.5
310.8
Equity
307.9
227.8
80.1
35.2
271.6
Liabilities
770.6
1,198.0
-427.4
-35.7
691.0
Net debt
6
83.5
-28.6
112.1
N/A
220.8
Working capital
12
-27.5
-21.5
-6.0
N/A
-72.8
Financial ratios
Assets turnover ratio
7
44.4%
45.2%
36.8%
Net debt-to-equity ratio
27.1%
-12.5%
81.3%
FFO to net debt ratio
10
121%
-
29%
Net debt-to-EBITDA
ratio
11
0.8
-
2.8
Net debt-to-adjusted
EBITDA
1.4
-
3.4
Equity-to-assets ratio
28.5%
16.0%
28.2%
Current liquidity ratio
8
1.0
0.7
0.7
(1) EBITDA = profit (loss) before tax + finance costs – finance income + depreciation and amortization charges + impairment charges (including a negative revaluation
of non-current tangible assets) + asset write-offs
(2) Regulated revenue, expenses and profitability indicators are recalculated due to temporary regulatory deviations from the regulated profitability indicator approved
by the Council, revaluation of non-current assets and other gain/loss from non-ordinary activities.
(3) Cash flows from operating activities (FFO) = EBITDA + interest received - interest paid - income tax paid
(4) Investments = additions in PP&E + additions in non-current intangible assets, before consideration of offsets with grants received/receivable intended for acquisition
of the related assets + change in the balance of prepayments during the year
(5) EBITDA margin = EBITDA/Revenue
(6) Net debt = non-current borrowings + current borrowings + lease liabilities - short-term investments - term deposits - cash and cash equivalents
(7) Asset turnover = Revenue (LTM)/Assets
(8) Total liquidity ratio = Current assets/Current liabilities
(9) Depreciation of assets is included in operating expenses
EPSO-G ANNUAL REPORT FOR 2023
40
(10) FFO-to-net debt ratio = FFO (LTM)/net debt
(11) Net debt-to-EBITDA ratio = Net debt/EBITDA (LTM)
(12) Working capital = Inventories + Prepayments and contract assets + Trade receivables + Other receivables + Income tax paid in advance + Trade debts + Advances
received + Provisions + Other current payables and liabilities - PIP payables - PIP payables - PIP and SIP accruals - PIP receivables
4.2.1 Revenue
The EPSO-G Group’s consolidated revenue decreased by EUR 111.0 million or 18.8% in 2023 compared to 2022, i.e. from EUR
589.9 million to EUR 478.9 million. In 2023, revenue from regulated activities accounted for 94.1% (2022: 87.4%) of the Group’s
total revenue.
Revenue by segment, EUR million
2023
2022
Change
+/-
%
Group’s revenue:
478.9
589.9
-111.0
-18.8
Litgrid
369.8
420.3
-50.5
-12.0
Amber Grid
81.3
96.7
-15.3
-15.8
Other and elimination of reciprocal
transactions
27.7
73.0
-45.3
-62.0
In 2023, Litgrid’s revenue from electricity transmission and related activities decreased by 12.4% compared to 2022 and
amounted to EUR 366.8 million or 99.2% of Litgrid’s total revenue and 76.5% of the EPSO-G Group’s total revenue. Revenue
from electricity transmission increased 2.8-fold, to EUR 206.5 million. This is due to the 2023 transmission price approved by the
Council, which was more than 5 times higher than in 2022 due to the projected electricity price and technology costs.
Nevertheless, the transmission tariff for consumers decreased by 4.3%, as a EUR 142.3 millions of congestion management
revenue was used to reduce the tariff. Despite the increase in revenue from electricity transmission, the overall revenue decline
was mostly driven by revenue from additional services, which fell from EUR 137.2 million to EUR 28.0 million (-79.6%) due to a
59% lower price for additional services set by the Council, as well as by revenue from imbalance and balancing electricity, which
fell from EUR 175.1 million to EUR 108.3 million (-38.1%) due to the decrease in the electricity market price.
In 2023, the EPSO-G Group generated revenue of EUR 80.0 million, or EUR 15.3 million less, from natural gas transport and
related services (account for 98.4% of Amber Grid’s revenue). The main reason for the decrease was the decline in revenue from
balancing products by 2.4-fold from EUR 30 million to 12.5 million due to lower gas prices and the application of the agent
principle for the accounting of system users’ balancing activities as of 1 March 2022 (net result in the financial statements,
balancing revenue are offset against costs). Revenue from natural gas transmission for the reporting period increased by EUR 2
million or 3%, compared to 2022, and totalled EUR 67.4 million. Of this, EUR 28.2 million was generated from gas transmission
to adjacent gas systems (2022: EUR 39.7 million).
The other Group’s revenue decreased by 62.0%, or EUR 45.3 million, and totalled EUR 27.7 million. This was mainly due to the
Physical Barrier project implemented by Tetas in 2022, whereas, in 2023, there were no projects of similar size.
EPSO-G ANNUAL REPORT FOR 2023
41
4.2.2 Operating Costs
In 2023, the Group’s operating expenses totalled EUR 442.0 million (in 2022, this indicator reached EUR 636.6 million). Compared
to the same period in 2022, the expenses decreased by EUR 194.6 million or 30.6% due to significantly lower prices of energy
resources and the Physical Barrier project which was implemented by Tetas in 2022 and which resulted in higher operating
expenses.
EPSO-G ANNUAL REPORT FOR 2023
42
Operating expenses by segment, EUR
million
2023
2022
Change
+/-
%
Group’s operating expenses:
442.0
636.6
-194.6
-30.6
Litgrid
333.2
477.8
-144.6
-30.3
Expenses for electricity and related
services
251.3
420.1
-168.8
-40.2
Wages and salaries
17.6
15.6
2.0
13.0
Depreciation and amortisation
19.7
20.6
-0.9
-4.1
PP&E impairment loss
21.7
0.0
21.7
-
Other
22.8
21.5
1.3
6.1
Amber Grid
76.4
78.5
-2.1
-2.8
Natural gas purchase expenses
25.4
39.8
-14.4
-36.4
Wages and salaries
13.8
11.9
1.9
15.9
Depreciation and amortisation
12.6
12.9
-0.3
-2.0
PP&E impairment loss
8.0
0.1
7.9
-
Other
16.6
13.8
2.8
20.1
Other segments and elimination of
reciprocal transactions
32.5
80.3
-47.8
-59.6
incl. (sub)construct works and materials of
Tetas
17.6
59.1
-41.5
-70.2
Litgrid’s operating expenses decreased by EUR 144.6 million or 30.3%, mainly due to substantially lower prices for electricity
and related services resulting from lower electricity market prices. In 2023, the average electricity price on Nordpool exchange
(EUR 94.44 per MWh) decreased 2.5-fold compared to 2022 (EUR 230.23 per MWh).
In 2023, Litgrid tested property, plant and equipment for impairment and recognised a EUR 21.6 million impairment loss and a
EUR 27.4 reversal of the revaluation reserve. The overall effect of changes in the value of the assets was positive and amounted
to EUR 5.8 million.
Amber Grid’s operating expenses decreased by EUR 2.2 million or 2.8%, mainly due to lower costs of acquisition of gas for
technological needs resulting from lower gas market prices. In 2023, the weighted average gas price on GET Baltic exchange
(EUR 49 per MWh) decreased by almost 2.4-fold compared to 2022 (EUR 117 per MWh).
In 2023, Amber Grid tested property, plant and equipment for impairment and recognised a EUR 7.9 million impairment loss and
a EUR 3.3 reversal of the revaluation reserve. The overall effect of changes in the value of the assets was negative and amounted
to EUR -4.7 million.
Expenses incurred in other Group’s segments decreased, mainly due to reduced contract and subcontract works of Tetas, after
the Physical Barrier project was completed in 2022.
4.2.3 Results of Operations
In 2023, the Group’s earnings before interest, tax, depreciation and amortisation (EBITDA) amounted to EUR 101.3 million, (2022:
EBITDA was negative and amounted to EUR -11.4 million).
In 2023, the EBITDA margin stood at 21.1% (in the same time in 2022, this indicator was negative and stood at -1.9%).
GRI 3-3
EPSO-G ANNUAL REPORT FOR 2023
43
Net profit/(loss) and EBITDA by segments,
EUR million
2023
2022
Change
+/-
%
Group’s EBITDA:
101.3
-11.4
112.7
N/A
Litgrid
78.3
-36.5
114.8
N/A
Amber Grid
25.7
31.1
-5.4
-17.4
Other segments and elimination of
reciprocal transactions
-2.8
-6.0
3.3
N/A
Group’s net profit/(loss):
53.8
-42.5
96.3
N/A
Litgrid
48.4
-49.5
97.9
N/A
Amber Grid
12.6
15.7
-3.2
-20.1
Other segments and elimination of
reciprocal transactions
-7.1
-8.8
1.6
N/A
Litgrid’s EBITDA, compared to 2022, increased by EUR 114.8 million to EUR 78.3 million and accounted for 77% of the EPSO-G
Group’s total EBITDA. This is explained by the decrease in technological expenses below the targets set and included in tariff by
the Council. Amber Grid’s EBITDA decreased by EUR 5.4 million to EUR 25.7 million and accounted for 25% of the EPSO-G
Group’s total EBITDA. The decrease was mainly affected by the decline in revenue from transit and balancing services.
4.2.4 Adjusted Results of Operations
Regulated revenue, expenses and profitability indicators are recalculated due to temporary regulatory deviations from the
regulated profitability indicator approved by the Council. Calculation of adjusted indicators involves estimation of adjustment for
previous period revenue, which has already been approved by the decision of the Council when determining regulated
transmission prices for the reporting period, and estimation of deviation of the actual profitability from the regulated profitability
approved by the Council, which will be considered when determining the transmission prices by the Council for future period,
with the asset revaluation results and other profit/loss from non-ordering activities being eliminated.
Adjusted EBITDA by segments, EUR million
2023
2022*
Change
+/-
%
Group’s adjusted EBITDA:
59.2
63.6
-4.4
-6.9
Litgrid
37.3
34.6
2.7
7.9
Amber Grid
24.7
35.0
-10.3
-29.6
Other and elimination of reciprocal
transactions
-2.7
-6.0
3.3
-
Adjusted net profit/(loss) by segments, EUR
million
2023
2022*
Change
+/-
%
Group’s adjusted net profit/(loss):
24.0
24.7
-0.7
-2.7
Litgrid
22.0
13.8
8.2
59.0
Amber Grid
9.2
19.5
-10.3
-52.7
Other and elimination of reciprocal
transactions
-7.2
-8.7
1.5
-
Detailed adjustments to calculate adjusted EBITDA and adjusted net profit/loss are disclosed below.
GRI 3-3
EPSO-G ANNUAL REPORT FOR 2023
44
Adjusted EBITDA, EUR million
2023
2022*
Group’s EBITDA
101.3
-11.4
Amber Grid
Refunding of ROI deviation in relation to previous periods
10.9
17.0
Payment to Poland for GIPL was included in 2022 revenue
-13.8
-8.3
Current year difference between actual revenue and revenue set
by the Council
-1.5
-12.5
Current year actual balancing result
5.7
-3.7
Current year difference between actual technological losses and
those set in the pricing
-3.1
11.2
Other adjustments for difference between current year actual rates
and those set in the pricing
0.8
0.2
Litgrid
Refunding of ROI deviation from transmission activities in relation
to previous periods
-4.1
15.3
Current year difference between actual technological losses and
those set in the pricing
-103.1
73.6
Other ROI deviations from transmission activities
-4.1
7.3
Refunding of ROI deviations from additional services in relation to
previous periods
27.1
4.4
Current year difference in regulatory rate of return from additional
services
43.2
-29.5
Group’s adjusted EBITDA
59.2
63.6
Adjusted net profit/(loss), EUR million
2023
2022*
Group’s net profit/(loss)
53.8
-42.5
Amber Grid
Adjusted EBITDA
-1.1
3.9
Current year difference between regulatory and financial depreciation of
PP&E
-0.1
0.6
Current year difference between actual taxes and those set in the pricing
0.1
-0.7
Effect of PP&E assessment and non-ordinary events
-2.3
0.0
Litgrid
Adjusted EBITDA
-41.0
71.7
Current year difference between actual taxes and those set in the pricing
-3.9
-7.7
Effect of PP&E assessment and non-ordinary events
18.5
0.0
Group’s adjusted net profit/(loss)
24.0
24.7
* Indicators adjusted in 2022 were restated given the electricity TSO’s income tax relief.
In 2023, the Group tested property, plant and equipment for impairment. As a result, a EUR 29.7 million impairment loss was
eliminated from calculations of adjusted indicators. The EUR 9.1 million effect of the sale of the controlling stake in GET Baltic
exchange was also eliminated.
4.2.5 Return on Equity
In 2023, adjusted return on equity decreased by 0,.9% compared to 2022 due to the decline in Amber Grid’s revenue from transit
services and the increase in the average equity (from EUR 249.7 million to EUR 267.8 million or by 7.3%) used to calculate the
indicator. The average equity increased due to a significant increase in the temporary surplus of return on investments generated
by Litgrid in 2023.
EPSO-G ANNUAL REPORT FOR 2023
45
The positive effect (but not in excess of the negative effects mentioned above) on adjusted return on equity was due to the interest
earned on cash held on deposits and invested in short-term bonds, as well as a higher regulatory return. The regulatory return
increased because of the higher RAB and the rate of return on investments for both operators.
It is worth noting, that on 27th July 2023 by the decision of the Council (NERC) the Methodology for the Setting of the Rate of the
Return on Investments (WACC) was adjusted. In accordance with the adjusted WACC Methodology, for the energy transmission
services of Litgrid, Amber Grid and for isolated operation reserve service of Energy Cells approximately by 1 percentage point
higher regulated return on investments was set for 2024 in comparison to 2023 (for 2023 for Litgrid, Amber Grid and Energy Cells
4.09 perc., 3.96 perc. and 3.99 perc. were set respectively, for 2024 - 5.00 perc., 5.04 perc. and 4.97 perc. respectively).
Key performance indicators of regulated
activity
2023
2022
Change
+/-
%
RAB (at the beginning of the year), EUR
million
Litgrid
351.7
330.0
21.7
6.6
Amber Grid
273.0
271.1
1.9
0.7
Energy Cells
10.7
9.1
1.5
16.8
Regulatory depreciation, EUR million
Litgrid
19.3
20.1
-0.8
-4.0
Amber Grid
12.5
13.0
-0.5
-3.7
Energy Cells
0.3
0.0
0.3
-
WACC (rate of return on investments)*, %
Litgrid
4.09
4.03
0.06 pp
Amber Grid
3.96
3.94
0.02 pp
Energy Cells
3.99
-**
3.99 pp
* The rate of return on investment set by the Council and included in the regulated prices (WACC).
** Energy Cells’s rate of return on investment was first set in 2023 (when operations were commenced and the price cap was approved).
4.2.6 Statement of Financial Position
As at 31 December 2023, the Group’s assets amounted to EUR 1,078 million. Compared to 2022, the assets decreased by 24.4%
mainly due to the sale of the controlling stake in GET Baltic exchange and the decrease in the balance of PSO funds collected by
Baltpool.
After the loss of control in GET Baltic, the results were no longer consolidated from 1 June 2023, thus the amounts recorded in
the Group’s balance sheet under the security deposits and funds deposited by the natural gas exchange participants for
GRI 3-3
Return on equity
(ROE)
Adjusted return on
equity
(ROE)
9.0%
9.9%
20.1%
-17%
2023
2022
EPSO-G ANNUAL REPORT FOR 2023
46
guarantees decreased, and the Group’s consolidated assets and liabilities decreased by EUR 203.8 million and EUR 202.6 million,
respectively, compared to 31 December 2022.
The Group’s non-current assets amounted to EUR 756.2 million and accounted for 70.0% of the Group’s total assets. Compared
to the year end of 2022, non-current assets increased by 7.0% due to investments in the electricity and natural gas transmission
infrastructure and the system of energy storage facilities.
At the end of 2023, compared to the end of 2022, current-liabilities decreased due to the lower balance of the PSO Funds accrued
by the Group (decreased by EUR 91.5 million) and a smaller current portion of congestion management revenue (decreased by
EUR 252.2 million), the major part of which was reclassified to non-current liabilities, with the intention to use the revenue after
one year.
Compared to the end of 2022, the shareholders’ equity increased by 35.2% to EUR 307.9 million due to the profit earned and a
revaluation reserve recognised for property, plant and equipment, whereas the ownership interest compared to the Group’s assets
at the end of 2023 amounted to 28.5%.
In 2023, the Group's net working capital remained unchanged, as compared to 2022. The decrease in payables to suppliers due
to the falling energy prices generated a negative cash flow which was compensated for by a positive cash flow from the trade
receivables which decreased for the same reasons.
EPSO-G ANNUAL REPORT FOR 2023
47
At the end of 2023, the Group’s net financial liabilities to creditors, including lease liabilities, amounted to EUR 206.7 million. Due
to accrued congestion revenue of Litgrid, cash and cash equivalents, term deposits and short-term investments at the end of the
period amounted to EUR 123.2 million, therefore, net financial debt was EUR 83.5 million.
Net debt, EUR million
2023
2022
Change
+/-
%
Group’s net debt:
83.5
-28.6
112.1
N/A
Non-current ant current borrowings
195.9
208.2
-12.3
-5.9
Lease liabilities
10.9
12.9
-2.0
-15.4
Cash and cash equivalents
123.3
248.1
-124.9
-50.3
4.2.7 Cash Flows
In 2023, the Group’s net cash flows from operating activities amounted to EUR 111.8 million (2022: EUR 11.5 million). The
Group’s investments in non-current assets amounted to EUR 243.5 million (2022: EUR 113.2 million). In 2023, the EU financial
support obtained to finance the investment projects amounted to EUR 71.5 million (2022: EUR 107.8 million).
Investments in working capital increased mainly due to the EUR 91.5 million TSO Funds accrued and used by Baltpool. The
obligations for TSO Funds recoded on the balance sheet decreased from EUR 160.5 million to EUR 69.0 million.
In 2023, Litgrid collected the EUR 108.5 million congestion management funds, which were almost 2.5-fold lower than in 2022
due to small differences between regional electricity prices. These proceeds are not recognised as revenue and have no direct
impact on the Company’s result of operations, and their use is regulated under the European Parliament and Council Regulation
No 2019/943 and the methodology approved by the European Union Agency for the Cooperation of Energy Regulators (ACER).
Congestion management proceeds are used mostly to finance in part the investments aimed at capacity enhancement of
interconnections. In 2023, EUR 142.3 million of congestion management revenue was used to reduce the tariff, and EUR 15.2
million for investments.
EPSO-G ANNUAL REPORT FOR 2023
48
In 2023, the Group repaid loans in the amount of EUR 30.9 million (2022: EUR 35.4 million), and did not receive new long-term
loans. As at 31 December 2023, the Group made a temporary use of a EUR 18 million overdraft, which was fully repaid in January
2024.
4.2.8 Investments
In 2023, the EPSO-G Group’s investments (non-current assets carried at cost, before consideration of offsets with grants
received/receivable for acquisition of the related assets) amounted to EUR 243.1 million, i.e. were higher by EUR 67.9 million than
in 2022. Excluding assets received from third parties, the EPSOG Group’s investments amounted to EUR 231.3 million, i.e. were
higher by EUR 76.9 million than in 2022.
Litgrid’s investments amounted to EUR 165.4 million (66% of which was spent on strategic and nationally important electricity
projects, 34% on transmission grid reconstruction and development and operational support), excluding assets received from
third parties investments amounted to EUR 153.6 million.
Amber Grid’s investments in the reconstruction and modernisation of the main grid amounted to EUR 35.7 million (of which EUR
13.2 million for the reconstruction of individual sections of the Vilnius-Kaunas main gas pipeline, EUR 3.2 million for the
replacement of overground passes with the underground passes and deepening of not deepened sections of main gas pipeline
(MD A2 stage II), EUR 6.7 million for the reconstruction of Grigiškės, Kėdainiai, Vievis, Telšiai, Šiauliai DSSs, EUR 3.1 million for
the replacement of closures and connection to Scada, et.).
Energy Cells’ investments in the system of energy storage facilities amounted to EUR 32.6 million.
GRI 2-23
GRI 2-24
EPSO-G ANNUAL REPORT FOR 2023
49
4.3 Research and Development Activities
The ambitious goals of the National Energy Independence Strategy regarding the integration of renewable energy sources and
the simultaneous synchronisation programme with the continental European network and the regional gas market integration
processes encourage the EPSO-G Group companies to seek new innovative solutions for the reliable operation of Lithuania’s
energy system now and in the future. Research and studies, and the planning and implementation of innovation activities,
encourage the Group companies to improve the efficiency of their operations by applying new methods, tools and best practices.
In carrying out these activities, the EPSO-G Group companies follow the Guidelines for Research and Experimental Development
and Innovation Activities (hereinafter referred to as the “R&D&I Guidelines”). The objective of the R&D&I guidelines is to ensure,
through research, innovation and new solutions, the continuity and efficiency of the activities of the EPSO-G Group companies, to
ensure competitiveness or to create the conditions for competition, in order to achieve the objectives of the National Energy
Independence Strategy and to create greater added value for society.
R&D&I Guidelines determine common concepts of scientific research, experimental development, innovations and innovative
activities applicable to the entire EPSO-G Group, common performance directions and priorities, classification principles and
recommendations for operators of transmission system regarding funds attributable to the R&D&I Guidelines activities not
covered by the regulated activities. At the end of 2023, the Group's innovation portfolio consisted of 40 instruments focusing on
advanced and efficient systems management and monitoring (9), modern asset management solutions (16), the development of
the Group's ICT and digitalisation (9), and the development of new business organisations and services (6). During 2023, as much
as 20 measures were initiated.
By engaging in R&D&I activities the Group contributes to the energy transformation and the transition to a climate-neutral
economy, at the same time striving for greater energy efficiency and cross-sectoral cooperation to create benefit for the Lithuanian
people and businesses. Through research, demonstration and experimental projects, the Group supports building RES capacities,
consumption electrification and industry decarbonisation, development of green gas market, system integrations, flexibility and
balancing services or products.
Below is an overview of the main R&D&I tools that contribute to the objectives identified above.
Lithuania Energy Vision to 2050
EPSO-G together with experts from international consultancy DNV have developed Lithuania
Energy Vision to 2050. Through cooperation with Lithuanian industry, energy companies and
experts, scenarios have developed that open up opportunities for Lithuania to become the hub of
next-generation industrial development and a climate-neutral country by 2050. Lithuania would
switch from fossil fuels to electricity from renewable energy sources (RES), generate electricity
for domestic needs, to produce hydrogen, and export not only energy, but also higher-value
sustainable products. Lithuania's energy vision would guide the implementation of energy
projects and the development of strategic partnerships, creating a basis for the integration of
different sectors. The Vision will also be used as a basis for the update of the Lithuanian Energy Independence Strategy (NEIS).
Experts of EPSO-G, Litgrid and Amber Grid are involved in the development of LT100 modelling
study. The LT100 project is a follow-up on the Lithuanian Energy Vision 2050, which includes
comprehensive assessment of Lithuania’s energy sector, with the aim of presenting proposals for
Lithuania to become a completely self-sufficient in electricity generation and to achieve that 100%
of Lithuania’s electricity consumption is generated from renewable energy sources.
The first interim results of the Lithuanian energy system modelling study are expected to be
submitted in early 2024, on the basis of which the proposals for updating the NEIS will be assessed.
GRI 2-23
GRI 2-24
GRI 3-3
EPSO-G ANNUAL REPORT FOR 2023
50
Guidelines and roadmap for hydrogen development in Lithuania
To assess prospects for hydrogen transport potential, Amber Grid completed the technical
feasibility study on adapting gas transmission networks in the Baltic States and Finland for
transporting methane and hydrogen blend in 2023, as well as study on modernisation measures
and the investment requirements. Following in-depth examination of the situation, independent
foreign experts have provided estimates of the required investments in the natural gas
transmission network to ensure technical capacity for the transport of the methane-hydrogen
blend. The investment requirement has been estimated by examining different scenarios based
on the percentage of hydrogen/methane in the blend that has a direct impact on the
characteristics of the components of the existing technological equipment.
In November 2023, the Nordic-Baltic Hydrogen Corridor was granted the status of the project of common
interest (PCI) by the European Commission. Following this, the gas transmission system operators from
Nordic and Baltic countries, namely Gasgrid Finland (Finland), Elering (Estonia), Conexus Baltic Grid (Latvia),
Amber Grid (Lithuania), GAZ-SYSTEM (Poland) and ONTRAS (Germany), signed a contract on the pre-
feasibility study on the green hydrogen corridor. AFRY Management Consulting, the winner of the tender,
will analyse the conditions for the development of cross-border hydrogen infrastructure from Finland,
through the Baltic countries and Poland to Germany, as well as green hydrogen trends in the region. It is
planned that the study, which will provide a comprehensive, fact-based framework to allow the optimal
decisions to be made, will be prepared in six months, by the middle of 2024.
Demonstration of the synergy between electric and heat storage systems
Litgrid, jointly with Kaunas University of Technology (KTU), carried out unique tests on
a 1 megawatt (MW) experimental battery and smart energy system with a heat
storage. These hybrid system tests are important for the development of the energy
system flexibility and RES integration solutions through coupling of power and heat
sectors (Power to Heat, P2H). Five demonstrations involved testing of the following:
• efficient consumption of surplus electricity generated by solar PV;
• system economic efficiency measurement using electricity price forecasting;
• system’s power balance management by stabilising the power system frequency;
• provision of balancing services where the system is used as a power source for
manual frequency restoration reserve (mFRR);
• provision of a new flexibility service (congestion management) through
geographically distant elements of the system.
Dynamic Line Rating pilot project
Litgrid tested artificial intelligence and sensor technologies that can contribute to the successful
operation of renewable energy plants. Special devices were installed on overhead lines to
measure weather conditions, and an innovative model was used to assess current and to predict
potential line rating (capacity). Test results show that using this technology, transmission line
throughput has increased by an average of 52% compared to the established design.
Dynamic Line Rating (DLR) is promising for creating more favourable conditions for renewable
energy power plants to generate more electricity without restrictions.
New physical sensors mounted on overhead power lines supports measured weather
conditions, line temperature, current, vibration strength and frequency, and allowed to test the
conductor deflection. The innovation was implemented on 110 kV overhead transmission line
Palanga–Vėjas 1 in Klaipėda district. Additionally, an innovative permeability assessment
model was developed for the 330 kV Kaunas–Šiauliai overhead line.
GRI 3-3
GRI 2-6
GRI 2-23
GRI 2-24
EPSO-G ANNUAL REPORT FOR 2023
51
A study on the operation of a battery energy storage system under simulated electricity market conditions and a technical
assessment of its operation in combination with renewable energy source
Litgrid together with Green Genius, a renewable energy company, completed testing of the
first 1 MW battery connected to the electricity transmission grid in the Baltic States. Findings
show that energy storage has great potential to contribute to the development of renewable
energy sources (RES).
The 1 MW battery with 1 MWh capacity can not only store and instantly supply energy to
the grid, but also contribute to the management of frequency and other system parameters.
In cooperation with Green Genius, the battery was tested under different scenarios: it was
loaded and unloaded according to a pre-planned schedule to simulate its operation in the
Day-ahead and Intraday markets of the Nord Pool. The battery was also tested to see how it
can complement solar and wind power in different operation modes of RES plants and the
battery, and to find the most efficient model of interaction.
The tests provided insights into how batteries will enable RES plants to meet grid
requirements, as energy storage systems greatly extend the RES plant management
potential.
GRI 2-6
GRI 2-23
GRI 2-24
GRI 3-3
EPSO-G ANNUAL REPORT FOR 2023
52
4.4 Significant Events of the Reporting Period
2 January. Ministry of Energy announces the selection of EPSO-G’s Board members for the new term of office.
2 January. EPSO-G opens the selection process for the Board of Tetas.
5 January. The new version of the Articles of Association of EPSO-G was registered in the Register of Legal Entities.
The new version of the Articles of Association provides clarification of how EPSO-G carries out its patronage
functions, revision of competences of EPSO-G's General Meeting of Shareholders, the Board and the CEO,
clarification of the provisions relating to the formation of EPSO-G management committees, clarification of the
provisions concerning the composition of the Board and the organisation of its activities, the possibility for the
EPSO-G’s Board to form the Group Executives’ Committee.
13 January. In an incident in Pasvalys district, Amber Grid’s main gas pipeline was damaged and the gas it contained
caught fire. No people were injured in the incident and the gas supply was ensured by a parallel gas pipeline.
Following the rehabilitation of the damaged pipeline, the gas supply was restored on 16 January.
16 January. Darius Kašauskas takes up the post of the Head of Finance and Operational Planning at EPSO-G.
3 February. Initial testing of the energy storage system of Energy Cells was completed.
3 February. Litgrid published an update of its strategy until 2030.
9 February. EPSO-G’s sustainability-related bond issue at the Nasdaq Baltic Market Awards 2023 was recognised
as a key event in the Baltic capital market.
20 February. Paulius Butkus took up the position as Head of Development and Innovation of EPSO-G.
24 February. EPSO-G has opened the selection process for the members of the Board of Litgrid and Amber Grid.
16 March. Amber Grid’s subsidiary, the regional gas exchange GET Baltic, has chosen the European Energy
Exchange as its strategic partner. The European Energy Exchange public tender offered 66%. The acquisition value
of the GET Baltic shares is EUR 6.5 million. The transaction will be finalised in May-June following the signing of
the necessary contracts and other formal closing steps.
13 March. EPSO-G has published a vacancy for a member of the Board of the Innovation and Business Development
Competence Area of the subsidiary Energy Cells, nominated by the parent company.
24 March. The Ministry of Energy of the Republic of Lithuania has appointed the new EPSO-G Board, which will
consist of three independent members Robertas Vyšniauskas, Asta Sungailienė and Liudas Liutkevičius, and the
Ministry of Energy’s delegates Dainius Bražiūnas and Tomas Daukantas.
30 March. Darius Kašauskas, Head of Finance and Operational Planning at the EPSO-G Group, has been elected
Chair of the Board of Tetas. The Board, which began its four-year term in March, also includes an independent
board member, Tomas Astrauskas, and two board members delegated by EPSO-G, the sole shareholder of Tetas,
Elida Drapienė and Ieva Kuodė. The selection of the fifth member of the Tetas Board is expected to be finalised in
April.
31 March. Viktoras Baltuškonis, a member delegated by EPSO-G, left the Board of Baltpool. He resigned from the
Board of Baltpool before the end of his term of office, following the end of his employment with EPSO-G.
01
JANUARY
02
FEBRUARY
03
MARCH
EPSO-G ANNUAL REPORT FOR 2023
53
5 April. Vytautas Lisauskas was appointed as an independent member of the Board of Tetas, thus finalising the
five-member Board of Tetas.
7 April. Robertas Vyšniauskas, an independent member of the EPSO-G Board, was elected the Chairman of the
Board. The new five-member EPSO-G Board, which will serve for four years, was formed at the end of March. Mr.
Vyšniauskas also served on the company’s Board in the previous term of office, and has been its Chair since February
2022.
7 April. The Remuneration and Nomination Committee was formed at the Board meeting and Board members Asta
Sungailiene and Tomas Daukantas were elected as its members. The selection of an independent committee
member has also been announced.
On 11 April, Amber Grid’s General Meeting of Shareholders approved the signing of agreements with GET Baltic’s
strategic partner and the sale of 66% of the shares to the winner of the public tender - European Energy Exchange.
The transaction with the European Energy Exchange will be finalised in May-June following the signing of the
necessary contracts and other formal closing steps.
11 April. Paulius Butkus, Head of Development and Innovation at EPSO-G, has been confirmed as a member of the
Board for the Innovation and Green Transformation Competency Area of Amber Grid, nominated by the parent
company.
14 April. Amber Grid has launched an international tender for a feasibility study on the hydrogen corridor.
21 April. The Ministry of Energy of the Republic of Lithuania has appointed Dainius Bražiūnas, a member of the
Board, as a member of EPSO-G’s Audit Committee.
22 April. Litgrid has successfully completed the isolated operation test - Lithuania’s electricity system is ready to
operate independently.
24 April. Simona Grinevičienė took up her new position as Head of Organisation Development and Culture at EPSO-
G.
24 April. Litgrid and PSE informed about the intention to re-launch the Harmony Link procurement.
On 2 May, the Republic of Lithuania’s national biofuel sustainability scheme RED BP was launched, ensuring that
biomass fuels meet sustainability and greenhouse gas emission reduction criteria, the development and
implementation of which was entrusted to Baltpool.
3 May. Moody’s Investors Service, the rating agency, confirmed EPSO-G's Baa1 credit rating with a stable outlook
following a periodic review.
5 May. Approved amendments to the Synchronisation Law obliged the storage system operator Energy Cells to
allow Litgrid, the Lithuanian electricity transmission system operator, to use a part of the 200 MW capacity of the
energy storage system, free of charge, to reduce the cost of technological losses and for other functions necessary
to ensure the security and reliability of the country’s electricity system.
9 May. Ernesta Dapkienė took up the position of the Head of Communication at EPSO-G.
12 May. EPSO-G is planning to move to the Business Garden Vilnius office complex in autumn. EPSO-G has signed
a five-year lease agreement with Vastint Lithuania, which won the tender.
16 May. The sole shareholder of EPSO-G has appointed Paulius Butkus, Head of Group Development and
Innovation, as a member of the Board of Energy Cells.
16 May. Amber Grid and the European Energy Exchange AG (EEX) have officially signed an agreement under which
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EEX will acquire a 66% stake in regional gas exchange GET Baltic. The gas exchange, which operates in the three
Baltic countries and Finland, will thus become part of the EEX Group. The remaining 34% will beheld by Amber
Grid, which will continue to be involved in the further development of the gas business in the dynamic Baltic Sea
region.
18 May. Litgrid has launched 88 km of 330 kV electricity transmission lines in Western Lithuania. During the
reconstruction, the single-circuit Grobinė (Latvia)-Klaipėda and Jurbarkas-Bitėnai overhead lines became double-
circuit lines, thus increasing the power capacity and strengthening the reliability of the grid. Construction projects
for electricity transmission lines in western Lithuania are being carried out in preparation for synchronisation with
continental European network.
19 May. The Cabinet of Ministers of the Republic of Latvia adds Baltpool Energy Exchange to the list of exchanges
where sustainable biofuels purchased are deemed to meet the sustainability and GHG reduction requirements of
Latvian national regulation.
26 May. Energy Cells launches a public procurement procedure for the purchase of consultancy services for the
transfer of the storage system. The winning consultants will have until the end of the year to prepare a plan for the
transfer of the storage system.
31 May. Litgrid is building a new transformer substation in Klaipėda district, opening new opportunities for business
development and strengthening the electricity transmission grid in the region. The first to connect to the
transmission grid through this substation will be the VMG Technics R&D Farm, an industrial and innovation farm
project being developed by VMG Technics, a VMG group company.
31 May. Amber Grid’s transaction with the European Energy Exchange for the sale and purchase of a 66% stake in
GET Baltic was legally completed. The value of the transaction is EUR 6.5 million.
2 June. As part of its internal investigation and assessment of available information, Amber Grid contacted the
Prosecutor's Office regarding a part of the GIPL pipeline connection fittings.
12 June. Litgrid’s Extraordinary General Meeting of Shareholders has appointed Andrius Šemeškevičius as a new
independent member of the Board. A. Šemeškevičius is Chief Technology Officer of Telia Lietuva.
14 June. Litgrid starts the construction of a 330 kV substation in Darbėnai, Kretinga district. The switchyard, which
is considered to be the future energy hub of western Lithuania, will increase Lithuania's energy security and
commercial trade opportunities, and will contribute significantly to the growth of renewable electricity generation.
20 June. Litgrid buys physical smart sensors from Heimdall Power AS of Norway. This innovation will be used to
monitor the condition of overhead wires and the parameters that determine their capacity.
21 June. The Government of the Republic of Lithuania adopts a Resolution on the amendment to the Rules for the
procurement of energy or fuels required for the production of electricity and heat by enterprises operating in the
energy sector, which provides for the possibility for market participants to purchase biofuel produced outside the
territory of the Republic of Lithuania, if the place of delivery is outside the territory of the Republic of Lithuania, and
for the introduction of differentiation of the purchased fuel in the event of additional fuel using installations (Vilnius
CHP plant).
23 June. Litgrid has successfully completed another phase of its preparations for synchronisation with the
continental European network. The operator has completed its seventh project after conducting and reporting on
Lithuania’s first-ever isolated operation test.
27 June. Litgrid is planning to install noise attenuation barriers to reduce the noise from the autotransformers
operating at the Alytus transformer substation. This is the second phase of the ongoing project “Installation of noise
attenuation measures at the Alytus 330-400 kV power unit”. The first sound attenuation measures at the LitPol
Link converter station were installed in 2021, in accordance with an agreement with the Alytus District Municipality
and residents.
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29 June. The Board of EPSO-G has approved the new composition of the company's Remuneration and Nomination
Committee. Asta Sungailienė, an independent member of EPSO-G’s Board, becomes the Chair of the committee.
EPSO-G’s Remuneration and Nomination Committee consists of 3 members. Sungailiene will be joined on the
Committee by independent member Ramūnas Bagdonas, Head of Human Resources at the telecommunications
company Telia Lietuva, and Tomas Daukantas, Head of the Ministry of Energy's Legal and Personnel Group.
As of 1 July, following amendments to the Law on Alternative Fuels and the Description of the procedure for the
administration of the renewable fuel accounting unit system, electricity is also eligible for the allocation of
renewable fuel accounting units, which are needed by fuel suppliers to meet the objectives set out in the law.
3 July. Litgrid has completed one of the most important projects of the year in Southern Lithuania - the 61 km long
330 kV electricity transmission line from Elektrėnai to Alytus has been reconstructed. The upgraded line will bring
reliability, stability and security to the electricity system, and is important for synchronisation with the continental
European network.
As of 1 August, special land use conditions will apply to areas within the location classes of trunk gas pipelines.
2 August. Lithuanian, Latvian and Estonian electricity transmission system operators Litgrid, AST and Elering sign
an agreement on a new synchronisation date. Under the agreement, disconnection from the Russian controlled
system and connection to the continental European network will take place in February 2025. The agreement also
foresees that the Baltic countries will jointly refuse to extend the BRELL contract with Russian and Belarusian
operators in summer 2024, six months before synchronisation.
4 August. Amber Grid and Litgrid have launched an international tender to ensure the protection of strategically
important energy facilities from unmanned aerial vehicles. The energy companies are to purchase drone detection
and neutralisation systems.
30 August. Litgrid starts construction of the 330 kV Mūša switchyard, which is important for synchronisation.
5 September. Litgrid’s important package arrived in Ukraine: a powerful autotransformer will provide electricity to
hundreds of thousands of people.
12 September. Litgrid together with Ignitis Gamyba has successfully tested one of the most important projects for
synchronisation with the continental European network – the Automatic Generation Control System (AGC).
18 September. Lithuania’s first green gas appeared in the gas transmission network. The newly opened Tube green
biomethane plant in Pasvalys district has started supplying biomethane to Amber Grid’s transmission network.
Around 100,000 megawatt hours (MWh) of biomethane is expected to be injected into the transmission system
from this plant each year. This will account for up to 1% of Lithuania’s total gas demand.
19 September. Litgrid completed the reconstruction of the 330 kV power transmission line Jurbarkas-Bitėnai, which
is important for synchronisation. The reconstruction increased the electrical capacity and strengthened the reliability
of the grid by replacing a single-circuit line with a double-circuit line.
23 September. The NordBalt electricity link with Sweden was successfully switched on after repair.
10 October. Amber Grid launches hydrogen transport activities: to become the Lithuanian hydrogen grid operator.
18 October. Energy Cells energy storage system officially went live: it provides isolated operation reserve service
at full capacity of 200 MW (the actual start of the service at full capacity of 200 MW was on 6 October).
20 October. Litgrid has implemented the Automatic Generation Management System software. This is one of the
most important projects in preparation for synchronisation with continental European network.
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08
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09
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25 October. The word and figurative trademarks of the energy transmission and exchange group EPSO-G are
registered in the Trademark Register of the Republic of Lithuania.
28 October. NordBalt interconnection relaunched following the successful completion of planned repairs.
As of 15 November, EPSO-G’s registered and correspondence address from Gedimino ave. 20, Vilnius, LT-01103
to Laisvės ave. 10, Vilnius, LT-04215.
13 November. The Lithuanian and Polish electricity transmission systems operators, Litgrid and PSE, are looking
into alternatives for the new Polish-Lithuanian interconnection.
22 November. Litgrid received certificate confirming its management system’s compliance with the requirements
of the international standards.
24 November. The Lithuania Energy Vision 2050 was introduced to the public. The Vision has been developed by
EPSO-G together with experts from international consultancy DNV. It also involved cooperation with Lithuanian
industry, energy companies and experts.
1 December. Amber Grid completed the reconstruction of sections in the Vilnius-Kaunas gas pipeline.
6 December. Litgrid signed a contract with Estonian company Enefit, the second electricity demand aggregator in
Lithuania.
8 December. Amber Grid renewed six important objects for Lithuanian gas consumers for EUR 14 million.
18 December. EPSO-G announced the selection of the Board members for Amber Grid and Litgrid.
18 December. Litgrid carried out major works in Bitėnai transformer substation switchyard, which is important for
synchronisation.
22 December. Litgrid reserved 1.3 GW of capacity for solar, wind and storage within the period of 3 months.
29 December. EPSO-G has published an audited report on the Group's Sustainability Progress for 2022 with an
Independent Limited Assurance Report. The report was audited by PricewaterhouseCoopers.
Significant events after the end of the financial period
3 January. The European Gas Transmission System Operators Gasgrid Finland (Finland), Elering (Estonia), Conexus
Baltic Grid (Latvia), Amber Grid (Lithuania), GAZ-SYSTEM (Poland) and ONTRAS (Germany) participating in the
international project for the creation of the Nordic-Baltic Hydrogen Corridor signed a contract on the pre-feasibility
study on the green hydrogen corridor.
12 January. Litgrid and KTU completed innovative battery and thermal accumulator tests.
15 January. Litgrid signed a cooperation agreement to prepare the electricity transmission grid for the electrification
of Rail Baltica.
15 January. EPSO-G announced selection of the members of the Board of Baltpool.
23 January. EPSO-G will develop the Group’s 2050 long-term strategy in partnership with companies implementing
the project on a consortium basis which won an international procurement tender launched by EPSO-G.
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The new electronic register system for guarantees of origin of green gases, administered by Amber Grid, was
launched on 1 February.
12 February. Based on Litgrid’s data, in 2023, electricity generation in Lithuania grew by one third, which was the
highest volume since 2010, and RES plants reached record levels by generating 70% of the country’s total
electricity.
26 February. Amber Grid requested to rectify identified deficiencies in the certification of the GIPL pipeline
components. Failure to do so will result in the defects being rectified by replacing the parts.
13 March. On 12 March 2024, the independent member of the Board of EPSO-G, Asta Sungailienė, has declared
her resignation from the position of the member of the Board and of the Chairperson of the Nomination and
Remuneration Committee of EPSO-G due to personal reasons, starting from 27 March 2024.
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03
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4.5 Membership in Organisations
In 2023, the holding company EPSO-G and the transmission system operators actively participated in the activities of the national
(Lithuania’s National Energy Association - Lith. NLEA) and various international organisations and associations, such as the
European Association of Transmission System Operators for Electricity (ENTSO-E) and the European Association of Transmission
System Operators for Gas (ENTSO-G), as well as in the activities of TSOs and other associations of electricity undertakings. The
involvement in the activities of Lithuanian and foreign organisations allows the Group companies to build their competences,
share best practices, and participate in joint projects with other countries that contribute to strengthening Lithuania’s energy
independence.
Organisation
Representing
company
Link
Organisation description
Bioenergy Europe
Baltpool
www.bioenergyeurope.org
The association bringing together national
bioenergy associations and bioenergy
companies based in Europe, as well as
academic and research institutions in Europe.
EASEE-gas
Amber Grid
www.easee-gas.eu
The association established to develop and
promote simplified and streamlined physical
transportation and trade of gas throughout
Europe.
ENTSO-E
Litgrid
www.entsoe.eu
The organisation bringing together European
electricity transmission system.
ENTSO-G
Amber Grid
www.entsog.eu
The organisation bringing together European
natural gas transmission
European Green
Hydrogen Alliance
(European Green
Hydrogen Alliance)
Amber Grid
www.ech2a.eu
An alliance for the development of hydrogen
technology in Europe.
European Renewable
Gas Registry
Amber Grid
www.ergar.org
An organization with the objective to develop
trade in guarantees of origin for gas produced
from renewable energy
European Hydrogen
Backbone
Amber Grid
www.ehb.eu
Members participating in the initiative create a
shared vision for hydrogen transportation
infrastructure across Europe.
Infobalt
EPSO-G,
Amber Grid,
Litgrid
www.infobalt.lt
DigiTech Sector association to create the best
conditions for technology application, market
development and export.
EnergyTech Digital, a group set up by Infobalt
and the EPSO-G Group companies to promote
the wider use of digital technologies in the
energy sector.
International Council
on Large Electric
Systems (CIGRE)
Litgrid
www.cigre.org
Global non-profit organization, the scope of
the activities, of which includes the technical
and economic aspects of the electrical grid, as
well as the environmental and regulatory
aspects
AIB, the organization
uniting bodies issuing
guarantees of origin in
Europe
Amber Grid
www.aib-net.org
Creates and develops a standardized system
for the exchange of guarantees of origin of
energy among the bodies issuing guarantees
of origin of the European Union and the
member states of the European Economic
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Area to ensure a reliable, transparent and
economical cross-border exchange of
guarantees of origin of energy.
Polish-Lithuanian
Chamber of Commerce
Amber Grid,
Litgrid
www.plcc.lt
The organisation seeking to improve economic
cooperation between Lithuania and Poland.
Lithuanian Project
Management
Association
EPSO-G
www.ipma.lt
The association bringing together project
management professionals
Lithuanian LNG
platform
Amber Grid
The Platform partners aim to promote the use
of LNG as a new, cleaner and quieter fuel in
the transport, industrial and other sectors of
the economy and to create a common
information and working platform for all
potential LNG market players.
Lithuanian Hydrogen
Energy Association
Amber Grid
www.h2lt.eu
The association uniting the country’s
scientists and business organizations that
participates in the formation of national,
regional and EU policies and objectives,
including the preparation of the strategy and
action plan for the development of hydrogen
in the legislative process regulating the
Lithuanian hydrogen.
Lithuanian Hydrogen
Platform
Amber Grid,
EPSO-G
The platform aims to help achieve the goals
of the EU Hydrogen Strategy to create a full-
fledged and affordable renewable hydrogen
value chain. It also promotes the involvement
of Lithuanian companies and organizations in
the value chain activities of the hydrogen
sector, in developing and producing products
and providing services for the needs of
Lithuania and other countries.
Lithuania’s National
Energy Association
(Lith. NLEA)
EPSO-G,
Amber Grid,
Litgrid
www.nlea.lt
The association bringing together Lithuanian
companies operating in the electricity and
natural gas sectors, as well as scientific
establishments.
Association of
Personnel
Management
Professionals (Lith.
PVPA)
EPSO-G
www.pvpa.lt
An association uniting personnel
management professionals.
Lithuanian Responsible
Business Association
LAVA
EPSO-G
Asociacijajava.lt
LAVA is in the center of sustainable business
ecosystem, connecting companies and
organizations at the national level.
Kaunas Chamber of
Commerce, Industry
and Crafts
Tetas
www. chamber.lt
An association uniting business enterprises
and the scientific community.
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Oil & Gas Methane
Partnership 2.0 (OGMP
2.0)
Amber Grid
www.ogmpartnership.com
The flagship oil and gas reporting and
mitigation programme of the United Nations
Environment Programme (UNEP), directly
involving oil and gas companies that could
decide on methane emission issues
4.6 Transactions with Related Parties
After considering the amendments to the Law on Companies of the Republic of Lithuania, EPSO-G Board abolished the Policy of
Transactions with Related Parties on 29 June 2023. To ensure compliance with the requirements of the Law and proper oversight
and disclosure procedures of the transactions carried out by EPSO-G Group companies with related parties, the Group’s boards
(of Litgrid and Amber Grid) are obliged to seek the opinion of EPSO-G’s Audit Committee prior to entering into any related party
transactions that meet the criteria of the Law, and ensure publication of such transactions in accordance with a procedure
prescribed by the Law.
Information on transactions with related parties is disclosed in the financial statements of this Annual Report.
GRI 2-28
COMPLIANCE AND RISK
MANAGEMENT AND AUDIT
5
5.1 Risk management Framework
5.2 Key Risks and their Management
5.3 Sustainability Risk Management
5.4 Climate Change Risks
5.5 Compliance Management
5.6 Anti-corruption Activities and Interest Management
5.7 Management of Interests
5.8 Information on the Internal Audit
5.9 Information on the External Audit
EPSO-G ANNUAL REPORT FOR 2023
62
5 COMPLIANCE AND RISK MANAGEMENT AND AUDIT
5.1 Risk Management Framework
The EPSO-G Group understands risk management as a structured approach to uncertainties management by methodologically
evaluating risk effect and probability, and by applying the proper measures of management.
In 2023, the EPSO-G Group followed the Group’s Risk Management Policy and Risk Management Methodology. These documents
embedded a uniform risk management system that is based on common principles and meeting good practice according to COSO
ERM (Committee of Sponsoring Organisations of the Treadway Commission Enterprise Risk Management) methodology
applicable in the international practice.
The Risk Management Policy defines the key risk management principles and responsibilities for the EPSO-G Group companies
to ensure a unified corporate risk management process based on common principles. The EPSO-G Group companies define risk
management principles and responsibilities in the Risk Management Policy. The Policy is published on EPSO-G website.
The Company’s risk appetite, as defined in the Risk Management Policy, is the level of risk that is below the highest level of risk
that is equal to or greater than a score of 15 (the product of the probability and the impact of the risk on the Company), or the
level of risk the Company’s governing bodies willing to accept to achieve the strategy and performance objectives set. Risks
exceeding the score set for the risk appetite are subject to additional management measures.
The Group has in place the following risk management process (stages):
1 Business environment understanding. The Company identifies aspects that may have an impact on the Company’s failure to
achieve its goals based on the Company’s internal and external environment, planning documents, the Risk Assessment history,
and the monitoring of the implementation of the risk management measures. Regular environmental assessments are carried out
to adapt to changes and to prepare in advance for unexpected threats.
2 Risk assessment. The Company identifies, analyses, and assesses risks on regular basis, identifies Key Risk Indicators, and
prepares the List of Risks. The Company also identifies the risk appetite and categorizes risks according to their priority and the
appetite identified.
3 Developing a Plan on risk Management Measures. The Company develops a Plan on Risk Management Measures for risks
exceeding risk appetite.
4 Monitoring of risks and the implementation of the Plan on Risk Management Measures. This process involves continuous
monitoring of the Company’s List of Risks and the Plan on Risk Management Measures, as well as monitoring of the Group-level
risks and the list of the Group-level risks management measures. The monitoring results are communicated to the Company’s
manager, the Board, the Audit Committee, in accordance with the remit of each of them.
5 Communication and information. Regular and effective sharing of information among the participants in the Risk Management
process that has impact on the assessment of the Company’s risks and their management. Relevant information on risks and their
management is communicated to the Company’s employees during staff meetings.
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The Group companies identified operational risks for 2023, assessed them, set risk monitoring indicators and provided risk
management measures.
After assessing the risks identified and managed in the Group companies and their level (impact on the Company's activities as
well as on the EPSO-G Group as a whole), the Board of EPSO-G approved the EPSO-G group-level risk list.
In each quarter of 2023, the Audit Committee of EPSO-G assessed the changes in the key risk indicators of each company of the
Group, the effectiveness of risk management and presented its conclusions and recommendations to the Boards of the companies.
In 2023, to improve risk management and integrity within the Group, Power App, the Risk Management Information System, has
been installed. Using the tool, users can enter relevant risk information, depending on their role, to generate relevant content from
a common dataset, and to send reminders or comments related to risk management.
5.2 Key Risks and Their Management
The following key risks were included in the group-level risk list for 2023:
5
4
6, 7
1
3
10
2, 5, 8, 9
2
4
3
1
1
2
3
Impact
4
5
1 Risk of delays in strategic projects
EPSO-G implements complex, large-scale projects included in strategic planning documents at national level, which are crucial
for the development of Lithuania's energy system, the smooth integration of RES, and the creation of additional opportunities for
market participants to choose to consume climate-neutral energy. Delays in government and Group projects have a negative
impact on the achievement of the Company’s and/or the Group’s strategic objectives. Delays in the implementation of public
projects will prevent timely synchronisation with the KETs and preparation for large-scale RES integration.
Management measures:
• The companies, together with the Group’s Project Management Officer (PMO), monitor and control government projects.
• Ongoing (passive and active) controls are in place, such as monitoring of automated State and Group project reports and KPIs,
and active involvement in risk management and problem solving.
Probability
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• The companies, together with the Group’s PMO, participate in meetings between the programme, the project team and the
project developer and contractors, joint problem solving and risk assessment.
• Project process audits are carried out to review in detail risks, issues, benefits, timeliness and compliance with approved
processes.
2 Long-term funding risk
There is a risk that EPSO-G (and/or its Group companies) will face difficulties in attracting new funding and/or will be forced to
pay significantly higher than normal prices for new funding, which would jeopardise the implementation of its strategic plans.
Risks may arise from unsustainable financial conditions (e.g., overleveraging, underperformance), adverse changes in the business
environment (e.g., downgrading of a country’s credit rating, unfavourable regulatory developments), or inability to achieve the
intended strategic objectives.
Management measures:
• The Treasury and financial risk management policy guides day-to-day operations and decision-making, aiming at ensuring a
sustainable financial position, maintaining a rating of at least investment grade (BBB-/Baa3 or above), and ensuring
compliance with non-financial commitments and financial indicator commitments.
• Regular monitoring of budgets and long-term financial forecasts to ensure that the long-term financial targets (e.g.,
debt/EBITDA, ROE) set in the operational strategy are met.
• When drawing up short-term and/or long-term business plans, decisions on dividends must take into account the potential
impact of the decisions on the long-term financial sustainability of EPSO-G and/or its Group companies, the fulfilment of
financial targets and liquidity.
3 Regulatory risk
The prices of electricity and natural gas transmission and related services are regulated, the price and/or revenue caps are set by
the Council. These decisions have a direct effect on the EPSO-G Group’s performance and the allocation of funds for necessary
operating costs, investments to ensure the transmission grid’s reliability, as well as the possibility of financing strategic projects
with own or borrowed funds.
Management measures:
• In order to achieve clear and consistent regulation that does not adversely affect performance, the Group companies actively
communicate with the Council, participate in the discussions on amendments to legislation, and submit their comments on the
improvement of the legislation, arguing the impact of future decisions and the importance of the companies' long-term
strategic objectives. Proactive engagement with the Council will also be crucial in coordinating decisions on the costs of
climate neutrality activities.
4 Technological risk
One of the key roles and responsibilities of the EPSO-G Group companies is to ensure secure, reliable, and efficient operation of
natural gas and electricity transmission systems. Technological risk management aims to avoid disruptions to operations and the
disconnection of gas or electricity to consumers.
Management measures:
• To ensure reliable operation of transmission systems, the Group companies implement specialized information systems,
modern business management systems, update accident and technological disruption and emergency management, business
continuity plans on a continuous basis, and set high standards for the contractors.
• To avoid disruptions to the transmission systems, the systems are continuously monitored, maintenance plans are drawn up
accordingly, and the necessary new investments in grid upgrades are planned in time.
5 Risk of non-compliance with occupational safety requirements
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Group companies place great emphasis on occupational safety. Given the applicable and most relevant occupational safety
requirements and the current implementation situation, there is a risk of non-compliance with the OHS requirements.
Management measures:
• Proper installation of workstations, timely maintenance and control of systems, equipment, work tools.
• Internal documents on health and safety have been approved.
• Staff training, certification and briefings on safety and health issues.
• Continuous monitoring and supervision of employees' and contractors' compliance with OHS requirements.
6 Risk of lack of relevant qualification employees, employee turnover and motivation
Companies managed by EPSO-G are facing challenges on the labour market and competition for highly skilled professionals is
intensifying.
Management measures:
• Group companies are improving shift plans for critical positions. Over the next few years, the focus will be on updating the
competency model, improving employer branding and developing talent.
7 Risk of too little competition in procurement procedures carried out
The EPSO-G Group companies carry out large-scale projects as part of NEIS. There is a risk that insufficient competition from
suppliers will lead to economically unfavourable tenders exceeding the planned budget/not meeting the company's needs or to
the procurement having to be cancelled and re-tendered.
Management measures:
• There is a requirement to publish all purchases on the CPP IS.
• Requirement for promoters to identify at least 3 Suppliers in their application or justify a smaller number.
• Requirement to carry out a market consultation in all simplified and international procurement. The principle of "4-eye" control
is set as a minimum.
8 Cybersecurity risk
The information and data managed by the EPSO-G Group are of strategic importance for the security of Lithuania, therefore, loss
of such information or data, illegal change or disclosure, damage thereof, or termination of the data flow which is necessary for a
secure operation of transmission systems may cause disturbances of the activities of the EPSO-G Group companies, cause damage
to other natural persons and legal entities.
Management measures:
• In order to prevent cyber incidents, threats to the information systems, physical protection and security management systems
of the EPSO-G Group companies are regularly assessed, existing security measures, systems and/or tools are constantly
updated and new ones are introduced to comply with the strict requirements of the EU and the Republic of Lithuania’s
legislation on information security.
• EPSO-G staff actively participate in cybersecurity exercises to train how to manage and respond to cyber incidents targeting
critical information systems and networks, and to ensure the functioning of their services.
9 Risk of failing to meet the Group companies’ budget
There is a risk that Group companies will fail to meet their budgets and financial plans, which will adversely affect their ability to
meet the commitments of specific companies and EPSO-G as the Group’s, as well as ability to meet financial covenants and other
obligations, and to pay dividends.
Management measures:
• Performance control (monitoring by EPSO-G, the Boards) as part of the Integrated Planning and Monitoring Policy.
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• For the purpose of regulated activities, comments and recommendations, as appropriate, on decisions related to recognition
of expenses, changes in a methodology, and development of a common Group position.
• For the purpose of non-regulated activities, review of, amendments to the action plan, where appropriate.
10 Environmental impact mitigation risk
Untimely or inaccurate recording and reporting of sustainability-related indicators, inaccurate calculation of GHG emissions from
the Group’s operations, or delays in reporting compliance with requirements to institutional investors may result in sanctions from
the exchange authorities, and fines for defaulting on commitments to investors. There is also a risk of non-achievement of EPSO-
G’s long-term strategic objectives and its commitments (sustainability indicators) related to the issued bonds when the regulatory
approval for the necessary investments to reduce environmental impacts (GHG emissions) is not obtained due to regulatory
restrictions or lack of cost-effectiveness.
Management measures:
• In line with EPSO-G’s Sustainability Policy, the Group companies are required to collect and, at least annually, publish
sustainability-related data in accordance with the global GRI and/or other disclosure standards.
• The Group companies are provided with the list of ESG indicators to be selected Additional measures are also being put in
place: ESG system (IT solution) is developed for the timely collection of sustainability-related indicators.
• Group companies are required to develop and implement cost-effective mitigation plans and related measures.
5.3 Sustainability Risk Management
The Group aims to integrate sustainability principles into the operations and processes of all Group companies.
The Group aims to transform the energy sector by striking a sustainable balance between environmental, social, and economic
objectives.
Sustainability risks are treated as an integral part of the Group’s day-to-day operations and are integrated into the risk
management process. The Group assess all the risks against the criteria set for the sustainability risks. Risks that meet these
criteria are assigned to the relevant sustainability risk type.
In 2023, the following risks were assigned to sustainability (environmental, social and governance) risks in the Group:
Risks that meet environmental criteria:
- Risk of reducing the environmental impacts.
Risks that meet social criteria:
- Risk of non-compliance with occupational safety requirements.
- Risk of lack of relevant qualification employees, employee turnover and motivation.
Risks that meet governance criteria:
- Risk of regulatory change.
- Risk of -insufficient competition in procurement procedures carried out.
- Cybersecurity risk.
Descriptions of the Group’s sustainability risks listed above, and their management measures are provided in chapter 5.2 (see
“Key risks and their management”).
In 2023, issues pertaining to corruption, compliance, and continuity of operations were not included in the primary Risk Register
of the Group. However, due to the effective risk management measures implemented, all of these concerns are of moderate or
low risk level. Nevertheless, the Group, recognizing the significance of these risks in achieving sustainability goals, allocates
special attention to managing these risks and disclosing information about them (see "Anti-corruption activity and governance of
interests", "Compliance management").
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67
5.4 Climate Change Risks
Given the importance of climate-change challenges in the energy sector, the EU regulations (the EU Taxonomy Regulation, the
European Sustainability Reporting Standards (ESRS), etc.), climate-related risk disclosures and to improve related risk
management, in 2023, the EPSO-G Group in partnership with consulting firm Deloitte conducted a comprehensive analysis of the
Group’s climate-related risks (physical and transition), opportunities and climate scenarios (based on IPCC climate change
scenarios) in the short-term (2026), medium-term (2030) and long-term (2050).
The evaluation was carried out in the Group for the first time and was guided by the recommendations of the Task Force on
Climate-related Financial Disclosures (TCFD). The evaluation report and methodology drawn up will help to improve the
assessment and management of climate change risks, improve disclosures to the Group’s stakeholders and strengthen the
sustainability risk management in the Group.
The evaluation comprised climate-related physical risks (impact of occurrence of extreme weather events on transmission
infrastructure, buildings, offices) and transition risks (regulatory, technology, reputation, market, public pressure), measures and
indicators were developed to manage these risks.
Climate-related issues fall within the wide range of sustainability topics and are integrated into the Group’s decision-making
process (see earlier in chapter “Risk management framework”).
The process of assessing climate change risks:
The scale for assessing climate risks is based on the EPSO-G Group’s risk management methodology (the same scale is being
used), and the impact is understood as the financial impact compared to the income level. The impact assessment was carried out
at the individual level of each Group company, and then aggregated in the Group-level analysis.
Due to the risk management measures already in place and applied in the Group, physical and transition risks are identified as
moderate or low. However, the Group, being aware of the importance of these risks for the achievement of the sustainability
objectives, will pay particular attention to the management these risks, better disclosures, and integration of risk-related
opportunities into business strategy.
More detailed information disclosed in the Report on Climate Change Risks 2022/2023 (see reference to the report).
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5.5 Compliance Management
We seek to establish a uniform compliance management system in the Group companies that would:
1. Enable to protect the Group companies from financial or reputational damage that may result from behaviour that does
not meet internal and external requirements;
2. Enable to manage the risks of non-compliance and mitigate their impact and likelihood of occurrence;
3. Promote a culture of compliance, i. e. encourage the Group’s employees to work in accordance with the set
requirements and to justify their application on the Group’s values.
Compliance activities are governed by the Group’s Compliance Management Policy. Compliance is based on the Three Lines
Principle and principle governing the use of the risk-based approach. It focuses the Group companies’ attention and resources on
priority areas of compliance, i.e. areas where most instances of non-compliance occur or are likely to occur, and/or where there is
the greatest likelihood of the realisation of non-compliance risks, which could have a material adverse effect on the Group
company and/or the Group. In 2023, the following priority areas for compliance were approved by the Group companies:
Litgrid
Amber Grid
EPSO-G
Tetas
Baltpool
Protection of personal data
Accounting, financial information, and
information on the administration of PSO
funds to be published and submitted
publicly (from 2022)
Anti-corruption activities
Competitive
environment
Information related to the performance of
the functions of an exchange operator and
other trading/accounting systems’
administrator to be published and submitted
publicly (from 2022)
Public procurement
TSO independence and separation of activities
Information of
Litgrid as TSO to be
published publicly
Inside information management
Integration of
renewable energy
sources
The Group is guided by the principle that compliance is everyone’s responsibility - each employee has a responsibility to ensure
compliance. In addition to complying with and ensuring compliance with applicable requirements in their daily activities, the aim
is for employees to participate in compliance training, to report non-compliances observed and to make proposals s for compliance
process improvement. Training and targeted communication activities are carried out to promote employee contribution to
compliance management activities. We encourage both employees and third parties to report non-compliances observed to the
Helpline www.epsog.lt using available contacts.
In 2023 and previous periods (2021 and 2022), the Group companied neither identified significant non-compliances with laws
nor paid related fines.
5.6 Anti-corruption Activities and Interest Management
The EPSO-G Group’s anti-corruption activity is based on the zero tolerance to corruption principle, i.e. corruption and any related
behaviour is not tolerated in the Group and the following anti-corruption measures of the Group are implemented to manage
corruption risks:
• setting restrictions on the acceptance and provision of Gifts, and procedures for making donations;
• using measures to manage interests of employees and members of the collegial bodies to ensure the primacy of interests;
• screening of business partners;
• ensuring the credibility of staff;
EPSO-G ANNUAL REPORT FOR 2023
69
• operating a Helpline;
• conducting internal investigations;
• Concluded transactions are subject to transparency measures;
• Training, communication and other targeted actions are used to raise the anti-corruption awareness of Employees;
• ensuring transparency of procurement.
The Group’s anti-corruption activities are based on corruption risk assessment and management. Corruption risks in the Group
are identified on an annual basis by establishing adequate management measures, and assessing the implementation of the
management measures and the risk status on quarterly basis. Details on the corruption risks identified in the Group companies in
2023 are disclosed in the Sustainability Report.
In creating an anti-corruption environment in EPSO-G, a great emphasis is paid one the development of anti-corruption awareness
among employees through various means and methods. In 2023, the Company held basic anti-corruption training for employees,
as well as targeted training for those responsible for anti-corruption activities. The Group employees’ corruption resilience is also
built through other measures, such as internal communication to bring employees’ attention to the most important Group’s
internal anti-corruption legislation, its requirements and the rules of anti-corruption conduct (e.g. giving or accepting gifts at work,
declaration of private interests, etc.). During the reporting period, to improve the knowledge on the topics of corruption prevention,
representatives of the Group companies took active participation in the “Transparency Academy” jointly organized by the Special
Investigation Service and partners, where they improved their competence and shared their knowledge with other institutions.
The Group plans to introduce anti-corruption training platform in 2024 to ensure systemic anti-corruption development.
In 2023, as every year, the Group conducted an anonymous employee tolerance to corruption survey to identify the Group
employees’ perception of corruption and their willingness (not) to tolerate any forms of corruption. Although the number of
employees taking part in the survey decreased compared to 2022 (from 438 to 247), the results systematically improve. The
survey shows that 98% of employees have not encountered any forms corruption in their work in the last 3 years (2022: 98%),
and 95% of them know whom to contact if encounter corruption (2022: 94%).
With a view to improving our anti-corruption activities, during the reporting period, we updated the Group’s key anti-corruption
regulations: the Group’s Anti-Corruption Policy and the Group’s Policy of Management of Interests of Employees and Members
of Collegial Bodies. A new version of the Group’s Anti-Corruption Policy has established that the Group’s anti-corruption activities
are based on the Anti-Corruption Management System in accordance with the international standard ISO 37001:2016 “Anti-
bribery management systems. Requirements with guidance for use”. The Policy sets that the implementation of the anti-
corruption management system in the Group companies may vary depending on the context of the Group company’s operations
and the corruption risk. In 2024, the Group companies EPSO-G, Litgrid and Ambers Grid plan to certify its anti-corruption
management system according to the requirements of the standard.
Key anti-corruption indicators for 2023 are disclosed in the Sustainability Report.
5.7 Management of Interests
The management of conflicts of interest in the Group companies is guided by the Group’s Policy of Management of Interests of
Employees and Members of Collegial Bodies, which was updated on 2023. The Policy, which aims to ensure priority of the Group’s
interests, timely identification and adequate management of potential conflicts of interest, defines three main categories of
measures for conflict of interest management to be implemented in the Group companies:
• declaration of private interests;
• monitoring, surveillance and control of interests;
• conflict of interest management (abstention and recusal).
The Policy also provides for the procedure for independence assessment of the independent members of the Group’s collegial
bodies against the criteria set out in the laws, and defines the rules for submitting internal declaration of private interests. The
Group’s Policy of Management of Interests of Employees and Members of Collegial Bodies is available on website at
www.epsog.lt in the section “Operating policies” (in Lithuanian, “Veiklos politikos”).
The Group has an integral model of declaration of private interests, which includes declaration via the PINREG, a register managed
by the State Ethics Commission, where required by the Law on the Alignment of Public and Private Interests of the Republic of
Lithuania and submission of internal declarations, the form of which has been approved in the Group’s Policy of Management of
Interests of Employees and Members of Collegial Bodies. The responsible persons of the Group companies periodically verify
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EPSO-G ANNUAL REPORT FOR 2023
70
whether all employees have declared their private interests, and whether they have done it properly, and if needed make the
necessary recommendations. The declaration of private interests is one of the critical responsibilities of employees, enabling to
ensure early management of conflicts of interest.
The Group companies’ employees are encouraged to avoid situations where their private interests are, or may be, in conflict
(conflict of interest), and, if conflict, to recuse themselves. Conflicts of interest between staff members are reported to the parties
concerned: the line manager and the head of department. Conflicts of interest arising for the Company’s management and
members of the collegiate bodies are disclosed to the Group’s senior management.
At the end of the reporting period:
• The members of the collegiate management bodies and administration have not acquired any shares in EPSO-G group
companies, except for Nemunas Biknius, CEO of Amber Grid, who holds 0.001055 % of shares in Amber Grid. His shareholding
remained unchanged during the reporting period.
• The declarations of interests of EPSO-G board members and the CEO are submitted and published in the Register of Private
Interests (PINREG) on the website of the Chief Official Ethics Commission (COEC) and at www.epsog.lt. All executives of
EPSOG Group companies have submitted declarations of interest to the holding company to the extent and according to the
procedure set out in EPSO-G’s Policy on Management of Interests, which is available at www.epsog.lt in the menu item
“Operating Policies”.
• Members of the collegiate management bodies and executives of the companies have not been involved in any conflicts of
interest as regards their obligations to EPSO-G and their private interests and/or other duties.
• There were no family relationships between members of the collegiate management bodies and administrative staff.
• Members of the collegiate management bodies and executives of the companies have not been convicted of any criminal
offence, have not been subject to any indictment or sanction by any regulatory authority in the last five years, have not been
barred by a court from holding any office as a member of the administrative, management or supervisory bodies of the
Company or from holding any managerial position or from managing the affairs of any issuer.
• EPSO-G has not entered into any transactions with the above-mentioned persons which are outside the operating activities
of the company or which have not been duly notified to and authorised by EPSO-G collegiate management bodies.
All employees of the EPSO-G management company have declared public interests in accordance with requirements of the Law
on Alignment of Public and Private Interests.
5.8 Information on the Internal Audit
The internal audit mission of EPSO-G is to create added value for all the companies of the Group and to contribute to the
achievement of their operational objectives by systematically and comprehensively assessing and helping to improve the
effectiveness of management, risk management, and control processes. These functions are implemented through an independent
and objective assurance and advisory activity.
To ensure transparency and efficiency of operations, a centralized Internal Audit Unit operates in the EPSO-G Group companies.
The Unit carries out the functions assigned at the Group level and is directly accountable to the EPSO-G Board, the majority of
which are independent members.
The auditors of the holding company EPSO-G are not subordinate to the administration of a company audited. This creates better
preconditions for identifying possible deficiencies in order to eliminate them and to highlight the areas for increasing efficiency.
The staff members of the Unit carry out internal audits and monitor on a regular basis the way the recommendations of the internal
audit are implemented, as well how the other deficiencies related to the internal control, which have been identified by the
external auditors, regulatory authority and the public control institutions, are corrected.
The activities of the centralized Internal Audit Unit covered the following areas that were selected based on the performed
assessment of risks and by identifying the priority companies/processes to be inspected or as separately directed by the Board:
• Assessment of the reasonableness of the Physical Barrier Project’s administration costs and the transparency of procurement.
• Assessment of the management of transmission system operators’ procurements.
• Assessment of adequacy of gas transmission network maintenance.
• Assessment of the Group’s achievement of its annual goals.
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71
• Assessment of the technological cost management.
Internal audits (the first two on the list) also assessed control measures aimed to prevent corruption. Much attention was also
paid to monitoring the implementation of internal audit recommendations by companies and to assessing the impact of
implemented actions.
Internal audit findings along with recommendations for areas subject to improvement are submitted to the management of the
audited companies and the Boards of the companies of the Group, as well as to the Board and Audit Committee of EPSO-G. In
addition, an annual assessment of the effectiveness of the internal control system is carried out in all Group companies, identifying
the strengths and weaknesses of the system, discussing them with the boards of the respective companies and planning actions
to strengthen internal control. The overall effectiveness of the internal control system is assessed as strong. The change in the
level of control in the elements of this system is assessed during the next year’s survey.
5.9 Information on the External Audit
In 2023, Amber Grid, the EPSO-G Group company, carried out a joint procurement of audit services for the audit of the financial
statements of the Group companies for the period 2023-2025, through a negotiated procedure. With regard to the results of the
public procurement of external audit services, the offer of PricewaterhouseCoopers was recognized as the winner.
The Audit Committee of EPSO-G, having assessed the results of the selection procedure for the audit firm, decided to recommend
the boards of the Group companies to propose to their General Meetings of Shareholders to select PricewaterhouseCoopers as
an audit firm to perform the audit of financial statements for the period 2023-2025 by paying the remuneration for the audit
services specified in the offer of this audit firm.
At the General Meetings of Shareholders of the Group companies, decisions were made to select PricewaterhouseCoopers as the
audit firm to perform the audit of financial statements for the period of 2023-2025 and to set the annual remuneration for the
audit services of financial and related statements specified in the offer of the audit firm.
Information on the external audit firms of the EPSO-G Group companies and their remuneration for audit services:
Company
Firm that performed the
audit of the financial
statements 2023
Remuneration for the
audit firm for the audit
of the financial
statements 2023, EUR
(VAT excluded)
Firm that performed the
audit of the financial
statements 2022
Remuneration for the
audit firm for the audit
of the financial
statements 2022, EUR
(VAT excluded)
EPSO-G
PricewaterhouseCoopers
UAB
56,000
PricewaterhouseCoopers
UAB
30,635
Litgrid
86,000
52,054
Amber Grid
77,000
33,829
Baltpool
18,000
6,344
Tetas
31,000
25,115
GET Baltic*
-
11,650
Energy Cells
16,000
7,260
* After Amber Grid, the EPSO-G Group company, sold its 66% stake in GET Baltic to the strategic partner EEX on 31 May 2023, audit services
for the audit of the financial statements of GET Baltic for the period 2023-2025 were excluded from the procurement of the Group’s audit
services.
In 2023, PricewaterhouseCoopers provided uninsured non-audit services for EUR 65,690 (2022: EUR 76,780) to the EPSO-G
Group companies. Non-audit services consisted of assurance services for banks on financial ratios, real-time monitoring of
sustainability performance indicators, and verification for regulated activity reports. In 2022, the audit firm additionally provided
translation of financial statements and annual reports, and review of a bond prospectus. The services were procured in accordance
with the provisions of the EPSO-G Group’s Policy on Acquisition of Non-Audit Services from an audit firm or any network to which
the audit firm belongs.
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SHAREHOLDERS AND DIVIDENDS
6.1 Shareholders
6.2 Dividends
6.3 Dividend policy
6.4 Ratings
6
EPSO-G ANNUAL REPORT FOR 2023
73
6 SHAREHOLDERS AND DIVIDENDS
6.1 Shareholders
The Republic of Lithuania is the sole shareholder of EPSO-G (100% of the shares). The property and non-property rights of the
shareholder, in accordance with Clause 2.3 of the Resolution No 826 On the Establishment of a Private Limited Liability Company
and Investment of State-Owned Capital of the Government of the Republic of Lithuania of 4 July 2012, are implemented by the
Ministry of Energy of the Republic of Lithuania represented by the Minister of Energy of the Republic of Lithuania.
In 2023, there were no changes in the shareholder structure of EPSO-G.
As of 31 December 2023, the issued capital of EPSO-G amounted to EUR 189,631,000.
The Company’s shareholder
Number of
shares
Nominal value per share,
EUR
Share capital,
EUR
Shareholding
The Republic of Lithuania, represented
by the Ministry of Energy of the
Republic of Lithuania
653,900,000
0.29, EUR
189,631,000
100%
Restrictions on the transfer of securities other than those stipulated in the legal acts are not applied for the shares of EPSO-G.
Neither EPSO-G nor the Group companies have issued the convertible securities. EPSO-G has not acquired own shares. EPSO-G
has neither acquired nor transferred own shares during the reporting period. The subsidiaries of the Company have not acquired
the shares of the Company either. The shareholder of EPSO- G does not have special rights of control other than those stipulated
by the legal acts of the Republic of Lithuania.
Shares of EPSO-G’s subsidiaries Litgrid and Amber Grid are traded on Nasdaq Vilnius stock exchange.
Company
ISIN code
Ticker
Trading list
Securities manager
LITGRID AB
LT0000128415
LGD1L
BALTIC SECONDARY
SEB bankas AB
Amber Grid AB
LT0000128696
AMG1L
BALTIC SECONDARY
SEB bankas AB
In early June 2022, sustainability-related bonds issued by EPSO-G have been listed on Nasdaq’s Baltic Debt Securities List.
The securities of other companies owned by EPSO-G are not traded on the stock exchange.
6.2 Dividends
On the basis of Resolution No 208 of the Government of the Republic of Lithuania of 29 March 2023 On the payment of dividends
by EPSO-G UAB for the shares held by the State by the right of ownership, until 2026, EPSO-G must pay to the state budget
dividends equal to 0.5% of profit available for direct distribution, if the conditions set in the resolution are met.
On the basis of the resolution of the Government of the Republic of Lithuania, EPSO-G paid directly to the state budget dividends
amounting to EUR 66 thousand for the year 2022 (EUR 845 thousand for 2021) at the same time ensuring a sustainable financial
position of the Group.
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74
6.3 Dividend Policy
The Dividend Policy of EPSO-G that governs the procedure of determining the dividend amount, pay-out and publication on
dividends for all companies forming the Group, establishes clear guidelines of expected return on equity and return on investment
for the existing and potential shareholders while at the same time ensuring a sustainable long-lasting growth of corporate value,
timely implementation of strategic projects that are of great importance for the country, thereby gradually strengthening
confidence in the entire Group of energy transmission and exchange.
The Dividend Policy of EPSO-G directly links the amount of payable dividends with the efficiency of use of the Company’s equity
- the bigger benefit is created by the Company for the shareholder, the bigger share of profit it may allocate for the further
development and implementation of other important projects.
The Dividend Policy is published on the website of EPSO-G in the menu item Operating Policies.
6.4 Ratings
After a periodic review for EPSO-G, on 3 May 2023, the rating agency Moody’s Investors Service affirmed its Baa1 credit rating
with a stable outlook.
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GOVERNANCE REPORT
7
7.1 Articles of Association of EPSO-G
7.2 Supervisory and Management System and Functions of EPSO-G
7.3 General Meeting of Shareholders of EPSO-G
7.4 The Board of EPSO-G
7.5 The Remuneration and Nomination Committee of EPSO-G
7.6 The Audit Committee of EPSO-G
7.7 Chief Executive Officer
7.8 Additional Information on the Chairman of the Board, the Manager, the
Chief Financial Officer and the Head of the Internal Audit
7.9 Operating Policies
7.10 Functional Area Governance
7.11 Performance Assessment and Results of the Activities of the Collegial
Supervisory and Management Bodies
7.12 Information on Compliance with the Code of Conduct
7.13 Information on Compliance with Transparency Guidelines
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76
7 GOVERNANCE REPORT
In 2023, the EPSO-G Group’s corporate governance was exercised in accordance with the updated version of the Guidelines on
Corporate Governance of the EPSO-G Group, approved by the Ministry of Energy of the Republic of Lithuania, the sole shareholder
of the EPSO-G, on 29 December 2022. The guidelines establish corporate governance principles uniformly applied to all
companies of the EPSO-G Group, regulate the management organization model, management structure, the system of
management and control and accountability assurance.
The updated version of the Guidelines on Corporate Governance establishes seven main principles of corporate governance:
• The principle of establishing assumptions for effective corporate management, which aims to ensure that the management of
the Group and the necessary decisions are made efficiently;
• The principle of proportionality, which aims to ensure that management methods applied by EPSO-G are proportionate, i.e.
do not create an unnecessary administrative burden;
• The principle of realization of shareholders' rights, which aims to create conditions for the proper realization of rights and
legitimate interests of all shareholders;
• The principle of inclusiveness of all interested parties, which recognizes the rights and expectations of interested parties;
• The principle of transparency, which aims to ensure that the Group's activities are organized transparently, with proper
disclosure of essential information;
• The principle of responsibility and accountability of management bodies, which aims to ensure that management bodies
perform their functions in a proper and timely manner, actively exercise their rights and properly fulfil their duties;
• The principle of integrity, which aims to ensure both vertical and horizontal integrity.
EPSO-G draws on good governance practices set out in the Good Governance Recommendations published by the Organisation
for Economic Co-operation and Development (OECD), the United Nations and Nasdaq Vilnius Recommendations, and other
internationally recognised standards and good governance recommendations, with the overarching aim of ensuring that state-
owned companies are governed in a transparent and effective manner.
In an effort to purposefully build trust in ongoing strategic projects and extremely focus on transparency and accountability, the
joint governance quality of the EPSO-G Group companies has been rated A. This was evidenced by the Good Governance Index
of State-Owned Enterprises (SOE) 2022/23 published by the Public Enterprise Governance Coordination Centre (GCC). GCC’s
Good Governance Index is the most comprehensive tool for evaluating the quality of management of all SOEs. The index consists
of three main assessment dimensions: transparency, collegial bodies, and strategic planning and implementation.
In terms of the transparency dimension, EPSO-G received the rating A+.
The rating A+ was awarded for the work of collegial bodies, the process of selection of their members, competence and
engagement in identifying areas for improvement.
EPSO-G’s strategic planning and implementation received the rating A.
In preparation of the action plan for 2024, the holding company EPSO-G will proceed with further implementation of measures
and improvement of the governance quality in line with GCC recommendations with a strong focus on improving the practices of
collegial bodies, strategic planning and sustainability.
7.1 Articles of Association of EPSO-G
During the reporting period, the EPSO-G’s Articles of Association were revised one time.
On 29 December 2022, a new version of the Articles of Association of EPSO-G was approved by a decision of the sole shareholder
and registered in the Register of Legal Entities on 5 January 2023. The following substantive changes were made to the new
version of the Articles of Association:
• clarification of how EPSO-G carries out its patronage functions;
• revision of competences of the General Meeting of Shareholders, the Board and the CEO of EPSO-G;
• clarification of the provisions relating to the formation of EPSO-G management committees;
• clarification of the provisions concerning the composition of the Board and the organisation of its activities;
• the possibility for the Board of EPSO-G to form the Group Executives’ Committee.
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77
The existing corporate management model ensures the efficiency of the organizational and management structure of the EPSO-
G Group and compliance with the highest governance standards.
The EPSO-G’s Articles of Association of are available at the website: www.epsog.lt in the menu item “Corporate Governance”.
7.2 Supervisory and Management System and Functions of EPSO-G
EPSO-G’s management, supervisory and organisational structure ensures optimal organisation, accountability, process efficiency
and responsibility.
Organisational structure of EPSO-G
The EPSO-G Group’s corporate governance documentation system consists of the following:
• Guidelines on Corporate Governance of the EPSO-G Group companies;
• Articles of Association of the holding company and its subsidiaries;
• Corporate Governance Policy;
• Rules of Procedures of the Board;
• Regulations of the Audit Committee;
• Regulations of the Remuneration and Nomination Committee;
• Other corporate governance documents of the Group companies.
All the above documents are available at the website of the holding company EPSO-G: www.epsog.lt.
GENERAL MEETING OF SHAREHOLDERS
Remuneration and
Nomination Committee
(RNC)
BOARD
Audit Committee
(AC)
Head of Group
Organisation
Development and
Culture
Head of Group
Infrastructure and
Project
Management
Head of Group
Development and
Innovation
Head of Group
Finance
Head of Group
Legal and
Corporate
Governance
Head of Group
Compliance and
Risk Management
Group
Communication
Team
Office
administration Team
People Culture
Team
Sustainability
Management Team
Project Manager
Project
implementation
team
Technology Team
ePMO Team
IT Team
Data Analytics and
Management Team
Innovation Team
Group Planning and
Strategy Team
Accounting Team
Finance and
Treasury Team
Public Procurement
Team
Head of Regulatory
Affairs
Public Procurement
Legal Team
Corporate Law
Team
Head of Energy
Project Legal
Risk management
team
Compliance Team
Head of
Cybersecurity
BOARD
Internal Audit Team
Chief Executive Officer
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7.3 General Meeting of Shareholders of EPSO-G
The rights and obligations of the sole shareholder of the holding company EPSO-G are implemented by the Ministry of Energy of
the Republic of Lithuania. The sole shareholder of EPSO-G Adopts decisions on strategic issues of operational activities, approves
key operational guidelines (guidelines on corporate governance, collegiate body remuneration, etc.).
In 2023, EPSO-G’s sole shareholder took the following key decisions:
Date
Key decisions
6 March 2023
Increased the audit fee payable to PricewaterhouseCoopers for the audit of financial
statements for 2022.
24 March 2023
Elected the Board of EPSO-G for a new term of office, consisting of three independent
members: Robertas Vyšniauskas, Asta Sungailienė and Liudas Liutkevičius, and the Ministry
of Energy’s delegates Dainius Bražiūnas and Tomas Daukantas
13 April 2023
Approved the set of EPSO-G’s consolidated and company’s financial statements for 2022.
Approved the decision on profit distribution.
21 April 2023
Tomas Daukantas was removed from the Audit Committee of EPSO-G and Dainius
Bražiūnas was elected for the remaining term of office of the Audit Committee.
29 August 2023
Selected PricewaterhouseCoopers UAB as the audit firm to perform the audit of the set of
consolidated and the company’s financial statements prepared in accordance with the
international financial reporting standards adopted in the European Union and the
consolidated annual report of EPSO-G for 2023–2025 and determined the remuneration for
the provision of these services.
6 November 2023
From 15 November 2023 the registered address of EPSO-G is changed from Gedimino ave.
20, Vilnius, LT-01103 to Laisvės ave. 10, Vilnius, LT-04215.
7.4 The Board of EPSO-G
According to the current version of the Articles of Association of EPSO-G, the Board consists of five members. The members of
the Board are elected for a four-year term of office by the General Meeting of Shareholders, to which the Board is accountable.
At the request of General Meeting of Shareholders, the Remuneration and Nomination Committee makes a recommendation on
the nomination of members of the Board.
The continuous term of office of a member of the Board shall not exceed two full consecutive terms, i.e. in any event no more than
10 consecutive years. Members of the Board are elected in accordance with the Resolution No 631 of the Government of the
Republic of Lithuania of 17 June 2015 on the Approval of the Description of the Procedure for the Selection of Candidates to the
Collegial Supervisory Body or Management Body of Municipal Enterprise, State or Municipal Company or Subsidiary.
On 24 March 2023, a new EPSO-G Board, which will consist of three independent members Robertas Vyšniauskas, Asta
Sungailienė and Liudas Liutkevičius, and the Ministry of Energy’s delegates Dainius Bražiūnas and Tomas Daukantas. In April
2023, Robertas Vyšniauskas, an independent member of the EPSO-G Board, was elected the Chairman of the Board, who served
as chair of the Board in the previous term of office since February 2022. Until then, from March 2019, Gediminas Almantas held
this position.
The Board of EPSO-G:
• Forms a common Corporate Governance Policy of the Group companies;
GRI 2-9
EPSO-G ANNUAL REPORT FOR 2023
79
• Is responsible for the organizational and systematic development and management of the Group within the scope of its
competence;
• Approves the Group’s strategy and monitors the implementation;
• Carries out the supervision and control of the management of the strategic projects carried out by the Group companies that
are included in the national energy strategy, the projects of particular national interest, the economic projects of great state
importance;
• Approves key Group-level documents: guidelines, policies, etc.
• Performs supervisory functions as provided for in the Law on Companies of the Republic of Lithuania.
During the reporting period, 18 meetings of the Board were held, in which 4 decisions were adopted by a written vote. During the
reporting year, one cooperation session was also held.
The Board, having carried out performance assessment for 2022 and identified areas for improvement of the Board’s activities
regarding the joint work, expectations and objectives of the Board and the CEO, reviewing the Company’s strategy and structure
and their renewal in the context of the Letter of Expectations of the Shareholder, prepared the Company Board’s action plan for
2023.
In implementing this plan, the Board made decisions on reviewing the Company's strategy, the remuneration system, changing
the organizational structure, to form the Group Executives’ Committee, risk management, development of organizational culture.
GRI 2-9
GRI 2-10
GRI 2-17
GRI 405-1
GRI 2-9
GRI 2-10
GRI 2-17
GRI 405-1
EPSO-G ANNUAL REPORT FOR 2023
80
EPSO-G’s Board composition
Member of the
Board
Position
Term of office
Other positions
Education
Robertas
Vyšniauskas
Independent
member, Chair
(from February 2022
to 20/03/2023, and
again from April
2023)
From 24/03/2023
(again from
20/03/2019 to
20/03/2023)
CEO of Valstybės
Investicinis Kapitalas UAB;
Member of the Board of
Vilniaus Vystymo
Kompanija UAB, Chair of
the Supervisory Board of
Klaipėdos Nafta
Mykolas Romeris
University, Master in Law.
Liudas Liutkevičius
Independent
member
From 24/03/2023
Managing Partner at INVL
Renewable Energy Fund I
Vilnius University, Master
in International Finances.
Asta Sungailienė
Independent
member
From 24/03/2023
-
Vytautas Magnus
University, Master in
Business and
Management
Dainius Bražiūnas
Member
From 24/03/2023
(again from
20/03/2019 to
20/03/2023)
Head of Energy Security
Group at the Ministry of
Energy of the Republic of
Lithuania
Vilnius Gediminas
Technical University,
Bachelor in Energy
Sciences.
Tomas Daukantas
Member
From 24/03/2023
(again from
06/05/2022 to
20/03/2023)
Head of Legal and HR
Group at the Ministry of
Energy of the Republic of
Lithuania
Mykolas Romeris
University, Master in
Law.
Gediminas
Almantas
Independent
member
From 20/03/2019
to 20/03/2023
Independent Member of
the Board of the State
Enterpriser Lietuvos Oro
Navigacija AB; Chairman of
the Board of LTG Infra,
Member of the Compliance
and Mediation Committee
at the International
Federation of the Red
Cross and Crescent
Societies, Chairman of the
Open Lithuania Foundation,
the member of the
Procurement and
Investment Policy
Committee of the
Lithuanian National Radio
and Television.
Vilnius University, Master
in Law;
University of Bern,
Switzerland, Master in
Law;
Copenhagen Business
School, Ethics of Business
Negotiation, PhD in
Industry.
GRI 2-17
EPSO-G ANNUAL REPORT FOR 2023
81
Participation statistics of board meetings in 2023:
No
Meeting
date
Gediminas
Almantas*
Dainius
Bražiūnas
Tomas
Daukantas
Robertas
Vyšniauskas
Liudas
Liutkevičius*
Asta
Sungailienė*
1.
01-09
⚫
⚫
⚫
⚫
-
-
2.
02-02
⚫
⚫
⚫
⚫
-
-
3.
02-10
⚫
⚫
⚫
⚫
-
-
4.
02-23
⚫
⚫
⚫
⚫
-
-
5.
03-13
⚫
⚫
⚫
⚫
-
-
6.
03-20
⚫
⚫
⚫
⚫
-
-
7.
04-07
-
⚫
⚫
⚫
⚫
⚫
8.
05-03
-
⚫
⚫
⚫
⚫
⚫
9.
05-19
-
⚫
⚫
⚫
⚫
⚫
10.
05-31
-
⚫
⚫
⚫
⚫
⚫
11.
06-29
-
⚫
⚫
⚫
⚫
⚫
12.
08-11
-
⚫
⚫
⚫
⚫
⚫
13.
08-24
-
⚫
⚫
⚫
⚫
⚫
14.
09-28
-
⚫
⚫
⚫
⚫
⚫
15.
10-25
-
⚫
⚫
⚫
⚫
⚫
16.
11-14
-
⚫
⚫
⚫
⚫
⚫
17.
11-29
-
⚫
⚫
⚫
⚫
⚫
18.
12-15
-
⚫
⚫
⚫
⚫
⚫
* Mr. Liutkevičius and Mrs. Sungailienė were elected to the Board on 24/03/2023; term of office of Mr. Almantas expired on
20/03/2023 (inclusive).
⚫ Attended
Did not attend
- The member did not attend meeting of the Board because he/she was not elected during the period or his/her term of office
expired.
EPSO-G ANNUAL REPORT FOR 2023
82
Key decisions of the Board in 2023:
2023-01
2023-02
2023-03
2023-04
2023-05
2023-06
01-06
The updated
Group Strategy of
EPSO-G until
2030 was
approved
The objectives of
the CEO of
EPSOG for 2023
were set, which
are identical to
those of the
Company
The budget of
EPSO-G for 2023
was approved
02-02
The report on the
implementation of
the 2022
performance targets
was approved.
General Meetings of
Shareholders of
LITGRID and Amber
Grid have been
initiated to approve
the new version of
the Articles of
Association of Litgrid
and Amber Grid.
The material terms of
the lending and
borrowing
agreements between
Litgrid, Baltpool and
EPSO-G were
amended.
The new version of
the Compliance
Management Policy
of the EPSO-G Group
was approved
A new version of the
list of compliance
priorities for EPSO-G
was approved.
List of group level
risks for 2023 of
EPSO-G was
approved
02-10
A decision adopted to
open a public
selection procedure
for the position of
Independent Member
of the Board of Tetas
in the area of
Production
Management
Competences.
02-23
The preliminary
material terms and
conditions for the
sale of shares in GET
Baltic by way of
share purchase and
shareholders’
03-13
A decision was taken
to instruct the
Remuneration and
Nomination
Committee to
conduct a public
selection process for
the nomination of a
member of the Board
of Energy Cells, the
parent company of
the Innovation and
Business
Development
Competence Area.
03-20
Decisions were taken
to approve the
Company's and the
consolidated annual
report, including
information on the
implementation of
the Company's
business strategy, to
approve the
Company's and the
consolidated annual
financial statements,
to approve the draft
distribution of profits,
and to convene the
Ordinary General
Meeting of
Shareholders of
EPSO-G.
Decisions were
adopted on voting at
the Ordinary General
Meetings of
Shareholders of
Litgrid, Amber Grid
(approval of the sale
of shares of GET
Baltic by concluding
share purchase and
sale agreements),
Baltpool, Tetas, and
Energy Cells,
companies controlled
by EPSO-G.
The report on the
implementation of
04-07
Robertas
Vyšniauskas
was elected
Chair of the
Board.
The decision
was taken to
set up a
Remuneration
and
Nomination
Committee
(the “NRC”)
with three
members, and
to appoint two
members to
the
Nomination
and
Remuneration
Committee
until the end of
the Board's
term from
among the
members of
the Board:
Tomas
Daukantas and
Asta
Sungailienė, to
authorise and
instruct the
Selection
Panel to carry
out the
selection of
candidates for
the position of
independent
member of the
NRC.
A decision was
adopted to
approve the
updated
calendar of
meetings and
the activity
plan of the
Board of
05-03
It was decided to
vote at the
Extraordinary
General Meeting
of Shareholders
of Energy Cells
to elect Paulius
Butkus as a
nominated
member of the
Board of EPSOG
until the expiry
of the term of
office of the
current Board of
Energy Cells.
The new version
of the Group
Risk
Management
Policy of the
EPSO-G Group
was approved
Determination of
the annual
remuneration for
the manager of
EPSO-G.
05-19
It was agreed
that EPSO-G, as
the sole
shareholder of
Energy Cells
(hereinafter
referred to as
“the Company”),
would take a
decision to
approve the
decision of the
Board of Energy
Cells on the
amendment of
the terms of the
transaction.
05-31
The decision to
elect Andrius
Šemeškevičius
as an
independent
member of the
06-29
A decision was
taken to amend
the terms of the
lending and
borrowing
agreement
between Amber
Grid and EPSO-
G.
The new version
of the Corporate
Governance
Policy of the
EPSO-G Group
was approved.
It was agreed
that Asta
Sungailienė
would act as
Chair of RNC.
A decision was
taken to approve
the updated
organisational
structure, list of
posts and list of
management
posts of EPSO-G
as of 1 July
2023.
The new version
of the Anti-
Corruption Policy
of the EPSO-G
Group was
approved.
The policy on
related party
transactions of
the EPSOG
group of
companies has
been repealed.
EPSO-G ANNUAL REPORT FOR 2023
83
agreements were
approved.
The General Meeting
of Shareholders of
Energy Cells is
initiated to approve
the new version of
the Articles of
Association of Energy
Cells.
A decision taken to
conduct public
selections for the
positions of members
of the Board of
Litgrid and Amber
Grid.
Approval was given
for EPSO-G to join
the Lithuanian
Responsible Business
Association.
The report by the
Head of Internal
Audit of EPSO-G on
the achievement of
the 2022 objectives
was approved.
The Remuneration
and Nomination
Committee's activity
report for 2022 was
approved.
The Board has
evaluated its
performance and has
drawn up a plan to
improve its
performance in 2023.
The General Meeting
of Shareholders of
EPSO-G was initiated
to determine the
revised terms of
payment for audit
services for 2022.
EPSO Strategy 2030
in 2022 was
approved.
The report of the
Audit Committee was
approved was
approved.
The EPSO-G Group
Executives’
Committee was
formed.
The Internal Audit
Plan for 2023-2025
for the centralised
internal audits of the
UAB EPSO-G group
of companies, and the
performance targets
for the Head of
Internal Audit of UAB
EPSO-G for 2023
were approved.
The management fee
model applicable to
the subsidiaries of
EPSO-G UAB and its
subsidiaries at a later
level was set.
A decision was taken
to conclude a
Lending and
Borrowing
Agreement between
BALTPOOL and
EPSO-G.
A decision was taken
to join the
Association of
Personnel
Management
Professionals.
EPSO-G for
2023.
Board at the
Extraordinary
General Meeting
of Shareholders
of LITGRID was
adopted.
It was decided to
appoint
Ramūnas
Bagdonas, an
independent
member, to the
RNC until the
end of the
Board’s term of
office.
The decision to
vote “FOR” all
the votes
attaching to the
shares in EPSOG
UAB at the
Ordinary
General Meeting
of Shareholders
of TSO Holding
AS was adopted.
EPSO-G ANNUAL REPORT FOR 2023
84
2023-08
2023-09
2023-10
2023-11
2023-12
08-11
The General
Meeting of
Shareholders was
convened to elect
the audit
company of
EPSO-G and to
set the terms of
remuneration for
the audit services
for 2023-2025
08-29
It was decided to
vote at the
Extraordinary
General Meeting
of Shareholders
of Baltpool on the
Management
Holding Services
Agreement with
EPSO-G.
The updated
organisational
structure of
EPSO-G was
approved.
The updated
action plan of the
Audit Committee
of EPSO-G for
2023 was
approved.
09-28
The updated
organisational
structure of
EPSO-G UAB
was approved.
A new version of
the Regulations
of the
Remuneration
and Nomination
Committee were
approved.
10-25
The Extraordinary
General Meeting of
Shareholders of
EPSO-G was
convened to
change registered
address.
Decision was taken
to approve a new
version of the
Policy of
Management of
Interests of
Members of
Collegial Bodies,
Executives and
Employees of the
EPSO-G Group of
Companies and the
Transport Policy of
the EPSO-G Group
of Companies.
11-14
The project of the
updated Group
Strategy of
EPSO-G until
2030 and its
submission to VŠĮ
Valdymo
Koordinavimo
Centras was
approved.
11-29
Decision was
taken to approve
monthly
remuneration
bands for the
Group’s
employees
applicable from 1
January 2024.
EPSO-G internal
audit budget for
2024 was
approved.
12-15
It was agreed
that EPSO-G, as
the sole
shareholder of
Energy Cells,
would take a
decision on
amendments to
the agreement for
purchase and sale
of technical
maintenance
services.
It was agreed
that EPSO-G, as
the sole
shareholder of
Tetas, would take
a decision to
increase in issued
capital.
The skill matrices
for the Boards of
Litgrid and
Amber Grid were
approved.
The action plan of
the Audit
Committee of
EPSO-G for 2024
was approved.
The action plan of
the Remuneration
and Nomination
Committee of
EPSO-G for 2024
was approved.
The calendar for
the meetings and
activity plan of
EPSO-G Board
for 2024 were
approved.
EPSO-G ANNUAL REPORT FOR 2023
85
7.5 The Remuneration and Nomination Committee of EPSO-G
Under the current Articles of Association of EPSO-G, the Remuneration and Nomination Committee shall be composed of at least
three members appointed by the Board for a period of up to four years by a reasoned decision. The nomination of members of the
Remuneration and Nomination Committee ensures that this Committee has at least one independent member. The continuous
term of office of a member of the Remuneration and Nomination Committee shall not exceed two consecutive terms of office. The
term of office of RNC coincides with the term of office of the Board.
In 2023, Gediminas Almantas, Dainius Bražiūnas and the Chair Jolita Lauciuvienė worked in the Remuneration and Nomination
Committee until 20 March 2023. On 7 April 2023, a new Remuneration and Nomination Committee was set up, with Tomas
Daukantas and Asta Sungailienė (Chair) appointed as members, and the third member, Ramūnas Bagdonas, was appointed as of
6 June 2023.
The Remuneration and Nomination Committee of EPSO-G:
• Assists in carrying out the selections of candidates to the members of the bodies in all companies of the Group;
• Provides the companies of the Group with recommendations regarding the nomination of the members of the management
bodies, entry into contracts with them and setting remuneration;
• makes recommendations on the Group’s corporate governance documents relating to the selection, appointment and
determination of independence criteria for the governing bodies, senior management;
• makes recommendations on the system for succession of the Group’s managers and critical positions;
• makes recommendations on the system of equal opportunities, inclusion and diversity promotion within the Group;
• and etc.
In 2023, 12 meetings of the Remuneration and Nomination Committee were held.
Remuneration and Nomination Committee composition
Committee
member
Position
Term of office
Other positions
Education
Asta Sungailienė
Independent
Member, Chair
From 07/04/2023
–
Vytautas Magnus University,
Master in Business and
Management
Tomas Daukantas
Member
From 07/04/2023
Head of Legal and HR
Group at the Ministry of
Energy of the Republic of
Lithuania
Mykolas Romeris University,
Master in Law
Ramūnas
Bagdonas
Independent
member
From 06/06/2023
Head of HR at Telia
Lietuva
Founder of the
Association of Personnel
Management
Professionals and chair of
the Board
Vytautas Magnus University,
Master degree in Business
Administration and Management
Baltic Management Institute,
EMBA
Jolita Lauciuvienė
Independent
Member, Chair
From 20/05/2019
to 20/03/2023
Personalo Vertė Verslui
UAB, Director
Vilnius University, Master in
Economics;
Lithuanian University of
Educational Sciences, Bachelor in
Psychological Sciences
GRI 2-19
EPSO-G ANNUAL REPORT FOR 2023
86
Dainius Bražiūnas
Member
From 29/03/2019
to 20/03/2023
Head of Energy Security
Group at the Ministry of
Energy of the Republic of
Lithuania
Vilnius Gediminas Technical
University, Bachelor in Energy
Sciences.
Gediminas
Almantas
Independent
member
From 29/03/2019
to 20/03/2023
Independent Member of
the Board of the State
Enterpriser Lietuvos Oro
Navigacija; Chairman of
the Board of LTG Infra,
Member of the
Compliance and
Mediation Committee at
the International
Federation of the Red
Cross and Crescent
Societies, Chairman of the
Open Lithuania
Foundation, the member
of the Procurement and
Investment Policy
Committee of the
Lithuanian National Radio
and Television.
Vilnius University, Master in Law;
University of Bern, Switzerland,
Master in Law;
Copenhagen Business School,
Ethics of Business Negotiation,
PhD in Industry.
Attendance and key decisions of the Remuneration and Nomination Committee in 2023
No
Meeting date
Asta
Sungailienė
Tomas
Daukantas
Ramūnas
Bagdonas
Jolita
Lauciuvienė
Gediminas
Almantas
Dainius
Bražiūnas
1
02-08
-
-
-
⚫
⚫
⚫
2
03-08
-
-
-
⚫
⚫
⚫
3
03-17
-
-
-
⚫
⚫
⚫
4
04-24
⚫
⚫
-
-
-
-
5
05-04
⚫
⚫
-
-
-
-
6
06-13
⚫
⚫
⚫
-
-
-
7
09-06
⚫
⚫
⚫
-
-
-
8
10-04
⚫
⚫
⚫
-
-
-
9
10-20
⚫
⚫
⚫
-
-
-
10
11-15
⚫
⚫
⚫
-
-
-
11
12-06
⚫
⚫
⚫
-
-
-
12
12-21
⚫
⚫
⚫
-
-
-
⚫ Attended
Did not attend
- The member did not attend meeting of the Remuneration and Nomination Committee because he/she was not elected during
the period or his/her term of office expired
GRI 2-19
EPSO-G ANNUAL REPORT FOR 2023
87
Key decisions of the Remuneration and Nomination Committee in 2023:
2023-02
2023-03
2023-04
2023-05
02-08
Approval of the activity
report of RNC for 2022;
RNC assessment of
performance for 2022;
Recommendation on the
candidates for election to
the Board of Tetas,
including
recommendation on the
Board skills matrix of
Tetas
03-08
Discussion of the
performance assessment
process of the Group’s
collegial bodies, the
achievement of the
objectives of the Group’s
executives, approval of the
general areas of
improvement of the
Group’s activities;
03-17
Recommendation on the
candidate for election to
the Board of Amber Grid
04-24
Recommendation on the
candidate for election to the
Board of Energy Cells
05-04
Recommendation on the
candidate nominated by Amber
Grid for election to the Board of
GET Baltic
2023-06
2023-09
2023-10
2023-11
2023-12
06-13
Election of the chair of
RNC;
Periodic assessment of the
independence of RNC
members;
Recommendation on the
action plan for the
management training of
Tetas
Discussion on the review
of the areas of
responsibilities and
functions of RNC;
Consideration of the report
on the Employee
Remuneration,
Performance Review and
Training Policy and the
Policy on Management of
Interests of Members,
Heads and Employees of
Collegial Bodies (to the
extent it is related to the
independence criteria of
the CB and their
assessment);
09-06
Recommendation to
the Board of EPSO-G
on approval of the
updated regulations of
RNC.
10-04
Recommendation on
the Board skills
matrix for newly
elected Boards of
Litgrid and Amber
Grid;
Meeting with
representatives of
Litgrid regarding HR
management
matters.
10-20
Approval of the
schedule of ordinary
meetings of RNC for
2024 and the action
plan of RNC for
2024.
11-15
Recommendation on
the Group’s
remuneration bands
from 2024.
12-06
Meeting with
representatives of
Amber Grid
regarding HR
management
matters.
Assessment of
performance
appraisal
questionnaires for
the Group boards
and committees;
Recommendation
on the employee
succession planning
and management,
critical positions
and future
employee
competencies;
12-21
Recommendation
on the skill matrix
for the newly
elected Board of
Baltpool
EPSO-G ANNUAL REPORT FOR 2023
88
7.6 The Audit Committee of EPSO-G
According to the current version of the Articles of Association of EPSO-G, the Audit Committee shall be composed of at least
three members appointed by the sole shareholder of EPSO-G for a maximum period of four years, subject to the recommendations
(if any) of the Remuneration and Nomination Committee. The continuous term of office of a member of the Audit Committee shall
not exceed two consecutive terms. Only an independent member may be elected to chair the Audit Committee.
During the reporting period, the Audit Committee had two independent members: Gediminas Šiušas and Robertas Vyšniauskas.
On 22 April 2023, Dainius Bražiūnas was nominated by the Ministry of Energy as a member of the Audit Committee, replacing
Gediminas Karalius, former member of the Audit Committee.
The Audit Committee of EPSO-G:
• Carries out the monitoring of the preparation and auditing of the financial statements of the Group companies;
• Is responsible for the ensuring of the observance of the independence and objectivity principles by the auditors of the Group
companies and of audit firms;
• Is responsible for the monitoring of effectiveness of the internal control of the Group companies, compliance and risk
management, and internal audit systems, activity processes;
• Is responsible for the control of provision of non-audit services by the auditor of the Group companies and / or audit firm;
• Evaluates the transactions concluded by the Group companies, the shares of which are admitted to trading on a regulated
market, with the parties concerned.
During the reporting period, 25 meetings of the Audit Committee were held in which 8 decisions were adopted by a written vote.
EPSO-G’ Audit Committee composition as at 31 December 2023
Full name
Position
Term of office
Other positions
Education
Gediminas
Šiušas
Independent
member, Chair
From 22/10/2020
CFO at Convera Europe
Financial S.A.
Stockholm School of
Economics in Riga, Bachelor
in Economics and Business
Administration
Vilnius University, Bachelor in
Management and Business
Administration;
Vilnius University, Master in
Economics.
Robertas
Vyšniauskas
Independent
member
From 22/10/2020
CEO of Valstybės
Investicinis Kapitalas UAB;
Member of the Board of
Vilniaus Vystymo
Kompanija UAB
Lecturer at Vilnius
University
Member of the Supervisory
Council at KN Energies
Member of the Audit
Committee at KN Energies
Mykolas Romeris University,
Master in Law.
Dainius Bražiūnas
Member
From 22/04/2023
Head of Energy Security
Group at the Ministry of
Energy of the Republic of
Lithuania; Director of the
association Koturna
Vilnius Gediminas Technical
University, Bachelor in Energy
Sciences
EPSO-G ANNUAL REPORT FOR 2023
89
Attendance and key decisions of the Audit Committee in 2023
Gediminas Šiušas
Robertas Vyšniauskas
Dainius Bražiūnas
(from 22/04/2023)
Tomas Daukantas (until
22/04/2023)
25/25
25/25
15/25
10/25
Key decisions of the Audit Committee in 2023
2023-01
2023-02
2023-03
2023-04
2023-05
2023-06
01-23
New lists of
compliance priorities
for Tetas, EPSO-G
and Litgrid were
approved.
A new version of the
Group’s Compliance
Management Policy
was endorsed.
It was recommended
that the EPSO-G
Board initiate
external audit
procedures on the
implementation of
the Physical Barrier
Project.
The Audit
Committee’s opinion
on the transaction to
be concluded by
Litgrid with the
related party was
approved.
The list of Group
level risks was
approved.
Amber Grid, Litgrid,
Tetas, Baltpool,
Energy Cells and GET
Baltic were advised
to add recommended
risks to their risk lists.
The shortage of
project managers in
Litgrid was brought
to the attention of the
company’s Board.
02-20
The Audit
Committee’s
improvement
plan for 2023
was approved.
The report by
the Head of
Internal Audit
on the
achievement of
the objectives
was endorsed.
EPSO-G Board
was advised on
the selection of
an external
auditor.
The
independence of
two members of
the Audit
Committee was
assessed.
02-28
The Audit
Committee’s
conclusions on
the financial
statements of
Baltpool and
GET Baltic for
2022 were
approved.
03-07
The Audit Committee’s
conclusion on the
audited financial
statements of Tetas and
Energy Cells for 2022
was approved.
03-18
The Audit Committee’s
conclusions on the
financial statements of
Amber Grid and Litgrid
for 2022 were approved.
Approval of the Audit
Committee’s activity
report for 2022.
EPSO-G Board was
advised on approval of
the report by the Head of
Internal Audit on the
achievement of the 2023
objectives.
It was confirmed that the
review of the decisions
made by the Boards and
Executives of Litgrid and
Tetas for H2 2022 did
not reveal any material
irregularities and/or
weaknesses.
Recommendation to the
EPSO-G Board on the
review of the procedures
for the indexation of
contracts.
Amendments to the list
of risks and their
management measures
for Amber Grid, Litgrid,
Baltpool, Tetas for 2023
were endorsed.
04-24
Approval of the
AC conclusion
on the audited
financial
statements of
EPSO-G for
2022.
A new version
of the Group’s
Risk
Management
Policy was
endorsed.
EPSO-G Board
was advised on
the employee
turnover
management in
the Group.
The Boards of
the Group
companies were
advised on
assessment of
annual goals.
05-04
Approval of the
AC opinion on
the transaction
to be concluded
by GET Baltic
with the related
parties
approved.
EPSO-G Board
was advised on
initiation of a
root cause
analysis of the
project
managers’
shortages.
06-14
The Audit
Committee
was advised
on the
external
auditor’s
independenc
e.
06-19
Decision to
repeal the
Policy on
Related
Party
Transactions
was
endorsed.
The Group’s
Policy of
Anti-
Corruption
Activities
was
endorsed.
Litgrid Board
was advised
on additions
to the List of
Risks.
EPSO-G ANNUAL REPORT FOR 2023
90
EPSO-G Board was
advised on Tetas’ cost
management and the
adequacy of financial
data.
2023-07
2023-08
2023-09
2023-10
2023-11
2023-12
07-24
The
amendments to
the List of Risks
of Amber Grid
were endorsed.
07-28
The report on
the conclusions
of the selection
procedures of
the Group’s
external auditor
was approved.
The Boards of
the Group
companies were
advised on the
selection of an
external auditor.
08-21
A new version of the
Audit Committee’s
action plan was
endorsed.
The Boards of Litgrid
and Amber Grid were
advised on the
implementation of the
internal audit
recommendations.
The Board of Litgrid
was advised on plans
to restore and
modernise the
transmission grid.
The Board of Litgrid
was advised on
inventory of facilities
located in protection
zones of overhead
lines.
09-15
The
amendments
to the List of
Risks of
Amber Grid
were
endorsed.
10-23
The internal audit
budget for 2024 was
endorsed.
The Board of Litgrid
was advised on
procurement
efficiency.
The Board of Litgrid
was advised on the
reasonableness and
adequacy of the grid
upgrade plan.
The new version of
the Group’s Policy of
Management of
Interests of
Employees and
Members of Collegial
Bodies was
endorsed.
11-17
The Audit
Committee’s
action plan
for 2024
was
approved.
12-07
The advised was
given on the external
auditor’s
independence.
12-22
EPSO-G, Litgrid and
Amber Grid’s risk
appetite and plans on
risk management
measures for 2024
were endorsed.
Tetas, Baltpool and
Energy Cell’s risk
appetite and plans on
risk management
measures for 2024
were endorsed.
7.7 Chief Executive Officer
The Chief Executive Officer of EPSO-G is appointed by the Board of the Company taking into account the recommendations of
the Remuneration and Nomination Committee. The Chief Executive Officer is accountable to the Board.
Mr. Keizeris was elected as the CEO of EPSO-G from 22 August 2022.
After the registration of the new version of the Articles of Association of EPSO-G on 5 January 2023, the title of the position of
the Company’s CEO was changed to the Manager.
The competence of the Manager does not differ from the competence of the head of the company established by the Law on
Companies, except for the additional competence provided for in the Articles of Association. The Manager of EPSO-G:
• arranges and controls the implementation of the Group’s strategy, approves the Group strategy’s action plan, and ensures the
implementation of the Group's strategy, within the limits set by law;
• Controls the activities of the subsidiaries, makes suggestions and conclusions to the Board of EPSO-G regarding the
organization of the Group’s activities and development thereof;
• implements the guidelines, procedures, policies, codes and other documents approved by the Board in relation to the Group’s
activities and functioning within the Company, and, within the scope of his/her authority, takes measures to ensure their
implementation in the Group companies;
EPSO-G ANNUAL REPORT FOR 2023
91
• approves Group-wide procedures, rules, descriptions and other Group-level documents, if the relevant areas of the Group are
not governed by Group-level documents approved by the Board or the relevant Group-level documents approved by the
Board confer the relevant competences on the CEO;
• and etc.
Mr. Keizeris has been the member of the Board of Litgrid since December 2022.
7.8 Additional information on the Chairman of the Board, the Manager, the Chief Financial
Officer and the Head of the Internal Audit
Robertas Vyšniauskas (chair of the Board from February 2022 to 20 March 2023 and from April 2023) Mr. Vyšniauskas also
holds the position of the CEO at the company Valstybės Investicinis Kapitalas (State Investment Capital), is the member of the
Board of the company Vilniaus Vystymo Kompanija (Vilnius Development Company), the Chairman of the Supervisory Board of
KN Energies, and is a consultant in the field of corporate governance, law and taxes.
Mindaugas Keizeris (CEO) holds this position from 22 August 2022. Mr. Keizeris has been the member of the Board of Litgrid
since December 2022. Mr. Keizeris graduated from Vilnius University with completed studies of business administration and
management and a master's degree in international business, and also completed the training program for professional board
members at Baltic Institute of Corporate Governance.
Darius Kašauskas took up his duties as the Head of Finance of the EPSO-G Group from 16 January 2023. From 30 March 2023
Darius Kašauskas is Chairman of the Board of Tetas. Mr. Kašauskas holds Master in Economics and Management at Vilnius
University and ISM University of Management and Economics, and also studied for his doctoral degree in Social Sciences and
Economics at the latter university.
Žydrūnas Augutis, Chief Financial Officer. Mr. Augutis has more than 20 years of experience in financial accounting and taxation
and holds the position of the Chief Financial Officer of EPSO-G from April 2019. Before joining EPSO-G, he held the position of
the Chief Financial Officer of the subsidiary Litgrid for two years, was the head of the Accounting Department of Lietuvos Dujos
AB (following the separation of the transmission activities from it, Amber Grid was established). In 2017-2019, Mr. Augutis was
a member of the Board of EPSO-G’s subsidiary Tetas. Mr. Augutis holds a Master’s degree in Accounting and Auditing in
Economics from Vilnius University.
Ms. Rasa Juodelytė, Head of Internal Audit. Holds the position of the Head of Internal Audit Unit at EPSO-G from January 2017.
Before starting to serve in this position, she was responsible for the Internal Audit Unit’s activities at the subsidiary Litgrid for four
years; she held the same position at the international company of wholesale and retail trade in petroleum products. In 2020, Ms.
Juodelytė was also a member of the Audit and Risk Committee of SE Ignalina Nuclear Power Plant. Ms. Juodelytė holds a Master
in Accounting and Auditing from Vilnius University.
The CVs of the members of the Board, the Committees and the Chief Executive Officer of the Company are published on the
website of EPSO-G at www.epsog.lt.
GRI 2-10
GRI 2-11
EPSO-G ANNUAL REPORT FOR 2023
92
7.9 Operating Policies
Good governance practices in the EPSO-G Group were implemented during the reporting period through the application and
continuous targeted improvement of the operating policies approved by the Board, applicable to all the Group companies. The
operating policies of the EPSO-G Group are intended to implement a consistent and effective organizational management system
helping the employees in successful implementation of important strategic projects and transparent and effective benefit creation
for both the people of the country and the business.
In order to meet the objectives set out in the Shareholder’s Letter of Expectations, the holding company EPSO-G has established
guiding principles and, where appropriate, specific rules in the following areas of activity across the Group:
During the reporting period the following policies were updated: Risk Management, Anti-Corruption Activities, Management of
Interests of Employees and Members of Collegial Bodies, Corporate Governance, Interest Management and Transport
Management.
Policies or their summaries are available on the EPSO-G website at www.epsog.lt, in the menu item Operating Policies.
GOVERNANCE AND
CONTROL
ASSETS
EMPLOYEES
SUSTAINABILITY AND
TRANSPARENCY
GRI 2-23
Selection
Equal opportunities
Remuneration,
Performance Appraisal
and Development
Ethics
Occupational Safety
Accounting
Dividends
Treasury
Technological assets
Transport
IT
Information security
Data Protection
Sale of shares
Sustainability
Environmental
Anti-corruption
activities
Transparency and
communication
Purchases
Management of
interests
Financial support
Corporate governance
Planning and
monitoring
Compliance
Risk management
Internal audit
Project management
Research and
innovations
EPSO-G ANNUAL REPORT FOR 2023
93
7.10 Functional Area Governance
In H1 2023, the holding company EPSO-G applied a functional governance model to it operations, which, based on international
practice, creates the greatest value for the Group companies. In application of the functional governance model, the holding
company EPSO-G:
• Mostly focuses on operational efficiency, shared resources, and centralized services;
• Allocates resources and enhances competence for key, long-term value creation activities - strategy development, investment
management, and innovation;
• Defines the policies of the Group companies, standardizes the core processes of the Group;
• Promotes the sharing of good practices among the patronized companies and supports initiatives to improve performance.
The effectiveness of the governance model is measured by EPSO-G through an employee engagement survey. Based on the
survey results, areas for improvement are identified and a further action plan for the development of the organization is adjusted
accordingly.
Based on the provisions of the new version of the Corporate Governance Policy approved by the Board of the Company on 29
June 2023, the Corporate Governance Model of the EPSO-G Group is implemented on the basis of two main governance
mechanisms: (i) Corporate Governance and (ii) Functional Governance.
7.11 Performance Assessment and Results of the Activities of the Collegial Supervisory and
Management Bodies
With respect to the guidelines prepared by the Remuneration and Nomination Committee, at the beginning of 2024, the governing
bodies of the holding company EPSO-G and its subsidiaries carried out the assessment of their performance in 2023. The
summarized performance assessments of the members of each collegial body were discussed during the meeting of each collegial
body. The fields of activity to be improved were identified and the directions for improvement of the operational processes were
established by drawing up a coherent plan of actions and tasks for 2024.
7.12 Information on Compliance with the Code of Conduct
The holding company EPSO-G complies with the provisions of the Corporate Governance Code of the Companies listed on
NASDAQ OMX Vilnius. The Code applies to the extent that the Articles of Association of the Company do not provide otherwise.
The Company discloses its compliance with the provisions of the Corporate Governance Code in Annex 3 of the Annual Report.
7.13 Information on Compliance with Transparency Guidelines
The EPSO-G Group complies with Resolution No 1052 of the Government of 14 July 2010 On the Approval of the Description of
the Guidelines for Ensuring the Transparency of the Activities of State-Owned Enterprises (the “Transparency Guidelines”). The
application of the Transparency Guidelines is mandatory for the holding company EPSO-G.
In order to ensure compliance with the Transparency Guidelines at the EPSO-G Group, the Business Transparency and
Communication Policy is effective at the Group, which considers in detail the requirements set forth in the Transparency
Guidelines, and defines their applicability to the companies of the Group.
The implementation of the Transparency Guidelines is largely ensured through disclosure of information in the annual report and
on the official websites, where information is disclosed in the format that is acceptable and comprehensible to the stakeholders.
Structured information on the implementation of the Transparency Guidelines is presented in Annex 3 to the Annual Report.
GRI 3-3
GRI 2-23
REPORT ON THE
IMPLEMENTATION OF THE
REMUNERATION POLICY
8
8.1 Formation and Monitoring of the Remuneration and Nomination
Policy
8.2 Remuneration Policy
8.3 Employee Performance Assessment
8.5 Information on Remuneration
8.6 Information on Remuneration of Collegial Members
8.6 Legal Disputes and Uncertainties
EPSO-G ANNUAL REPORT FOR 2023
95
8 REPORT ON THE IMPLEMENTATION OF THE REMUNERATION
POLICY
We create an open, progressive organization guided by the objectives of sustainable development, where the professional
partnership between an employer and employees prevails, where everyone has opportunities for self-realization, grows together
with the organization and can take responsibility for their decisions and actions. In our activities we are guided by these values:
professionalism, cooperation, and progress.
When implementing the strategic and business goals set by the shareholder: to create an energy transmission and exchange
platform interconnected with the European Union countries and enabling sustainable and efficient energy exchange for regional
consumers, and thus increasing the competitiveness of the country’s business and the well-being of Lithuanian people, we seek
to attract and retain competent, responsible professionals following the provisions of the Group’s Code of Conduct and reaching
their targeted goals.
We constantly foster employee improvement and upgrade of their skills. We develop employees’ professional (functional) and
general (values-based) competencies. We encourage the development of managerial competencies.
We set goals related to the strategy for employees and evaluate their achievement. We encourage all employees to propose and
implement innovations in their activities: from innovative work methods and tools that facilitate everyday processes to
breakthrough innovations that lead to new activities.
We operate efficiently, ensure optimal operating costs and investments based on the best possible cost-benefit ratio, and we are
responsible in managing the remuneration budget. We pay employees a performance-based salary, offer incentives for achieving
goals that require additional efforts.
8.1 Formation and Monitoring of the Remuneration and Nomination Policy
The Board of the Company is responsible for the formation and implementation supervision of the Remuneration and Nomination
Policy of EPSO-G. In order to ensure the proper formation, monitoring and management of the remuneration fund, the EPSO-G
Group has a three-member Remuneration and Nomination Committee, the majority of which are independent members.
When performing this function, the Remuneration and Nomination Committee of EPSO-G:
• in the cases provided for in the company’s articles of association, or at the request of the bodies of the company or of the
Group companies, makes recommendations to them on the appointment of the members of the collegial bodies and on the
terms of their contracts, including on the level of their remuneration in accordance with the remuneration guidelines;
• makes recommendations on the appointment of managers of the Group companies, the forms of standard employment
contracts and the terms of contracts with managers being appointed, including the remuneration and/or its band;
• at least once a year, assesses the structure, size, composition and performance of the management bodies of the Group
companies, and may assess the skills, knowledge and expertise of individual members of the management body, and makes
recommendations for improvement;
• makes recommendations on the structure, amount of remuneration of managers of the Group companies, on key performance
assessment criteria and the remuneration review in accordance with the Group’s remuneration, performance assessment and
training policy;
• can make recommendations on the implementation of the Group's Remuneration Policy and measures necessary for its
implementation;
• makes recommendations on the Group’s remuneration policy for senior management and board members, its implementation,
including the transparency of the remuneration system;
• assesses the level and structure of remuneration of the members of the Group’s collegial management bodies, and oversees
the implementation of the remuneration guidelines;
• at the request of General Meeting of Shareholders, can make recommendations on the remuneration guidelines.
• makes recommendations on the system for succession of the Group’s managers and critical positions;
• makes recommendations on the system of equal opportunities, inclusion and diversity promotion within the Group;
• The management bodies of the Group companies have the right to obtain from RNC recommendations, conclusions on specific
issues raised by them, if these issues fall within the competence of the RNC.
EPSO-G ANNUAL REPORT FOR 2023
96
8.2 Remuneration Policy
The EPSO-G Group has a uniform remuneration policy based on the principles of responsibility and accountability. Its aim is to
effectively manage the Group’s payroll costs and to create motivational incentives to ensure that the level of remuneration is
directly linked to the achievement of the objectives set for the company and for each employee.
This means that performance appraisals are taken into account in determining remuneration. The remuneration of EPSO-G’s
management and staff therefore consisted of two main components: monthly remuneration and financial incentives. The monthly
remuneration depends on the level of responsibility of the job position, which is determined according to a methodology used in
international practice. As of 1 January 2023, a new remuneration policy is in force in the EPSO-G Group, which stipulates that a
financial incentive is paid when the annual targets of the relevant Group company are achieved by at least 80%. Financial
incentives for individual staff members depend on their individual performance. Individual performance assessment results
depend on the achievement of the staff member’s annual objectives, value behaviours and performance criteria.
Based on international good governance practice, the Remuneration Policy of EPSO-G is approved or changed by the Board only
after the Remuneration and Nomination Committee, which includes independent members, provides its recommendations.
All companies of the Group are subject to the same principles of the Remuneration Policy:
• The principles of the remuneration policy are identical for executives and employees.
• The remuneration fund is approved by the Boards of the companies. The Remuneration and Nomination Committee monitors
whether there is a balanced control of salary costs with motivation of the employees who are properly performing their duties;
• The remuneration of EPSO-G’s management and staff consists of two parts: monthly remuneration and financial incentives.
• Monthly salary depends on the level and competencies of the employee, while financial incentives depend on the achievement
of the Group’s annual targets and on the individual performance of the employee.
• No financial incentive is payable if performance does not meet expectations according to the established evaluation criteria.
• The amount of a financial incentive is estimated in the Company’s budget and recorded in the financial result, which is audited
and made public;
• The financial incentives of the company’s manager depend on the outcome of the company’s annual objectives, which are
linked to the implementation of the company’s strategy and published on the company’s website.
• Members of the collegiate bodies are not paid a financial incentive.
• The termination benefits for executives and staff do not exceed the amount set by the legislation of the Republic of Lithuania.
• A premium may be awarded for outstanding performance.
• The relevant board of the Group company must be informed about the financial incentive to be granted at its next meeting.
• Prior agreements on severance pays, except for companies’ managers whose terms of employment are determined by the
Board, are not concluded;
• Severance pays are paid to employees in accordance with the procedure laid down in the Labour Code of the Republic of
Lithuania and in employment contracts;
• The Remuneration Policy does not provide for any remuneration entitling the company manager, a member of the collegial
body or an employee to shares, stock options or to receive remuneration based on changes in share prices other financial
instruments;
• To promote employee engagement and loyalty, the EPSO-G Group companies provide non-financial rewards, including
voluntary health insurance, seminars on wellness and psychological well-being, seasonal vaccinations, employee events,
recognition, and career advancement within the Group.
In order to ensure the effectiveness of the Remuneration Policy, the fixed and variable pay components of remuneration are made
public by groups of posts. This creates assumptions for the companies of the EPSO-G Group companies to adequately remunerate
the employees, who reach the objectives and exceed expectations, on the basis of the average market value. The assessment of
the competitiveness of companies and employees’ remuneration is based on market research data. External consultants were not
engaged to prepare the Remuneration Policy of EPSO-G.
8.3 Employee Performance Assessment
Employee performance assessment is one of the most important conditions of management and effective leadership that helps
achieving the objectives of the EPSO-G Group companies and creating a positive relationship between the leaders and their
subordinates, allows planning employee careers, increasing their motivation and engagement.
The annual and interim performance appraisal meetings are a performance assessment tool ensuring that personal objectives of
GRI 2-19
GRI 2-23
EPSO-G ANNUAL REPORT FOR 2023
97
EPSO-G employees are tailored to the objectives of the Company. The meetings are intended to discuss and set measurable,
time-defined and motivating objectives for the employees, to discuss and assess an employee’s performance compliance with the
value behaviours and quality criteria.
The annual and interim performance appraisal meetings are intended to assess the achievement of objectives set for an employee
of EPSO-G and to set the new ones, forms a feedback culture between a leader and a subordinate. The need for the employee’s
competence development and further professional growth, and career opportunities are also discussed during the meetings.
In the companies of the EPSO-G Group, individual objectives are discussed with each employee and set annually. Their
implementation has a direct impact on the variable pay component, which also depends on the overall achievement of the
Company’s objectives.
After the Employee Remuneration, Performance Review and Training Policy of the EPSO-G Group companies was adopted, the
principles of setting individual objectives for employees did not change – result and quality orientation remained, the performance
assessment process was complemented by the assessment of compliance with performance quality criteria.
8.4 Employees
* Due to the specifics of the project work, most of the employees of Energy Cells work under fixed-term contracts and part-time in 2021-2022. In FTE
terms, the Company had 19.5 FTEs as at 31 December 2022 and 11 FTEs as at 31 December 2021.
For detailed information about employees please refer to chapter 10 of the Sustainability Report.
8.5 Information on Remuneration
As at 31 December 2023, the EPSO-G Group companies had 1,261 employee (as at 31 December 2022: 1,271 employee). Wage
Guarantee Fund of the EPSO-G Group for 2023 was EUR 52,937 thousand (2022: EUR 45,460 thousand).
Information on remuneration
Remuneration by
category of employees
Group
Number of employees (at
the end of the period)
Average monthly pay (including the variable pay
component)
2023
2022
2021
2023
2022
2021
Executives
6
7
7
12,092
10,256
9,063
Top Management
25
23
21
8,862
7,929
7,999
Middle Management
144
145
135
5,790
4,970
4,518
66
345
418
393
20
0
19
1261
60
332
391
416
18
10
44*
1271
74
324
335
498
19
8
20*
1278
EPSO-G Amber Grid Litgrid Tetas Baltpool GET Baltic Energy cells EPSO-G Group
Number of employees in the EPSO-G Group and separate companies in 2021-2023
2023 2022 2021
GRI 2-7
GRI 2-19
GRI 2-23
EPSO-G ANNUAL REPORT FOR 2023
98
Professionals
783
780
725
3,450
2,910
2,582
Workers
303
316
390
1,937
1,583
1,375
Total
1,261
1,271
1,278
3,492
2,857
2,561
Wage Guarantee Fund,
EUR thousand
52,937
45,460
35,133
Information on the holding company EPSO-G’s fixed and variable pay components
Remuneration by
category of
employees
Company
Number of employees
(at the end of the period)
2023
2022
2021
2023
2022
2021
Average monthly pay,
EUR
Variable pay
component for
results
achieved in
2022, EUR
Average monthly
pay, EUR
Variable
pay
compone
nt for
results
achieved
in 2021,
EUR
Average
monthly
pay, EUR
Variable pay
component
for results
achieved in
2020, EUR
Chief
Executive
Officer
1
1
1
13,803
971
9,708
8,078
2,140
Top
Management
6
3
5
8,034
1,207
7,099
1,791
7,142
1,794
Middle
Management
19
17
17
6,379
1,243
5,040
1,019
4676
798
Professionals
40
39
51
3,792
458
3,278
276
3,031
177
Total
66
60
74
5,049
748
4,063
559
4,254
647
Wage
Guarantee
Fund, EUR
thousand
4 447
4,171
2,495
* On 1 January 2023, a new remuneration system was introduced in the Company: a part of the variable pay component previously paid once a
year was added to a monthly remuneration. The update has been applied to the remuneration of the CEO since 1 June.
Executives; 6
Top Management; 25
Middle Management; 144
Professionals; 783
Workers; 303
Employee structure by groups of posts as at 31 December 2023
EPSO-G ANNUAL REPORT FOR 2023
99
8.6 Information on Remuneration of Collegial Members
The members of EPSO-G’s collegial bodies, the Board, RNC and AC, are appointed for the term of office of four years. Civil
contracts have been signed with members, detailing their responsibilities, duties, rights and functions.
The sole shareholder of the company, the Ministry of Energy of the Republic of Lithuania, approved the new version of the
Guidelines for Determining the Remuneration for Activities in the Management Bodies of EPSO-G UAB and the EPSO-G Group
of Companies (hereinafter the “Remuneration Guidelines”) on 21 October 2022.
The currently valid version of the Remuneration Guidelines establishes that remuneration for activities in the collegial bodies of
the Group companies can be paid to such members who meet at least one of the conditions set below and the payment of
remuneration to these members is not prohibited by the legislation in force in the Republic of Lithuania:
independent members the independence of whom is determined in accordance with applicable normative legal acts and internal
documents;
members who are civil servants.
Remuneration is not paid to employees of the Group companies and/or employees of shareholders of the Group companies.
EPSO-G
Subsidiaries and downstream
subsidiaries
Chair of the Board
1/3 AMP (CEO)*
1/3 AMP (CEO)
Member of the Board
1/4 AMP (CEO)
1/4 AMP (CEO)
Member of the Board (civil servant)
1/4 AMP (CEO)**
1/5 AMP (CEO)**
Chair of the Group’s AC and RNC
1/3 AMP (CEO) less 400 EUR
-
Member of the Group’s AC and RNC
1/4 AMP (CEO) less 400 EUR
-
* AMP (CEO) means average monthly pay of the CEO of EPSO-G or the CEO of a subsidiary or downstream subsidiary.
** In the event that a Board member (civil servant) holds the position and is engaged in activities of the collegial body of another state enterprise/state-
owned enterprise and/or municipal enterprise/municipally-owned enterprise, they are paid 1/8 of the average monthly salary of the head of the relevant
Group company. The Board member (civil servant) is not remunerated for activities in the Board Committee.
A fixed monthly remuneration for EPSO-G collegial body members is calculated from the average monthly salary calculated and
paid by the CEO of the Company for the previous calendar year at the time of remuneration determination and is not recalculated
for the entire term of office of the CO member, except if the previously determined remuneration no longer meets the requirements
established in legal acts.
By the decision of the sole shareholder of 21 October 2022, the following fixed monthly pay components (excluding payable
taxes) were established for the members of EPSO-G Board and the Audit Committee, which apply from 1 October 2022:
Position
Monthly fixed pay component (EUR)
Chair of the Board
3,406
Member of the Board
2,555
Member of the Board (civil servant), if the civil servant does not hold the position
and is not engaged in activities of the collegial body of another SE/SOE and/or
ME/MOE*
2,044
Member of the Board (civil servant), if the civil servant holds the position and is
engaged in activities of the collegial body of another SE/SOE and/or ME/MOE
1,277
Chair of the Audit Committee
3,006
Member of the Audit Committee
2,155
* SE - state enterprise, SOE - state-owned enterprise, ME - municipal enterprise, MOE - municipality-owned enterprise
GRI 2-7
EPSO-G ANNUAL REPORT FOR 2023
100
By the decision of the Board of EPSO-G of 25 November 2022, the following amounts of remuneration were set for the members
of the Remuneration and Nomination Committee (excluding payable fees): the Chair – EUR 3,006, the member – EUR 2,155. The
variable pay component for the members of collegial bodies is not set.
In the event that a member of the Board of the Company is elected as a member of the Board Committee formed in the Group
and/or the Chairman of the Board, or a member of the Board of the Company is revoked/resigns from the position of a member of
the Board Committee formed in the Group and/or the Chairman of the Board, the remuneration of such member of the Board of
the Company shall be changed without a separate decision of the Company’s shareholder with reference to a salary set by the
Company shareholder’s decision depending on the position held.
10% from the total relevant collegial body’s budget of the Company is allocated to the additional costs of the Company intended
to ensure the activities of the collegial body. The budget allocated to the costs of ensuring the activities of the collegial body can
be used for the organization of joint collegial bodies’ trainings, cooperation sessions or joint events of collegial bodies organized
in any other form, where knowledge and good practices are exchanged. The Company’s collegial bodies’ training budgets are not
used for individual training of collegial bodies’ members.
The contracts entered into with the members of supervisory and management bodies do not grant any rights to the shares of the
companies of the EPSO-G Group, other forms of remuneration or additional benefits. The contracts do not provide for any
severance pays and notice periods.
Information on activities and pay-outs for the members of the holding company EPSO-G’s collegial supervisory and
management bodies
As at 31 December 2023
As at 31 December 2022
As at 31 December 2021
Number of meetings of collegial
supervisory and management
55
94
94
Number of members of collegial bodies
remunerated (persons)*
6
6
4
Pay-outs related to members of
management bodies (thousand EUR)
259
209
94
Information on individual payments to members of collegial supervisory and management bodies
Member’s full name
As at 31 December 2023
As at 31 December 2022
As at 31 December 2021
Robertas Vyšniauskas*
66,013
62,960
21,000
Gediminas Almantas*
12,459
54,553
25,800
Asta Sungailienė*
47,781
-
-
Liudas Liutkevičius*
23 654
-
-
Tomas Daukantas*
24,330
6,132
-
Dainius Bražiūnas*
24,330
6,132
-
Gediminas Šiušas**
36,072
34,473
13,200
Ramūnas Bagdonas**
16,881
-
-
Jolita Lauciuvienė**
7,951
34,473
13,200
Ramūnas Abazorius*
-
9,902
-
Tomas Tumėnas*
-
20,546
* A total remuneration for activities as an independent member of the Board and a member of a corresponding the EPSO-G Group’s Board
Committee.
** A remuneration for activities as a member of the EPSO-G Group’s Board Committee.
EPSO-G ANNUAL REPORT FOR 2023
101
8.7 Legal disputes and uncertainties
In the Years 2023 EPSO-G and the Group had no n legal disputes related with financial liabilities or that could effect financial
results of the Company or the Group
INFORMATION ON SPECIAL
OBLIGATIONS
9.1 PSO funds administration activities PSO Funds Administration
Activities
9.2 Implementation of the Functions of the Project Executor for the
Installation of a Physical Barrier at the Border with Belarus
9
EPSO-G ANNUAL REPORT FOR 2023
103
9 INFORMATION ON SPECIAL OBLIGATIONS
9.1 PSO funds administration activities
To serve the interests of all electricity consumers, inter alia, by ensuring the reliability and security of electricity supply,
diversification of electricity resources, and increasing Lithuania’s energy independence, the Public Service Obligations (hereinafter
the “PSO”) are provided in the electricity sector of the Republic of Lithuania in accordance with the procedure established by the
legislation.
Baltpool, a company of the EPSO-G Group, was appointed to implement the special obligation to perform the functions of the
administrator of funds of public service obligations (PSO) in the power sector from 1 January 2013 under the Resolution No 1338
of the Government of the Republic of Lithuania of 7 November 2012 On the Appointment of the Administrator of Funds of Public
Service Obligations in the Power Sector.
This activity included in the List of Special Obligations Performed by State-Owned Enterprises and their Subsidiaries, as approved
by the Order No 4- 193 of the Minister of Economy and Innovation of the Republic of Lithuania of 16 March 2021 (hereinafter the
“List of Special Obligations”), is performed by Baltpool in accordance with the Law on Electricity of the Republic of Lithuania, the
Law on Energy from Renewable Source of the Republic of Lithuania, the Description of the Procedure for Rendering Public Interest
Services in the Electricity Sector, as approved by the Resolution of the Government of the Republic of Lithuania No 916 On the
Approval of the Description of the Procedure for Rendering Public Interest Services in the Electricity Sector of 18 July 2012, the
Description of the Procedure for the Administration of Funds Raised from Public Interest Services in the Electricity Sector, as
approved by the Resolution of the Government of the Republic of Lithuania No 1157 of 19 September 2012 (hereinafter the
“Description of the Procedure for the Administration of PSO Funds”) and other regulations governing administration of PSO funds.
The objective of the administration of the PSO funds is to ensure the proper and legal collection, payment, recovery and
administration of the PSO funds. To ensure the proper implementation of this objective, Baltpool puts special emphasis on the
proper safekeeping of the PSO funds balance, the smooth and transparent collection and payment of the PSO funds, and the
proper representation of Baltpool in legal disputes related to the administration of the PSO funds. In light of this, Baltpool has
identified in its documents governing planning, compliance and risk management, and carried out in 2023 and will carry out in
2024, regular monitoring of the proper implementation of these performance targets:
• information related to the administration of PSO funds is made public and/or submitted to the National Energy Regulatory
Council (hereinafter the “the Council”) within time limits set in the applicable legislation (target delay value: 0 days);
• the balancing of PSO funds is ensured by flow forecasting of PSO funds, controlling of PSO funds balance through borrowing
arrangements which, in the event of a shortfall in PSO funds balance, would enable immediate and proper fulfilment of
Baltpool’s obligations for payment of PSO funds;
• Baltpool participation in legal disputes related to the administration of PSO funds (target value: 100%).
The legislation governing the administration of PSO funds does not entitle Baltpool to profit from these activities. In accordance
with the provisions of the description of the procedure for the administering PSO funds, Baltpool costs incurred in performing the
activity of administering PSO funds are compensated from the collected PSO funds, but not more than 1/12 of the amount of the
administration of PSO funds approved by the Council for the current calendar year, which is set on an annual basis in accordance
with the Methodology for the pricing of public-interest services in the electricity sector as adopted by the Council by its resolution
No O3-279 of 28 September 2012 (hereinafter the “PSO Methodology”). Baltpool accounts PSO funds separately from its other
activities. PSO prices for the coming calendar year and the amounts of PSO funds to be paid to the providers of PSO services in
the current calendar year are set by the Council in accordance with the PSO Methodology.
In 2023, the public interest in the electricity sector was aimed at promoting the use of RES for electricity production by supporting
the production of electricity from RES (hereinafter the “RES electricity”), the balancing and the centralised trading of such
electricity through the use of PSO funds, in accordance with the procedure laid down by the legislation. By Resolution No O3E-
1469 of 24 October 2022, the Council decided, inter alia, to award: (i) EUR 4,098 thousand to electricity producers for RES
electricity fed into the grid; (ii) EUR 5,250 thousand to transmission system and distribution grid operators for the balancing of
RES electricity; EUR 31 thousand to the centralised RES electricity purchasing entity; and (iv) EUR 181 thousand to compensate
costs of administering PSO funds in 2023. Following the assessment of the balance of PSO funds accumulated in previous periods
in accordance with the procedure set out in the PSO Methodology, the Council fixed the PSO price of less than zero (0) (- 0.780
ct/kWh excl. VAT) to be applicable in 2023 by its said Resolution No O3E-1469 of 24 October 2022.
EPSO-G ANNUAL REPORT FOR 2023
104
During 2023, Baltpool provided the Council with the data necessary to determine the need for PSO funds and PSO prices for
2024 in accordance with the PSO Methodology. By Resolution No O3E-1480 of 12 October 2023, the Council decided to allocate
EUR 245 thousand to Baltpool to compensate the costs of administering PSO funds in 2024, and fixed PSO price at 0 ct/kWh
excl. VAT for 2024. The cash flow forecast of PSO funds, together with other reports on the administration of PSO funds and
detailed information on PSO, is available on Baltpool’s website at:
https://www.baltpool.eu/lt/ataskaitos-2/ ir https://www.baltpool.eu/viap-lesos/viap-administravimas/.
The balance sheet of TSO Funds administration activities as at 31 December 2023 and 2022 was as follows: balance of PSO
funds, PSO funds receivable, related obligations are listed in the following table:
2023
2022
Change
+/-
%
Administered PSO funds receivable
33,427
27,953
5,474
20
Balance of PSO funds
35,571
132,554
-96,983
-73
68,998
160,507
-91,509
-57
Short-term financial debts
-
-
-
-
PSO funds payable
12,636
-
12,636
100
VAT payable
0
1,196
-1,196
-100
Accrued PSO funds payable
56,362
159,311
-102,949
-65
68,998
160,507
-91,509
-57
In carrying out the PSO Funds administration activities in 2023 and 2022, Baltpool, the EPSO-G Group company, incurred the
below costs which were reimbursed in accordance with the Council’s methodology. The reimbursed costs were recognised as
income, and therefore revenue and costs, including financial result, related to PSO activities were reported under the following
line items in the income statement of EPSO-G:
2023
2022
Change
+/-
%
Revenue
181
192
-11
-0.06
Total revenue and other income:
181
192
-11
-0.06
Wages and salaries and related
expenses
-98
-106
8
-0.08
Legal services and stamp duty
-22
-22
0
0
Other expenses
-45
-51
6
-0.12
Total expenses
-165
-179
11
-0.08
EBIDTA
16
13
3
23.08
Depreciation and amortisation
-16
-13
-3
0.23
Operating profit (loss) EBIT
0
0
0
0
Income tax
0
0
0
0
Net profit (loss)
0
0
0
0
9.2 Implementation of the functions of the project executor for the installation of a physical
barrier at the border with Belarus
Upon the implementation of the Law on the Installation of a Physical Barrier on the Territory of the Republic of Lithuania at the
EU External Border with the Republic of Belarus (hereinafter - the Law on the Physical Barrier), EPSO-G UAB was assigned a
special obligation, i. e. to perform the functions of the executor of the project for the installation of a physical barrier, as defined
in Paragraph 1 of Article 2 of the Law on the Physical Barrier, under the Resolution No 680 of the Government of the Republic of
Lithuania of 23 August 2021 On the Implementation of the Law on the Installation of a Physical Barrier on the Territory of the
GRI 2-6
EPSO-G ANNUAL REPORT FOR 2023
105
Republic of Lithuania at the EU External Border with the Republic of Belarus. EPSO-G used its controlled legal entities to perform
the assigned functions.
The physical barrier installation works were completed on time (30 December of 2022) and within the scope of the budget.
Detailed information on the physical barrier project implemented, and related project objectives is available on EPSO-G website.
Information on these special obligations committed (fulfilled) by EPSO-G and its subsidiaries is also provided in the List of Special
Obligations.
Given that EPSO-G has implemented the functions of the project executor for the installation of a physical barrier at the border
with Belarus, it is expected that the functions of the project executor for the installation of a physical barrier at the border with
Belarus, as a specific obligation of EPSO-G, will be removed from the List of Special Obligations in the near future.
SUSTAINABILITY (NON-
FINANCIAL DISCLOSURE)
REPORT
10.1 Environment
10.2 Social Responsibility
10.3 Governance
10
EPSO-G ANNUAL REPORT FOR 2023
107
10 SUSTAINABILITY (NON-FINANCIAL DISCLOSURE) REPORT
About the Sustainability Report
Principles and scope of reporting
The EPSO-G Group Sustainability Report (disclosure of non-financial information) is presented in accordance with the Law of the
Republic of Lithuania on Financial Reporting of Undertakings and the European Union’s Non-Financial Reporting Directive.
This Sustainability Report is part of the EPSO-G Group’s Consolidated Annual Report for 2023.
Disclosures in the Sustainability Report were made in accordance with the Global Reporting Initiative (GRI) Core Standards. The
recommendations of the Bank of Lithuania, the Governance Coordination Centre (GCC) on disclosure of sustainability-related
information have also been taken into account in the preparation of this report.
The information in this report covers relevant data and events within the period from 1 January to 31 December 2023. In order to
improve the comparability of the results presented, and in line with the requirements of GRI standards, this report also includes
additional data for previous years. Given stakeholders’ expectations, the scope of disclosures has been expanded compared to
the previous year’s Report, with amendments made to certain data disclosed in previous periods to reflect changes in calculation
methodology or new information. The content of the Sustainability Report shall include the most recent information available at
the time of publication. The Sustainability Report is unaudited.
The EPSO-G Group Sustainability Report provides information on the significant environmental, social and governance impacts
of the Group's activities and describes EPSO-G's contribution to the United Nations Sustainable Development Goals.
Sustainability Report is part of the EPSO-G Group’s consolidated annual report for 2023. Unless otherwise stated, the disclosures
in the Report comprise information of all the Group companies: Amber Grid, Baltpool, Energy Cells, Litgrid and Tetas. The Group
subsidiaries include a cross-reference to the Sustainability Report in their annual reports.
The previous "EPSO-G" sustainability report, published on March 21, 2023, along with the 2022 consolidated annual report, and
other information regarding the Group's sustainability management are available in the ‘Sustainability’ section on the EPSO-G
website.
Klaudija Kionies, a Head of Sustainability Development at EPSO-G (klaudija.kionies@epsog.lt.) is responsible for preparing the
content of this sustainability report.
Information on the operating model
EPSO-G has a key role to play in ensuring Lithuania's smooth and reliable transition to an energy system integrating large
amounts of renewable energy sources, enabling the decarbonisation of the sector, initiating system interconnection projects, and
facilitating the exchange of climate neutral energy. EPSO-G's activities are understood through the platform business model.
EPSO-G is working to create a coherent, transparent ecosystem based on uniform standards, facilitating exchanges between
producers, suppliers, and consumers. The Group also creates value for society by empowering sustainable energy choices and
contributing to national competitiveness.
Detailed information on the EPSO-G Group's business model, business environment, organisation and structure, market,
objectives, and strategy is provided in the relevant parts of this consolidated annual report of the EPSO-G Group.
General information on sustainability in the EPSO-G Group
EPSO-G has a key role to play in ensuring Lithuania's smooth and reliable transition to an energy system integrating large
amounts of renewable energy sources (RES), enabling the decarbonisation of the sector, initiating interconnection projects, and
facilitating the exchange of climate neutral energy.
The EPSO-G Group aims to transform the energy sector by striking a sustainable balance between environmental, social, and
economic objectives.
The Group integrates sustainability principles into the operations and processes of all Group companies. As an operator of
strategically important energy infrastructure, EPSO-G contributes to the implementation of the climate change and environmental
commitments set out in the Paris Agreement, the European Green Deal, the National Energy Independence Strategy, and the
National Climate Change Management Agenda. EPSO-G also aims to contribute directly to the United Nations Sustainable
GRI 2-2
GRI 2-3
GRI 2-6
GRI 2-9
GRI 3-1
GRI 3-3
EPSO-G ANNUAL REPORT FOR 2023
108
Development Goals by focusing on ensuring access to affordable and clen energy, combating climate change, developing modern
infrastructure and innovation, safe and decent working conditions, worker well-being and a sustainable supply chain.
EPSO-G’s main directions for sustainable development stem from the activities defined in the Group's long-term strategy until
2030.
• Environmental - the empowerment of climate-neutral energy by reducing the environmental impact of activities.
• Social - building a progressive, sustainable organisation.
• Governance - transparent and efficient management and development of the energy exchange platform.
EPSO-G’s sustainability performance is disclosed in the context of a group-wide analysis of the significance of impacts. This
analysis, carried out in 2022 on a Group-wide basis, involved three steps: identification of the most significant environmental,
social and governance impacts; a survey of stakeholders and Group management; and identification of the most significant impacts
on EPSO-G’s operations. The survey, implemented in early 2022, involved 645 respondents, including employees, suppliers,
customers, business partners, local communities, associations, trade unions, the Ministry of Energy, investors, and executives and
board members of the Group companies.
Under the EPSO-G Group's Sustainability Policy, approved by the Board in 2021, the Group commits to reviewing its
environmental, socio-economic impacts and sustainability priority topics on a regular basis, but at least once every two years, by
carrying out a materiality assessment, ensuring the involvement of stakeholders.
EPSO-G assessed the significance of 19 identified sustainability impacts, which were determined in accordance with the
specificities of the Group’s business activities, EPSO-G’s long-term strategy until 2030, and the SASB and GRI guidelines for
determining significance, as set out in international standards. The main impacts identified in operations of EPSO-G are explained
below:
Environmental impacts:
• Reducing environmental impacts and GHG emissions in operations - reducing environmental impacts (air, water, soil quality),
pollution and GHG emissions (CO
2
, CH
4
, SF
6
, etc.) in the company's operations.
• Biodiversity and ecosystem conservation – protecting terrestrial and aquatic wildlife, natural vegetation, and habitats of high
ecological value through activities.
• Sustainable and efficient use of resources in the company's operations - using green energy in the company's operations, using
water and other resources efficiently.
• Waste minimisation, responsible sourcing, and management - reducing the amount of waste generated by operations and
ensuring the safe and proper management of hazardous and non-hazardous waste.
• Creating favourable conditions for the growth of RES - ensuring efficient grid connection of renewable energy producers,
smooth operation of the Energy Guarantee System.
• Decarbonising energy systems - adapting transmission grids to reliably transport new and increased quantities of renewable
energy sources (electricity/biogas, methane, and green hydrogen).
Social impacts:
• Ensuring human rights and equal opportunities for employees - Ensuring human rights, creating a culture based on equal
opportunities and non-discrimination within the company.
• Ensuring professional development for employees – providing professional and personal development opportunities for
employees and actively developing the necessary competences.
• Employee well-being and job satisfaction – creating the environment that enhances employee well-being and satisfaction and
ensures work-life balance.
• Occupational health and safety - ensuring that company and contractor employees comply with safety requirements when
carrying out work, and actively ensuring the good health of employees.
• Dialogue and involvement of local communities – actively informing local communities about the activities taking place in their
environment, fostering a culture of dialogue and community involvement.
• Customer satisfaction with services – the quality of services provided to customers, improving customer-centric services.
• Public action, volunteering, and social partnerships - promoting volunteering, educational activities and targeted cooperation
with NGOs, research institutions and public authorities.
GRI 2-2
GRI 2-3
GRI 2-6
GRI 2-9
GRI 3-1
GRI 3-3
EPSO-G ANNUAL REPORT FOR 2023
109
Governance impacts:
• Reliability and security of transmission networks – ensuring the safe, reliable, and efficient operation of energy transmission
systems.
• Transparent governance and creating an anti-corruption environment - upholding standards of transparency and business
ethics, not tolerating corruption and actively fighting all forms of it.
• Cybersecurity and data protection – ensuring the security of critical data, building a cyber-attack resistant IT infrastructure,
and creating the organizational culture.
• Sustainable value for the economy and financial return for the State - meeting shareholders’ financial return targets, ensuring
return on investment, economic and social returns.
• Innovation, research, digitalisation - creating an organisational culture that fosters innovation and ensuring adequate funding
for innovation.
• Sustainable management of the supply chain – increasing the share of public procurement of goods and services that meet
environmental and sustainability standards, actively encouraging contractors, suppliers, and other partners to follow the
recognized environmental, anti-corruption and social standards.
A matrix of the significance of the EPSO-G Group’s impacts, based on the results of a survey of stakeholders and the Group’s
management:
EPSO-G materiality matrix
Environment:
Reducing Environmental Impacts and GHG Emissions in
Operations
10.1.2
Preserving Biodiversity and Ecosystems
10.1.3.4
Sustainable and Efficient Use of Resources in Operations
10.1.1
Waste Reduction, Responsible Sourcing, and Management
10.1.3.1
Facilitating the Growth of RES
10.1.2.3
Adapting Energy Systems for Decarbonisation
10.1.2.3
Social:
Ensuring Human Rights and Equal Opportunities for
Employees
10.2.1.4
Providing Professional Development for Staff
10.2.1.2
Employee Well-being and Job Satisfaction
10.2.1.1
Occupational Safety and Health
10.2.1.3
Dialogue and Involvement of Local Communities
10.2.2.2
Customer Satisfaction with Services
10.2.2.1
Community Action, Volunteering and Social Partnerships
10.2.2.3
Governance:
Reliability and Security of Transmission Networks
10.3.2
Transparent Governance and Creating an Anti-Corruption
Environment
10.3.1.1
Cyber Security and Data Protection
10.3.1.3
Sustainable Value for the Economy and Financial Return for
the State
10.3.1
Innovation, Research Development, Digitisation
10.3.3
Sustainable Supply Chain Management
10.3.1.2
A double materiality assessment is scheduled for 2024 to identify the Company’s impact on the environment and society (impact
materiality) and, in turn, the impact of these external factors on the Company’s financial position (financial materiality).
1
2
3
4
7
Assessment of the EPSO
-G Group companies
6
5
14
15
16
8
5
9
10
10
6
11
12
12
1
13
14
2
3
4
7
8
9
15
16
11
18
19
17
17
18
19
13
Assessment of the EPSO-G’s stakeholders
Important
High importance
Medium importance
Medium importance
Important
High importance
GRI 3-2
GRI 2-14
EPSO-G ANNUAL REPORT FOR 2023
110
EPSO-G's sustainability objectives have been defined by taking into account the main environmental, social and economic impacts
of the Group's businesses, as well as the actions set out in the Group's long-term strategy, the implementation of which will help
to ensure the transformation of the energy sector and the transition to climate- neutral energy. As part of their long-term
sustainability goals for 2030, the EPSO-G Group companies are guided by the United Nations’ Sustainable Development Goals
(SDGs) and are working towards the targets defined in these goals.
Topic
Goals and targets
EPSO-G long-term sustainability goals for 2030
2023
Environmental
• 30 % reduction of GHG (Scope 1 and 2)
emissions by 2026; 50% reduction of GHG
(Scope 1 and 2) emissions by 2030 (both
compared to 2019 baseline).
-12%
• 0 significant environmental incidents in
operations
1 (see chapter “Environmental area”)
• Gas transmission systems adapted to transport
hydrogen
See chapter “Energy systems for decarbonisation”;
“Research and development activities”
• Enabling conditions for connecting green energy
producers to infrastructure
See chapter “Adapting energy systems for
decarbonisation”
Social
• 0 cases of human rights violations or
discrimination
0
• ≥ 21% women in senior management positions
by 2027 (compared to 2022)
In 2023, 85% of the Board and Top Management
members were men and 15% women (2022: 84%
and 16%, respectively).
• 0 serious or fatal accidents
0
• Customer satisfaction – at least 80 according to
the GCSI methodology
In 2023, the Group companies’ indices according to
the GCSI methodology ranged from 68 (Tetas) to
>80 (Baltpool, Litgrid and Amber Grid).
Governance
• 0 cases of corruption
0
• VCC Good Governance Index – A+
In 2022/23, the EPSO-G Group companies’ Good
Governance Index – A
• 100% of public procurement is green
>95% (some procurements were carried over from
2022, therefore the result is below 100%)
• Reliable and safe operation of electricity and gas
transmission systems
See chapter “Reliability and security of
transmission networks”
• Sustainability criteria integrated into supplier
requirements
See chapter “Sustainable supply chain
management”
• Innovation projects are financed as a share of the
transfer revenue - at least 0.5%
See chapter “Innovation, research development,
and digitisation”
Sustainability and risk management
At EPSO-G, sustainability principles are integrated into the Group's business processes, and the management of sustainability
areas of competence covers all levels.
The Company’s Board is responsible for setting, reviewing the long-term strategic sustainability objectives and monitoring
indicators. The Board also approves policies on the environment, equal opportunities, health and safety, anti-corruption,
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EPSO-G ANNUAL REPORT FOR 2023
111
remuneration, performance evaluation and development. Within its remit, the Board also approves the Company’s annual
objectives, which include sustainability-related objectives.
EPSO-G's Board also approves a list of risks at Group level, which includes risks related to sustainability: risks of non-compliance
with occupational health and safety requirements, lack of adequate skills, turnover, motivation risks, risks of damage caused by
natural phenomena, etc. The results of the monitoring of the implementation of the identified risks and the risk management plan
are regularly communicated to the Group's corporate managers, the corporate and Group Boards of Directors, and the Audit
Committee, in accordance with the remit of each of them.
The Group Sustainability Development Manager is responsible for monitoring and coordinating the achievement of the Group's
sustainability objectives. Meanwhile, within the Group companies, the relevant environmental, social and governance objectives
are delegated to individual functional units within the EPSO-G Group companies (e.g. environmental, occupational safety, human
resources, risk, and compliance management, etc.) according to their respective competences. EPSO-G Group companies with
more than 50 employees have delegated individual people responsible for ensuring equal opportunities within the company.
EPSO-G Group companies are guided by common Group-wide policies governing the unified management of environmental,
social and governance issues:
• Sustainability Policy
• Occupational Safety and Health policy
• Equal Opportunities Policy
• Environmental Policy
• Transparency and Communication Policy
• Anti-Corruption Policy
• Remuneration, Performance Appraisal and Development Policy
• Corporate Governance Policy
• Procurement Policy
• Dividend Policy
• Policy of Management of Interests of Employees and Members of Collegial Bodies
• Guidelines for Research and Experimental Development and Innovation Activities
• Support Policy
• Code of Ethics
• Supplier Code of Conduct
The Group’s policies are available on EPSO-G website.
EPSO-G Group companies have identified environmental, social and governance risks and, depending on the nature of their
activities, have implemented measures to monitor and mitigate them.
10.1 Environment
In the field of environmental conservation, the "EPSO-G" group is dedicated to its primary objective of facilitating climate-neutral
energy and mitigating the environmental impacts and emissions resulting from the activities of its companies. As outlined in the
environmental policy ratified by the "EPSO-G" board in 2021, the group has pledged to monitor the environmental repercussions
of its operations closely. Furthermore, it is committed to implementing state-of-the-art technologies and measures aimed at
significantly reducing its environmental footprint. When operating, expanding, or modernising the infrastructure of energy
systems, the Group companies have committed to ensure the protection of biodiversity, and to implement environmental
management systems in its operations and to ensure that these systems comply with the requirements set. Both Amber Grid and
Tetas have achieved certification of their environmental management activities according to the ISO 14001 standard. Similarly, in
2023, Litgrid obtained accreditation for its operations.
All EPSO-G Group companies have a goal of zero tolerance to environmental pollution and zero environmental incidents. EPSO-
G companies take the precautionary approach by carrying out environmental impact assessments in accordance with legal
requirements before undertaking projects that may have a significant impact on the environment, biodiversity, or society.
The implementation of the environmental policy is the responsibility of EPSO-G's corporate managers and environmental
functional managers, who ensure that environmental aspects are identified, environmental objectives are set, plans are drawn up,
targets are set to improve the environmental situation and sufficient resources are allocated to their implementation, results are
monitored periodically, and processes are audited.
EPSO-G ANNUAL REPORT FOR 2023
112
During the reporting period, one environmental incident was reported in the EPSO-G Group companies and related to the activities
of Amber Grid. In an incident in Pasvalys district on 13 January, Amber Grid’s main gas pipeline cracked, and the gas ignited. The
high wall of fire and the high heat generated by the incident burnt the crops growing in the field and the herbaceous vegetation
growing in the protection zone of the category II national road No 150 Šiauliai-Pakruojis-Pasvalys (the burnt area on the right side
of the road is 4.5 m wide and 104 m long, and on the left side of the road 3.5 m wide and 78 m long). The combustion of natural
gas released CO
2
(carbon dioxide) into the ambient air (20,200.776 MWh). Natural gas was not emitted directly into the ambient
air. The environmental damage is currently under investigation. The surrounding area was returned to the original state.
10.1.1 Energy
EPSO-G Group companies strive to create an organisational culture based on a philosophy of conservation of nature and other
resources. In the Group's environmental policy, EPSO-G companies are committed to using certified green electricity in their
administrative activities, to expanding the use of renewable energy sources to meet the technological energy needs of the
transmission network infrastructure, to prioritising and expanding the use of clean transport, and to consistently reducing the use
of polluting fuels and energy efficiency measures. All these initiatives are continuously integrated within the Group. This is
reflected in the aggregated energy consumption indicators presented in the table below.
Group’s energy consumption indicators in 2021-2023
2023
2022
2021
Energy from RES, MWh
Electricity from RES
7,290
514
16
Electricity from own solar power plants
513
289
-
Non-renewable energy, MWh
Electricity
35,411
34,977
35,749
Fuel for transport
11,966
14,552
11,558
Fuel for technical needs
70,001
75,665
29,587
Natural gas
71,124
76,644
30,394
Heating
473
440
476
Grid losses, MWh
Electricity losses in grid
337,417
346,542
318,894
Natural gas losses in grid
69,856
75,540
29,498
Energy intensity, MWh
Total electricity consumption (including grid losses)
380,631
382,322
354,660
Total energy consumption
604,051
625,162
456,172
Energy intensity by revenue (MWh/EUR thousand)
1.26
1.06
1.29
Share of renewable energy, %
Share of renewable electricity in the Group’s total electricity
consumption (%)
2.05
0.21
0.00
In 2023, compared to 2021, the consumption of renewable energy increased by over 30 times. This demonstrates the Group’s
efforts to increase the use of energy from renewable sources. The primary driver of this change is the fact that the offices of the
Group's companies use certified renewable electricity for their needs. Electricity and natural gas losses in 2023 decreased by 7.5%
compared to 2022, indicating a more efficient process of energy transmission and utilization. The total electricity consumption in
GRI 3-3
GRI 2-23
GRI 3-3
GRI 302-1
GRI 302-2
GRI 302-3
GRI 302-4
EPSO-G ANNUAL REPORT FOR 2023
113
the Group's companies decreased by 3.4% annually, compared to 2021 and 2022.The use of fuel for transport at the Group level
decreased by 17.8% from 2022 to 2023. This is driven by the upgrade of the fleet with more efficient vehicles and the increased
integration of electric vehicles for transport. Additionally, fuel consumption for technical purposes decreased by 7.5% annually.
This was influenced by the electrification of certain technical processes.
Additionally, the share of renewable electricity is increasing, along with electricity generation from self-owned solar power plants
for internal use. In 2020, EPSO-G, Amber Grid, Litgrid and the Ministry of Energy of the Republic of Lithuania signed the
agreement, whereby Litgrid committed to save 3.04 GWh of electricity in final consumer devices and/or facilities by 2030. The
amount of electricity saved in 2023, compared to 2022, reached 8.41 GWh. This savings was primarily driven by nearly 10 GWh
lower electricity losses in the transmission grid. On October 23, 2020, a four-party agreement No. 8-52 was concluded between
EPSO-G, Amber Grid, Litgrid, and the Ministry of Energy, whereby Amber Grid commits to saving 1.15 GWh of energy by the end
of 2030 in final consumer devices and (or) facilities. The amount of energy saved between 2022 and 2023 reached 5.21 GWh.
This was driven by 20% reduction in diesel usage for technical purposes. Additionally, the consumption of natural gas for technical
purposes decreased by 8%. (This figure does not include the 20,200.776 MWh of natural gas that leaked during an incident in
the Pasvalys district on January 13, 2023, when a section of Amber Grid's main gas pipeline was damaged, causing the gas it
contained to ignite.)
10.1.2 Greenhouse Gas Emissions and Climate Impact
10.1.2.1 Greenhouse Gas Emissions
The greenhouse gas emissions were calculated in accordance with the GHG Protocol: The Corporate Accounting and Reporting
Standard and The Corporate Value Chain Accounting methodologies. GHG emissions are classified into three scopes: direct
(Scope 1), indirect (Scope 2) and other indirect emission sources (Scope 3). In 2023, the Group and the Group companies’ Scope
3 emissions were calculated, and the inventory thereof was carried out for the first time. The table below presents the
consolidated Scope 3 emissions for 2022 and 2023.
We aim to ensure increasingly precise accuracy of our GHG emissions calculations in the Group’s report and disclosures in line
with stakeholder expectations. It is noteworthy that the inventorying and calculations of greenhouse gas emissions in 2023 were
supplemented with data from Energy Cells due to the operation of battery storage systems in 2023.
Sources of the Group’s GHG emissions
The main sources of GHG emissions from the Group’s operations are electricity losses in the transmission grid (Scope 2), natural
gas leaks (Scope 1), fuel usage in stationary equipment (Scope 1), and emissions resulting from the acquisition of long-term assets
(Scope 3, Category 2).
In terms of total GHG emissions in 2023, Scope 2 emissions accounted for the largest share - 62%, Scope 1 emissions for 16%
and Scope 3 emissions for 22%.
GRI 3-3
GRI 305-1
GRI 305-2
GRI 305-3
EPSO-G ANNUAL REPORT FOR 2023
114
GHG emissions in the EPSO-G group
EPSO-G ANNUAL REPORT FOR 2023
115
Group’s GHG emissions by sources
tCO
2
e in
2023
tCO
2
e in
2022
tCO
2
e in
2021
Change, %
(2023/2022)
Change
compared
to baseline
year, %
Scope 1
Natural gas emissions
during operation and
repair
17,608
4,946
39 063
37
-24
Uncontrolled natural gas
losses due to leaks
12,993
13,452
12,309
Fuel in mobile equipment
2,719
3,309
2,721
Combustion of fuels in
stationary installations
18,927
15,998
6,573
Gas leakages
353
566
475
Total Scope 1 emissions
52,599
38,271
61,141
Scope 2
Electricity losses in the
transmission network
186,056
191,606
176,352
0.2
-8
Purchased electricity for
own use
19,521
19,134
19,768
Acquired district heating
energy
23
23
18
Total market-based
Scope 2 emissions*
205,600
210,764
196,140
Total location-based
Scope 2 emissions**
90,144
90,747
77,609
Scope 3 (indirect GHG emissions in the
supply chain)
73,810
44,573
-
-
Total Scope 1 and 2 emissions (market-
based):
258,199
249,034
257,281
6
-12
Total emissions:
332,009
293,607
-
-
Intensity of GHG emissions (Scope 1 and 2) by revenue, t CO
2
e per EUR 1 million
538.8
422.2
708.5
* For the market-based calculation of emission were based the derived emission factors calculated by “One Click LCA” - Life Cycle Metrics
software using the IPCC Emission Factor Database (EFDB) and the reports of the Association of Issuing bodies (AIB). The “market -based method”
emission factors were provided to the Group by independent third-party consultants licensed to use the One Click LCA software. The Group used
the same factors for all reporting years presented in the table as updated factor values have not yet been calculated.
** The location-based Scope 2 emissions were calculated using emission factors based on data published by AIP.
It should be noted that the emissions data for 2021-2022 differ to some extent from the last year’s annual report due to revised calculations
during the verification process.
The assessment of total greenhouse gas (GHG) emissions from Scope 1 and 2 in 2023, compared with the baseline of 2019,
reveals a notable decrease of 12% and increase by 6% compared to 2022. In 2023, GHG emissions related to the electricity
losses in the transmission grid (Scope 2) decreased by 3% compared to 2022. The amount of emissions from technological
losses are influenced by grid reconstruction work within the network, associated planned and unplanned disconnections.
Compared to 2019, sulphur hexafluoride gas (insulating gases, SF
6
) decreased by 38%. Within Scope 1 emissions, SF6 gases
account for 52% of Litgrid's emissions (Scope 1). However, at the Group level, SF6 gases represent only 1% of emissions within
Scope 1.
Scope 1 emissions (natural gas leakage) from transmission of natural gas increased by 44%. The increase was primarily driven
by the incident at the gas pipeline in the Pasvalys district on 13 January 2023, as well as the reconstruction work on the Vilnius-
Kaunas gas pipeline over a distance of 16 km, the reconstruction of five gas distribution stations (Šiauliai, Telšiai, Grigiškės,
Kėdainiai, and Vievis), and the reconstruction of the gas pressure relief valve. Compared to the baseline year, this scope’s
emissions from Amber Grid’s operations decreased by 25%. The use of a mobile gas compressor and the replacement of gas
GRI 3-3
GRI 305-1
GRI 305-2
GRI 305-3
EPSO-G ANNUAL REPORT FOR 2023
116
boilers with condensing units at gas distribution stations contributed to the reduction in emissions.
Other indirect GHG emissions (Scope 3) comprise all other indirect consolidated emissions from the Group’s operations, i.e. from
sources neither owned nor controlled by the Group (occurring in the supply chain).
In 2023, the Scope 3 inventory included six relevant emissions categories (out of 15):
Category 1: Purchased goods and services. Third-party emissions from manufacturing of the goods and services used by the
Group in its operations.
Category 2: Capital goods. Emissions from the acquisition of capital goods. This category includes emissions from the production
of capital goods.
Category 3: Fuel extraction and transport (excluded from Scope 1 and 2). Third-party emissions from extraction, production,
and transportation of fuels (Well to tank; Tank to wheel) and electricity (Transmission & distribution).
Category 5: Waste generated in the Group’s operations. Based on actual and estimated generated amount of waste of the
Group companies.
Category 6: Business Travel. Emissions associated with flights taken by employees for business travel purposes.
Category 7: Employee commuting.
The largest Scope 3 emission categories in 2023 were as follows: Capital goods (Cat. 2) - 57%, Fuel extraction and Transport
(Cat. 3) - 35%, Purchased goods and services (Cat. 1) - 4%.
Currently, GHG emission reduction plans only cover Scope 1 and Scope 2 emissions, with Scope 3 emissions to be integrated into
the Group’s emission reduction plans in 2024.
Reduction of GHG emissions
The Group promotes and supports the global commitment to prevent the impacts of climate change and to pursue efforts to limit
global warming to 1.5˚C above pre-industrial levels.
The Group’s strategic objective is to reduce GHG Scope 1 and 2 emissions by 30% by 2026, and by 2030, the Group will aim to
reduce emissions from its operations by at least 50%, compared to 2019 baseline. These objectives are also linked to the
prospectus for sustainability-linked bonds.
In 2024, the Group intends to submit the Group’s reduction targets for alignment with the Science-Based Targets initiative (SBTi).
This step will enable the Group’s targets and reduction plans to be aligned with a warming scenario of up to 1.5˚C.
The Group companies’ main GHG reduction measures focus on the largest contributors to emissions from the electricity and gas
transmission activities. This includes investments in mobile gas compressors, optimization solutions for existing gas compressor
capacities, acquisition of special equipment for the reconstruction and repair of gas pipelines, procurement of renewable energy
for in-house production (installation of solar collectors in reconstructed and newly constructed transformer substations, distribution
stations), and reduction of technological losses in grid - procurement of green energy through power purchase agreements, among
others. In Litgrid's strategy and GHG reduction plan, the installation of transformer substations (TP) without sulphur hexafluoride
(SF6) gases is planned for newly reconstructed ones. Currently, a total of 10 SF
6
-free TSs are planned to be reconstructed by 2030.
Additionally, measures to reduce greenhouse gas emissions (GHG) include the electrification of the vehicle fleet (it is expected that
all the Group’s cars and some of its special vehicles will be less polluting by 2028) and the use of green energy for own needs.
More information about the development of renewable energy can be found in chapter “Energy”.
In 2023, Amber Grid signed a memorandum of understanding with the United Nations Environment Programme (UNEP) and
joined the Oil and Gas Methane Partnership 2.0 (OGMP 2.0). UNEP is a flagship programme for oil and gas reporting and
environmental impact reduction. The Company has committed to improve methane disclosures and to reduce its methane
emissions by 20% by 2028 compared to 2022. For the data of 2022 reported in 2023, Amber Grid, among the other operators,
was awarded the Gold Standard Pathway, the highest possible rating, given Amber Grid’s reasonable plan to achieve the highest
level of accuracy of the data reported.
EPSO-G ANNUAL REPORT FOR 2023
117
Climate change
The energy sector is top-priority sector for climate policy. EPSO-G, as a group of transmission system and energy exchange
operators, has a key role to ensure a smooth and reliable transformation of the energy system in Lithuania. This transformation
includes the development of RES and the smooth integration of increasing volumes of RES into the energy system, enabling the
sector to reduce its dependence on fossil fuels, to initiate system interconnection projects and to facilitate climate-neutral energy
exchanges.
In 2022, EPSO-G issued the Sustainability-Linked Financing Framework. The Framework was independently assessed by CICERO
Shades of Green, the international climate change research institute. The independent assessment identifies the sustainability
objectives of the EPSO-G Framework as ambitious compared to the sustainability objectives set by other similar companies
operating in Europe. These objectives are also seen as largely in line with the Paris Agreement’s targets for reducing climate
change impacts.
For more on climate change adaptation and possibilities see chapter “Energy systems for decarbonisation”. Information on the
climate change risks is disclosed in chapter “Sustainability and risk management”, as well as in the annual report, chapter
“Compliance and risk management”.
10.1.2.2 Adapting energy systems for decarbonisation
In the context of the National Energy Independence Strategy (NEIS) and National Energy and Climate Action Plan (NECAP)
objectives, it is relevant for the EPSO-G Group to focus on enabling the decarbonisation of the energy sector: preparing for large-
scale integration of RES, including the adaptation of the gas system to transport hydrogen, preparing for the integration of large
volumes of energy from offshore wind farms, and the development of guarantee of origin schemes.
Based on Litgrid’s data, in 2023, the permitted generation capacity of solar power plants connected to Lithuania’s electricity
transmission and distribution grids increased by 538 MW (from 570 MW to 1108 MW), while the permitted generation capacity
of wind power plants increased by 265 MW (from 963 MW to 1228 MW). The total generation capacity from solar and wind
resources increased by 803 MW, from 1533 MW to 2336 MW. The capacity of other renewable energy sources
(biomass/biofuels/hydropower) increased by 98 MW (from 99 MW to 197 MW). The total change for all types of renewable
energy was 901 MW (from 1,632 MW to 2,533 MW).
The year 2023 was marked by important regulatory developments. Litgrid was instrumental in delivering the following
innovations of particular importance to the network:
Conditions have been created to connect generation capacities up to three times larger to the transmission grid, by connecting up
to 100% solar, 100% wind, and 100% storage capacities into one grid capacity zone. Conditions have been established to abandon
"hard limits" (e.g., 2 GW for commercial solar projects), ensuring grid security through other means. Additional benefits are provided
for investments in energy storage devices, incentivizing the breakthrough of new storage projects. These changes have led to the
completion of a record number of development projects in 2023, with intentions for 4,083 MW of solar, 2,815 MW of wind, and 283
MW of storage projects in inland areas. Another 1,400 MW is planned for offshore wind farms, of which 700 MW were already
allocated in the first tender of 2023.
2023 was a historic year for green energy in Lithuania. For the first time, the share of electricity generated by renewable energy
plants accounts for around 67% of the total electricity generated in the country. In 2022, 60% of the country’s electricity (2021:
48%) was generated by renewable energy plants.
The increase in the number of renewable power plants connected to the transmission and distribution grids has led to a significant
increase in the amount of clean energy produced by both wind and solar power plants. Compared to 2022, clean energy
production in Lithuania's wind farms has increased by 67% (2021: 11%), and in solar farms by 131% (2021; 74%). The latter is
due to the rapid addition of new prosumers.
Taking into account the energy transformation towards economic decarbonisation and the implementation of the European Green
Deal, Amber Grid launched its hydrogen transportation activities in 2023 with the aim to become Lithuanian hydrogen grid
operator. This will allow for the timely development of new infrastructure, the adaptation of existing gas infrastructure for
hydrogen transport and the integration into the European green hydrogen transport grid.
In 2023, Amber Grid together with its regional partners (the Baltic and Finnish gas transmission system operators) completed a
technical feasibility study on the adaptation of the gas transmission grid for the transport of methane/hydrogen mixtures, which
will also lead to the identification of the system investment needs for different hydrogen concentrations. The adaptation of the
GRI 3-3
GRI 305-1
GRI 305-2
GRI 305-3
GRI 305-4
GRI 3-3
GRI 305-4
GRI 305-5
EPSO-G ANNUAL REPORT FOR 2023
118
gas infrastructure for the transport of hydrogen is expected to take place in several phases. By 2027, the Power-to-Gas (P2G)
project for hydrogen blending in the natural gas grid will be implemented in cooperation with the gas distribution system and
electricity transmission system operators as part of a research programme to assess the technical parameters for adapting the
natural gas infrastructure for transporting the hydrogen/methane blend, the economic feasibility, the need for legislative changes,
and the potential for adapting the P2G technology to ensure energy system flexibility. The specific potential amount of hydrogen
to be blended and the investment in the natural gas network will be determined after taking into account the results of the
planned studies, the infrastructure capacities of the neighbouring countries, the EU requirements and the results of the economic
analysis. In the period up to 2030, gas transmission and distribution systems will be adapted to transport methane/hydrogen
blend of a set level.
In 2023, Amber Grid together with gas transmission system operators in Finland, Estonia, Latvia, Poland, and Germany has
initiated the Nordic-Baltic Hydrogen Corridor project to create a green hydrogen transport corridor between Finland and Germany
as a way to connect hydrogen production, supply and storage hubs in Finland, Sweden, Estonia, Latvia, Lithuania, Poland and
Germany. This project is expected to be implemented by 2030. In 2023, this project was granted the status of the infrastructure
project of European interest (project of common interest) by the European Commission. A feasibility study for this project was
launched at the end of 2023. The objective of the feasibility study is to assess the main business opportunities for a cross border
hydrogen corridor and the main infrastructure parameters and implementation conditions. The study is scheduled to be completed
by mid-2024.
As part of the decarbonisation of the gas sector in Lithuania, the first biomethane plant in the Baltics started operating in Pasvalys
district in September 2023. The plant feeds green gas into the transmission system, which is expected to feed around 100,000
megawatt hours (MWh) of biomethane each year. In addition, during 2023, four connection agreements were signed with
potential biomethane suppliers with a total biomethane injection capacity of around 500,000 MWh/year. In total, about 20
companies applied for the opportunity to supply biomethane to Amber Grid’s grid in 2022-2023 and received preliminary
conditions for connection to the transmission grid. It is estimated that if all the projects planned to be connected to the
transmission system were to come to fruition, the grid would be able to receive around 2 TWh of biomethane per year. In the long
term, Lithuania's biomethane production could increase to as much as 2.5 TWh/year.
As from 2019, Amber Grid administers the National Register of Guarantees of Origin for gas produced from RES, which performs
the functions of issuing, transferring, and cancelling guarantees of origin, supervising, and controlling the use of guarantees of
origin and recognizing in Lithuania of the guarantees of origin issued in other countries. The register is useful for energy consumers
using green gas produced in Lithuania or other EU Member States. The Company cooperates with designated bodies in other
countries and with organizations in the RES gas sector and their associations to facilitate the exchange of guarantees of origin
between EU Member States. From the end of 2022, biomethane with guarantees of origin is imported from the Netherlands. This
biomethane is used in transport as fuel and the guarantees of origin are used in the Renewable Energy Fuel Units (REFU) system
to cover the obligations of fuel suppliers regarding the share of renewable fuels in the final fuel blend. In the summer of 2023,
the first guarantees of origin were issued for biomethane produced in Lithuania and injected into the gas transmission system. By
the end of 2023, 47 GWh of biomethane with guarantees of origin were produced.
10.1.3 Other environmental impacts
10.1.3.1 Waste
EPSO-G Group companies are guided by the principles of pollution prevention and strive to reduce the amount of waste generated
and to ensure safe and responsible waste management. The Group’s companies are committed to manage waste generated by
their operations according to the waste hierarchy: prevention and reduction, recycling, recovery, and disposal.
In 2023, the Group companies generated five thousand tonnes of waste: almost 98% was sent for recycling and 2% for disposal
(incineration with energy recovery or to landfills).
EPSO-G ANNUAL REPORT FOR 2023
119
Waste generated by categories (in metric tonnes)
Waste category
2023
2022
2021
Total waste
generated
Waste
diverted
from
disposal
(recycling,
reuse)
Waste
diverted to
disposal
(incineration
with energy
recovery; to
landfills)
Total waste
generated
Waste
diverted
from
disposal
(recycling,
reuse)
Waste
diverted to
disposal
(incineration
with energy
recovery; to
landfills)
Total waste
generated
Waste
diverted
from
disposal
(recycling,
reuse)
Waste
diverted to
disposal
(incineration
with energy
recovery; to
landfills)
Construction
and
demolition
waste
4,772
4,744
28
3,951
3,915
36
3,682
3,681
1
Household
waste
40
6
33
236
192
45
16
4
12
Waste from
oil products
and liquid
fuel
182
176
6
69
69
0
352
349
4
Packaging
waste
20
11
9
14
7
7
18
4
14
Other waste
47
42
6
164
147
17
203
196
6
Total, t:
5,061
4,979
81
4,434
4,329
105
4,271
4,233
38
Total
hazardous
waste:
231
205
542
Total non-
hazardous
waste:
4,830
4,229
3,729
Construction and demolition waste is the main waste generation source (94%). This includes waste from the construction of
transmission grids, the reconstruction or repair activities by Amber Grid and Litgrid, as well as by Tetas, a company that carries
out repair and construction work at energy facilities. Most waste is generated during the reconstruction of overhead lines and
transformer substations in the electricity transmission grid. During the reconstruction of transformer substations, equipment that
is suitable for operation is dismantled but transferred to reserve and reused. Unsuitable dismantled equipment is handed over to
waste operators. In the case of redevelopment projects, non-hazardous waste is accounted for by contractors and handed over to
waste operators.
In the administrative activities of other Group companies, a negligible amount of household waste is generated, which is not
separately accounted for. Offices are equipped with special recycling bins. Category ‘’Other waste” - small and large IT and
telecommunication equipment, etc. In total, they account for only about 1% of the total amount of generated waste.
Amber Grid, Litgrid and Energy Cells have developed waste management plans and are implementing them in accordance with
the applicable procedures for the application of environmental requirements in their operations. Amber Grid, Litgrid and Energy
Cells have entrusted the sorting and treatment of hazardous and non-hazardous waste generated by their operations to
contractors with the necessary permits and waste management contracts. Companies also keep records of the waste they produce
that has value (is suitable for reuse or recycling) and pass it on to the relevant waste managers or companies that buy it. Hazardous
waste is sorted separately by type of waste and stored in containers that are labelled and protected from the environment before
being taken away. Hazardous waste accounts for around 5% of the total waste generated in the Group.
GRI 3-3
GRI 305-5
GRI 306
EPSO-G ANNUAL REPORT FOR 2023
120
10.1.3.2 Air emissions
Emissions into atmosphere occur only in the activities of Amber Grid, where various fuel-burning devices are used: compressors,
boilers, electric generators, etc., which generate nitrogen oxides and carbon monoxide emissions.
Amber Grid’s air emissions
Emissions, t
2023
2022
2021
Nitrogen oxide, NO
X
35.00
58.6
27.3
Carbon monoxide, CO
51.01
73.3
35.21
In 2023, compared to 2022, emissions from Amber Grid activities decreased by 60%. In 2022, after the construction of the Lithuania-
Poland gas pipeline GIPL connection, the operation of the equipment was not yet stabilized, leading to increased fuel consumption
in stationary equipment and consequently increased emissions into the atmosphere. In 2023, stationary equipment in gas
compressor and gas distribution stations, as well as in the Vilnius branch, operated more steadily, resulting in more efficient fuel
consumption and increased emissions.
In order to reduce emissions into the atmosphere, in 2023, Amber Grid initiated the purchase of a new electric compressor for the
Jauniūnai compressor station. The electric compressor will not use fossil fuels for its operation and will take over the workload from
the gas compressors. The expected outcome – reduction of both air pollution and GHG emissions. The upgrade is also planned for
the Panevėžys Gas Compressor Station. The reconstruction of gas distribution stations in 2023 involved the replacement of
conventional combustion installations with condensing installations, which reduce fuel consumption and thus emissions into
atmosphere. Moreover, the potential of replacing some fossil fuel boilers with electric boilers is being assessed, with a first pilot
project is scheduled for 2024.
10.1.3.3 Water
The companies within the EPSO-G group primarily use water for household purposes and for replenishing fire reservoirs. Amber
Grid’s surface and domestic wastewater is treated in wastewater treatment plants: a biochemical reactor, sludge settling tanks,
and oil traps. After treatment, the wastewater is discharged to the natural environment or to centralised wastewater networks.
To control and ensure the quality of the treatment of wastewater discharged into the natural environment, the wastewater
pollution is monitored on quarterly basis.
Water usage in the Group
2023
2022
2021
Water withdrawal, m
3
Municipal water supply
2,218
1,488
1,253
Groundwater
7,495
7,210
5,492
Rainwater
885
0
0
Total
10,598
8,698
6,745
Water discharge, m
3
Untreated wastewater discharged to
third-party treatment plants
3,200
5,406
1,897
Treated wastewater discharged to
wastewater networks (domestic)
1,547
676
693
Treated wastewater, discharged to
environment (domestic)
813
741
679
Treated wastewater, discharged to
environment (rainwater)
14,617
14,269
14,318
Total
20,177
21,092
17,587
GRI 303
GRI 305-7
EPSO-G ANNUAL REPORT FOR 2023
121
10.1.3.4 Biodiversity
EPSO-G Group companies operating, expanding, or upgrading the infrastructure of energy systems, or otherwise carrying out
their activities, are committed to protect biodiversity by monitoring biodiversity where necessary and, in the event of unavoidable
objective circumstances, by planning and implementing the necessary mitigation or compensation measures. This is ensured by
carrying out a mandatory Environmental Impact Assessment (EIA) before undertaking projects or works.
Amber Grid’s compressors, gas metering, gas distribution stations and gas pipelines that (including a 25-metre protection zone)
enter, border, or cross the protected areas and objects. In total, Amber Grid’s stations cross 3 protected areas and cross the Luponė
stream. Meanwhile, the Lithuania-wide main gas pipeline crosses 414 rivers, 9 ponds, enters the territory of 41 nature reserves,
2 botanical objects of natural heritage, 5 biosphere polygons, and 52 territories important for the protection of habitats. After the
completion of the GIPL (Gas Interconnection Poland-Lithuania) project in 2022, post-construction monitoring of the individual
phases will be carried out for 4 years. During this monitoring, how the local flora, fauna, and species diversity characteristic of the
area are recovering from the construction of the pipeline is monitored and it is decided whether additional measures are needed
to restore or improve the pre-construction situation. Although the biodiversity and the landscape at the pipeline construction site
was monitored and monitoring shows a natural recovery of biodiversity and landscape have occurred. No additional measures
(riverbank stabilization, sowing of grass, etc.) were necessary in 2022 and 2023.
More than 606 km of Litgrid’s overhead transmission lines and about 21 km of cable lines pass through protected areas. The
greatest impact of the ongoing activities is manifested in bird populations. After carrying out EIA procedures and consulting
ornithologists, the power lines are equipped with the bird flight diverters to increase the visibility of wires to birds and bats. Litgrid
also carries out post-construction monitoring in projects, i.e. monitoring of physical impact of overhead lines on birds and bats. No
significant impact on bird and bat populations or species diversity was identified in 2021, 2022 and 2023.
During the bird nesting season, both Litgrid and Amber Grid take measures to minimise the impact on birds during operational or
construction works. Following ornithologists' recommendations, work activities are restricted from May 1st to July 31st to avoid
disturbing bird breeding during this period. This is carefully assessed before scheduling project activities.
The Group Biodiversity Policy is planned to be developed 2024 to promote both preservation and recreation of biodiversity.
10.2 Social responsibility
10.2.1 Employees
EPSO-G's purpose is to create a progressive, sustainable culture. Inherent elements of this culture include caring for the well-
being and development of employees, fostering a culture of safe work, promoting equal opportunities, building open and mutually
trusting relationships with local communities, and ensuring customer satisfaction with the services provided. EPSO-G aims to be
an organisation that is seen by a large majority of suppliers, producers, consumers, employees, communities, and other
stakeholders perceive as adhering to the principles of sustainability.
In 2023, the EPSO-G Group’s employment rate was 23% for women and 77% for men. A similar gender structure of employees
has been established over recent years and is due to the specific nature of the Group’s activities, where most employees are
required to have a degree and/or qualification in engineering. There are very few women in the Lithuanian labour market to whom
engineering is the first choice, therefore the gender structure of the EPSO-G Group’s employees reflects the situation on the
labour market.
GRI 3-3
GRI 303
GRI 305-7
EPSO-G ANNUAL REPORT FOR 2023
122
Number of employees by age groups and gender in 2021-2023
At the end of 2023, the highest share of employees aged 30-50 years accounted for 65% of the EPSO-G Groups workforce.
Employees aged over 50 years represented 25%, while employees aged under 30 years – only a small proportion of the
workforce, around 10%. This age structure of employees is the result of the high-level qualifications required for most positions,
therefore the EPSO-G Group attempts to retaining professionals in their respective fields and providing them with favourable
working conditions until retirement.
The EPSO-G Group companies provide employees with additional health care insurance, reimburse vaccination against seasonal
diseases, ensure strict compliance with occupational health and safety requirements, organise periodic workplace health checks,
and provide accident insurance cover for employees working in infrastructure facilities.
The 30-50 years age group dominates the number of employees recruited in recent years, representing 60% of the total
workforce. Employees under 30 years represent 31% of those recruited in recent years. This proportion is higher as compared to
the 10% share of this age group in the total number of the EPSO-G Group’s employees. The proportion of employees in the age
group over 50 recruited in recent years is smaller than that in the total workforce, accounting for 9%. This demonstrates the
natural workforce rejuvenation as long-serving staff leave or prepare to retire. Given the specific nature of the EPSO-G Group’s
activities, the successors of the latter employees are being trained one year or even few years before their well-deserved
retirement to ensure the business continuity of the Group companies.
31
177
45
125
571
329
31
198
45
107
574
317
41
207
45
106
551
311
Aged under 30 years
30-50 years
Aged over 50 years
Aged under 30 years
30-50 years
Aged over 50 years
Women
Men
2023 2022 2021
GRI 2-7
GRI 2-29
GRI 3-3
GRI 401-3
GRI 405-1
GRI 402
EPSO-G ANNUAL REPORT FOR 2023
123
Newly hired employees by age groups and gender in 2021-2023
Employees are entitled to guarantees under the Labour Code of the Republic of Lithuania: additional days off for raising children,
parental leave, and paternity leave. During parental leave, employees have access to health insurance and benefits, receive
communication and are invited to the Company’s events and initiatives for employees and children.
Remuneration of an employee on parental leave (PL) is subject to review before his/her return to bring it into line with that of
others in the same position, thus maintaining fair pay for all, allowing to fit work around their family needs, for example by starting
part-time.
Number of employees on and returning from parental leave by age groups and gender in 2021-2023
Women
Men
on PL
returning from PL
on PL
returning from PL
2023
12
5
1
1
2022
15
3
0
2
2021
7
2
2
0
In the EPSO-G Group, the predominant type of contract is open-ended, but, where appropriate, employees are recruited under
fixed-term contracts, e.g. to cover an employee on parental leave or for project work. The type of employment contract is identified
without discrimination in terms of gender, age, or any other personal aspects, and it is up to the agreement and needs of the
Company and the employees. In 2023, the number of men employed under fixed-term and part-time contracts dropped
significantly due to the completion of the Tetas and Energy Cells’ projects for which such employees were recruited.
21
56
5
85
212
63
24
66
5
96
190
57
22
54
5
56
87
19
Aged under 30 years
30-50 years
Aged over 50 years
Aged under 30 years
30-50 years
Aged over 50 years
Women
Men
2023 2022 2021
GRI 2-7
GRI 2-29
GRI 3-3
GRI 401-3
GRI 405-1
EPSO-G ANNUAL REPORT FOR 2023
124
Types of employment contracts by gender in 2021–2023
Women
Men
Fixed-term contract
Part-time employment
Fixed-term contract
Part-time employment
2023
10
6
9
12
2022
12
5
39
49
2021
18
10
34
30
10.2.1.1 Employee well-being, rewards, and job satisfaction
The EPSO-G Group is an open, progressive, and sustainable organisation, where there is a professional partnership between
employer and employee, where every employee has the opportunity for self-development, grows with the organisation and is
able to take responsibility for his or her own decisions and actions.
The EPSO-G Group manages its payroll budget responsibly to ensure efficiency and optimum operating costs. Staff is paid a
performance-related salary, as well as incentives for achieving challenging targets. The Group also provides employees with
health and welfare benefits: voluntary health insurance, birth grants, payments for raising three or more children, single parenting,
death of a close family member and accidents. Employees are granted additional days of leave and other guarantees beyond the
minimum social guarantees set out in the Labour Code of the Republic of Lithuania.
The EPSO-G Group has a uniform remuneration policy based on the principles of responsibility and accountability. Its aim is to
effectively manage the Group’s payroll costs and to create motivational incentives to ensure that the level of remuneration is
directly linked to the achievement of the objectives set for the company and for each employee.
The monthly remuneration of an employee considers the position level, the situation on the labour market and the competence of
the employee in fulfilling the requirements set for the job. Position levels are determined in accordance with the following criteria:
(i) the education, expertise, qualification and experience required for the position (including the ability to effectively plan and
organise one’s own work and the work of others, and the ability to effectively communicate and cooperate with stakeholders); (ii)
difficulty/complexity of decision making of the post; (iii) the position’s responsibility for and power of independent decision-
making, and the extent and nature of the impact on the Company as a whole or part thereof.
In 2023, a new remuneration policy is in force in the EPSO-G Group, the primary purpose of which is to ensure equal payment for
work equivalent in terms of responsibility, competencies and contribution to the result, to encourage employees to achieve better
performance results, to contribute more actively to the achievement of the goals of the Company and the Group companies, to go
beyond the formal performance of their duties, to develop innovative, out-of-the-box solutions, and to improve performance, as
well as to attract and retain qualified employees. With a new remuneration policy, a part of the variable pay component paid
under the previous policy was added to the monthly remuneration, thus redistributing the weighting between monthly
remuneration and financial incentives. Total remuneration per employee increased by around 18% on average in 2023. The
increase was driven by a remuneration review and increase in remuneration for existing employees, a change in the position
structure due to the introduction of new higher-level positions. Additionally, following the entry into force of the amendment to
the Labour Code of the Republic of Lithuania, the compensation has been added to the monthly remuneration of Tetas’ ambulant
workers.
GRI 2-23
GRI 2-29
GRI 2-30
GRI 3-3
EPSO-G ANNUAL REPORT FOR 2023
125
Average monthly remuneration of employees in the EPSO-G Group by gender and age (EUR)
Women
Men
Under 30 years
30-50 years
Over 50 years
Under 30 years
30-50 years
Over 50 years
2023
2,537
3,738
3,700
2,714
3,924
3,791
2022
1,982
3,106
3,119
2,171
3,309
3,134
2021
1,751
2,956
2,616
2,122
3,360
3,309
Average monthly remuneration of employees in the EPSO-G Group by gender and position (EUR)
Women
Men
2023
2022
2021
2023
2022
2021
Top Management
6,965
7,132
7,667
9,733
8,410
8,406
Middle and First-
Level Managers
5,413
4,485
4,140
5,479
4,908
4,638
Professionals
3,187
2,661
2,329
3,399
2,888
2,754
Workers
No data
No data
No data
2,056
1,756
1,587
The EPSO-G group adheres to the provision that all employees of the group's companies are free to join trade unions without any
restrictions. Amber Grid and Litgrid have trade unions and collective agreements in place, which set out working, remuneration,
social, economic and professional conditions and guarantees beyond the statutory minimum guarantees set for employees. The
collective agreements with Amber Grid and Litgrid employees provide for additional notice periods and consultation provisions
in relation to changes in remuneration and working conditions, planned structural changes, redundancies and other issues that
may have a significant impact on employees. In EPSO-G and Tetas, where the number of employees exceeds 20, work councils
have been set in accordance with the Labour Code of the Republic of Lithuanian, and successfully represent employee interests.
The table below shows the number of employees of Litgrid and Amber Grid who belong to a trade union. It should be noted that
100% of employees in these companies are covered by collective agreements, regardless of their trade union membership.
Company name
2023
2022
2021
Amber Grid
157
198
180
Litgrid
113
99
95
Each year, the EPSO-G Group companies measure employee loyalty (Employer Net Promoter Score, eNPS), engagement and
empowerment. The eNPS measures the number of employees willing to recommend their employer and believe that the
employer meets their image of the best employer. Employee engagement measures the number of employees who are motivated
GRI 2-23
GRI 2-29
GRI 2-30
GRI 3-3
EPSO-G ANNUAL REPORT FOR 2023
126
at work, satisfied with the content of the job and willing to go beyond what is formally expected. The EPSO-G Group has already
achieved the 2030 target of ≥72% in 2023. Employee empowerment measures the number of employees who believe they have
all the necessary authority and tools to make decisions within the scope of their job.
Result of the surveys carried out in the EPSO-G Group in January 2023 and 2024
It should be noted that the EPSO-G Group’s scores for job satisfaction, engagement and empowerment are higher than the
average scores of private businesses and state-owned enterprises in Lithuania in the same year.
In 2022-2023, the employee turnover rate in the EPSO-G Group was higher than in the Lithuanian labour market, where the
average employee turnover rate was around 22% (according to Korn Ferry). Such outcome was determined by the employee
turnover in Tetas, which is usually higher than the labour market’s average due to the specifics of the project work, i.e. additional
employees must be hired at the beginning of the project and dismissed when the project finishes. Additionally, the turnover rate
was influenced by the turnover of Energy Cells employees in 2023. Since its establishment in 2021 until the end of 2023, Energy
Cells carried out a project for the construction of a battery park, which required hiring a significant number of technical experts
working on fixed-term contracts and part-time. Most of them were Litgrid employees who took on additional work. After the
completion of Energy Cells’ project and termination of employment contracts, these employees have remained in their main posts
with Litgrid. It should be noted that the employee turnover in Litgrid and Amber Grid over the last three years was around 11%,
i.e. half the average turnover rate in Lithuania.
34
74
79
28
71
77
eNPS Employee engagement Employee empowerment
2024 2023
GRI 2-23
GRI 2-29
GRI 2-30
GRI 3-3
EPSO-G ANNUAL REPORT FOR 2023
127
10.2.1.2 Professional development for staff
EPSO-G Group companies continuously encourage and create opportunities for employees to develop their skills and
qualifications. The employees are provided with the opportunity to develop their professional (functional) and generic (values-
based), and leadership competences. To maintain and strengthen the quality of management processes, a strong emphasis is
placed on developing the competences of managers.
Employee development at the EPSO-G Group is based on the 70-20-10 principle, whereby 70% of development, training and
learning activities are carried out through the employee's work experience, 20% through interaction and collaboration with
colleagues and managers with diverse experience and competences, and 10% through structured training events. Staff
development activities are planned in line with the EPSO-G Group's and the company's strategy, values, performance appraisal,
competency model, shift planning, and assessment of professional and technical skills. In 2023, the highest annual average
number of training hours per employee was recorded for Litgrid and Energy Cells’ employees in the “Professionals” category (61
hours), and for Tetas’ employees in the “Workers” category (42 hours). In all these companies, around 60% of employees work in
engineering roles, therefore they must receive continuing further training and learn new technologies.
External and in-house training within the EPSO-G Group in 2021-2023
2023
2022
2021
Annual average number of training
hours per EPSO-G Group’s employee
47
48
31
Number of external training courses
attended by the EPSO-G Group’s
employees
N/D
97
90
Number of in-house training sessions
attended by EPSO-G staff
N/D
15
7
Average number of training hours by gender in 2021-2023
2023
2022
2021
Women
40
42
23
34%
31%
17%
77% 77%
66%
2023 2022 2021
Employee turnover and retention in the EPSO-G Group in 2021-2023
Employee turnover
Employee retention
GRI 3-3
GRI 404-1
GRI 404-2
GRI 404-3
EPSO-G ANNUAL REPORT FOR 2023
128
Men
49
46
25
Average number of training hours by employee categories in 2021-2023
2023
2022
2021
Top Management
33
43
44
Middle and First-Level Managers
47
55
43
Professionals
42
35
25
Workers
55
41
36
At the end of 2023, the majority of employees in the EPSO-G group - 73% - had a higher education degree, 14% had vocational
education, 8% had post-secondary education, and 5% had secondary education.
Employee structure by educational background in 2021-2023
In EPSO-G group, staff members' performance is evaluated in different ways and at different intervals, depending on the nature
of their activities and responsibilities. The performance of all employees, regardless of their position, age, or gender, is subject to
an annual appraisal, in which an employee and his/her manager discus and evaluate the employee’s performance in the relevant
areas: achievement of the employee’s annual objectives, quality of performance, compliance with the value behaviours,
competences, and the manager determines the overall result of the performance appraisal.
844
125
97
212
922
101
72
176
922
96
64
179
Higher education
Post-secondary education
Secondary education
Vocational education
2023 2022 2021
EPSO-G ANNUAL REPORT FOR 2023
129
Employees subject to performance appraisals by gender in 2021-2023
2023
2022
2021
Women
244
206
218
Men
644
648
588
Employees subject to performance appraisals by category in 2021-2023
2023
2022
2021
Top Management
30
23
24
Middle and First-Level Managers
146
133
128
Professionals
624
593
552
Workers
96
93
92
Performance appraisal interviews were conducted for all (100%) employees who were employed during the performance
appraisal period in the relevant company and whose probationary period had expired at that time.
10.2.1.3 Occupational safety and health
One of the key strengths of the EPSO-G Group is its experienced and competent workforce, whose safe working environment,
well-being, and health are a prerequisite for the achievement of the strategies and objectives of the EPSO-G and its member
companies, and for the maintenance of an excellent reputation.
EPSO-G's Occupational Safety and Health Policy, approved by the Board and applicable to all the Group's companies, sets out
the objective of providing employees with safe and healthy working conditions in their workplaces, preventing work-related
injuries and occupational diseases, and creating a company-wide culture of promoting a safe and healthy environment that
commits every employee to strive for and contribute to it.
Regular risk assessments are carried out and risk reduction measures are put in place to ensure occupational safety and health at
all workplaces in the EPSO-G Group companies. All dangerous events (equipment failures, accidents, incidents) are subject to
recording. Once the causes and circumstances of the events have been established, preventive measures are introduced to prevent
similar events from occurring. Occupational safety violations identified are reported to the heads of departments or
representatives of contractors. Internal and external audits are carried out to prevent occupational safety violations or accidents.
Every year, the EPSO-G Group companies strive to ensure that no serious or fatal accidents occur among its employees or
contractors and subcontractors. No serious or fatal accidents occurred at any the EPSO-G Group company in 2023. There were
four accidents in 2023, comprising a minor hand injury at Amber Grid and minor eye, leg, and arm injuries at Tetas. All the
occupational accidents did not have critical and lasting consequences on health and well-being of employees. Furthermore, the
accidents did not affect the companies’ performance and business continuity.
GRI 3-3
GRI 404-1
GRI 404-2
GRI 404-3
GRI 3-3
GRI 404-1
GRI 404-2
GRI 404-2
GRI 403
EPSO-G ANNUAL REPORT FOR 2023
130
Number of accidents in the EPSO-G Group in 2021-2023
2023
2022
2021
Number of accidents
4
4
2
Total hours worked
2,168,172
2,392,925
2,061,947
TRIR (total recordable injury rate per 200
thousand hours worked)
0.37
0.33
0.19
The EPSO-G Group companies develop competencies and knowledge of their employees in occupational safety and health to
sustain accident-free operations. In addition to mandatory and periodic briefings and instructions for both employees and
contractors, there is additional safety training for managers, civil protection, and fire safety training, first aid courses, defibrillator
usage training, and equality training. Employees are invited to take part in various sport or healthy lifestyle initiatives and events
to raise their awareness of healthy ways of life. Employees are also offered a free seasonal influenza vaccination. Furthermore,
the outdoor workers of Litgrid, Amber Grid and Tetas are invited to receive a free tick-borne encephalitis vaccine. The EPSO-G
Group’s employs are also provided with additional health care insurance.
In 2022, occupational health and safety management systems of Amber Grid and Tetas have been re-certified to ISO 45001. The
external surveillance audit of the management system carried out in both companies did not reveal any non-conformities. Litgrid’s
occupational safety and health management system was also certified according to ISO 45001 in 2023.
10.2.1.4 Human rights and equality
EPSO-G aims to make an active contribution to the implementation of the human rights and equal opportunities goals of the
United Nations 2030 Agenda for Sustainable Development and the commitments to equal opportunities set out in national laws.
EPSO-G Group companies prohibit all forms of discrimination and do not tolerate any form of mobbing, psychological violence,
bullying or abuse. Group companies respect and protect the rights of every employee, treat them with respect and fairness,
provide safe working conditions that meet their needs, promote their personal and professional development, and do not
discriminate against employees in any form.
EPSO-G's equal opportunities policy provides that, in the case of recruitment to jobs in the Group's undertakings, candidates are
subject to the same selection criteria and conditions, except where the nature of the type of professional activity in question, or
the conditions of its pursuit, makes a particular human characteristic an essential and decisive professional requirement, and
where this objective is legitimate, and the requirement is proportionate.
Job advertisements specify the competences, experience and skills required for the job function. Vacancy announcements shall
be designed so that they do not restrict eligibility for a position to candidates of a particular gender, race, nationality, origin, social
status, religion, belief or opinion, age, sexual orientation, disability, ethnic origin, or religion.
The EPSO-G group companies make it possible to report possible cases of discrimination both anonymously, especially in cases
where identification is not necessary to investigate the report, and by disclosing identity.
All reports received shall be recorded and must be investigated. The internal investigation shall be carried out within the shortest
possible time, but not more than 30 calendar days from the date of receipt of the report, with the possibility of an extension of
another 30 calendar days. The findings of the internal investigation committee, as approved by the internal investigation
committee, shall be submitted to the company's head of management, who shall decide whether to open an investigation into
the breach of labour law or to take other measures, if necessary. The persons concerned (the victim and the complainant) shall be
informed in writing of the conclusion. Depending on the nature of the breach, the employee may be subject to disciplinary action
for breach of his/her duties.
2023
2022
2021
Reports received through the helpline on possible
cases of discrimination, mobbing at work and human
rights violations
0
2
0
Investigating reports of possible cases of
discrimination, mobbing at work and human rights
violations
0
2
0
GRI 3-3
GRI 403
GRI 2-26
GRI 2-29
GRI 406
EPSO-G ANNUAL REPORT FOR 2023
131
Confirmed cases of discrimination, mobbing at work
and human rights violations
0
0
0
The EPSO-G Group has the equal opportunities policy and the procedure for the prevention of discrimination, violence,
harassment, and sexual harassment in place. It describes possible ways to identify violence, discrimination, harassment and sexual
harassment, measures to prevent them, and procedures for reporting and dealing with possible inappropriate behaviour observed
or experienced. The procedure provides for measures to protect the reporting persons and victims and forms of assistance to
them.
The employees of EPSO-G Group companies can report possible human rights violations or discrimination through a dedicated
helpline channel: by email, phone or by filling in the reporting form available on EPSO-G website. Reports can also be made
anonymously.
In 2023, all the EPSO-G Group companies implemented action plans for improving equal opportunities based on theoretical and
practical training of all employees to ensure that each employee has a personal responsibility and commitment to provide equal
opportunities in the workplace through his/her own professional behaviour. As employers, the Group companies ensure equal
opportunities in all aspects of an employee’s performance in the organisation, such as performance appraisals, development,
additional benefit offerings on equal terms are applied to all employees, regardless of their position.
Litgrid has traditionally proclaimed November 2023 as Equal Opportunities Month. It involved training and events to deepen staff
understanding and knowledge of what equal opportunities mean in an organisation and what effective ways we can work towards
achieving them. Litgrid also has an Equality Embassy, where its employees implement various initiatives to promote equal
opportunities.
10.2.2 Customers and society
10.2.2.1 Customer satisfaction with services
Such EPSO-G Group companies as Litgrid, Amber Grid, Baltpool and Tetas operate in B2B segment, and thus they are
continuously improving their customer service systems and processes, with a focus on upgrading and automating customer self-
service systems.
Litgrid’s customers are electricity distribution network operators, electricity producers and suppliers, and large industrial
companies that use electricity. Each year, the number of renewable energy consumers connected to Litgrid’s system continues to
grow.
The customers of Amber Grid are the major Lithuanian companies of electricity, district heating generation as well as industrial
companies, and the medium-sized Lithuanian business companies, including energy and natural gas supply companies of the
Baltic States and the third countries to which the services of natural gas transmission are rendered, and biomethane producers.
The customers of Baltpool are the biofuel buyers operating in Lithuania, other Baltic countries, and Poland (heating companies,
independent heat generating entities and other companies using in their activity the biofuel products traded in the exchange) and
biofuel suppliers (manufacturers and suppliers of wood pellets and fibers). Meanwhile, in the activity of timber auction
organisation, the customers are timber sellers, specifically the State Forestry Enterprise and its territorial subdivisions, and
companies using timber products in their activities. The most important customers in the activity of heat auction organising are
heat supply companies, which are obliged to buy the necessary quantity of heat from independent heat suppliers at heat auctions
and independent heat suppliers connected to the heat supply systems and sell heat at the auction. The customers in the activity
of administration of the PSO funds are the electricity consumers, which as per the valid legal regulation must pay the PSO funds
for the electricity consumed by them. The customers of REUs administration activities are fuel suppliers operating in the country,
who are obliged to register with the Renewable fuel accounting unit’s system and to declare data on the fuel supplied to the
market and used by drivers, according to its type, origin, and energy value. Meanwhile, the customers of the Emergency Response
Fund Management activities are electricity generators and companies active in the crude oil, natural gas, coal, and oil refining
sectors.
The customers of Tetas are owners, developers, sellers of energy infrastructure. Currently, the key customers of Tetas are Litgrid
and ESO.
GRI 3-3
GRI 2-26
GRI 2-29
EPSO-G ANNUAL REPORT FOR 2023
132
In November-December 2023, Shopper Quality Group, a market research agency, carried out a customer satisfaction survey of
the Group companies Amber Grid, Baltpool, Litgrid and Tetas. 211 customers took part in the survey, which is now in its third
year.
The results of the survey revealed that, same as in 2022, among the Group companies, Amber Grid and Baltpool (each 83 points)
and Litgrid (81 point) were among the companies that received the highest customer satisfaction scores according to the GCSI
(Global Customer Satisfaction Index) methodology. During the year, the score of Amber Grid improved by one point, whereas the
scores of Baltpool and Litgrid fell by one and three points, respectively. The results place them among the market leaders, which
are companies that have achieved a GCSI score above 80.
The fastest grow of customer satisfaction (rated according to the GCSI methodology) during the year was recorded for Tetas: the
score 68 points was achieved in 2023 and further grew by 5 points.
Having regard the customer needs, since October 1, Amber Grid has been providing transmission system users with access to an
advanced electronic transmission service system, which ensures more convenient ordering of volume and capacity, as well as the
submission of up-to-date and high-quality data on the status of completed orders. Additionally, from the beginning of 2023,
Amber Grid has launched a continuous practical employee attitude development campaign “Pabūk kliento batuose” (Put yourself
in the customer’s shoes) to reinforce each employee’s attitude towards customers. Baltpool further made improvements in the
biofuel exchange system, such as certificate modules and document signing systems. In 2023, Litgrid started measuring customer
satisfaction after each stage of renewable energy development (signing of the Letter of Intent, issuing pre-conditions for
connection, issuing connection conditions).
The GCSI index consists of a score from 0 to 100, calculated by assessing three criteria: overall satisfaction with the company, its
compliance with expectations and its comparison with an imaginary ideal company.
10.2.2.2 Local communities
EPSO-G Group companies inform local communities in advance about projects in their neighbourhoods. During the
implementation of the projects, the timing of works is coordinated with the residents. The aim is to minimise inconvenience to
residents throughout the project.
To ensure the safety of people living close to gas pipelines and to raise the awareness of the population, Amber Grid implemented
a public awareness campaign ‘Protect yourself and the pipeline’ in 2023. The campaign was designed to draw the attention of
people living or working or having a property close to the main gas pipeline to the gas pipeline, its protection zones, and class
territory of the area ensuring safety. The campaign raised public awareness of the standards for property development near gas
transmission system facilities, encouraged people to plan their activities near gas pipelines more carefully, to check the applicable
activity restrictions and to comply with the rules.
During Amber Grid’s largest infrastructure project in 2023, i.e. the reconstruction of sections in the Vilnius-Kaunas gas pipeline,
high priority was given to the local community. Kaunas and Kaišiadorys district municipalities and residents were kept informed
through direct interpersonal communication and information posters about the start of the work, the main planned stages of the
work and related temporary inconveniences, as well as about the completion of the work. The project involved cooperation with
residents and contractors on the repair of roads.
In 2023, five meetings of the ‘Security Conversations’ series of events for communities took place. With this initiative, Amber Grid
aims to build a sustainable relationship with citizens living or having property close to the pipeline, to explain the importance of
the protection zones and the steps we are taking to ensure the safety and reliability of the pipeline.
The Company places great emphasis on engaging with the communities where it has ongoing activities, plans to carry out or
carrying out works that affect the environment and quality of life of residents.
In the districts where works are scheduled, visits of the Litgrid’s representatives to municipal offices are planned, municipal
administrations, mayors are provided with the plans and deadlines for the works, as well as the contact details in case of any
inconvenience to the residents. In 2023, the districts of Joniškis, Kretinga, Vilnius and Šilutė were visited.
Once works are commenced, Litgrid contractors inform local communities in advance about projects in their neighbourhood.
During the implementation of the projects, the timing of works is coordinated with the residents. The aim is to minimise
inconvenience to residents throughout the project.
GRI 3-3
GRI 413
EPSO-G ANNUAL REPORT FOR 2023
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In areas where operating equipment cause noise, Litgrid carries out noise measurements, participates in meetings with residents
and resolves any issues that arise. In 2023, an installation of a noise barrier was initiated in the Alytus district near the LitPol Link
substation operated by Litgrid.
The battery energy storage systems of Energy Cells were installed in districts of Vilnius, Šiauliai, Alytus and Utena. From the
inception of the project, the company communicated to the neighbouring communities the nature of the project, its importance for
the energy sector, and the phases of the project. The awareness of communities was raised through meetings in their
municipalities, the media, and face-to-face meetings with residents, as well as through the company’s website. Given that battery
storage facilities are the first of their kind in the Baltic region and that residents may have questions about the operation and
environmental impact of such facilities, the company has put great emphasis on describing, explaining, and presenting these
questions. Moreover, during the construction phase of the project in 2022, efforts were made to minimise construction-related
inconvenience to residents by properly planning heavy-duty vehicle movement routes and timing to maintain peace of residential
neighbourhood during rest periods.
In 2023, as during previous years of the project, Energy Cells aims to build open, transparent, and socially responsible
relationships with communities, municipalities, and the representatives of the National Public Health Centre (NPHC). A great deal
of attention was paid to noise issues. Once testing of the battery parks were launched, the representatives of the Vilnius Battery
Farm’s neighbouring communities were offered the opportunity to visit the battery parks to look at the acoustic sound-absorbing
walls installed. Moreover, acoustic measurements were carried out in all four battery parks, which, as confirmed by
representatives of the National Public Health Centre, showed that the noise abatement measures installed around the battery
parks were adequate.
It must be noted that, during the implementation of the project, EPSO-G, Litgrid, and Energy Cells set a project team taking into
account that the battery storage facilities were built next to Litgrid’s existing infrastructure, and the complaints received from
residents in Vilnius and Alytus about the noise emissions from Litgrid’s substations, near which the battery parks were built. The
project team, which is coordinated by EPSO-G, is going to carry out a sound measurement study in Vilnius substation and Vilnius
Battery Farm for the purpose of installing additional noise abatement measures. The efforts of the companies to maintain contact
with communities and to improve the existing situation has been observed and welcomed by NPHC.
Energy Cells also teamed up with the communities to replant vegetation and trees removed from the territory of the battery park,
as required by the procedure of Vilnius City Municipality Administration. The company asked the residents to identify the areas
where they thought tree planting would be extremely necessary and useful and, after coordinating with the Vilnius City
Municipality Administration, planted the trees in the areas identified by the residents.
10.2.2.3 Volunteering
By contributing to the achievement of goals that are important to society or the local community, the EPSO-G Group companies
in 2023 promoted voluntary, unpaid involvement of employees in charitable activities and environmental actions.
In 2023, EPSO-G together with Baltpool, Energy Cells and GET Baltic, the Group companies, organised a forest planting event.
Furthermore, employees of EPSO-G, Litgrid, Baltpool and Tetas joined the Favourable Pinwheel campaigns organised by the
charity trust Rugutė. For 16 years, the Fund has been providing informational, financial, medical, and psychological support to
children who are or have been ill with cancer.
Amber Grid encourages its employees to volunteer. In 2023, 37% of the Company’s employees joined volunteering activities,
participating in Darom, Blood Donation, Favourable Pinwheel campaigns, etc.
In 2023, Litgrid’s employees volunteered in the initiatives of the Food Bank, and volunteers from Litgrid organised the
accommodation and integration of the families of Ukrainian electricity transmission system employees in Lithuania. Additionally,
in 2023, "Litgrid" organized its traditional tree-planting event, during which employees of "Litgrid" and family members of
employees from the Ukrainian electricity transmission system company "Ukrenergo" planted and cared for the forest together.
Since the beginning of the war, Litgrid has organised the accommodation of 100 people in Vilnius, helping them to integrate and
deal with the daily challenges of moving to another country.
Following a request for assistance from the Ukrainian electricity transmission system operator, Litgrid provided support for
equipment for the restoration of the electricity grid in Ukraine: it shipped 110-330 kV primary equipment, current and combined
transformers, insulators, current transformers and splitters, and a 330/110 kV autotransformer. The equipment available in
Lithuania is technologically suitable for the reconstruction of the Ukrainian grid, making Lithuania one of the most important
suppliers of equipment to the war-torn country.
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Tetas’ employees took part in the “Dronų Giesmės” (Drone Songs) campaign in support of Ukraine, organised by the “Maži, bet
Stiprūs” (Small but Strong) foundation. A drone was bought with money donated by the employees.
10.3 Governance
EPSO-G aims to ensure transparent and efficient management and development of the energy exchange platform. The necessary
components for this are: maintaining high transmission grid reliability, building an anti-corruption culture across the Group's
companies, improving the supply chain based on sustainability standards, and promoting innovation and deployment in
operations.
10.3.1 Transparent business activities
10.3.1.1 Transparent management and an anti-corruption environment
EPSO-G implements strategic projects of regional and national importance. These are the projects that require large investments.
Their success depends on the understanding, trust and support of shareholders, partners, regulators, and the Lithuanian people.
Therefore, EPSO-G focuses on anti-corruption activities to enhance trust by emphasising the Group’s zero tolerance for corruption.
The Group’s anti-corruption activities are carried out according to Anti-Corruption Management System by the international
standard ISO 37001:2016 “Anti-bribery management systems. Requirements with guidance for use”. The scope of anti-corruption
measures, applicable to the Group’s companies, varies depending on the corruption risks identified therein.
Corruption risks identified the Group companies in 2023, involve:
• declaration of private interests and management of conflicts of interest
• recruitment of persons who do not meet the requirements of the Law on the Prevention of Corruption and the Law on
the Protection of Objects Critical for National Security
• inadequate contract performance monitoring
• employees’ abuse of office, abuse of authority, bribery, and underperformance.
Corruption risks were managed through the management measures consistent with the risk level, internal documents were
supplemented with the provisions on declarations of private interests and management of conflicts of interest, employees were
consulted on these matters, contract performance rules were set, etc. The Group performed quarterly assessments on the
implementation of risk management measures and their impact on risk levels.
In creating an anti-corruption environment in the Group, a great emphasis is paid one the development of anti-corruption
awareness among employees through various means and methods. In 2023, the Group companies had anti-corruption training
and all (100%) of the Group’s employees were invited to participate. Employees’ corruption resilience is also built through other
measures, such as internal communication, an annual employee anti-corruption survey (the results included in the Annual Report),
and by bringing their attention to the most important Group’s and the Group companies’ internal anti-corruption legislation. In
2023, these internal documents were made available to all (100%) employees of the Group companies. Members of the
management bodies were not identified as a separate target audience for communication, nor did they receive anti-corruption
training in 2023. In 2024, the EPSO-G Group is planning to launch a corruption prevention training platform, therefore, it is
expected to extend training to the members of the management bodies.
The Group strives to ensure that its business partners are committed to the highest transparency standards. Therefore, information
on key anti-corruption documents, including the Supplier Code of Conduct applicable to business partners, is available on the
Companies' websites for both business partners and other stakeholders.
GRI 3-3
EPSO-G ANNUAL REPORT FOR 2023
135
Key anti-corruption indicators
2023
2022
2021
Number of corruption cases identified
0
0
1
Staff members sanctioned and dismissed for corruption
0
0
3
Corruption-related cases filed against the Company/employees
0
0
0
Corruption cases identified due to which contracts with business
partners were not concluded/renewed
0
0
0
In 2023, no corruption cases were identified in the Group companies. For the three-year period from 2021 to 2023, this type of
cases was only recorded in 2021 and were related to the use of work resources provided by the Group company for non-work-
related purposes, for which employees were subject to sanctions related to the annual financial incentive.
10.3.1.2 Sustainable supply chain management
The success of EPSO-G’s activities and projects depends on transparent and fair procurement of goods, services and works.
The updated procurement policy of the EPSO-G Group also integrates green procurement criteria. The Group companies are
committed to reducing their environmental impact and are therefore committed to prioritising green procurement. The Group
undertakes to carry out at least 100% of green procurements every year since 2023.
It should be noted that the EPSO-G Group has developed a green procurement tool facilitating the selection of the most
appropriate green criteria in procurement processes. The Group also provides green procurement training at regular intervals. In
two years, significant results have been achieved: the share of green procurement has increased from 10% in 2021 to 95%.
Result for 2023
Result for 2022
Result for 2021
Target for 2023
Value of the EPSO-G Group
procurements attributable to
green procurement (based on
public procurement carried out by
contracting authorities)
>95% (some
procurements were
carried over from 2022,
therefore the result is
below 100%)
83.2%
10%
100%
In 2022, EPSO-G’s Board approved the Supplier Code of Conduct. EPSO-G’s Supplier Code of Conduct is based on the
Organisation for Economic Co-operation and Development's Guidelines for Multinational Enterprises, the principles of the United
Nations' Global Compact, and the best sustainability practices of international energy companies.
From the end of 2023, organisations participating in EPSO-G public procurements must undertake to respect the Supplier Code
of Conduct. As part of EPSO-G’s monitoring of compliance with the Code, EPSO-G companies will invite suppliers to provide
information on their value chain and geography, policies, employment, anti-corruption, and environmental practices from 2024.
Suppliers and their employees can also report to EPSO-G any behaviour that violates the Code through the Helpline channel.
Social Criteria
In 2023, the EPSO-G Group Executives’ Committee set a target for at least 5% of its purchases to include social criteria. For the
proper application of these criteria appropriately, a tool for socially responsible procurement has been developed facilitating the
selection of the most appropriate social criteria in procurement processes. Training on socially responsible procurement is also
available.
In all its public procurements publicly advertised (>95% of procurements by value in 2023), the EPSO-G Group also verifies
grounds for exclusion of suppliers, including social criteria such as offences concerning trafficking in human beings, failure to
perform obligations arising from the payment of taxes, including social security premiums, non-compliance with environmental,
social, and labour law obligations, etc.
GRI 2-15
GRI 2-29
GRI 205-3
EPSO-G ANNUAL REPORT FOR 2023
136
The social criteria to be applied by the EPSO-G Group in 2024 will be introduced to its suppliers at a “Suppliers’ Day” event.
Suppliers will be consulted on the application of social criteria.
Procurement from Lithuanian and Foreign Suppliers
In 2023, >95% of the EPSO-G Group’s public procurements contracts (by value) were awarded to Lithuanian suppliers. This keeps
supply chains short and avoids unnecessary logistical costs and environmental impacts. Data has been collected since 2023.
10.3.1.3 Cybersecurity
Transmission services for electricity and natural gas are classified as services of particular importance. For this reason, the EPSO-
G group companies that provide these services carry out assessment of critical information infrastructures on regular basis.
Across the EPSO-G Group, IT and cybersecurity professionals are working to create an organisational culture that is resilient to
cyber-attacks of all kinds. In 2023, a series of social engineering tests were conducted to test employees' readiness to identify
false messages designed to extract sensitive information.
2023
2022
2021
Preventive training on
cyber security
Cyber security trainings (1)
and social engineering tests
(4)
Cyber security trainings (1) and
social engineering tests (3)
Cyber security
trainings (1) and social
engineering tests (3)
Amber Grid and Litgrid were successfully re-certified in accordance with ISO 27001, an international standard to manage
information security, for three consecutive years.
Amber Grid, Litgrid and EPSO-G employees took part in the Cyber Security Exercise Cyber Shield 2023. During the exercise, staff
tested the capabilities of the virtual cyber security training ground and cyber fraud simulation tools. During the exercise, the
participants tested the incident response process, knowledge of cyber security, communication with the media and crisis
communication skills.
It is expected that cybersecurity drills in 2024 will involve employees from the following Group companies: Litgrid, Amber Grid
and Energy Cells.
10.3.1.4 Protection of personal data
In ensuring the protection of personal data of the Group companies, we are guided by the Group’s Personal Data Protection Policy
outlining the basic requirements for the processing of personal data in the Company, and personal data processing documentation
prepared by the Group companies and communicated to all employees of the Group companies. The protection of personal data
in the Group companies is ensured by documenting personal data processing activities, conducting a data protection impact
assessment, evaluating technical and organisational data security measures in place, managing risks arising out of the processing
of personal data and data breach incidents.
To ensure compliance with personal data protection requirements in practice and to promote a culture of personal data protection,
periodic employee training, knowledge tests and communication on relevant matters related to protection of personal data are
conducted (e.g. employees are trained to identify personal data breaches, to conclude personal data processing agreements, etc.).
Compliance audits are carried out to check whether the Group companies are properly implementing the requirements of the
General Data Protection Regulation. Compliance audits in 2023 did not identify any material non-compliance with the General
Data Protection Regulation.
Key Personal Data Protection Indicators
2023
2022
2021
Number of personal data breaches identified
0
0
0
Complaints from other organisations/authorities
0
0
0
GRI 2-23
GRI 2-6
GRI 3-3
GRI 204
GRI 418
EPSO-G ANNUAL REPORT FOR 2023
137
From 2021 to 2023, no personal data breaches were identified in the Group companies. Minor personal data-related incidents
were recorded but did not qualify as personal data breaches.
10.3.1.5 Anti-Competitive Behaviour and Anti-Corruption Environment
The EPSO-G Group’s management ensures that the Group complies with provisions relating to anti-competitive behaviour, which
includes compliance with legislation prohibiting unfair competition, ensuring compliance by all managers, legal and internal audit
procedures, and reporting about anti-competitive conduct.
In 2023, the Group was not involved in any litigation related to competition infringements, and no potential incident related to
anti-competitive conduct was identified in the Group companies.
10.3.1.6 Socioeconomic compliance
The Group implements measures to ensure the Group’s compliance with the requirements of the legal acts of the European Union
and Republic of Lithuania, internal documents, other legally binding instruments, good practices, and standards in the energy
sector critical to national security.
In their compliance activities, the Group companies are guided by the Three Lines Principle and principle of the risk-based
approach. Efforts are being made to focus compliance activities on priority areas where most instances of non-compliance occur
or are likely to occur, and/or where there is the greatest likelihood of the realisation of non-compliance risks, which could have a
material adverse effect on the Group companies and/or the Group. A list of the Group companies’ compliance priorities for 2023
is set out in the “Compliance Management” section of the Annual Report.
We understand compliance as the responsibility of each employee. We aim for employees not only to ensure compliance with
applicable requirements but also to engage in compliance activities by participating in training, reporting discrepancies, and
suggesting their own initiatives.
2023
2022
2021
Number of significant non-compliance events
0
0
0
Number of fines imposed for non-compliance
0
0
0
Number of non-pecuniary sanctions imposed for non-compliance
0
0
0
Number of fines paid for non-compliance (identified during the
reporting period)
0
0
0
Number of fines paid for non-compliance (identified during the
previous reporting period)
0
0
0
As shown above, the dynamics of material non-compliance is consistent across the Group, with no material non-compliance
recorded in the reporting period, both in 2021 and 2022.
10.3.2 Reliability and security of transmission grid
We understand the reliability of electricity and gas transmission grids as grids that operate without disruptions 24/7.This requires
analysing and assessing the country's long-term electricity and natural gas consumption needs and planning and implementing
appropriate investments to efficiently meet energy needs and ensure the necessary capacity of the electricity and gas transmission
systems, the safety and reliability of the systems and access to various sources of electricity generation and natural gas supply.
GRI 2-23
GRI 3-3
GRI 418
GRI 206
EPSO-G ANNUAL REPORT FOR 2023
138
Litgrid’s electricity transmission grid
reliability indicators
Indicators for 2023
Indicators for 2022
(Maximum) permitted level set by
the Council for the 2022-2026
regulatory period
AIT (average interruption time), min.
0.84
1.29
0.934
of which for the causes falling within the
scope of responsibility of TSO
0.10
0.356
ENS (energy not supplied), MWh
23.23
38.69
27.251
of which for the causes falling within the
scope of responsibility of TSO
2.67
10.62
In 2023 (as in 2022), there were no unplanned interruptions in Amber Grid activities which would be the transmission system
operator’s (TSO) responsibility.
Both Amber Grid and Litgrid prepare and regularly update 10-year transmission grid development plans, which provide for
investments in modernisation and upgrades of grid components. These investments help maintain high electricity and natural gas
transmission rates.
10.3.3 Innovation, research, and digitisation
The ambitious goals of the National Energy Independence Strategy regarding the integration of renewable energy sources and
the simultaneous synchronisation programme with the continental European network and the regional gas market integration
processes encourage the EPSO-G Group companies to seek new innovative solutions for the reliable operation of Lithuania’s
energy system now and in the future. Research and studies, and the planning and implementation of innovation activities,
encourage the Group companies to improve the efficiency of their operations by applying new methods, tools, and best practices.
In carrying out these activities, the EPSO-G Group companies follow the Guidelines for Research and Experimental Development
and Innovation Activities (hereinafter referred to as the “R&D&I Guidelines”). The objective of the R&D&I guidelines is to ensure,
through research, innovation and new solutions, the continuity and efficiency of the activities of the companies in the EPSO-G
group, to ensure competitiveness or to create the conditions for competition, in order to achieve the objectives of the National
Energy Independence Strategy and to create greater added value for society.
At the end of 2023, the Group’s innovation portfolio consisted of 40 instruments focusing on advanced and efficient systems
management and monitoring (9), modern asset management solutions (16), the development of the Group’s ICT and digitalisation
(9), and the development of new business organisations and services (6). During 2023, as much as 20 measures were initiated.
For more information on the innovation projects carried out by the EPSO-G Group companies, please refer to the chapter “Research
and development activities” in this consolidated annual report.
GRI 3-3
EU TAXONOMY REPORT 2023
11.1 Disclosures under the European Union Taxonomy
Regulation
11.2 Identifying Taxonomy-eligible activities
11.3 Accounting Policies
11.4 Revenue under the EU Taxonomy
11.5 Capital expenditure under the EU Taxonomy (CapEx)
11.6 Operating expenditure under the EU Taxonomy (OpEx)
11
EPSO-G ANNUAL REPORT FOR 2023
140
11 DISCLOSURES UNDER THE EU TAXONOMY REGULATION
11.1 Disclosures under the European Union Taxonomy Regulation
General principles of disclosure
The main measures defined for financing activities aligned with the principles of sustainable development in the European
Commission's (EC) action plan aim to direct capital towards environmentally friendly activities and thereby help the European Union
(EU) become a climate-neutral continent by 2050, as envisaged in the European Green Deal.
EC laid the foundations for this with Regulation (EU) 2020/852, also known as the EU Taxonomy Regulation, which describes
what constitutes an environmentally sustainable economic activity and the criteria for classifying an economic activity as
environmentally sustainable. The aim of the Taxonomy Regulation is to classify economic activities across the EU according to
defined requirements, based on their contribution to the six environmental objectives (Article 9 of the Taxonomy Regulation), in
order to support the transition of the EU towards a climate-neutral economy.
The six key environmental objectives are:
• In Article 3 of the Taxonomy Regulation, it is defined that economic activity is considered environmentally sustainable
when: makes a significant contribution to one or more of the environmental objectives set out in Article 9 (under Articles 10
to 16 of the Regulation)
• does not cause significant harm to any of the environmental objectives set out in Article 9 (under Article 17 of the Regulation);
• is carried out in accordance with the minimum safeguards laid down (under Article 18 of the Regulation);
• meets the technical analysis criteria defined by EC in Delegated Regulation (EU) 2021/2139 of 4 June 2021.
In accordance with EC Delegated Regulation (EU) 2021/2178 of 6 July 2021, EPSO-G, as a non- financial undertaking, is obliged
to disclose the percentage of its total turnover, capital and operating expenditure that is made up of taxonomic, qualifying
taxonomic and non-taxonomic economic activities and the qualitative information specified in Annex I and Annex II of the same
Regulation that is relevant to explain these data. Article 16 and Article 10(2) of the Taxonomy Regulation also define the types
of economic activities and transition economic activities that constitute the conditions.
Taxonomy-eligible economic activities are defined as activities described in EC Delegated Acts, irrespective of whether they
meet any or all the technical analysis criteria set out in the Delegated Act on the EU Taxonomy for climate objectives. Therefore,
the taxonomic nature of an economic activity does not automatically imply that it is environmentally efficient and sustainable.
Taxonomic activities are grouped according to the groups of activities defined in Article 16 and Article 10(2) of the Taxonomy
Regulation - enabling economic activities and transition economic activities.
Transitional activities are those for which low-carbon alternatives are not yet available and that have greenhouse gas emission
EPSO-G ANNUAL REPORT FOR 2023
141
levels that correspond to the best performance in the sector or industry. These activities fulfil the two following conditions: (i)
they should not hamper the development and deployment of low-carbon alternatives, and (ii) they should not lead to a lock-in of
carbon-intensive assets, considering the economic lifetime of those assets.
Enabling economic activities are those that directly enable others to make a substantial contribution to an environmental
objective.
A Taxonomy-aligned activity is defined as an activity that makes a significant contribution to at least one or more of the
environmental objectives set out in the Delegated Act, does not cause significant harm to any of them, is carried out in accordance
with the minimum safeguards set out, and complies with the technical analysis criteria set out.
Taxonomy-non-eligible economic activities are defined as activities that are not included and described in the European
Commission’s Delegated Acts on EU Taxonomy.
11.1.1 Applying the Taxonomy in the EPSO-G Group.
As part of our commitment to support Europe's ambition to move towards a climate-neutral economy, EPSO-G has carried out an
analysis of the compliance and compatibility of its activities with the Taxonomy Regulation. In accordance with the Taxonomy
Regulation and the Delegated Acts, we have carried out the analysis of the activities following these steps:
1. Identification of Taxonomy-eligible economic activities. The Group analyses and reviews the Delegated Act on
sustainable activities for climate change adaptation and mitigation objectives, as well as the Complementary Climate
Delegated Act. The Group also identifies all Taxonomy-eligible economic activities in the Group’s companies. The list of
Taxonomy-eligible activities was supplemented with activities which were not covered by the Annual Report 2022.
2. Assessment of compliance with the technical analysis (substantial contribution) criteria. To determine whether the
activity contributes to one of the six environmental objectives, the economic activity must comply with the technical
analysis criteria set out in Annexes I or II of EC Delegated Regulation (EU) 2021/2139 of 4 June 2021, which determine
the conditions under which the economic activity is considered to make a significant contribution to mitigate and/or adapt
to climate change.
3. Analysis of doing no significant harm to other environmental objectives. The economic activity must not cause
significant harm to other five environmental objectives in accordance with the criteria for the technical analysis of non-
detriment of harm to other environmental objectives as set out in Annexes I or II of EC Delegated Regulation (EU)
2021/2139 of 4 June 2021.
4. Assessment of compliance with the minimum safeguards Assessment of alignment with the OECD Guidelines for
Multinational Enterprises and the UN Guiding Principles on Business and Human Rights, including each Taxonomy-
aligned activity.
5. Determining the alignment status. Based on the previous steps, after examining substantial contribution and do no
significant harm criteria, if the Group’s Taxonomy-eligible activity meets them, we state that activity is Taxonomy-
aligned. If not, we indicate that activity is not Taxonomy-aligned.
6. Calculation of KPIs for Taxonomy-eligible, Taxonomy-aligned and Taxonomy-non-eligible activities. In accordance
with the requirements of the Regulation, the following metrics are provided: revenue, capital expenditure (CapEx) and
operating expenditure (OpEx) for economic activities, which are calculated on the basis of the results of the assessments
in the previous steps.
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11.2 Identifying Taxonomy-eligible activities
The identification of Taxonomy-eligible activities of the EPSO-G Group was carried out in accordance with the European
Commission Delegated Regulation (EU) 2021/2139 of 4 June 2021 and the criteria set out therein. Taxonomy-eligibility is a first
step towards determining the alignment with the EU Taxonomy Regulation. Taxonomic economic activities are divided into
transition and enabling activities, assigning them the relevant NACE classification code.
The following EPSO-G companies and their activities were assessed in the process of identifying Taxonomy-eligible activities:
• Amber Grid - transmission of natural gas in Lithuania
• Baltpool - administration of the biofuel exchange, organisation of timber auctions, organisation of heat auctions
• Energy Cells - managing a system of energy storage devices (batteries)
• EPSO-G - management, supervision and control of a group of companies
• Litgrid - transmission of electricity through high-voltage (110 and 330 kV) electricity facilities
• Tetas - construction and operation of electrical installations up to 400 kV, construction of power grids, installation of
renewable energy sources.
The list of Taxonomy-eligible activities of the EPSO-G group companies
EPSO-G
Group
company
Taxonomy
code
NACE code(s)
Activity listed in
the Delegated
Acts
Activity description for climate
change mitigation objective
(Activity listed in Annex I to
EC Delegated Regulation (EU)
2021/2139)
Activity description
for climate change
adaptation
(Activity listed in
Annex II to EC
Delegated Regulation
(EU) 2021/2139)
Amber Grid
4.1
D35.11
Electricity
generation using
solar photovoltaic
technology
Construction or operation of
electricity generation facilities
that produce electricity using
solar photovoltaic (PV)
technology
Construction or
operation of
electricity generation
facilities that produce
electricity using solar
photovoltaic (PV)
technology
4.14
D35.22,
F42.21, H49.50
Transmission and
distribution
networks for
renewable and
low-carbon gases
Conversion, repurposing or
retrofit of gas networks for
the transmission and
distribution of renewable and
low-carbon gases.
Construction or operation of
transmission and distribution
pipelines dedicated to the
transport of hydrogen or other
low-carbon gases.
Conversion,
repurposing or
retrofit of gas
networks for the
transmission and
distribution of
renewable and low-
carbon gases.
Construction or
operation of
transmission and
distribution pipelines
dedicated to the
transport of hydrogen
or other low-carbon
gases.
Energy Cells
4.10
This category
of economic
activity does
not have a
specific NACE
code according
to Regulation
Storage of
electricity
Construction and operation of
facilities that store electricity
and return it at a later time in
the form of electricity. The
activity includes pumped
hydropower storage.
Construction and
operation of facilities
that store electricity
and return it at a later
time in the form of
electricity. The
activity includes
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(EC) No
1893/2006
pumped hydropower
storage.
Litgrid
4.9
D35.12
Transmission
of electricity
Electricity
transmission and
distribution
Construction and operation of
transmission systems that
transport the electricity on the
extra high-voltage and high-
voltage interconnected
system
Construction and
operation of
transmission systems
that transport the
electricity on the
extra high-voltage
and high-voltage
interconnected
system
Tetas
4.9
D35.12
Transmission
of electricity
Electricity
transmission and
distribution
Construction and operation of
transmission systems that
transport the electricity on the
extra high-voltage and high-
voltage interconnected
system
Construction and
operation of
transmission systems
that transport the
electricity on the
extra high-voltage
and high-voltage
interconnected
system
7.6
F42
Installation,
maintenance, and
repair of
renewable energy
technologies
On-site installation,
maintenance, and repair
activities for renewable
energy technologies,
consisting of one of the
following individual
measures, if installed on-site
as technical building systems:
(a) installation, maintenance
and repair of a photovoltaic
solar energy system and
ancillary technical equipment.
On-site installation,
maintenance, and
repair activities for
renewable energy
technologies,
consisting of one of
the following
individual measures,
if installed on-site as
technical building
systems:
(a) installation,
maintenance and
repair of a
photovoltaic solar
energy system and
ancillary technical
equipment.
EPSO-G
Group owned
vehicles
6.5
H49.32 Taxi
operation,
H49.39 Other
passenger land
transport n.e.c
and N77.11
Renting and
leasing of cars
and light motor
vehicles
Transport by
motorbikes,
passenger cars
and light
commercial
vehicles
Purchase, financing, renting,
leasing and operation of
vehicles designated as
category M1232 , N1233,
both falling under the scope
of Regulation (EC) No
715/2007 of the European
Parliament and of the
Council234, or L (2- and 3-
wheel vehicles and
quadricycles)
Purchase, financing,
renting, leasing and
operation of vehicles
designated as
category M1232 ,
N1233, both falling
under the scope of
Regulation (EC) No
715/2007 of the
European Parliament
and of the
Council234, or L (2-
and 3-wheel vehicles
and quadricycles)
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The Taxonomy- aligned and Taxonomy non-eligible economic activities, as referred in Article 8 (6) and (7) of the Complimentary
Climate Delegated Act are not relevant to the Group as it does not carry out any nuclear energy (4.26–4.28) and fossil gas (4.29–
4.31) related activities. Therefore, this information is not included in the tabular forms in accordance with Regulation (EU)
2021/2178 Annex XII.
11.2.3 Assessment of compliance with the technical analysis (substantial contribution) criteria
The assessment of compliance with the technical analysis criteria for determining under which conditions economic activities are
considered to make a significant contribution to mitigating and/or adapting to climate change is limited to the activities of the
EPSO-G Group companies that have been identified as Taxonomy-eligible. This assessment shall be carried out in accordance
with the technical analysis criteria set out in Annexes I and II of EC Delegated Regulation (EU) 2021/2139 of 4 June 2021.
It should be noted that, on 27 June 2023, EC adopted Delegated Regulation (EU) 2023/2486 supplementing Regulation (EU)
2020/852 of the European Parliament and of the Council by establishing the technical screening criteria for determining the
conditions under which an economic activity qualifies as contributing substantially to the sustainable use and protection of water
and marine resources, to the transition to a circular economy, to pollution prevention and control, or to the protection and
restoration of biodiversity and ecosystems and for determining whether that economic activity causes no significant harm to any
of the other environmental objectives and amending Commission Delegated Regulation (EU) 2021/2178 as regards specific public
disclosures for those economic activities The assessment of Delegated Regulation 2023/2486 did not identify any Taxonomy
activities to be attributed to the EPSO-G Group companies, which are subject to the substantial contribution criteria.
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145
EPSO-G
Group
company
Taxonom
y code
Activity listed in the
Delegated Acts
Substantial contribution criterion
Description of the Group
company’s activity
Amber Grid
4.1
Electricity generation
using solar
photovoltaic
technology
The activity generates electricity
using solar PV technology.
In 2023, Amber Grid produced
electricity for own needs using a
1.45 MWh installed solar
photovoltaic technology. In
2023, the company generated
1,478 MWh of renewable
energy, of which 288.5 MWh
were used for own need.
The activity meets the technical
analysis criterion of making a
significant contribution to
mitigation.
4.14
Transmission and
distribution networks
for renewable and
low-carbon gases
The activity consists in one of the
following:
(c retrofit of gas transmission and
distribution networks that enables
the integration of hydrogen and other
low-carbon gases in the network,
including any gas transmission or
distribution network activity that
enables the increase of the blend of
hydrogen or other low carbon gasses
in the gas system
The activity includes leak detection
and repair of existing gas pipelines
and other network elements to
reduce methane leakage.
The first biogas producer was
connected to Amber Grid’s
system at the end of March
2023 in Vytarai, Pasvalys
district. Biogas has been
injected into Amber Grid’s
system from 12 July. During
2023, 47,028,890 kWh of
biogas with guarantees of origin
have been fed and transported
to Amber Grid system.
The activity meets the technical
analysis criterion of making a
significant contribution to
mitigation.
Energy Cells
4.10
Electricity storage
Construction and operation of
facilities that store electricity and
return it at a later time in the form of
electricity. The activity includes
pumped hydropower storage.
Energy Cells carried out
construction of the energy
storage system until 25 August
2023/15 September 2023/27
September 2023/28 September
2023. The Company started
operating the Energy Storage
System as follows: the first
park since 26 August 2023, the
second since 16 September
2023, the third since 28
September 2023, and the fourth
since 29 September 2023.
In Lithuania, 4 battery parks
with a total capacity of 200
MWh have been installed.
The activity meets the technical
analysis criterion of making a
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146
significant contribution to
mitigation.
Litgrid
4.9
Transmission and
distribution of
electricity
1 The transmission and distribution
infrastructure or equipment is in an
electricity system that complies with
at least one of the following criteria:
the system is the interconnected
European system, i.e. the
interconnected control areas of
Member States, Norway, Switzerland
and the United Kingdom, and its
subordinated systems;
2 The activity is one of the following:
(e) installation of equipment to
increase the controllability and
observability of the electricity system
and to enable the development and
integration of renewable energy
sources, including: (ii) communication
and control (including advanced
software and control rooms,
automation of substations or feeders,
and voltage control capabilities to
adapt to more decentralised
renewable infeed).
Installation of metering infrastructure
that does not meet the requirements
of smart metering systems of Article
20 of Directive (EU) 2019/944 is not
compliant.
The electricity transmission grid
operated by Litgrid is
interconnected with the
European system through DC
converters with Swedish and
Polish power grids
In 2023, Litgrid installed
equipment to increase the
controllability and observability
of the electricity system. In
2023, the pilot Dynamic Line
Rating project was
implemented, during which
special devices were installed
on overhead lines to measure
weather conditions, and an
innovative model was used to
assess current and to predict
potential line capacity. Test
results show that using this
technology, transmission line
throughput has increased by an
average of 52% compared to
the established design.
In course of 2023, Litgrid AB did
not install any metering
infrastructure that does not
comply with the twenty
requirements under Directive
(EU) 2019/944.
The activity meets the technical
analysis criterion of making a
significant contribution to
mitigation.
Tetas
4.9
Transmission and
distribution of
electricity
Construction and operation of
transmission systems that transport
the electricity on the extra high-
voltage and high-voltage
interconnected system.
In 2023, Tetas conducted
activities within the electricity
transmission system operator
Litgrid and the electricity
distribution system operator
Energijos Skirstymo Operatorius
networks.
According to the technical
analysis criteria defined in
Paragraph 4.9 of Annex I, the
company carried out the
following activities:
(c) installation of transmission
and distribution transformers
that comply with the Tier 2 (1
July 2021) requirements set out
in Annex I to the Commission
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147
Regulation (EU) No 548/2014
(178) and, for medium power
transformers with highest
voltage for equipment not
exceeding 36 kV, with AAA0
level requirements on no-load
losses set out in standard EN
50588-1 (179);
(d) construction/installation and
operation of equipment and
infrastructure where the main
objective is an increase of the
generation or use of renewable
electricity generation;
(e) installation of equipment to
increase the controllability and
observability of the electricity
system and to enable the
development and integration of
renewable energy sources,
including:
(i) sensors and measurement
tools (including meteorological
sensors for forecasting
renewable production);
(h) construction and operation
of interconnectors between
transmission systems, provided
that one of the systems is
compliant.
The activity meets the technical
analysis criterion of making a
significant contribution to
mitigation.
7.6 (a)
Installation,
maintenance, and
repair of renewable
energy technologies
The activity consists in one of the
following individual measures, if
installed on-site as technical building
systems:
(a) installation, maintenance and
repair of solar photovoltaic systems
and the ancillary technical
equipment.
In 2023, Tetas carried out an
activity that included the
installation, maintenance, and
operation of solar power plants
for households and businesses.
According to the technical
analysis criteria defined in
Paragraph 7.6 of Annex I, this
activity corresponds to part (a) -
installation, maintenance and
repair of a solar photovoltaic
system and ancillary technical
equipment.
The activity meets the technical
analysis criterion of making a
significant contribution to
mitigation.
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148
11.2.4 Analysis of doing no significant harm to other environmental objectives
This analysis aims to determine whether the Taxonomy-eligible economic activities identified (listed in the table above) does not
cause significant harm to the other five environmental objectives in accordance with the technical analysis criteria for non-
detriment of harm to other environmental objectives set out in Annexes I or II to the European Commission Delegated Regulation
(EU) 2021/2139 of 4 June 2021. As all the previously identified Taxonomy-eligible economic activities have been identified as
contributing to the mitigation network, the analysis is carried out in accordance with Appendices A, B, C, D and E to Annex I to EC
Delegated Regulation (EU) 2021/2139 of 4 June 2021, which also defines the criteria for “doing no significant harm”.
EPSO-G
Group owned
vehicles
6.5
Transport by
motorbikes, passenger
cars and light
commercial vehicles
The activity complies with the
following criteria:
(a) for vehicles of category M1 and
N1, both falling under the scope of
Regulation (EC) No 715/2007: (i)
until 31 December 2025, specific
emissions of CO2, as defined in
Article 3(1), point (h), of Regulation
(EU) 2019/631, are lower than
50gCO2/km (low- and zero-emission
light-duty vehicles);(b) for vehicles of
category L, the tailpipe CO2
emissions equal to 0g CO2e/km
calculated in accordance with the
emission test laid down in Regulation
(EU) 168/2013.
At the end of 2023, the Group
had 415 vehicles of category
M1. Only 12% of the Group’s
cars are zero-emission light-
duty vehicles, and 15% are with
specific emissions of CO
2
are
lower than 50 g CO
2
/km.
Therefore, we consider that 6.5
activity does not meet
substantial contribution criteria.
EPSO-G ANNUAL REPORT FOR 2023
149
EPSO-G Group
company
Taxonomy
code
Activity listed in
the Delegated
Acts
Climate change Criteria for doing no significant harm in accordance with Appendices A, B, C, D and E to Annex I to (EU) 2021/2139 adaptation
Amber Grid
4.1
Electricity
generation
using solar
photovoltaic
technology
(2) Climate change adaptation
In 2023, the Group conducted an analysis of climate-related risks (related to transmission infrastructure and buildings) following the recommendations and
methodology of the Task Force on Climate-Related Financial Disclosures (TCFD). Climate forecasts and impact assessment were based on best available practices
and guidelines, relying on the latest reports from the Intergovernmental Panel on Climate Change (IPCC). The assessment also considered a study conducted by the
Climate and Research Department of the Lithuanian Hydrometeorological Service under the Ministry of Environment, titled "Climate Change Risk Study for the Mid-
21st Century" (2023), which predicts the level of physical risks in Lithuania under future climate conditions.
Physical hazards associated with this activity include heatwaves, heavy rainfall, and storms. The impact assessment indicates a low level of risk.
It is considered that the activity of Amber Grid aligns with this criterion.
(3) Sustainable use and protection
of water and marine resources
The criterion of causing no significant harm does not apply to these activities.
(4) Transition to a circular economy
When installing photovoltaic solar energy technology, Amber Grid chose sustainable technology with a lifecycle of at least 25 years. The selected equipment's
performance after 10 years of operation is 90%, and after 25 years of operation, it is 80%.
Therefore, it is assessed that the chosen technology meets this criterion.
(5) Pollution prevention and
control
The criterion of causing no significant harm does not apply to these activities.
(6) Protection and restoration of
biodiversity and ecosystems
When installing photovoltaic solar energy technology, the company Amber Grid conducted a pre-project feasibility study of solar power modules. Environmental
impact assessment was not conducted as it was not required by applicable legislation – Amber Grid installed solar energy technology with a total capacity of 1.45
MW in three of its territories.
Therefore, it is assessed that the chosen technology meets this criterion.
Amber Grid
4.14
Transmission and
distribution
networks for
renewable and
low-carbon gases
(2) Climate change adaptation
In 2023, an analysis of climate change-related risks (related to transmission infrastructure and buildings) was conducted within the Group, following the
recommendations and methodology of the Task Force on Climate-Related Financial Disclosures (TCFD). Climate forecasts and impact assessments were based on
best available practices and existing guidelines, relying on the latest reports from the Intergovernmental Panel on Climate Change (IPCC). The assessment also
considered a study conducted by the Climate and Research Department of the Lithuanian Hydrometeorological Service under the Ministry of Environment titled
"Climate Change Risk Study for the Mid-21st Century" (2023), which forecasted the level of physical risks in Lithuania under future climate conditions.
Physical hazards associated with this activity include heatwaves, heavy rainfall, and storms. The assessment of their impact is considered low.
It is considered that the activity of Amber Grid meets this criterion.
(3) Sustainable use and protection
of water and marine resources
The connection and transportation of biomethane through the gas transmission networks of "Amber Grid" are not related to the use or protection of water
resources, therefore, they do not hinder achieving good environmental status of marine waters and do not worsen the situation in marine waters where the
environmental status is good. Due to this activity, water resource usage does not increase, and protection does not deteriorate, hence the impact assessment is low.
It is considered that the activity of Amber Grid meets this criterion.
(4) Transition to a circular economy
The criterion of causing no significant harm does not apply to these activities.
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150
(5) Pollution prevention and
control
Amber Grid does not use transported biomethane for the operation of its facilities, therefore, they are not subject to the requirements of European Parliament and
Council Directive 2009/125/EC. When connecting biomethane producers to the system to ensure free transportation of biomethane in the Amber Grid system, no
new biomethane fuel consumption devices were designed and installed, to which eco-design requirements would apply.
It is considered that the activity of Amber Grid meets this criterion.
(6) Protection and restoration of
biodiversity and ecosystems
In accordance with the requirements of Lithuanian legislation, Amber Grid conducts Environmental Impact Assessments (EIA) for infrastructure projects.
During the reconstruction of the 16 km section of the Vilnius-Kaunas gas pipeline in 2022, an EIA was carried out, and a positive conclusion was obtained for the
implementation of the activity. Following the conditions of the EIA, the reconstruction project of individual sections was implemented in 2023.
After the completion of the Gas Interconnection Poland-Lithuania (GIPL) pipeline project in 2022, post-construction monitoring of individual stages will be carried
out until 2026 (for four years) according to the environmental monitoring program coordinated with the Environmental Protection Agency in 2016.
During monitoring, the recovery of local flora, fauna, and species diversity typical of the area after the construction of the main gas pipeline is observed, and whether
additional measures are necessary to restore or improve the pre-construction condition.
Based on the environmental monitoring data from 2021-2023, it was determined that the construction of the GIPL pipeline junction had no significant negative
impact on the natural environment.
According to the conclusion of the Environmental Protection Agency of the Republic of Lithuania regarding the "Environmental Impact Assessment of connecting
the biomethane pipeline to the transmission system of AB Amber Grid in the territories of Aukštikalnis and Vytartai, Pasvalys district," environmental impact
assessment for this economic activity is not mandatory.
The activity complies with the criteria set out in Appendix D of this Annex.
Energy cells
4.10
Electricity storage
(2) Climate change adaptation
In 2023, the analysis of the Group’s assessment of climate change risks (transmission infrastructure and buildings) in accordance with the recommendations of the
Task Force on Climate-related Financial Disclosures (TCFD). The climate projections and assessment of impacts are based on best practice and available guidance,
in line with the most recent Intergovernmental Panel on Climate Change reports. The assessment was based on “Study on climate change risks by the middle of the
21st century” (2023) carried out by the Climate and Research Division of the Lithuanian Hydrometeorological Service under the Ministry of Environment of the
Republic of Lithuania. The Study predicts the level of physical risks in Lithuania under future climate conditions.
Physical hazards associated with these activities: heat and cold waves, heavy rainfalls, storms. The impact is assessed as Low.
The activity of Energy Cells is considered compliant with this criterion.
(3) Sustainable use and protection
of water and marine resources
As the electricity storage facilities installed by Energy Cells are not pumped storage facilities and are not connected to water bodies, the activities are considered to
meet the criteria.
(4) Transition to a circular economy
Energy Cells follows the Description for the Procedure of Application of Environmental Requirements to Activities, which explains in detail the principles of the
company's management of the waste generated by its activities.
Energy Cells has entrusted the sorting and treatment of hazardous and non-hazardous waste generated by its operations to contractors with the necessary permits
and long- term service contracts. The company’s contractors also keep records of the waste they produce that has value (is suitable for reuse or recycling) and pass
it on to the relevant waste managers or waste buyers.
The activity of Energy Cells is considered compliant with the criteria set.
(5) Pollution prevention and
control
The criterion of causing no significant harm does not apply to these activities.
(6) Protection and restoration of
biodiversity and ecosystems
Energy Cells did not carry out an environmental impact assessment procedure or analysis for the installation of the energy storage system, as the energy storage
system were installed in existing electricity transmission distribution substations. This decision was taken in accordance with the Law on Environmental Impact
Assessment of Planned Economic Activities of the Republic of Lithuania and secondary legislation based on Directive 2011/92/EU.
The activity of Energy Cells is considered compliant with the criteria set.
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151
Litgrid
4.9
Transmission
and
distribution of
electricity
(2) Climate change adaptation
In 2023, the analysis of the Group’s assessment of climate change risks (transmission infrastructure and buildings) in accordance with the recommendations of the
Task Force on Climate-related Financial Disclosures (TCFD). The climate projections and assessment of impacts are based on best practice and available guidance,
in line with the most recent Intergovernmental Panel on Climate Change reports. The assessment was based on “Study on climate change risks by the middle of the
21st century” (2023) carried out by the Climate and Research Division of the Lithuanian Hydrometeorological Service under the Ministry of Environment of the
Republic of Lithuania. The Study predicts the level of physical risks in Lithuania under future climate conditions.
Physical risks associated with these activities: heat waves, fires, heavy rainfalls, storms. The impact is assessed as Very Low.
The activity of Litgrid is considered compliant with this criterion.
(3) Sustainable use and protection
of water and marine resources
The criterion of causing no significant harm does not apply to these activities.
(4) Transition to a circular economy
Litgrid has developed a waste management plan and implements it in accordance with the company's description of the procedure for applying environmental
requirements to the company's activities. Litgrid has entrusted the sorting and treatment of hazardous and non-hazardous waste generated by its operations to
contractors with the necessary permits and waste management contracts. The company also keeps records of the waste generated in its operations that has value
(is suitable for reuse or recycling), and transfers it to the relevant waste managers or companies that buy it.
The activity is considered compliant with the criteria set.
(5) Pollution prevention and
control
As part of its activities, Litgrid applies the environmental, health and safety requirements stipulated by the laws of the Republic of Lithuania to contractors working
on electricity transmission network facilities. The company’s experts carry out on-site inspections of contractors and record workplace safety non-compliances.
When carrying out works in the vicinity of communities, Litgrid informs residents in advance about the potential noise from heavy transport or works.
Litgrid has carried out detailed measurements of the electromagnetic fields generated near high-voltage power transmission lines. The results showed that the
electromagnetic fields generated in the Lithuanian electricity transmission network are in all cases in compliance with the requirements of the Lithuanian Hygienic
Standard, within the limits set thereby and is often significantly lower. The company’s experts measured the electric and magnetic field strengths under, near and
away from the lines in different sections of the power grid. The magnitude of the electric and magnetic fields varies depending on the voltage of the lines - 110 kV
or 330 kV - the intensity of the transmission on the lines, and the distance.
To protect against potential contamination due to oil spill, oil soak pits are installed under the transformers. The surface rainwater system is connected to oil traps to
prevent the release of oily water into surface water bodies or soil in case of accident.
In line with EC requirements, during construction or reconstruction, some of the equipment (circuit breakers) containing SF
6
gas are replaced with SF
6
-free
equipment. Litgrid’s Environmental Procedure also stipulates that employees operating such equipment must have appropriate specialized training certificates.
To reduce air pollution and ensure sustainable use of resources, the fleet is being upgraded by replacing internal combustion engine cars with hybrid or electric cars.
The activity is considered compliant with the criteria set.
(6) Protection and restoration of
biodiversity and ecosystems
Litgrid carries out environmental impact assessments when completely new transmission lines are built. Reconstruction of transmission lines is subject to an
environmental impact assessment. The environmental impact assessment also identifies potential impacts on biodiversity and ecosystems.
The assessment of significant effects on Natura 2000 sites is carried out prior to the planned reconstruction works in or near Natura 2000 sites (e.g. an overhead
line runs through a Natura 2000 site).
In 2023, Litgrid carried out screening for Environmental Impact Assessment (EIA screening) of the 110kV power transmission lines under reconstruction: Kvietiškis–
Kapsai–Prienai ir Kuršėnai–Kanteikiai. In both instances, the Environmental Protection Agency concluded that an environmental impact assessment is not required
for these 110kV power transmission lines under reconstruction.
The assessment of significant effects on Natura 2000 sites was carried out for the planned reconstruction of 110/10 kV Lazdėnai TL, as the 110 kV underground
cable line runs through Natura 2000 sites. The Dzūkija-Suvalkija Protected Area Directorate concluded that an environmental impact assessment is not required for
these works.
Assessments of the impact on soil, vegetation, wildlife, and monitoring of electromagnetic fields under the environmental monitoring programmes approved by the
Environmental Protection Agency shall be carried out during the construction/reconstruction period and a three-year post construction period.
The activity is considered compliant with the criteria set.
Tetas
4.9
Transmission
and
(2) Climate change adaptation
In 2023, the analysis of the Group’s assessment of climate change risks (transmission infrastructure and buildings) in accordance with the recommendations of the
Task Force on Climate-related Financial Disclosures (TCFD). The climate projections and assessment of impacts are based on best practice and available guidance,
in line with the most recent Intergovernmental Panel on Climate Change reports. The assessment was based on “Study on climate change risks by the middle of the
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distribution of
electricity
21st century” (2023) carried out by the Climate and Research Division of the Lithuanian Hydrometeorological Service under the Ministry of Environment of the
Republic of Lithuania. The Study predicts the level of physical risks in Lithuania under future climate conditions.
Physical risks associated with these activities: heat waves. The impact is assessed as Very Low.
The activity of Tetas is considered compliant with this criterion.
(3) Sustainable use and protection
of water and marine resources
The criterion of causing no significant harm does not apply to these activities.
(4) Transition to a circular economy
Tetas implements waste management in accordance with the legislation of the Republic of Lithuania and the requirements of its customers. Tetas employees
ensure that hazardous and non-hazardous waste generated in the operations is sorted and managed in accordance with contracts with licensed waste handlers.
Accounting for waste of value (reusable or recyclable) generated from operations and transferring it to waste buyers.
Tetas is organised in accordance with the ISO 14001 environmental management system. The 2022 audit of this system did not result in any additional
recommendations for improvement.
The activity is considered compliant with the criteria set.
(5) Pollution prevention and
control
In the course of its activities, Tetas applies the environmental, health and safety requirements stipulated by the laws of the Republic of Lithuania to the facilities of
the electricity transmission network and distribution network. The company’s experts carry out inspections of workers at their workplaces and record workplace
safety non- compliances.
Tetas is organised in accordance with management systems complying with ISO 14001 environmental and ISO 45000 occupational health and safety standards.
Representatives of Tetas operate on overhead high- voltage lines, where, as established by Litgrid the electromagnetic fields generated are in all cases in
compliance with the requirements set out in the Lithuanian Hygienic Standard, within the prescribed limits and often significantly lower.
Tetas has no activities involving polychlorinated biphenyls (PCBs).
The activity of Tetas is considered compliant with this criterion.
(6) Protection and restoration of
biodiversity and ecosystems
Tetas operates in compliance with the environmental impact assessment procedures carried out by the electricity transmission and distribution operators, the rules
of the transmission and distribution network companies and the legal restrictions. Tetas does not carry out environmental impact assessment or analysis procedures
when carrying out contracting or construction work.
The activity is considered compliant with the criteria set.
Installation,
maintenance
, and repair
of
renewable
energy
technologies
(2) Climate change adaptation
In 2023, the analysis of the Group’s assessment of climate change risks (transmission infrastructure and buildings) in accordance with the recommendations of the
Task Force on Climate-related Financial Disclosures (TCFD). The climate projections and assessment of impacts are based on best practice and available guidance,
in line with the most recent Intergovernmental Panel on Climate Change reports. The assessment was based on “Study on climate change risks by the middle of the
21st century” (2023) carried out by the Climate and Research Division of the Lithuanian Hydrometeorological Service under the Ministry of Environment of the
Republic of Lithuania. The Study predicts the level of physical risks in Lithuania under future climate conditions.
Hazards associated with these activities: heat waves. The impact is assessed as Low.
The activity of Tetas is considered compliant with this criterion.
(3) Sustainable use and protection
of water and marine resources
The criterion of causing no significant harm does not apply to these activities.
(4) Transition to a circular economy
The criterion of causing no significant harm does not apply to these activities.
(5) Pollution prevention and
control
The criterion of causing no significant harm does not apply to these activities.
(6) Protection and restoration of
biodiversity and ecosystems
The criterion of causing no significant harm does not apply to these activities.
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153
11.2.5 Assessment of compliance with the minimum safeguards
The assessment of the compliance of the identified Taxonomy-eligible activities with the minimum safeguards shall be carried
out in accordance with Article 18 of Regulation (EU) 2020/852 of the European Parliament and of the Council of 18 June 2020 on
the establishment of a framework to facilitate sustainable investment. It stipulates that:
1. [...] implemented by an undertaking that is carrying out an economic activity to ensure the alignment with the OECD
Guidelines for Multinational Enterprises and the UN Guiding Principles on Business and Human Rights, including the
principles and rights set out in the eight fundamental conventions identified in the Declaration of the International Labour
Organisation on Fundamental Principles and Rights at Work and the International Bill of Human Rights.
2. In implementing the procedures referred to in paragraph 1 of this Article, undertakings shall comply with the principle of
‘causing no significant harm’ referred to in Article 2(17) of Regulation (EU) 2019/2088.
The EPSO-G Group conducts activities by ensuring the alignment with the OECD Guidelines for Multinational Enterprises and the
UN Guiding Principles on Business and Human Rights.
The EPSO-G Group’s measures:
• In 2018, the EPSO-G Group adopted the Group’s Code of Conduct, which sets out uniform general guidelines for
communication and cooperation with internal and external stakeholders: service users, contractors, business partners,
shareholders, state and municipal authorities, the public, etc.
• In 2021, the EPSO-G Group adopted the Equal Opportunities Policy, in which it has publicly committed to respect human
rights and to ensure that there are no human rights abuses in any of the Group’s companies;
• In 2022, the EPSO-G Group adopted a policy on the prevention of discrimination, violence and harassment, which defines the
forms of discrimination, violence and harassment, the ways to identify them, and the procedures for preventing them. This
document also outlines the ways in which the Group ensures that processes based on the law are in place to address adverse
human rights impacts;
• In 2022, the EPSO-G Group introduced a Helpline for the Group employees to report possible cases of discrimination, violence
and harassment, or other possible human rights violations.
• In 2022, the Board of EPSO-G adopted the Supplier Code of Conduct, which obliges the Group's suppliers to ensure human
and workers' rights in their operations. The EPSO-G Group’s Supplier Code of Conduct also provides for suppliers to be subject
to due diligence at their sites. Since 2023, organisations participating in the EPSO-G Group’s public procurements must
undertake to respect the Supplier Code of Conduct.
• In 2023, the EPSO-G Group Executives’ Committee set a target for at least 5% of its purchases to include social criteria. For
the proper application of these criteria appropriately, a tool for socially responsible procurement has been developed
facilitating the selection of the most appropriate social criteria in procurement processes. Training on socially responsible
procurement is also available. In all its public procurements publicly advertised (>95% of procurements by value in 2023), the
EPSO-G Group also verifies grounds for exclusion of suppliers, including social criteria such as offences concerning trafficking
in human beings, failure to perform obligations arising from the payment of taxes, including social security premiums, non-
compliance with environmental, social and labour law obligations, etc.
EPSO-G’s operating policies are available here. More detailed information is also available in the Sustainable Supply Chain
Management section of the Annual Sustainability Report.
11.3 Accounting Policies
The calculation of key performance indicators (KPIs) shall be carried out in accordance with EC Delegated Regulation (EU)
2021/2178 of 6 July 2021 supplementing Regulation (EU) 2020/852 of the European Parliament and of the Council by specifying
the content and presentation of the information to be disclosed by undertakings covered by Articles 19a or 29a of Directive
2013/34/EU on their environmentally sustainable performance, and by setting out a methodology for the fulfilment of that
disclosure obligation.
The PVRR calculations and disclosures are made in accordance with Article 2 of Commission Delegated Regulation (EU)
2021/2178, which provides that:
1. Non-financial undertakings shall disclose the information referred to in Article 8, paragraphs 1 and 2, of Regulation (EU)
2020/852 as specified in Annex Ito this Regulation.
EPSO-G ANNUAL REPORT FOR 2023
154
2. The information referred to in paragraph 1 shall be presented in tabular form by using the templates set out in Annex II
to this Regulation.
Accounting Policies
The Group’s share of revenue (net turnover) is recognised as an environmentally sustainable economic activity and is assigned a
numerator value when calculating the percentage of this activity in total revenue:
• total revenue of the electricity transmission operator;
• contract work for electricity transmission and distribution operators in the development and operation of energy facilities;
• total revenue of electricity energy storage facilities;
• revenue of the gas transmission operator from the generation of electricity using photovoltaic solar technology;
• revenue of the gas transmission operator from renewable and low-carbon gas transmission through networks;
• revenue from contract work for electricity transmission and distribution operators in the installation, maintenance and repair
of renewable energy technologies;
• revenue of the Group companies from transport by motorbikes, passenger cars and light commercial vehicles.
Revenue from Taxonomy-eligible activities is recognised in accordance with IFRS 15 “Revenue from Contracts with Customers”,
IAS 1 “Presentation of Financial Statements” and related standards and IFRIC interpretations, in accordance with the accounting
policies described in the notes to the financial statements.
In counterparties, revenue from contractual work performed by the EPSO-G Group companies for an electricity transmission
operator and services provided by an operator of an electricity storage facility (in the future) to an electricity transmission operator
are eliminated in accordance with the provisions of IFRS 10 “Consolidated Financial Statements”.
The EPSO-G Group’s share of capital expenditure is recognised as meeting the environmental sustainability criteria and is included
as a numerator in the calculation of the percentage of these activities in the total capital expenditure (CapEx):
• total CapEx of the electricity transmission operator, except for investments financed by third parties;
• expenditure by the gas transmission operator or other Group companies on the acquisition, construction, maintenance and
repair of renewable energy facilities;
• total costs of installing electricity storage devices;
• the proportion of the Group company’s CapEx incurred in providing contracted services to electricity transmission and
distribution operators;
• CapEx of the gas transmission operator from the generation of electricity using photovoltaic solar technology;
• CapEx of the gas transmission operator from renewable and low-carbon gas transmission;
• CapEx of contract works for the electricity distribution operator in the installation, maintenance and repair of renewable energy
technologies;
• CapEx of the Group companies from transport by motorbikes, passenger cars and light commercial vehicles.
CapEx of Taxonomy-eligible activities is recognised in accordance with IAS 16 “Property, Plant and Equipment” and IAS 38
“Intangible Assets”. In counterparties, the Group’s CapEx exclude the margin (unrealised profit) on contract work in accordance
with IFRS 10 “Consolidated Financial Statements”.
The Group’s share of operating expenses is recognised as part of the activities that meet the sustainability criteria and is assigned
a numerator value when calculating the percentage of these activities in the total operating expenses (OpEx):
• total OpEx of the electricity transmission operator;
• total OpEx of the operator of electricity storage facilities;
• the proportion of the Group company’s OpEx incurred in providing contracted services to electricity transmission and
distribution operators;
• OpEx of the gas transmission operator from the generation of electricity using photovoltaic solar technology;
• OpEx of the gas transmission operator from renewable and low-carbon gas transmission;
• OpEx of contract works for the electricity transmission and distribution operator in the installation, maintenance and repair of
renewable energy technologies;
• OpEx of the Group companies from transport by motorbikes, passenger cars and light commercial vehicles.
OpEx of Taxonomy-eligible economic activities are recognised on an accrual basis in accordance with IAS 1 “Presentation of
Financial Statements” and elimination of intercompany transactions is carried out in accordance with the provisions of IFRS 10
GRI 2-23
EPSO-G ANNUAL REPORT FOR 2023
155
“Consolidated Financial Statements”.
Double counting
All reported Taxonomy KPIs, related to Taxonomy-eligible / aligned activities, exclude double counting, as each KPI is allocated
to different activities, which are independent. To avoid double counting, while calculating numerator, KPIs were counted only once
when an economic activity contributes to several environmental objectives. It should be noted that intra-group transactions were
eliminated, where needed.
Contextual information about EU Taxonomy KPIs
All KPIs are the same for both environmental objectives, therefore they are not disclosed separately.
Taxonomy-eligible share of revenue in 2023 was 79.6% and decreased by 7 pp or EUR 46.9 million compared to 2022:
• the EUR 52.2 million change was driven by decrease in the electricity sales revenue. The main reason behind the change was
decline in revenue from ancillary, balancing and regulating services compared to 2022;
• revenue from newly identified Taxonomy-eligible activities amounted to EUR 1.7 million or 0.4% of the Taxonomy-eligible
share of revenue;
In 2023, Taxonomy-eligible share of OpEx was 97%, and increased by 3.3 pp compared to 2022.
• The major driver was lower energy prices on the market, causing the decline in the costs of electricity for technological needs.
These costs were by EUR 139 million lower than in 2022;
• OpEx of energy storage activity increased by EUR 1.3 million due to the enhanced implementation of the energy storage
project (the system of four battery farms);
• OpEx of newly identified Taxonomy-eligible activities amounted to EUR 1.7 million or 0.5% of the Taxonomy-eligible share
of OpEx;
• In 2023, OpEx of Taxonomy-non-eligible activities due to decreased by EUR 65.5 million (or 7-fold) due to the installation of
the Physical Barrier in 2022, with a significant pro-rata reduction in denominator.
Taxonomy-eligible share of CapEx in 2023 was 84.7% and increased by 10.8 pp or EUR 64.8 million compared to 2022:
• CapEx of energy transmission activity increased by EUR 84.5 million due to the implemented synchronization-related projects;
• CapEx of electricity storage activities decreased by EUR 20.3 million as the implementation of the energy storage project (the
system of four battery farms) was completed
EPSO-G ANNUAL REPORT FOR 2023
156
11.4 Revenue under the EU Taxonomy
Financial year 2023
Economic
activities
Code(s)
Absolute
turnover,
EUR million
Proportion
of turnover
Substantial contribution criteria
Criteria for doing no significant harm (principle of
‘causing no significant harm’)
Minimum safeguards
Proportion of Taxonomy
-eligible
turnover, 2023
Proportion of Taxonomy
-eligible
turnover, 2022
Enabling activities
Transition activities
Climate change
mitigation
Climate change
adaptation
Water and marine
resources
Pollution
Circular economy
Biodiversity and
ecosystems
Climate change
mitigation
Climate change
adaptation
Water and marine
resources
Pollution
Circular economy
Biodiversity and
ecosystems
Currency
%
Yes
(Y)/No
(N)/N/EL
Yes (Y)/No
(N)/N/EL
Yes
(Y)/No
(N)/N/EL
Yes
(Y)/No
(N)/N/EL
Yes
(Y)/No
(N)
Yes
(Y)/No
(N)/N/E
L
Yes
(Y)/No
(N)
Yes
(Y)/No
(N)
Yes
(Y)/No
(N)
Yes
(Y)/N
o (N)
Yes
(Y)/N
o (N)
Yes
(Y)/N
o (N)
Yes
(Y)/N
o (N)
%
%
E
T
A. TAXONOMY-ELIGIBLE ACTIVITIES
A.1 Environmentally sustainable activities (aligned activities)
4.1 Generating
electricity using
photovoltaic
solar technology
D35.11
0.0
0.0
Y
Y
N/EL
N/EL
N/EL
Y
Y
Y
Y
Y
Y
0.0
0.0
4.14
Transmission
and distribution
networks for
renewable and
low-carbon
gases
D35.22,
F42.21,
H49.50
0.0
0.0
Y
Y
N/EL
N/EL
N/EL
Y
Y
Y
Y
Y
Y
0.0
0.0
4.10 Electricity
storage
No
dedicated
NACE code
2.7
0.6
Y
Y
N/EL
N/EL
N/EL
Y
Y
Y
Y
Y
Y
0.6
0.0
T
4.9 Electricity
transmission and
distribution
(Litgrid)
D35.12
366.8
76.5
Y
Y
N/EL
N/EL
N/EL
Y
Y
Y
Y
Y
Y
76.5
71.0
T
4.9 Electricity
transmission and
distribution
(Tetas)
D35.12
10.4
2.2
Y
Y
N/EL
N/EL
N/EL
Y
Y
Y
Y
Y
Y
2.2
1.6
7.6 Installation,
maintenance
and repair of
renewable
F42
1.7
0.3
Y
Y
N/EL
N/EL
N/EL
Y
Y
Y
0.3
0.0
EPSO-G ANNUAL REPORT FOR 2023
157
energy
technologies
A.2 Turnover of Taxonomy-eligible but environmentally unsustainable activities (Taxonomy-non-aligned)
6.5 Transport by
motorbikes,
passenger cars
and light
commercial
vehicles
H49.32,
H49.39,
N77.11
0.0
0.0
0.0
0.0
Total (A.1+A.2)
381.6
79.6
79.6
72.6
B. TAXONOMY-NON-ELIGIBLE ACTIVITIES
Turnover from
Taxonomy-non-
eligible
activities (B)
97.6
20.4
20.4
27.4
Total (A + B)
479.2
100.0
100.
0
100.
0
N/EL – not eligible, Taxonomy non-eligible activity for the relevant environmental objective
EPSO-G ANNUAL REPORT FOR 2023
158
11.5 Capital expenditure under the EU Taxonomy (CapEx)
Financial year 2023
Economic activities
Code(s)
Absolute
capital
expenditu
re, EUR
million
Proportion
of CapEx
Substantial contribution criteria
Do no significant harm
Minimum safeguards
Proportion of Taxonomy
-eligible
turnover, 2023
Proportion of Taxonomy
-eligible
turnover, 2022
Enabling activities
Transition activities
Climate change
mitigation
Climate change
adaptation
Water and marine
resources
Pollution
Circular economy
Biodiversity and
ecosystems
Climate change
mitigation
Climate change
adaptation
Water and marine
resources
Pollution
Circular economy
Biodiversity and
ecosystems
Currency
%
Yes
(Y)/No
(N)/N/E
L
Yes
(Y)/No
(N)/N/E
L
Yes
(Y)/No
(N)/N/EL
Yes
(Y)/No
(N)/N/EL
Yes
(Y)/No
(N)
Yes
(Y)/No
(N)/N/E
L
Yes
(Y)/No
(N)
Yes (Y)/No
(N)
Yes (Y)/No
(N)
Ye
s
(Y)
/N
o
(N)
Yes
(Y)/N
o (N)
Yes
(Y)/N
o (N)
Ye
s
(Y)/
No
(N)
%
%
E
T
A. TAXONOMY-ELIGIBLE ACTIVITIES
A.1 Environmentally sustainable activities (aligned activities)
4.1 Generating electricity using
photovoltaic solar technology
D35.11
0.0
0.0
Y
Y
N/EL
N/EL
N/EL
Y
Y
Y
Y
Y
Y
0.0
0.3
4.14 Transmission and
distribution networks for
renewable and low-carbon
gases
D35.22,
F42.21,
H49.50
0.3
0.1
Y
Y
N/EL
N/EL
N/EL
Y
Y
Y
Y
Y
Y
0.1
0.0
4.10 Electricity storage
No dedicated
NACE code
32.6
14.1
Y
Y
N/EL
N/EL
N/EL
Y
Y
Y
Y
Y
Y
14.1
30.3
T
4.9 Electricity transmission and
distribution (Litgrid)
D35.12
153,1
66.2
Y
Y
N/EL
N/EL
N/EL
Y
Y
Y
Y
Y
Y
66.2
43.3
T
4.9 Electricity transmission and
distribution (Tetas)
D35.12
0.2
0.1
Y
Y
N/EL
N/EL
N/EL
Y
Y
Y
Y
Y
Y
0.1
0.0
7.6 Installation, maintenance
and repair of renewable energy
technologies
F42
0.0
0.0
Y
Y
N/EL
N/EL
N/EL
Y
Y
Y
0.0
0.0
A.2 CapEx of Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned activities)
6.5 Transport by motorbikes,
passenger cars and light
commercial vehicles
H49.32,
H49.39,
N77.11
0.5
0.2
0.2
0.0
EPSO-G ANNUAL REPORT FOR 2023
159
Total (A.1+A.2)
186.7
88.7
80.7
73.9
B. TAXONOMY-NON-ELIGIBLE ACTIVITIES
CapEx of Taxonomy-non-
eligible activities (B)
44.6
19.3%
19.3
26.1
Total (A + B)
231.3
100.0%
100.0
100.0
N/EL – not eligible, Taxonomy non-eligible activity for the relevant environmental objective
11.6 Operating expenditure under the EU Taxonomy (OpEx)
Financial year 2023
Economic activities
Code(s)
Absolute
CapEx, EUR
million
Proportion
of OpEx (%)
Substantial contribution criteria
Do no significant harm
Minimum safeguards
Proportion of Taxonomy
-eligible turnover,
2023 (%)
Proportion of Taxonomy
-eligible turnover,
2022 (%)
Enabling activities (E)
Transition activities (T)
Climate change mitigation
Climate change adaptation
Water and marine
resources
Pollution
Circular economy
Biodiversity and
ecosystems
Climate change mitigation
Climate change adaptation
Water and marine
resources
Pollution
Circular economy
Biodiversity and
ecosystems
Currency
%
Yes (Y)/No
(N)/N/EL
Yes
(Y)/No
(N)/N/EL
Yes
(Y)/No
(N)/N/EL
Yes
(Y)/No
(N)/N/EL
Yes
(Y)/No
(N)
Yes
(Y)/No
(N)/N/EL
Yes
(Y)/No
(N)
Yes
(Y)/No
(N)
Yes (Y)/No
(N)
Yes
(Y)/No
(N)
Yes (Y)/No
(N)
Yes
(Y)/No
(N)
Y
e
s/
N
o
%
%
E
T
A. TAXONOMY-ELIGIBLE ACTIVITIES
A.1 Environmentally sustainable activities (aligned activities)
4.1 Generating electricity using
photovoltaic solar technology
D35.11
0.0
0.0
Y
Y
N/EL
N/EL
N/EL
Y
Y
Y
Y
Y
Y
0.0
0.0
4.14 Transmission and
distribution networks for
renewable and low-carbon gases
D35.22,
F42.21,
H49.50
0.0
0.0
Y
Y
N/EL
N/EL
N/EL
Y
Y
Y
Y
Y
Y
0.0
0.0
4.10 Electricity storage
No
dedicated
NACE code
1.8
0.5
Y
Y
N/EL
N/EL
N/EL
Y
Y
Y
Y
Y
Y
0.5
0.1
T
EPSO-G ANNUAL REPORT FOR 2023
160
4.9 Electricity transmission and
distribution (Litgrid)
D35.12
335.0
93.7
Y
Y
N/EL
N/EL
N/EL
Y
Y
Y
Y
Y
Y
93.7
81.4
T
4.9 Electricity transmission and
distribution (Tetas)
D35.12
8.2
2.3
Y
Y
N/EL
N/EL
N/EL
Y
Y
Y
Y
Y
Y
2.3
5.4
7.6 Installation, maintenance and
repair of renewable energy
technologies
F42
1.7
0.5
Y
Y
N/EL
N/EL
N/EL
Y
Y
Y
0.5
0.0
A.2 OpEx of Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned activities)
6.5 Transport by motorbikes,
passenger cars and light
commercial vehicles
H49.32,
H49.39,
N77.11
0.3
0.1
0.1
0.0
Total (A.1+A.2)
347.1
97.0
97.0
86.9
B. TAXONOMY-NON-ELIGIBLE ACTIVITIES
OpEx of Taxonomy-non-eligible
activities (B)
10.6
3.0
3.0
13.1
Total (A + B)
357.7
100.0
100.0
100.0
N/EL – not eligible, Taxonomy non-eligible activity for the relevant environmental objective
Please note that the denominator for OpEx is calculated by taking into account direct OpEx. The denominator for OpEx 2022 was recalculated accordingly.
„EPSO-G“ METINIS PRANEŠIMAS UŽ 2023 METUS
161
ANNEX 1. GRI INDEX LIST
GRI
standard
Name
Pages
The organization and its reporting practices
2-1
Organizational details
9, 12-16
2-2
Entities included in the organization’s sustainability reporting
9, 105, 106
2-3
Reporting period, frequency and contact point
9, 118, 119
Activities and workers
2-6
Activities, value chain and other business relationships
12-26, 27-36, 38, 49 50, 51,
52, 101, 118, 119, 132
2-7
Employees
96, 97, 98, 119, 120
Governance
2-9
Governance structure and composition
75, 76, 77, 78, 105, 106, 118,
119
2-10
Nomination and selection of the highest governance body
89
2-11
Chair of the highest governance body
89, 90
2-13
Delegation of responsibility for managing impacts
121-125
2-14
Role of the highest governance body in sustainability reporting
109
2-15
Conflicts of interest
131
2-17
Collective knowledge of the highest governance body
79
2-18
Evaluation of the performance of the highest governance body
148
2-19
Remuneration Policy
84, 85, 95, 96
2-20
Process for determining remuneration
180
2-21
Annual total compensation ratio
181
Strategy, policies, and practices
2-22
Statement on sustainable development strategy
107-111
2-23
Policy commitments
7, 8, 22, 23, 26, 27, 110, 112
121, 122, 132
1232-24
Embedding policy commitments
26, 27, 28, 47, 49, 50, 62, 63,
64, 65 81, 86, 87, 88, 106-109,
121-124
2-25
Processes to remediate negative impacts
121-125
2-26
Mechanisms for seeking advice and raising concerns
35, 36, 128
2-27
Compliance with laws and regulations
65, 66, 67
2-28
Membership associations
57-59
2-29
Approach to stakeholder engagement
23, 24, 25, 75, 119, 120, 121,
128, 131
2-30
Collective bargaining agreements
121-123
Material topics
3-1
Process to determine material topics
107, 108, 118
3-2
List of material topics
109
3-3
Management of material topics
26, 27, 41, 49, 50, 64, 65, 68,
75, 92, 107, 108, 109, 110,
111, 113, 114, 115, 116, 117,
118, 119, 120, 121, 122, 123,
124, 125, 126, 127, 128, 129,
„EPSO-G“ METINIS PRANEŠIMAS UŽ 2023 METUS
162
130
201
Economic performance 2016
37-40, 47
202
Market presence 2016
94-95, 121-123
204
Procurement practices 2016
136
205
Anti-corruption 2016
133
206
Anti-competitive behaviour 2016
133
Environmental
302
Energy 2016
112
303
Water and effluents 2018
120
304
Biodiversity 2016
118-119
305
Emissions 2016
113-120
306
Waste 2020
118, 119
Social area
401
Employment 2016
121-24
402
Labour management relations 2016
121-124, 127-130
403
Occupational health and safety 2018
130, 131
404
Training and education 2016
124-126
405
Diversity and equal opportunity 2016
127-128
406
Non-discrimination 2016
127-128
413
Local communities 2016
132-133
418
Customer privacy 2016
133
„EPSO-G“ METINIS PRANEŠIMAS UŽ 2023 METUS
163
ANNEX 2. DISCLOSURES IN ACCORDANCE WITH THE
RECOMMENDATIONS OF THE TASK FORCE ON CLIMATE-RELATED
FINANCIAL DISCLOSURES (TCFD)
TCFD disclosure recommendations
Page(s) of the
annual report
Governance
a. Describe the board’s oversight of climate-related risks and opportunities.
120-121
b. Describe management’s role in assessing and managing risks and opportunities.
121-125
Strategy
a. Describe the climate-related risks and opportunities the organization has identified
over the short, medium, and long term.
124-125
b. Describe the impact of climate-related risks and opportunities on the
organization’s businesses, strategy, and financial planning.
124-125
c. Describe the resilience of the organization’s strategy, taking into consideration
different climate-related scenarios, including a 2°C or lower scenario.
124-125
Risk management
a. Describe the organization’s processes for identifying and assessing climate-related
risks.
121-125
b. Describe the organization’s processes for managing climate-related risks.
121-125
c. Describe how processes for identifying, assessing, and managing climate-related
risks are integrated into the organization’s overall risk management.
121-125
Metrics
a. Disclose the metrics used by the organization to assess climate-related risks and
opportunities in line with its strategy and risk management process.
88, 96, 107-
109, 124-125,
167
b. Disclose Scope 1, Scope 2 and, if appropriate, Scope 3 greenhouse gas (GHG)
emissions and the related risks.
170-175, 124-
125
c. Describe the targets used by the organization to manage climate-related risks and
opportunities and performance against targets.
88, 96, 125,
167, 173-175
GRI 3-3
„EPSO-G“ METINIS PRANEŠIMAS UŽ 2023 METUS
164
ANNEX 3. INFORMATION ON COMPLIANCE WITH TRANSPARENCY
GUIDELINES
EPSO-G and its subsidiaries comply with Government Resolution No 1052 of 14 July 2010 on the adoption of the Guidelines on
Transparency in the Activities of State-Owned Enterprises (hereinafter Transparency Guidelines). The Transparency Guidelines
are mandatory, as EPSO-G is a State-owned establishment (SOE).
In order to ensure compliance with the Transparency Guidelines within the EPSO-G Group, the Operational Transparency and
Communication Policy has been adopted at Group level, which takes into account in detail the requirements set out in the
Transparency Guidelines and sets out how they apply to the companies in the EPSO-G Group.
The implementation of the Transparency Guidelines is mainly ensured through the information disclosed in the Annual Report
and through the disclosure of information on the websites of EPSO-G's management company and the Group's companies, by
disclosing and presenting the information in a format that is accessible and understandable to stakeholders.
The Transparency Guidelines state that the SOEs follow the provisions of the Nasdaq Vilnius Listed Company Governance Code
relating to public disclosure of information. Information on EPSO-G’s compliance with this Code is disclosed in Annex 4 of EPSO-
G’s annual report and in EPSO-G’s Report on Compliance with the Code of Corporate Governance for Nasdaq Vilnius Listed
Companies.
Below is structured information on the implementation of the Transparency Guidelines:
The EPSO-G website must publish information and comply with other requirements
Company name, company code and the register in which the data on the Company is collected and stored,
registered office (address)
Implemented
Legal status if EPSO-G is being reorganised, reorganised (specify the type of reorganisation), wound up,
bankrupt or insolvent
Not applicable
Information on the national authority, i.e. the Ministry of Energy of the Republic of Lithuania and a link to its
website
Implemented
Operational objectives, vision and mission
Implemented
Structure
Implemented
Data on the manager*
Implemented
Data on the chairperson and members of the Board*
Implemented
Details of the Chair and members of the Supervisory Council*
Not applicable
Names of committees, their chairs and members*
Implemented
*The following data shall be published: name, surname, date of commencement of duties, other management positions held in
other legal entities, education, qualifications, professional experience; whether the member of the collegial body is elected or
appointed as an independent member.
Total amount of the nominal values of the shares owned by the State (to the nearest euro cent) and the
percentage of EPSO-G’s issued capital
Implemented
Special obligations, which shall be established in accordance with the guidelines approved by the Minister
of Economy and Innovation of the Republic of Lithuania: the purpose of the special obligation, the state
budget allocations for its performance in the current calendar year and the legal acts entrusting the SOE with
the performance of the special obligation shall be indicated, the conditions for the performance of the special
obligation shall be established and/or the pricing shall be regulated
Implemented
Information on corporate social responsibility initiatives and measures, major investment projects underway
or planned
Implemented
If EPSO-G is a member of other legal entities (not applicable to subsidiaries and subsidiaries of a subsequent
level), the name, code number and register in which the Company’s data are collected and stored, the
registered office (address) and the website addresses of such legal entities
Not applicable
GRI 3-3
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1
When information is treated as a commercial (industrial) secret or as confidential information of the SOE, the SOE is allowed not
to disclose such information; however, in its annual report the SOE must indicate such non-disclosure and provide the reasons for
non-disclosure.
The annual financial statements, the annual report and the auditor's report on the annual financial statements
must be published on EPSO-G’s website within 10 working days of the approval of the annual financial
statements
Implemented
EPSO-G’s interim financial statements and EPSO-G’s interim reports must be published on its website no
later than two months after the end of the reporting period
Implemented
Given that EPSO-G is a parent company, the following information must be additionally published on its website:
Group structure
Implemented
Subsidiaries and downstream subsidiaries:
Company name, company code and the register in which the data on the Company is collected and stored,
registered office (address)
Implemented
Website addresses
Implemented
Percentage of shares held by EPSO-G in the issued capital of companies
Implemented
Annual consolidated financial statements and consolidated annual reports
Implemented
The following documents must be published on the website and other requirements must be met:
Articles of Association of EPSO-G
Implemented
Letter from the Ministry of Energy of the Republic of Lithuania on the definition of state objectives and
expectations for EPSO-G
Implemented
The business strategy or a summary thereof where the business strategy contains confidential information
or information considered to be a commercial/industrial secret
Implemented
Remuneration policy, including the determination of the salary of the Head of EPSO-G and the remuneration
of the members of the collegiate bodies and committees set up by EPSO-G
Implemented
EPSO-G annual and interim reports
Implemented
Sets of annual and interim financial statements for a period of at least five years and auditor’s reports on the
annual financial statements
Implemented
The above documents are published in PDF format and are technically printable
Implemented
Other requirements must be met/published in the financial statements and reports:
EPSO-G keeps its accounting records in a way that ensures preparation of the financial statements in
accordance with International Accounting Standards
Implemented
EPSO-G prepares a set of financial statements for the period of 6 months
Implemented
In addition to the annual report, EPSO-G prepares a set of financial statements for the period of 6 months
Implemented
In addition to the content requirements set in the Law on Financial Reporting by Undertakings of the Republic of Lithuania, the
following information must be disclosed in the annual report of EPSO-G
1
:
Brief description of the business model
Implemented
Information on significant events that occurred during and after the financial year (prior to the annual report)
and which had a material impact on EPSO-G's activities
Implemented
Results for the objectives set out in the Operational Strategy
Implemented
Profitability, liquidity, asset turnover, debt ratios
Implemented
Compliance with specific obligations
Implemented
Implementation of the investment policy, ongoing and planned investment projects and investments during
the year under review
Implemented**
Investments, ongoing and planned projects, and investments during the reporting period (see Sections 3.4, 3.5 and 4.2.8 of the Annual Report).
Implementation of risk management policy
Implemented
Implementation of the dividend policy
Implemented
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Implementation of the remuneration policy
Implemented
Total annual salary bill, average monthly salary by position and/or department
Implemented
The SOEs that are not required to prepare the social responsibility report, are recommended to provide
information related to environmental, social and personnel, human rights, anti-corruption and anti-bribery
matters in their annual report or annual activity report
Implemented
The consolidated annual report shall include the structure of the group, the name, code and register number
of each subsidiary company in which data on the Company are collected and stored, the registered office
(address), the percentage of shares held in the subsidiary company’s issued capital, and the financial and
non-financial performance of the financial year
Implemented
EPSO-G’s interim report shall contain a brief description of EPSO-G’s business model, an analysis of its
financial performance for the reporting period, information on significant events that occurred during the
reporting period, as well as profitability, liquidity, asset turnover, debt indicators and their evolution
compared to the corresponding period of the previous year
Implemented
GRI 3-3
GRI 3-3
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ANNEX 4. NOTIFICATION BY EPSO-G ON COMPLIANCE WITH THE
CODE OF CORPORATE GOVERNANCE FOR COMPANIES LISTED
ON NASDAQ VILNIUS
In accordance with the Description of the Guidelines for Ensuring the Transparency of the Activities of State-Owned Enterprises,
approved by the Resolution of the Government of the Republic of Lithuania No 1052 of 14 July 2010, and the Transparency and
Communication Policy of the EPSO-G Group of Companies, EPSO-G discloses in this report its compliance with the provisions of
the Corporate Governance Code for the Listed Companies approved by Nasdaq Vilnius. If there is a failure to comply with this
Code or any of its provisions, it shall be stated which provisions are not complied with and for what reasons.
The implementation of the recommendations of the Corporate Governance Code for the Companies Listed on NASDAQ OMX
Vilnius by EPSO-G is mainly ensured through the disclosures in the Annual Report and the extensive disclosures on EPSO-G’s
website, in order to provide information in a format that is accessible and understandable to stakeholders.
1 Free-form summary of the Corporate Governance Report:
EPSO-G, a state-owned company, is the parent company of the EPSO-G Group of companies. The rights and obligations of EPSO-
G holding shareholder are implemented by the Ministry of Energy of the Republic of Lithuania. The Company’s management
structure and governance model is determined by the Company’s Articles of Association, the Corporate Governance Guidelines
of the EPSO-G Group of Companies approved on 24 April 2018 (new version approved on 29 December 2022) by the Ministry of
Energy of the Republic of Lithuania, the sole shareholder, and the Corporate Governance Policy of the EPSO-G Group of
companies. All of the above documents are publicly available on the Company’s website.
Fig. 1 Principal scheme of the implementation of corporate governance of EPSO-G.
Corporate governance structure:
• General Meeting of Shareholders;
• the Board (5 members, 3 of whom are independent, the other 2 nominated by the Ministry of Energy as the sole shareholder);
• Committees operating on the Group level:
o Remuneration and Nomination Committee (majority of members are independent);
o Audit Committee (majority of members are independent).
• The Manager.
The Group has a centralised internal audit function. To ensure the independence of internal audit, the appointment and dismissal
of the head of internal audit is subject to the appointment and dismissal of the Board of the management company, which is
mainly composed of independent members. Internal Audit is also accountable to the EPSO-G Audit Committee, which is also
mainly composed of independent members. The Internal Audit recommendations are analysed by the Company’s Board, which
also approves the plan of measures for the implementation of audit recommendations.
Function performance
according to the provisions of
the respective committees
and bodies
Implementation of
shareholder rights
Group of companies
Other shareholders
THE REPUBLIC OF
LITHUANIA
(through ME)
PRINCIPLES AND
DOCUMENTS OF
THE CORPORATIVE
GOVERNANCE
EPSO-G
Compliance in
activities undertaken
Establishment of
principles and
document approval
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The EPSO-G Group’s Risk Management Policy is the basis for the implementation of a unified Group Risk Management System in
accordance with the internationally applicable COSO ERM standards, which define the principles and responsibilities for
identifying, assessing and managing risks. Coordination of risk management is carried out at Group level.
The EPSO-G Group has adopted operational policies to ensure good governance practices. They are designed to introduce a
consistent and effective management system of the organisation helping employees successfully implement important strategic
projects and create value to people and businesses of the country in a transparent and effective manner. To ensure the
effectiveness of the operational policies, the Company prepares an annual progress report on the implementation of the Group's
operational policies for the EPSO-G Board. Progress reports on the implementation of the operational policies of individual
companies within the Group are also presented to the Board of the respective company.
In order to meet the objectives set out in the Shareholder’s Letter of Expectations, the holding company EPSO-G has established
guiding principles and, where appropriate, specific rules in the following areas of activity across the Group:
EPSO-G draws on good governance practices set out in the Good Governance Recommendations published by the Organisation
for Economic Co-operation and Development (OECD), the United Nations and Nasdaq Vilnius Recommendations, and other
internationally recognised standards and good governance recommendations, with the overarching aim of ensuring that state-
owned companies are governed in a transparent and effective manner.
GOVERNANCE AND
CONTROL
ASSETS
EMPLOYEES
SUSTAINABILITY AND
TRANSPARENCY
Corporate governance
Planning and
monitoring
Compliance
Risk management
Internal audit
Project management
Research and
innovations
Selection
Equal opportunities
Remuneration,
Performance Appraisal
and Development
Ethics
Occupational Safety
Sustainability
Environmental
Anti-corruption
activities
Transparency and
communication
Purchases
Management of
interests
Financial support
Accounting
Dividends
Treasury
Technological assets
Transport
IT
Information security
Data Protection
Sale of shares
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2 Structured table
PRINCIPLES AND GUIDELINES
YES/NO/NOT
APPLICABLE
COMMENTARY
Principle 1: General Meeting of Shareholders, fair treatment of shareholders and shareholders' rights
The corporate governance system should ensure fair treatment of all shareholders. The corporate governance system should
protect shareholders’ rights.
All shareholders should have equal access to the information
and/or documents provided for by law and should be able to
participate in decisions that are important for the company.
YES
The company has a sole shareholder.
It is recommended that a company’s capital should consist only of
shares that give their holders equal voting, ownership, dividend
and other rights.
YES
All the Company’s shares are ordinary
registered shares with a nominal value
of EUR 0.29 per share.
It is recommended that investors should be given the opportunity
to familiarise themselves with the rights attached to new or
existing shares in advance, i.e. before purchasing them.
NOT
APPLICABLE
The Company has a single shareholder
and is not listed.
Exceptional transactions of major importance, such as the
disposal of all or almost all of the company's assets, which would
effectively amount to a disposal of the company, should be
subject to the approval of the General Meeting of Shareholders.
YES
Article 28 of the Company’s Articles of
Association specifies the cases in
which the sole shareholder’s approval
is required, which are determined
taking into account that the Company's
main assets are the shares of its
subsidiaries.
The procedures for organising and participating in the General
Meeting of Shareholders should give shareholders equal
opportunities to participate in the General Meeting of
Shareholders and should not prejudice the rights and interests of
shareholders. The choice of the place, date and time of the
General Meeting should not preclude the active participation of
shareholders in the General Meeting. In the notice of the General
Meeting, the company should indicate the latest date on which
the proposed draft resolutions can be submitted.
NOT
APPLICABLE
The Company has a single shareholder
and is not listed.
In order to ensure the right of shareholders living abroad to
access information, it is recommended that, where possible, the
documents prepared for the General Meeting of Shareholders be
made public in advance not only in Lithuanian, but also in English
and/or in other foreign languages. It is also recommended that
the minutes of the General Meeting of Shareholders, after
signing, and/or the decisions adopted be made public not only in
Lithuanian but also in English and/or other foreign languages. It is
recommended that this information be published on the
company's website. Not all documents may be made publicly
available if their public disclosure would be prejudicial to the
company or would disclose the company’s business secrets.
NOT
APPLICABLE
The Company has a single shareholder
and is not listed.
Shareholders entitled to vote should be able to vote at the
meeting of shareholders, either present or absent in person.
Shareholders should not be prevented from voting in advance in
writing by completing a single ballot paper.
YES
A shareholder may vote in writing.
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In order to increase shareholders' ability to participate in General
Meetings of Shareholders, it is recommended that companies
should make greater use of modern technology to enable
shareholders to participate and vote in General Meetings of
Shareholders by electronic means. In such cases, the security of
the information transmitted must be guaranteed and the identity
of the person who participated and voted must be identifiable.
NOT
APPLICABLE
The Company has a single shareholder
and is not listed.
It is recommended to disclose in the notice of the draft decisions
of the convened General Meeting of the Shareholder the new
nominations of the members of the collegial body, the
remuneration proposed for them, the proposed appointment of
the audit company, if these issues are included in the agenda of
the General Meeting of Shareholders. When proposing to elect a
new member of the collegial body, it is recommended that the
member's educational background, work experience and other
management positions held (or proposed to be held) be
disclosed.
NOT
APPLICABLE
The Company has a single shareholder
and is not listed.
Members of the Company’s collegial management body, heads of
the administration
2
or other competent persons related to the
Company who can provide information related to the agenda of
the general meeting of shareholders should take part in the
general meeting of shareholders. Proposed candidates to
member of the collegial body should also participate in the
general meeting of shareholders in case the election of new
members is included into the agenda of the general meeting of
shareholders.
NOT
APPLICABLE
The Company has a single shareholder
and is not listed.
Principle 2: Supervisory Council
1 Functions and responsibilities of the Supervisory Council
The Supervisory Council should ensure that the interests of the company and its shareholders are represented, that it is
accountable to the shareholders and that it exercises objective and impartial oversight of the company's activities and its
management bodies, and that it makes regular recommendations to the management bodies. The Supervisory Council should
ensure the integrity and transparency of the company's financial accounting and control system.
1) Members of the Supervisory Council should act honestly,
diligently and responsibly in the best interests of the
company and its shareholders and represent their
interests, taking into account the interests of employees
and the public good.
NOT
APPLICABLE
The Company does not have a
Supervisory Council.
2) Where the Supervisory Council’s decisions may affect
the interests of the company’s shareholders differently,
the Supervisory Council should treat all shareholders
impartially. It should ensure that shareholders are
adequately informed about the company’s strategy, risk
management and control, and the management of
conflicts of interest.
NOT
APPLICABLE
The Company does not have a
Supervisory Council.
3) The Supervisory Council should be impartial in making
decisions that have a bearing on the company’s
operations and strategy. The work and decisions of the
members of the Supervisory Council should not be
influenced by those who elected them.
NOT
APPLICABLE
The Company does not have a
Supervisory Council.
4) Members of the Supervisory Council should make clear
their objection if they consider that a decision of the
NOT
APPLICABLE
The Company does not have a
Supervisory Council.
2
For the purposes of this Code, heads of the administration are the employees of the company who hold top level management
positions.
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Supervisory Council could be detrimental to the
company. Independent members of the Supervisory
Council3 should: (a) remain independent in their analysis
and decision-making; (b) neither seek nor accept any
undue preference that may cast doubt on the
independence of the members of the Supervisory Board.
5) The Supervisory Council should oversee that the
company’s tax planning strategies are designed and
implemented in accordance with the law, to avoid
flawed practices that are not in the long-term interests
of the company and its shareholders, which may lead to
reputational, legal or other risks.
NOT
APPLICABLE
The Company does not have a
Supervisory Council.
6) The company should ensure that the Supervisory
Council is provided with sufficient resources (including
financial resources) to carry out its duties, including
access to all relevant information and the right to seek
independent professional advice from external legal,
accounting or other professionals on matters within the
competence of the Supervisory Council and its
committees.
NOT
APPLICABLE
The Company does not have a
Supervisory Council.
2 Establishment of the Supervisory Council
The procedure for the establishment of the Supervisory Council should ensure that conflicts of interest are properly managed
and that the company is governed efficiently and fairly.
1) The members of the Supervisory Council elected by the
General Meeting of Shareholders should collectively
ensure a diversity of qualifications, professional
experience and competences, as well as a gender
balance. In order to maintain an appropriate balance
between the qualifications of the members of the
Supervisory Council, it should be ensured that the
members of the Supervisory Council as a whole have a
broad range of knowledge, views and experience to
perform their tasks properly.
NOT
APPLICABLE
The Company does not have a
Supervisory Council.
2) Members of the Supervisory Council should be
appointed for a fixed term, with the possibility of
individual re-election for a new term, in order to ensure
the necessary growth in professional experience.
NOT
APPLICABLE
The Company does not have a
Supervisory Council.
3) The Chair of the Supervisory Council should be a person
whose current or former position would not be an
obstacle to the impartial exercise of his/her functions. A
former Manager or the Board member of the company
should not immediately be appointed as a Chair of the
Supervisory Council. Where a company chooses not to
comply with these recommendations, information should
be provided on the measures taken to ensure
operational impartiality.
NOT
APPLICABLE
The Company does not have a
Supervisory Council.
3
For the purposes of this Code, the criteria of independence of members of the supervisory council are interpreted as the criteria
of unrelated parties defined in Article 31(7) and (8) of the Law on Companies of the Republic of Lithuania.
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4) Each member should devote sufficient time and
attention to his/her duties as a member of the
Supervisory Council. Each member of the Supervisory
Council should undertake to limit his/her other
professional commitments (in particular management
positions in other companies) in such a way that they do
not interfere with the proper performance of his/her
duties as a member of the Supervisory Council. If a
member of the Supervisory Council attended less than
half of the Supervisory Council meetings during the
company’s financial year, the company’s shareholders
should be informed.
NOT
APPLICABLE
The Company does not have a
Supervisory Council.
5) Where the appointment of a member of the Supervisory
Council is proposed, it should be disclosed which
members of the Supervisory Board are considered
independent. The supervisory board may decide that,
despite the fact that a particular member meets all the
criteria of independence, he/she cannot be considered
independent due to special personal or company-related
circumstances.
NOT
APPLICABLE
The Company does not have a
Supervisory Council.
6) The amount of remuneration for members of the
Supervisory Council should be approved by the
company’s General Meeting of Shareholders for their
activities and participation in the meetings of the
Supervisory Council.
NOT
APPLICABLE
The Company does not have a
Supervisory Council.
7) The Supervisory Council should carry out an evaluation
of its own performance each year. It should include an
assessment of the structure, organisation and ability to
act as a group, as well as an assessment of the
competence and effectiveness of each member of the
Supervisory Council and an assessment of whether the
Supervisory Council has achieved its stated performance
objectives. The Supervisory Council should publish, at
least once a year, relevant information on its internal
structure and operating procedures.
NOT
APPLICABLE
The Company does not have a
Supervisory Council.
Principle 3: Board
3.1 Functions and responsibilities of the Board
The Board should ensure the implementation of the company’s strategy, as well as good corporate governance, taking into
account the interests of shareholders, employees and other stakeholders.
1) The Board should ensure the implementation of the
company’s strategy, as approved by the Supervisory
Council, if it is established. In cases where the
Supervisory Council is not established, the Board is also
responsible for approving the company’s strategy.
YES
Article 38 of the Company’s Articles of
Association states that the Board of
Directors of the Company shall
approve the Group’s business strategy,
which shall, inter alia, articulate the
overall mission and vision of the Group.
The Board also regularly considers
reports on the implementation of the
strategy (Article 39 of the Articles of
Association).
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2) The Board, as the collegial management body of the
company, performs the functions assigned to it by the
Law and the company’s Articles of Association and, in
cases where the company does not have a Supervisory
Board, also performs the supervisory functions provided
for in the Law. In carrying out its functions, the Board
should take into account the needs of the company,
shareholders, employees and other stakeholders, as
appropriate, in order to build a sustainable business.
YES
Paragraph 42 of the Company’s
Articles of Association states that the
Board of the Company has supervisory
functions.
3) The Board should ensure compliance with the laws and
internal company policies applicable to the company or
group of companies to which it belongs. It should also put
in place appropriate risk management and control
measures to ensure regular and direct accountability of
executives.
YES
Article 38 of the Company’s Articles of
Association provides that the Board of
the Company shall consider and
approve the Group-wide corporate
documents: policies, guidelines for the
most important activities of the Group,
as well as other Group-wide corporate
documents which are directly
applicable in full in the companies of
the Group, unless there are justified
decisions of the respective governing
bodies of the respective companies of
the Group on the application of
exceptions to the application of these
corporate documents. When approving
these documents, the Board may also
lay down measures for their
implementation.
The Board also, by individual decisions,
instructs the Manager to report
regularly on the Board's performance
indicators (e.g. the Company’s strategy,
business plan, budget, etc.).
4) Moreover, the management board should ensure that the
measures included into the OECD Good Practice
Guidance
4
on Internal Controls, Ethics and Compliance
are applied at the company in order to ensure adherence
to the applicable laws, rules and standards.
YES
The Company has various documents
in place to ensure the highest level of
internal controls, ethics and compliance
management measures, such as:
1. Internal Audit accountable to the
Company’s Board, which is made
up of external members (3
independent members);
2. the Audit Committee is mainly
composed of independent
members to whom Internal Audit is
also accountable;
4
Link to the OECD Good Practice Guidance on Internal Controls, Ethics and Compliance: https://www.oecd.org/daf/anti-
bribery/44884389.pdf
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3. The Company has the Code of
Ethics, the EPSO-G Group’s Anti-
Corruption Policy, the EPSO-G
Group’s Support Policy, the EPOS-
G Group’s Policy on the
Management of Interests, the
EPSO-G Group’s Policy on the
Management of the Risks, the
EPSO-G Group’s Policy on the
Transparency and Communication,
etc.
5) In appointing the company’s manager, the Board should
take into account the appropriate balance of
qualifications, experience and competence of the
candidate.
YES
The Company’s Articles of Association
provide that the Manager of the
Company is appointed by the Board on
the recommendation of the
Remuneration and Nomination
Committee.
Article 78 of the Company’s Articles of
Association provides that, when
assessing the suitability of a candidate
for the position of the Manager, the
Board shall assess the candidate’s
compliance with the requirements set
out in the Articles of Association and
applicable legislation and may, for that
purpose, require the candidate to
submit documents substantiating such
compliance and/or request the
competent public authorities to provide
the necessary information about the
candidate.
Establishment of the Board
1) The members of the Board elected by the Supervisory
Board or by the General Meeting of Shareholders if no
Supervisory Council is established should collectively
ensure a diversity of qualifications, professional
experience and competences, and strive for gender
balance. In order to maintain an appropriate balance
between the qualifications of the members of the Board,
it should be ensured that the members of the Board as a
whole have a wide range of knowledge, views and
experience to perform their tasks adequately.
YES
The selection of the members of the
Board of the Company is carried out in
accordance with the procedure
established by the Government of the
Republic of Lithuania. When electing
the members of the Board, it shall be
ensured that the Board is composed of
at least three (3) independent
members, their independence being
determined in accordance with the
criteria laid down by the mandatory
legislation, and that the members of
the Board have competences in
accordance with the Board’s areas of
responsibility and functions, and,
whenever possible, it is aimed to avoid
appointing any employees of the
Company to the Board.
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The Board members carry out their
performance assessment on annual
basis. The Remuneration and
Nomination Committee also assesses
the performance of the Board annually
and makes generalised
recommendations for improving the
performance of the Group’s collegial
bodies.
2) The names of the candidates for election to the Board,
their education, qualifications, professional experience,
positions held, other relevant professional commitments
and potential conflicts of interest should be disclosed,
without prejudice to the requirements of the legislation
governing the processing of personal data, at the
meeting of the Supervisory Council at which the Board
or its individual members will be elected. If the
Supervisory Council is not established, the information
set out in this point should be submitted to the General
Meeting of Shareholders. The Board should compile the
data on its members referred to in this point each year
and disclose it in the company’s annual report.
YES
Article 32 of the Company’s Articles of
Association provides that the Meeting,
in assessing the suitability of a
candidate for election to the Board,
shall assess his/her compliance with
the requirements laid down in the
Articles of Association and the
applicable legislation. Pursuant to
Article 33 of the Company’s Articles of
Association, each candidate for election
to the Board is required to submit a
declaration of interests to the General
Meeting of Shareholders. Information
on the appointed members of the
Board is published and updated on the
Company’s website.
The Annual Report does not repeat this
information in addition, but it does
include information on the Chair of the
Board, the Manager and the Chief
Financial Officer and the Head of
Internal Audit.
3) All new members of the Board should be briefed on
their duties, the company’s structure and its activities.
YES
Board members are briefed on the
Company’s structure and activities. The
key corporate documents of the
Company are shared.
4) Members of the Board should be appointed for a fixed
term, with the possibility of individual re-election, in
order to ensure the necessary growth in professional
experience and sufficiently frequent reconfirmation of
their status.
YES
The members of the Board are
appointed for a four-year term of office.
A member of the Board may not serve
as a member of the Board for more
than two (2) consecutive full Board
terms and in any case may not serve as
a member of the Board for more than
ten (10) consecutive years.
5) The Chair of the Board should be a person whose
current or former position would not be an obstacle to
the impartial conduct of business. A former manager of
the company should not immediately be appointed as a
Chair of the Board. Where a company chooses not to
comply with these recommendations, information should
be provided on the measures taken to ensure
operational impartiality.
YES
The Company’s Articles of Association
set out the criteria for a person to be
ineligible for election as a member of
the Board. According to Article 51 of
the Company’s Articles of Association,
the Chair of the Board should be an
independent member of the Board.
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6) Each member should devote sufficient time and
attention to his or her duties as a Board member. If a
member of the Board has attended less than half of the
meetings of the Board during the company’s financial
year, the company’s Supervisory Council should be
informed, or, if there is no Supervisory Council, the
General Meeting of Shareholders.
YES
The Company’s minutes record the
participation and voting of Board
members in decision-making. The
attendance of the Board at meetings
shall be indicated in the annual report.
Each year, the members of the
Company’s Board carry out a
performance evaluation, the results of
which are presented to the shareholder
and the Remuneration and Nomination
Committee.
7) If, in the cases provided for in the Law, when the Board
is elected in the absence of a Supervisory Council, some
of the members of the Board will be independent
5
, it
should be published which members of the Board are
considered independent. The Board may decide that a
particular member of the Board, although fulfilling all
the criteria for independence set out in the Law, may not
be considered independent because of special personal
or company-related circumstances.
YES
Both the Company’s website and the
Annual Report provide information on
the members of the Company’s Board,
with specific reference to independent
members.
8) The amount of remuneration to be paid to members of
the Board for their activities and participation in Board
meetings should be approved by the company’s General
Meeting of Shareholders.
YES
Article 28 of the Company’s Articles of
Association provide that the General
Meeting of Shareholders shall decide
on the remuneration guidelines
applicable to remuneration for service
on the Board of the Company and of
the Group of Companies.
9) Board members should act honestly, diligently and
responsibly in the best interests of the company and its
shareholders and represent their interests, taking into
account other interest holders. They should not pursue
personal interests in their decision-making, should be
subject to non-competition agreements, and should not,
to the detriment of the company's interests, take
advantage of business information and opportunities
that are relevant to the company's activities.
YES
In order to monitor the absence of
conflicts of interest among the
members of the Company’s Board,
each year the members of the Board
update their declarations of interest.
The Company has the EPSO-G Group’s
Conflict of Interest Management Policy
in place.
The Company’s Articles of Association
(Art. 34) also provide that members of
the Board may engage in any other
employment or hold any other position
compatible with their activities on the
Board, including, but not limited to,
holding management positions in other
legal entities, employment in the state
or statutory service, positions in the
Company and other legal entities
(subject to the limitations set out in the
Articles of Association) only after prior
notification to the Board.
Members of the Boards have signed
commitments to protect the
information confidential.
5
For the purposes of this Code, the criteria of independence of members of the board are interpreted as the criteria of unrelated
parties defined in Article 33(7) of the Law on Companies of the Republic of Lithuania.
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There are no non-compete agreements
with the members of the Board, no
need for such agreements has been
identified.
10) Every year the management board should carry out an
assessment of its activities. It should include an
assessment of the structure, organisation and ability to
act as a group, as well as an assessment of the
competence and effectiveness of each member of the
Board and an assessment of whether the Board has
achieved its stated performance objectives. The
management board should, at least once a year, make
public respective information about its internal structure
and working procedures in observance of the legal acts
regulating the processing of personal data.
YES
The Board carries out an annual
evaluation of its own performance and
draws up a performance improvement
plan. The summary results of the
Board’s performance evaluation are
presented in the Company’s Annual
Report.
Principle 4: Working procedures of the Company’s Supervisory Council and the Board
The company's procedures for the work of the Supervisory Council, if established, and the Board should ensure the effective
work and decision-making of these bodies and promote active cooperation between the company’s bodies.
1) The Board and the Supervisory Council, if established,
should work closely together for the benefit of both the
company and its shareholders. Good corporate
governance requires an open discussion between the
Board and the Supervisory Council. The Board should
regularly and, if necessary, promptly inform the
Supervisory Council of all matters of importance to the
company in relation to planning, business development,
risk management and control, and compliance with the
company’s obligations. The Board should inform the
Supervisory Council of actual deviations in business
development from the plans and objectives previously
formulated, stating the reasons for this.
NOT
APPLICABLE
The Company does not have a
Supervisory Council.
2) It is recommended that meetings of the company’s
collegial bodies be held at appropriate intervals in
accordance with a pre-approved schedule. It is up to each
company to decide on the frequency of meetings of the
collegial bodies, but it is recommended that they should
be held at such a frequency as to ensure the
uninterrupted discussion of the company’s key
governance issues. Meetings of the company’s collegiate
bodies should be convened at least once a quarter of the
year.
YES
The Company’s Articles of Association
provide that the Board shall take its
decisions at meetings of the Board,
which shall be held as often as
necessary to enable the Board to
perform its functions properly and to
take the decisions falling within its
competence.
At the beginning of each year, the
Board of Directors of the Company
approves the schedule of ordinary
meetings for the current year, as well
as the business plan (preliminary
questions for the relevant Board
meeting).
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3) The members of the collegial body should be informed in
advance of the convening of the meeting in order to allow
sufficient time for adequate preparation of the issues to
be discussed at the meeting and for the discussion
leading to the adoption of decisions. The members of the
collegial body should be provided with all relevant
material relating to the agenda of the meeting together
with the notice of the meeting. The agenda should not be
amended or supplemented during a meeting unless all
members of the collegiate body are present and agree to
such amendment or supplementation or unless there is
an urgent need to deal with important matters of the
company.
YES
According to the Board’s Rules of
Procedure, the material must be
submitted to the Board five working
days before the regular meeting.
a. In order to coordinate the work of the company’s collegial
bodies and to ensure an efficient decision-making
process, the chairpersons of the company’s collegial
supervisory and management bodies should coordinate
the dates and agendas of the meetings to be convened
and should cooperate closely on other issues related to
the company’s management. Meetings of the company’s
Supervisory Council should be open to the members of
the company’s Board, in particular where the meeting
deals with matters relating to the removal of members of
the Board, their liability and the determination of
remuneration.
NOT
APPLICABLE
The Company does not have a
Supervisory Council.
Principle 5: Nomination, Remuneration and Audit Committees
Purpose and composition of committees
The committees established within the company should enhance the effectiveness of the Supervisory Council and, if the
Supervisory Council is not established, of the Board, which performs supervisory functions, by ensuring that decisions are
taken after due deliberation and by helping to organise the work in such a way as to ensure that decisions are not affected by
material conflicts of interest.
The Committees should act independently and in a principled manner and make recommendations related to the decision of
the collegial body, but the final decision is taken by the collegial body itself.
1) Depending on the specific circumstances of the company
and the governance structure chosen, the company’s
Supervisory Council and, if the Supervisory Council not
established, the Board, which performs the supervisory
functions, form committees. It is recommended that the
collegial body form Nomination, Remuneration and Audit
committees
6
.
YES
The Company has the Remuneration
and Nomination Committee formed by
the Board of EPSO-G acting in
accordance with the regulations
approved by the body that forms it; and
the Audit Committee operating at the
Group level formed by the sole
shareholder EPSO-G and acting in
accordance with the regulations
approved by the body that forms it.
Given the close links between
remuneration and nomination issues
and the need for experts with the same
qualifications, it has been decided to
form a single Remuneration and
Nomination Committee.
2) Companies may decide to have fewer than three
committees. In this case, companies should provide an
explanation as to why they have chosen the alternative
approach and how the chosen approach meets the
objectives set by the three separate Committees.
YES
6
The legal acts may provide for the obligation to form a respective committee. For example, the Law on the Audit of Financial
Statements of the Republic of Lithuania provides that public-interest entities (including but not limited to public limited liability
companies whose securities are traded on a regulated market of the Republic of Lithuania and/or of any other Member State) are
under the obligation to set up an audit committee (the legal acts provide for the exemptions where the functions of the audit
committee may be carried out by the collegial body performing the supervisory functions).
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3) The functions assigned to the committees formed in
companies may be performed by the collegial body itself
in the cases provided for by law. In such a case, the
provisions of this Code relating to committees (in
particular as regards their role, functioning and
transparency) should, where appropriate, apply to the
collegiate body as a whole.
NOT
APPLICABLE
Please see par. 5.1.
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
Sections 7.7 to 7.9 of the Company’s
Articles of Association govern the
composition and competences of
committees within the Group. The
aforementioned statutes state that the
Remuneration and Nomination and
Audit Committees shall consist of at
least three members.
It is ensured that from among three
members there is at least one
independent member in the
Remuneration and Nomination
Committee, and more than half of the
members in the Audit Committee. The
Chairs of the Remuneration and
Nomination and Audit Committees are
independent members of the
Committees, none of them serving as
Chairman of the Board.
Not all members of the Remuneration
and Nomination Committee and the
Audit Committee are appointed by the
Board of EPSO-G. One member to each
of the committees is appointed on the
basis of competence when performing
the external selection of an
independent member of the committee.
5) The authority of each committee formed should be
determined by the collegial body itself. Committees
should perform their duties according to the authority
delegated to them and regularly report to the collegial
body on their activities and performance on a regular
basis. The Rules of Procedure of each committee, defining
its role and specifying its rights and duties, should be
published at least once a year (as part of the information
that the company publishes annually about its
governance structure and practices). Companies should
also publish each year in their annual report, without
prejudice to the requirements of the legislation on the
processing of personal data, the composition, number of
meetings and attendance of members of the existing
committees during the previous year, as well as the main
lines of their activities and their performance.
YES/NO
The committees are mandated by
EPSO-G’s Articles of Association and
by a decision of the committee-forming
body: the Regulations of the
Remuneration and Nomination
Committee are approved by a decision
of EPSO-G’s Board, and the
Regulations of the Audit Committee
are approved by a decision of EPSO-
G’s sole shareholder, as it is permitted
by the Requirements for Members of
the Audit Committee approved by the
Bank of Lithuania.
The Committees’ regulations are
published on EPSO-G’s website. The
composition, activities and other
information of the Committees is
disclosed in the Group’s annual report.
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6) In order to ensure the independence and objectivity of
committees, members of the collegial body who are not
members of the committee should normally be entitled to
attend committee meetings only at the invitation of the
committee. The Committee may invite or require the
attendance of certain employees or experts of the
Company. The Chair of each committee should be able to
communicate directly with shareholders. The cases in
which this should be done should be specified in the rules
governing the operation of the Committee.
YES
The Regulations of the Committees
provide for the right of the members of
the Committees, at their discretion, to
invite members of the organs of the
companies of the EPSO-G Group of
companies, employees, proxies,
candidates for certain positions, or
other persons to attend their meetings
and to obtain from them, within the
limits of their competence, the
necessary explanations, and for that
purpose, to request the necessary
actions to carry out the Committee’s
functions.
Nomination committee.
The main functions of the Nomination Committee should be:
(1) to select candidates for vacancies in the Supervisory,
Governing Body and Executive Management positions and to
recommend them to the collegial body for consideration. The
Nomination Committee should assess the balance of skills,
knowledge and experience in the governing body, develop a
description of the functions and skills required for the specific
position and assess the time required to complete the
assignment;
(2) regularly assess the structure, size, composition, skills,
knowledge and performance of the supervisory and management
bodies, and make recommendations to the collegiate body on
how to bring about the necessary changes;
(3) give due attention to succession planning.
YES
The Remuneration and Nomination
Committee of EPSO-G acts as an
advisory body to the Board of the
Company on the Committee’s areas of
activity, operating on a Group-wide
basis, with the main functions of:
1.
Assists in carrying out the
selections of candidates to the
members of the bodies in all
companies of the Group;
2.
Provides the companies of the
Group with recommendations
regarding the nomination of
the members of the
management bodies, entry
into contracts with them and
setting remuneration;
3.
– makes recommendations on
the Group’s corporate
governance documents
relating to the selection,
appointment and
determination of
independence criteria for the
governing bodies, senior
management;
4.
makes recommendations on
the system for succession of
the Group’s managers and
critical positions;
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5.
makes recommendations on
the structure, amount of
remuneration of managers of
the Group companies, on key
performance assessment
criteria and the remuneration
review in accordance with the
Group’s remuneration,
performance assessment and
training policy;
The Company’s Manager should be consulted on matters relating
to members of the collegial body who have an employment
relationship with the company and to the Senior Management,
with the right to make proposals to the Nomination Committee.
YES
The Regulations establish that the
right of initiative to convene the
Remuneration and Nomination
Committee is exercised by the boards
or general managers of the group of
companies that also propose the
agenda of the meeting by submitting
issue-related materials and draft
resolutions.
The provision is not practically relevant
at the present time as the Board does
not include any employees of the
Company.
Remuneration Committee.
The main functions of the Remuneration Committee should be:
(1) submit proposals to the collegial body for consideration on
the remuneration policy applicable to members of the supervisory
and management bodies and the executives. Such policies should
cover all forms of remuneration, including fixed remuneration,
performance-related remuneration, financial incentive schemes,
pension schemes, severance payments, as well as conditions that
would allow the company to recover amounts or suspend
payments, indicating the circumstances that would make it
appropriate;
(2) submit to the collegial body proposals regarding individual
remuneration for members of the collegial bodies and the heads
of the administration in order to ensure that they would be
consistent with the company's remuneration policy and the
evaluation of the performance of the persons concerned;
(3) review, on a regular basis, the remuneration policy and its
implementation.
YES
Please see par. 5.1.1.
Audit Committee.
YES
(1) The main functions of the Audit Committee are defined in the
legislation governing the Audit Committee
7
.
7
Issues related to the activities of audit committees are regulated by Regulation No 537/2014 of the European Parliament and
the Council of 16 April 2014 on specific requirements regarding statutory audit of public-interest entities, the Law on the Audit
of Financial Statements of the Republic of Lithuania, and the Rules Regulating the Activities of Audit Committees approved by
the Bank of Lithuania.
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(2) All members of the Committee should be provided with
detailed information relating to the company’s specific
accounting, financial and operational characteristics. The Audit
Committee should be informed by the company’s executives of
the accounting treatment of significant and unusual transactions,
which may be accounted for in different ways.
The Audit Committee of EPSO-G acts
as an advisory body to the Board of the
Company on matters relating to the
Committee’s areas of activity, operating
on a Group-wide basis, with the main
functions of:
1 Supervising the preparation of the
Group’s financial statements and the
audit process;
2 Ensuring the independence and
objectivity of the Group’s auditors and
audit companies;
3. Providing an opinion on related party
transactions in the cases provided for
in the Articles of Association of listed
subsidiaries;
4. Making recommendations regarding
the selection, appointment, re-
appointment and removal of an
external auditory and the terms and
conditions of a contract with the
external audit company;
5 Monitoring and making
recommendations on the effectiveness
of the internal control, risk and
compliance management, and the
internal audit function, as well as
business processes.
(3) The Audit Committee should decide whether (and if so, when)
the Chair of the Board, the Chief Executive Officer, the Chief
Financial Officer (or senior finance and accounting staff), the
internal auditor and the external auditor should attend its
meetings. The Committee should be able to meet the persons
concerned, if necessary, without the presence of members of the
management bodies.
YES
The Regulations of the Audit
Committee stipulate that the members
of the Committee, at their own
discretion, may invite to their meetings
the members of the bodies of the
companies of the group, their
employees, representatives, candidates
for certain positions or other persons,
and obtain from them the necessary
explanations within their competence,
as well as require for that purpose that
necessary actions would be taken for
the performance of the functions of the
Committee.
(4) The Audit Committee should be informed of the work
programme of the internal auditors and receive internal audit
reports or a periodic summary. The Audit Committee should also
be informed of the work programme of the external auditors and
should receive a report from the audit firm describing any
relationship between the independent audit company and the
company and its group.
YES
The Audit Committee is regularly, at
least quarterly, informed about the
internal audit reports, makes
recommendations for the approval of
the internal audit plan and monitor its
implementation.
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The Audit Committee organises
meetings with the external auditors to
discuss the auditors’ work program and
uncertainties arising during the audit,
and after the performance of the
external audit, their conclusions and
recommendations are discussed with
the external auditors. Each year, before
the start of annual audits, the audit firm
submits its declaration of
independence to the Audit Committee
and to the companies.
(5) 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 Regulations of the Audit
Committee stipulate that the Audit
Committee ensures the effective
functioning of the complaints system
and the proportionate and independent
investigation of submitted complaints.
In performing this function, the Chair of
the Audit Committee shall be promptly
informed of significant complaints
received, and the Audit Committee
shall receive a periodic report on all
complaints received by Group
companies, the investigations carried
out and the decisions taken on the
basis of the conclusions of the
investigations.
(6) The Audit Committee should report to the Supervisory
Council, or, if the Supervisory Council is not established, to the
Board at least once every six months, at the same time as the
approval of the annual and half-yearly reports.
YES
The Regulations of the Audit
Committee stipulate that the Audit
Committee shall submit half-yearly
and annual activity reports to the
Board.
It also submits an annual activity report
to EPSO-G’s Ordinary General Meeting
of Shareholders and to the Board.
Principle 6: Avoidance and disclosure of conflicts of interest
The corporate governance framework should encourage members of the company’s supervisory and management bodies to
avoid conflicts of interest and ensure a transparent and effective mechanism of disclosure of conflicts of interest related to
members of the supervisory and management bodies.
The corporate governance system should recognise the rights of stakeholders as established by law and promote active
cooperation between the company and stakeholders to create wealth, jobs and financial stability. In the context of this
principle, stakeholders include investors, employees, creditors, suppliers, customers, the local community and others with an
interest in the company.
A member of a company’s supervisory and management body
should avoid a situation where his or her personal interests
conflict or may conflict with the interests of the company. If such
a situation does arise, a member of the supervisory or
management body of the company should, within a reasonable
period of time, inform the other members of the same body, or
the body of the company that elected him or her, or the
shareholders of the company of the existence of such a conflict of
interests, indicating the nature of the interests and, where
possible, the value.
YES
This obligation is laid down in the
Board’s rules of procedure, in the
contract signed with the Board
member and in the Policy on the
Management of the Interests of the
Members of the Collegial Bodies,
Executives and Employees of the
EPSO-G group of companies.
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Article 33 of the Company’s Articles of
Association stipulates that any
candidate for election to the Board
must immediately inform the Board of
any new circumstances which may give
rise to a conflict of interest.
Principle 7: Company’s remuneration policy
The company's remuneration policy and the procedures for its review and disclosure should prevent potential conflicts of
interest and abuse in determining the remuneration of the members of the collegiate bodies and of the executives, and ensure
the openness and transparency of the company's remuneration policy, as well as the company’s long-term strategy.
(1) The company should approve and publish the remuneration
policy on its website, which should be regularly reviewed and be
consistent with the company’s long-term strategy.
YES
The Company applies the Guidelines
for Determining the Remuneration for
Activities in the Management Bodies of
EPSO-G and the EPSO-G Group of
Companies, which are approved by the
sole shareholder of EPSO-G and
available in a public domain.
The company applies the
Remuneration, Performance
Assessment and Development Policy
of the EPSO-G Group in full. The policy
is made available to public.
(2) The remuneration policy should cover all forms of
remuneration, including fixed remuneration, performance-related
remuneration, financial incentive schemes, pension schemes,
severance payments, as well as clauses providing for situations
where the company may recover amounts paid or suspend
payments.
YES
All possible forms of remuneration for
collegiate bodies and employees are
set out in the Guidelines for
Determining the Remuneration for
Activities in the Management Bodies of
EPSO-G and the EPSO-G Group of
Companies and in the Remuneration,
Performance Assessment and
Development Policy of the EPSO-G
Group. Both documents are made
available to public.
(3) With a view to avoid potential conflicts of interest, the
remuneration policy should provide that members of the collegial
bodies which perform the supervisory functions should not
receive remuneration based on the company’s performance.
YES
The Company applies the Guidelines
for Determining the Remuneration for
Activities in the Management Bodies of
EPSO-G and the EPSO-G Group of
Companies, which regulate the fixed
monthly remuneration for members of
collegial bodies. The members of the
Board are not remunerated on the
basis of the Company’s performance.
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(4) The remuneration policy should provide sufficient detail on the
policy regarding termination payments. Termination payments
should not exceed a fixed amount or a fixed number of annual
salaries and should generally not exceed a fraction of two years'
fixed remuneration or its equivalent. Termination payments
should not be paid if the contract is terminated because of poor
performance.
YES/NO
The Remuneration, Performance
Assessment and Development Policy
of the EPSO-G Group of companies
stipulates that there are no pre-agreed
severance payments in the group
companies (except for the companies’
managers, whose terms of
employment are determined by the
Board). The amounts of benefits
related to the termination of
employment relationships are
determined by taking into account the
mandatory minimum amounts of such
benefits established by the norms of
labour law, except for exceptional
cases when there are objective reasons
for the agreement on the other
benefits. The relevant Board of the
Group company shall be informed of
the disbursement of such (higher)
benefits and the grounds for their
payment at its forthcoming meeting.
(5) If the company has a financial incentive scheme, the
remuneration policy should contain sufficient details on the
retention of shares after vesting. In the case of a share-based
award, the shares should not vest for at least three years after
the award. After vesting, members of the collegiate bodies and
executives should retain a certain number of shares until the end
of their term of office, depending on the need to cover any costs
associated with the acquisition of shares.
NOT
APPLICABLE
The Company does not have a financial
incentive scheme.
(6) The company should publish on the company's website
information on the implementation of the remuneration policy,
which should focus on the remuneration policy of the collegial
bodies and the management for the next and, where appropriate,
the following financial year. It should also provide an overview of
how the remuneration policy was implemented in the previous
financial year. This type of information should not contain
information of commercial value. Particular attention should be
paid to significant changes in the company's remuneration policy
compared to the previous financial year.
YES
Information on the implementation of
the Company’s remuneration policy
and the average remuneration levels of
individual groups of employees are
disclosed in the Company’s Annual
Report, which is made available on the
Company’s website.
Information on employee remuneration
is made available to public on a
quarterly basis on the Company’s
website.
(7) It is recommended that the remuneration policy, or any
material change to the remuneration policy, should be included
on the agenda of the General Meeting of Shareholders. Schemes
where members of the collegial body and employees are
remunerated in shares or share options should be approved by
the General Meeting of Shareholders.
YES
The remuneration of the members of
the Company’s Board shall be
determined by the General Meeting of
Shareholders of the Company. The
remuneration is determined in
accordance with the Guidelines for
determining the remuneration for
activities in the corporate bodies of
EPSO-G and the EPSO-G Group, which
have been approved by the sole
shareholder of EPSO-G.
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The Company does not operate any of
the schemes in question.
Principle 8: The role of interest holders in corporate governance
The corporate governance framework should recognise the rights of stakeholders entrenched in the laws or mutual
agreements and encourage active cooperation between the company and stakeholders in creating the company value, jobs
and financial sustainability. In the context of this principle, stakeholders include investors, employees, creditors, suppliers,
customers, the local community and others with an interest in the company.
(1) The corporate governance framework should ensure that the
rights and lawful interests of stakeholders are protected.
YES
The Company has adopted the
Transparency and Communication
Policy of the EPSO-G Group of
Companies, which establishes goals to
increase awareness and understanding
of stakeholders about the activities of
the EPSO-G Group of companies and
individual group companies; to ensure
employee engagement; to create and
maintain sustainable relationship with
stakeholders based on mutual respect.
(2) The corporate governance framework should allow
stakeholders to participate in the governance of the company in
accordance with the law. Examples of participation by
stakeholders in corporate governance include the participation of
employees or their representatives in the adoption of decisions
that are important for the company, consultations with
employees or their representatives on corporate governance and
other important matters, participation of employees in the
company’s authorised capital, involvement of creditors in
corporate governance in the cases of the company's insolvency,
etc.
YES
The Company shall consult, negotiate
and confer with the Company’s
employee representatives on the
Company’s business processes.
Stakeholders can take part in the
corporate governance to the extent
permitted by law.
(3) Where stakeholders are involved in the governance of the
company, they should be given access to relevant information.
YES
Please see par. 8.1 and 8.2.
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(4) Stakeholders should be able to report illegal or unethical
practices in confidence to the collegiate body exercising the
supervisory function.
NO
The Company’s website section
“Corruption Prevention” provides the
Helpline, an internal whistleblowing
channel, contacts. The reporting form
invites you to report violations of the
provisions of legal acts and norms of
conduct committed by the executives
and employees of EPSO-G and the
companies directly or indirectly
controlled by EPSO-G UAB (Litgrid,
Amber Grid, Baltpool, Tetas, GET
Baltic); transaction and accounting
irregularities; bribery, graft, influence
peddling, abuse of office; conflicts of
interest, nepotism and cronyism;
breaches of the requirements of
transparency, equality, non-
discrimination, proportionality and
impartiality in procurement.
Information sent to this address is sent
only to EPSO-G’s Anti-Corruption
Officer, who ensures the confidentiality
of the sender.
EPSO-G’s Group-wide Audit
Committee ensures the functioning of
the complaints system and the
handling of complaints.
Principle 9: Disclosure of information
The corporate governance framework should ensure that timely and accurate disclosures are made on all material matters
concerning the company, including its financial position, performance and corporate governance.
Without prejudice to the Company’s procedures for confidential
information and trade secrets, as well as to the requirements of
the legislation governing the processing of personal data, the
Company’s public disclosures should include, but not be limited
to:
YES
The Transparency and Communication
Policy of the EPSO-G Group of
Companies has been adopted by the
Company.
the company’s performance and financial results;
YES
-
the company's business objectives and non-financial information;
YES
-
the persons owning or controlling a shareholding in the company,
directly and/or indirectly and/or jointly with associated persons,
as well as the structure of the group of companies and the
interrelationships between them, with an indication of the
ultimate beneficial owner;
YES
-
the members of the company’s supervisory and management
bodies, which of them are considered independent, the
company’s manager, their shareholdings or votes in the company,
and their involvement in the management of other companies,
their competence and remuneration;
YES
-
reports from existing committees on their composition, number of
meetings and attendance of members during the previous year,
as well as on their main activities and results;
YES
-
„EPSO-G“ METINIS PRANEŠIMAS UŽ 2023 METUS
188
the potential key risk factors, the company’s risk management
and supervision policy;
YES
-
the company’s transactions with related parties;
YES
-
key issues relating to employees and other stakeholders (e.g.
human resources policies, employee participation in the
management of the company, incentives in the form of shares or
share options, relations with creditors, suppliers, the local
community, etc.);
YES
-
the company’s governance structure and strategy;
YES
-
initiatives and measures of social responsibility policy and anti-
corruption fight, significant current or planned investment
projects.
This list is deemed minimum and companies are encouraged not
to restrict themselves to the disclosure of information included
into this list. This principle of the Code does not relieve a
company of its obligation to disclose information as required by
law.
YES
-
When disclosing the information specified in Item 9.1.1 of
recommendation 9.1, it is recommended that the company which
is a parent company in respect of other companies should
disclose information about the consolidated results of the whole
group of companies.
YES
EPSO-G, as the parent company,
discloses information on the Group’s
financial results and the activities of
the Group companies.
(1) When disclosing the information specified in Item 9.1.4 of
recommendation 9.1, it is recommended that the information on
the professional experience and qualifications of members of the
company’s supervisory and management bodies and the manager
of the company as well as potential conflicts of interest which
could affect their decisions should be provided. It is further
recommended that the remuneration or other income of members
of the company’s supervisory and management bodies and the
manager of the company should be disclosed, as provided for in
greater detail in Principle 7.
YES
This information is disclosed in the
Company’s annual report and on the
Company’s website.
(2) 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.
NOT
APPLICABLE
The Company has a sole shareholder
and is not listed.
Principle 10: Selecting the company's audit company
The company's mechanism for selecting the audit company should ensure the independence of the audit company's report
and opinion.
(1) In order to obtain an objective opinion on the company's
financial position and financial performance, the company's
annual set of financial statements and the financial information
contained in the annual report should be audited by an
independent audit company.
YES
The independent auditor is appointed
by the General Meeting of
Shareholders.
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189
(2) It is recommended that the nomination of the audit company
be proposed to the General Meeting of Shareholders by the
company's Supervisory Board or, if the company does not have a
Supervisory Board, by the company's Board.
YES
The Group-wide Audit Committee is
actively involved in the auditor
selection process. The Audit
Committee shall make a
recommendation to the Board on the
nomination of the auditor. The final
decision is taken by the General
Meeting of Shareholders, which is
convened and submitted draft
decisions by the Board.
(3) If the audit company has received remuneration from the
company for non-audit services, the company should disclose this
publicly. This information should also be made available to the
company's Supervisory Board or, if the company does not have a
Supervisory Board, to the company's Board when considering
which audit company to propose to the General Meeting of
Shareholders.
YES
The non-audit services provided by the
audit company shall be in accordance
with the policy approved by the Audit
Committee of the EPSO-G Group on
the purchase of non-audit services
from the audit company or from any
network to which the audit company
belongs. Any remuneration received by
the audit company during the reporting
period for non-audit services provided
to Group companies is disclosed in the
annual report.
The provision of non-audit services is
supervised by the Audit Committee
operating at the Group level, which, as
mentioned in paragraph 10.2, is
actively involved in the selection
process of an auditor. Therefore, the
Audit Committee, when submitting a
recommendation to the Board on the
auditor, has all the necessary
information on the auditors.
CONSOLIDATED AND THE
COMPANY’S OF FINANCIAL
STATEMENTS
12.1. Consolidated and the Company’s Statement of Financial Position
12.2. Consolidated Statement of Comprehensive Income
12.3. Parent’s Statement of Comprehensive Income
12.4. Consolidated and the Company’s Statements of Changes in Equity
12.5. Consolidated and the Company’s Statements of Cash Flows
12.6. Notes to the Consolidated and the Company’s Financial
Statements
12
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12. CONSOLIDATED AND THE COMPANY’S OF FINANCIAL
STATEMENTS
12.1 Consolidated and the Company’s Statement of Financial Position
AS AT 31 DECEMBER 2023 (All amounts are in EUR thousands unless otherwise stated)
No- | Group | Company | |||
ASSETS | tes | As at 31 December 2023 | As at 31 December 2022 | As at 31 December 2023 | As at 31 December 2022 |
Non-current assets | |||||
Intangible assets | 6 | 77 | 57 | ||
Property, plant and equipment | 7 | 83 | 3 | ||
Right-of-use assets | 8 | 694 | 235 | ||
Investments in subsidiaries | 9 | 351,526 | 324,120 | ||
Investments in associates | 9 | 13,830 | 13,830 | ||
Deferred tax assets | 30 | 45 | 30 | ||
Long-term loans granted | 2,700 | ||||
Receivables after one year | - | - | |||
Other non-current financial assets | 10 | ||||
Total non-current assets | 366,255 | 340,975 | |||
Current assets | |||||
Inventories | 11 | - | 5 | ||
Prepayments and contract assets | 12 | 69 | 40 | ||
Trade receivables | 13 | 383 | 197 | ||
Other receivables | 14 | 46,225 | 21,059 | ||
Prepaid income tax | 30 | 0 | - | ||
Other financial assets | 15 | 0 | - | ||
Cash and cash equivalents | 16 | 120,015 | 244,310 | ||
Total current assets | 166,692 | 265,611 | |||
Assets of the disposal group classified as held for sale | - | - | |||
TOTAL ASSETS | 532,947 | 606,586 | |||
EQUITY AND LIABILITIES | |||||
Issued capital | 17 | 189,631 | 189,631 | ||
Revaluation reserve | 18 | - | - | ||
Legal reserve | 19 | 2,524 | 2,248 | ||
Other reserves | 19 | 50 | 50 | ||
Retained earnings (loss) | ( | 30,001 | 5,514 | ||
Equity attributable to shareholders of the parent company | 222,206 | 197,443 | |||
Non-controlling interest | - | - | |||
Total equity | 222,206 | 197,443 | |||
Non-current liabilities | |||||
Non-current borrowings and issued bonds | 22 | 74,849 | 74,805 | ||
Lease liabilities | 23 | 552 | 142 | ||
Congestion management revenue | 27 | - | - | ||
Provisions | 28 | - | - | ||
Other non-current payables and liabilities | 29 | - | - | ||
Total non-current liabilities | 75,401 | 74,947 | |||
Current liabilities | |||||
Current portion of non-current borrowings | 22 | - | - | ||
Current borrowings | 22 | 234,114 | 332,888 | ||
Current portion of lease liabilities | 23 | 149 | 94 | ||
Trade payables | 25 | 153 | 222 | ||
Prepayments received | 26 | - | - | ||
Current portion of congestion management funds | 27 | - | - | ||
Provisions | 28 | - | - | ||
Other current payables and liabilities | 31 | 924 | 992 | ||
Total current liabilities | 235,340 | 334,196 | |||
Liabilities of the disposal group classified as held for sale | - | - | |||
Total liabilities | 310,741 | 409,143 | |||
TOTAL EQUITY AND LIABILITIES | 532,947 | 606,586 |
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192
12.2 Consolidated Statement of Comprehensive Income
FOR THE YEAR ENDED 31 DECEMBER 2023 (All amounts are in EUR thousands unless otherwise stated)
GROUP | |||
Notes | 2023 | 2022 | |
(Restated) | |||
Revenue | 32 | ||
Other income | 32 | ||
Total revenue and other income | |||
Purchase of electricity and natural gas services | 33 | ( | ( |
Purchase of contracting services | 33 | ( | ( |
Wages and salaries and related expenses | ( | ( | |
Purchases of repair and maintenance services | ( | ( | |
Other expenses | 33 | ( | ( |
Total expenses | ( | ( | |
EBITDA | ( | ||
Dividend income | 35 | ||
Result on loss of control and revaluation of shares in associates | 10 | ||
Depreciation and amortisation | 6,7,8 | ( | ( |
Impairment of non-current assets | 7 | ( | |
Loss on write-off of non-current assets | ( | ( | |
Operating profit (loss) (EBIT) | ( | ||
Share of results of associates | 9 | ||
Total finance costs, net | 34 | ( | |
Profit (loss) before income tax | ( | ||
Income tax | |||
Current year income tax expenses | 30 | ||
Deferred tax benefit (expenses) | 30 | ( | ( |
Total income tax | |||
Net profit (loss) | ( | ||
Other comprehensive income | |||
Items that will not be reclassified to profit or loss s in subsequent | |||
periods | |||
Gain on revaluation of non-current assets | 7 | ||
Deferred tax (expenses) | 30 | ( | |
Total comprehensive income for the period | ( | ||
Net profit (loss) attributable to: | |||
Shareholders of the parent company | ( | ||
Non-controlling interest | ( | ||
( | |||
Comprehensive income attributable to: | |||
Shareholders of the parent company | ( | ||
Non-controlling interest | ( | ||
( |
The accompanying notes are an integral part of the condensed interim financial statements.
EPSO-G ANNUAL REPORT FOR 2023
193
12.3 Parent’s Statement of Comprehensive Income
FOR THE YEAR ENDED 31 DECEMBER 2023 (All amounts are in EUR thousands unless otherwise stated)
Notes
COMPANY
2023
2022
(Restated)
Revenue
32
1,357
725
Other income
32
14
-
Dividend income
13,357
14,479
Total revenue , other income and dividend
14,728
15,204
Wages and salaries and related expenses
(4,420)
(3,590)
Other expenses
33
(1,984)
(1,311)
Total expenses
(6,404)
(4,901)
EBITDA
8,324
10,303
Depreciation and amortisation
(144)
(110)
Reversal of (impairment) of investments in subsidiaries
18,406
(3,447)
Operating profit (loss) (EBIT)
26,586
6,746
Total finance costs, net
(1,507)
(1,232)
Profit (loss) before income tax
25,079
5,514
Income tax
Current year income tax expenses
-
-
Deferred tax benefit (expenses)
(250)
(9)
Total income tax
(250)
(9)
Net profit (loss)
24,829
5,505
Total comprehensive income for the period
24,829
5,505
The accompanying notes are an integral part of the condensed interim financial statements.
12.4 Consolidated and the Company’s Statements of Changes in Equity
FOR THE YEAR ENDED 31 DECEMBER 2023 (all amounts are in EUR thousand unless otherwise stated)
Notes | Issued | Revaluation | Legal | Other | Retained | Non- | |||
Group | capital | reserve | reserve | reserves | earnings | Subtotal | controlling | Total | |
| interest | |||||||||
Balance as at 31 December 2021 | |||||||||
| Comprehensive income | |||||||||
| (expenses) | |||||||||
Net profit (loss) for the year | ( | ( | ( | ( | |||||
| Total comprehensive income | ( | ( | ( | ( | |||||
| (expenses) for the period | |||||||||
| Depreciation of revaluation | 18 | ( | |||||||
reserve and amounts written off Transfers to/from reserves | ( | ||||||||
Dividends | 20 | ( | ( | ( | ( | ||||
Increase in issued capital | 17 | ( | |||||||
Balance as at 31 December 2022 | ( | ||||||||
Balance as at 31 December 2022 | ( | ||||||||
Comprehensive income | |||||||||
Profit for the period | |||||||||
| Other comprehensive income | |||||||||
| (expenses) | |||||||||
Total comprehensive income for the period | |||||||||
| Depreciation of revaluation | 18 | ( | |||||||
reserve and amounts written off Transfers from reserves | ( | ( | |||||||
Dividends | ( | ( | ( | ( | |||||
Balance as at 31 December 2023 |
Company
Notes
Issued capital
Legal reserve
Other reserves
Retained earnings
Total
Balance as at 31 December 2021
22,483
2,248
50
168,002
192,783
Profit for the period
-
-
-
5,505
5,505
Total comprehensive income for
-
-
-
5,505
5,505
the period
Dividends
-
-
-
(845)
(845)
Increase in issued capital
17
167,148
-
-
(167,148)
-
Balance as at 31 December 2022
189,631
2,248
50
5,514
197,443
Balance as at 1 January 2023
189,631
2,248
50
5,514
197,443
Net profit for the period
-
-
-
24,829
24,829
Total comprehensive income for
-
-
-
24,829
24,829
the period
Dividends
20
-
-
-
(66)
(66)
Transfers to reserves
-
276
-
(276)
-
Balance as at 31 December 2023
189,631
2,524
50
30,001
222,206
The accompanying notes are an integral part of the condensed interim financial statements.
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195
12.5 Consolidated and the Company’s Statements of Cash Flows
FOR THE YEAR ENDED 31 DECEMBER 2023 (all amounts are in EUR thousand unless otherwise stated)
Notes
Group | Company | ||||
As at 31 | As at 31 | As at 31 | As at 31 | ||
December | December | December | December | ||
2023 | 2022 | 2023 | 2022 | ||
Cash flows from operating activities | |||||
Net profit (loss) | ( | 24,829 | 5,505 | ||
Adjustments for non-cash items: | |||||
Depreciation and amortisation expenses | 6,7,8 | 144 | 110 | ||
Impairment of property, plant and equipment | - | -- | |||
Loss on write-off of property, plant and equipment | - | - | |||
Loss on impairment and write-off of inventories, trade receivables and other assets | - | - | |||
Profit (loss) on disposal/write-off of property, plant and equipment | ( | - | - | ||
Income tax expenses | 30 | ( | ( | 250 | 9 |
Increase in provisions | 28 | - | - | ||
Grant income (amortisation) | 21 | ( | ( | - | - |
Elimination of results of financing and investing activities: | |||||
Dividend income | 35 | ( | (13,357) | (14,479) | |
Impairment (reversal of impairment) of investments in subsidiaries | 9 | (18,406) | 3,447 | ||
Total finance costs, net | ( | 1,508 | 1,232 | ||
Result on loss of control and revaluation of shares in associate | 10 | ( | - | - | |
Elimination of share of results of associates | ( | - | - | ||
Changes in working capital: | |||||
(Increase) decrease in trade and other receivables | ( | (186) | 94 | ||
(Increase) decrease in inventories, prepayments and other current assets | (29) | 165 | |||
Increase (decrease) in trade and other payables, grants, deferred income | ( | (75) | 136 | ||
and prepayments received | |||||
Increase in congestion management revenue | 27 | - | - | ||
Changes in other financial assets | ( | - | - | ||
Income tax received (paid) | ( | (270) | 440 | ||
Net cash flows from operating activities | (5,592) | (3,341) | |||
(Acquisition) of property, plant and equipment and intangible assets | ( | ( | (106) | (13) | |
Disposal of property, plant and equipment and intangible assets | - | - | |||
Loss of control in subsidiary/(acquisition) of associates and joint ventures | 9 | - | - | ||
(Acquisition) of associates and joint ventures | 9 | ( | (6,300) | (17,831) | |
Grants received | - | - | |||
Congestion management funds received | 27 | - | - | ||
Loans (granted)/recovered | (23,898) | (12,596) | |||
Dividends received | 13,357 | 14,479 | |||
Acquisition of short-term financial investments | ( | (180,366) | - | ||
Repayment of short-term financial investments | 180,366 | - | |||
Interest received | 6,709 | 430 | |||
Net cash flows used in investing activities | ( | (10,238) | (15,531) | ||
Issue of bonds | - | 74,804 | |||
Proceeds from borrowings | - | 242,884 | |||
Loans repaid | ( | ( | (117,420) | (5,973) | |
Repayment of lease liabilities | 23 | ( | ( | (109) | (91) |
Overdraft | 17,981 | - | |||
Interest paid | ( | ( | (8,842) | (337) | |
Dividends paid | ( | ( | (66) | (845) | |
Other cash flows from financing activities | ( | (9) | (84,128) | ||
Net cash flows from/used in financing activities | ( | ( | (108,465) | 226,314 | |
Change in cash and cash equivalents in disposal group | ( | - | - | ||
Increase/(decrease) in cash and cash equivalents | ( | (124,295) | (207,442) | ||
Cash and cash equivalents at the beginning of the period | 244,310 | 36,868 | |||
Cash and cash equivalents at the end of the period | 120,015 | 244,310 |
The accompanying notes are an integral part of the condensed interim financial statements.
12.6 Notes to the Consolidated and the Company’s Financial Statements
FOR THE YEAR ENDED 31 December 2023
1 General information
registered on 25 July 2012 with the Register of Legal Entities, company code 302826889.
EPSO-G is the parent company responsible for the activities of the group companies by ensuring the uninterrupted, stable
transmission of electricity over high voltage networks and transportation of natural gas via high pressure gas pipelines, as well
as by ensuring the management, maintenance and development of these transmission systems and organisation of trade on the
natural gas and biofuel exchanges; installation and management of electricity storage facilities operating as the primary capacity
reserve and ensuring reliable, stable and consumer-focused operation of the Lithuanian electricity system.
EPSO-G provides management services to the subsidiaries and the lower-tier subsidiaries. The purpose of the provision of
management services is to increase the efficiency of operations of the EPSO-G group companies, optimise the use of resources,
and implement uniform standards of operations. These services are provided in accordance with the agreements concluded
through a public procurement process.
As at 31 December 2023 and 2022, the Company’s issued capital consisted of 653,900,000 ordinary registered shares with the
nominal value of EUR 0.29 each. All shares, including newly issued shares, were held by the Company’s sole shareholder – the
As at 31 December 2023 and 2022, all shares of the Company were fully paid.
The Company’s shareholder | As at 31 December 2023 | As at 31 December 2022 | ||
| Republic of Lithuania represented by | Issued capital, EUR | % | Issued capital, EUR | % |
| the Ministry of Energy of the Republic | 189,631,000 | 100 | 189,631,000 | 100 |
| of Lithuania |
The Company’s management approved these financial statements on 22 March 2024. The shareholder of the Company has a
statutory right not to approve these financial statements and require that the management prepares a new set of financial
statements.
As at 31 December 2023, the EPSO-G Group had 1,261 employee (as at 31 December 2022, 1,271 employee), and the Company
had 66 employees (as at 31 December 2022, 60 employees).
The EPSO-G group (hereinafter the “Group”) consists of the Company, directly and indirectly controlled subsidiaries, associates
and joint ventures, as listed below:
Company name | Registered office address | Ownership interest (%) | Profile of activities | ||
| As at 31 | As at 31 | ||||
| December | December | ||||
SUBSIDIARIES 2023 | 2022 | ||||
Litgrid AB | Karlo Gustavo Emilio | 97.5 | 97.5 | Electricity transmission system | |
| Manerheimo st. 8, Vilnius, | operator | ||||
| Lithuania | |||||
Amber Grid AB | Laisvės ave. 10, Vilnius, | 96.6 | 96.6 | Natural gas transmission system | |
| Lithuania | operator | ||||
| BALTPOOL UAB | Žalgirio st. 90, Vilnius, Lithuania | 67.0 | 67.0 | Operator of the exchange for | |
| trading in energy resources | |||||
| (biomass products), the | |||||
| administrator of PSO funds | |||||
| TETAS UAB | Senamiesčio st. 102B, | 100 | 100 | ||
| Panevėžys, Lithuania | Transformer substation, | ||||
| distribution station and | |||||
Lithuania
natural gas exchange
construction, reconstruction and
AB)
maintenance services
EPSO-G ANNUAL REPORT FOR 2023
196
Company name | Registered office | Ownership interest (%) | Profile of activities | |
address | As at 31 | As at 31 | ||
| December 2023 | December 2022 | |||
Energy Cells UAB | Ozo st. 12A-1, Vilnius | 100 | 100 | Installation and management of electricity |
storage facilities | ||||
ASSOCIATES | ||||
GET Baltic UAB | Geležinio Vilko st. 18A, | Organisation of trading on the natural gas | ||
(controlled through Amber Grid AB) | Vilnius, Lithuania | 34.0 | 96.6 | exchange |
Holding company holding a minority | ||||
TSO Holding AS | Lilleakerveien 2A, 0283 | 39.6 | 39.6 | interest in equities of the electricity |
Oslo, Norway | exchange operator and the market | |||
coupling operator | ||||
JOINT VENTURES | ||||
| Provision of services ensuring safety and | ||||
Baltic RCC OÜ | Kadaka tee 42 12915 | 33.33 | 33.33 | reliability of the electricity system and |
Tallinn Eesti | coordination between the transmission | |||
| network operators of the Baltic region |
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Trade payables | |
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2022 | |||
Before restatement | Restatement effect | After restatement | |
Revenue | 587,757 | - | 587,757 |
Other income | 2,167 | - | 2,167 |
Dividend income | 43 | (43) | - |
Total revenue and other income: | 589,967 | (43) | 589,924 |
Expenses for purchase of balancing and regulating | (203,588) | 203,588 | - |
electricity | |||
Expenses for electricity system services | (111,633) | 111,633 | - |
Expenses for electricity technological needs | (99,576) | 99,576 | - |
Expenses for other electricity services | (5,309) | 5,309 | - |
Expenses for natural gas system balancing service | (26,827) | 28,627 | - |
Expenses for natural gas technological needs | (13,007) | 13,007 | - |
Subcontracting and raw materials acquisitions | (59,101) | 59,101 | - |
Purchase of electricity and natural gas services | - | - | (459,940) |
Purchase of contracting services | (59,101) | ||
Depreciation and amortisation | (35,056) | 35,056 | - |
Wages and salaries and related expenses | (45,072) | - | (45,072) |
Purchases of repair and maintenance services | (8,394) | - | (8,394) |
Taxes and charges | (7,897) | 7,897 | - |
Telecommunication and IT expenses | (4,695) | 4,695 | - |
Transport expenses | (5,614) | 5,614 | - |
Write-off expenses of property, plant and equipment | (211) | 211 | - |
Write-off expenses of other assets | (49) | 49 | - |
Write-downs of inventories, expected credit losses of receivables | (112) | 112 | - |
Other expenses | (10,484) | (18,206) | (28,851) |
Total expenses | (636,625) | 556,269 | (601,358) |
EBITDA | (11,434) | ||
Dividends | - | 43 | 43 |
Depreciation and amortisation | - | (35,056) | (35,056) |
Non-current assets write-offs | - | (112) | (211) |
Operating profit (loss) EBIT | (46,658) | - | (46,658) |
Interest income | 213 | (213) | - |
Interest expenses | (3,232) | 3,232 | - |
Total finance costs, net | (3,019) | - | (3,019) |
EPSO-G ANNUAL REPORT FOR 2023
209
2022 | |||
Before restatement | Restatement effect | After restatement | |
Revenue | 725 | - | 725 |
Other income | - | - | - |
Dividend income | 14,479 | - | 14,479 |
Total revenue and other income: | 15,204 | - | 15,204 |
Wages and salaries and related expenses | (3,590) | - | (3,590) |
Taxes and charges | (31) | 31 | - |
Telecommunication and IT expenses | (149) | 149 | - |
Transport expenses | (41) | 41 | - |
Depreciation and amortisation | (110) | 110 | - |
Impairment of investments in subsidiaries | (3,447) | 3,447 | - |
Other expenses | (1,090) | (221) | (1,311) |
Total expenses | (8,458) | 3,557 | (4,901) |
EBITDA | - | - | 10,303 |
Depreciation and amortisation | - | (110) | (110) |
Impairment (reversal of impairment) of investments | - | (3,447) | (3,447) |
Operating profit (EBIT) | 6,746 | - | 6,746 |
Financing activities | |||
Interest income | 430 | (430) | - |
Interest expenses | (1,662) | 1662 | - |
Total finance costs, net | (1,232) | - | (1,232) |
Profit (loss) before income tax | 5,514 | - | 5,514 |
Deferred income tax benefit | (9) | - | (9) |
Net profit (loss) | 5,505 | - | 5,505 |
EPSO-G ANNUAL REPORT FOR 2023
210
Transmission of | Transmission of | Elimination of | |||
electricity | natural gas | Other activities | intersegment | Total | |
transactions | |||||
Revenue and other income | 369,838 | 81,338 | 44,688 | (16,977) | 478,887 |
Operating expenses, excluding | |||||
electricity, gas and related expenses, depreciation, write-off and impairment | (40,294) | (30,248) | (36,951) | 17,000 | (90,493) |
EBITDA | 78,286 | 25,739 | 2,806 | (5,579) | 101,252 |
Adjusted EBITDA | 37,334 | 24,660 | 2,806 | (5,579) | 59,221 |
Temporary regulatory differences for previous periods | 18,942 | (2,883) | - | - | 16,059 |
Temporary regulatory differences for reporting period | (59,894) | 1,804 | - | - | (58,090) |
Overall effect of management’s | (40,952) | (1,079) | - | - | (42,031) |
adjustments on EBITDA | |||||
Reconciliation of EBITDA and net | (29,900) | (13,177) | 15,742 | (20,116) | (47,451) |
profit/loss | |||||
Depreciation and amortisation | (19,737) | (12,595) | (1,958) | - | (34,290) |
Loss on impairment and write-off of non-current assets | (21,905) | (8,169) | 18,397 | (18,406) | (30,083) |
Total finance costs, net | 4,434 | (1,758) | (1,942) | (508) | 226 |
Result of lost control in subsidiary | - | 9,076 | - | (660) | 8,416 |
and revaluation | |||||
Income tax | 7,308 | (567) | (235) | - | 6,506 |
Share of results of associates | 294 | 1,480 | - | 1,774 | |
Dividend income | - | 542 | - | (542) | - |
Net profit (loss) | 48,386 | 12,562 | 18,548 | (25,695) | 53,801 |
Total assets | 677,416 | 332,329 | 681,919 | (613,207) | 1,078,457 |
Net financial debt | (39,188) | (95,175) | (208,205) | 259,030 | (83,538) |
Investments (additions of property, plant and equipment and intangible assets) | (165,371) | (35,703) | (33,146) | (8,900) |
EPSO-G ANNUAL REPORT FOR 2023
211
Transmission | Transmission of | Elimination of | |||
of electricity | natural gas | Other activities | intersegment | Total | |
transactions | |||||
Revenue and other income | 420,308 | 96,652 | 83,007 | (10,043) | 589,924 |
Operating expenses, excluding | |||||
electricity, gas and related expenses, depreciation, write-off and impairment | (36,720) | (25,711) | (90,652) | 11,665 | (141,418) |
EBITDA | (36,513) | 31,108 | 6,837 | (12,866) | (11,434) |
Adjusted EBITDA | 34,556 | 35,024 | (7,642) | 1,613 | 63,551 |
Temporary regulatory differences for previous periods | 26,964 | (4,860) | - | - | 22,104 |
Temporary regulatory differences for reporting period | 44,105 | 8,776 | - | - | 52,881 |
Overall effect of management’s | 71,069 | 3,916 | - | - | 74,985 |
adjustments on EBITDA | |||||
Reconciliation of EBITDA and net | (12,810) | (15,388) | 11,836 | (14,718) | (31,081) |
profit/loss | |||||
Depreciation and amortisation | (20,582) | (12,854) | (1,620) | - | (35,056) |
Asset write-offs, impairment | (250) | (143) | (99) | 280 | (211) |
Interest income | 63 | 20 | 460 | (330) | 213 |
Interest expenses | (947) | (641) | (2,052) | 408 | (3,232) |
Income tax | 8,863 | (2,368) | 667 | - | 7,162 |
Dividend income | 43 | 598 | 14,479 | (15,077) | 43 |
Net profit (loss) | (49,323) | 15,720 | 18,672 | (27,584) | (42,515) |
Total assets | 718,545 | 345,347 | 1,047,555 | (685,719) | 1,425,728 |
Net financial debt | (45,631) | (104,455) | (174,325) | 352,972 | 28,561 |
Investments (additions of property, plant and equipment and intangible assets) | (77,071) | (42,852) | (53,440) | (1,833) | (175,196) |
Company name | 2023 |
Energijos Skirstymo Operatorius AB | 103,582 |
Ignitis UAB | 42,846 |
Ignitis Gamyba AB | 9,033 |
Total revenue from major clients: | 155,461 |
Company name | 2022 |
Energijos Skirstymo Operatorius AB | 208,486 |
Ignitis UAB | 71,662 |
Ignitis Gamyba AB | 35,165 |
Total revenue from major clients: | 315,313 |
EPSO-G ANNUAL REPORT FOR 2023
212
Statutory | ||||||
Group | Goodwill | Patents and | Computer | Other intangible | servitudes and | Total |
licences | software | assets | protection | |||
zones | ||||||
Net book amount as at 31 December 2021 | 61 | 120 | 4,425 | 483 | 4,665 | 9,754 |
Additions | - | 86 | 2,922 | 183 | - | 3,191 |
Write-offs | - | - | (18) | - | - | (18) |
Reclassification with PP&E | - | - | 89 | - | - | 89 |
Reclassification between categories | - | 239 | (239) | - | - | - |
Value adjustment due to a change in assumptions | - | - | - | - | (1,684) | (1,684) |
Amortisation charge | - | (87) | (2,133) | (216) | - | (2,436) |
Reclassification to disposal group | - | (36) | (301) | (137) | - | (474) |
Net book amount as at 31 December 2022 | 61 | 322 | 4,745 | 313 | 2,981 | 8,422 |
Acquisition cost | 61 | 1,001 | 14,926 | 792 | 2,981 | 19,761 |
Accumulated amortisation | - | (679) | (10,181) | (479) | - | (11,339) |
Net book amount as at 31 December 2022 | 61 | 322 | 4,745 | 313 | 2,981 | 8,422 |
Net book amount as at 31 December 2022 | 61 | 322 | 4,745 | 313 | 2,981 | 8,422 |
Additions | - | 11 | 3,176 | 60 | 176 | 3,423 |
Write-offs | - | - | (5) | - | - | (5) |
Value adjustment due to a change in assumptions | - | - | - | - | (62) | (62) |
Reclassification from PP&E | - | 70 | 280 | - | - | 350 |
Reclassification between categories | - | 816 | (816) | - | - | - |
Off-set of grants against non-current assets | - | - | (2,415) | - | - | (2,415) |
Amortisation charge | - | (335) | (1,078) | (125) | - | (1,538) |
Net book amount as at 31 December 2023 | 61 | 884 | 3,887 | 248 | 3,095 | 8,175 |
Acquisition cost | 61 | 1,840 | 12,992 | 580 | - | 18,568 |
Accumulated amortisation | - | (956) | (9,105) | (332) | - | (10,393) |
Net book amount as at 31 December 2023 | 61 | 884 | 3,887 | 248 | 3,095 | 8,175 |
Other property, Construct | |||||||
Group | Structures and | plant and | ion in | ||||
Land | Buildings | machinery | Vehicles | equipment | progress | Total | |
Net book amount as at 31 December 2021 | 682 | 26,079 | 520,816 | 1,049 | 14,217 | 40,260 | 603,103 |
Additions | - | - | 28,028 | 131 | 1,179 | 129,180 | 158,518 |
Prepayments for PP&E | - | - | - | - | - | 13,591 | 13,591 |
Sales | - | - | (27) | (5) | - | (32) | |
Write-offs | - | - | (1,325) | - | (27) | - | (1,352) |
Reclassification to/from inventories | - | - | (51) | - | (71) | - | (122) |
Put into operation (from construction work in progress) | - | 945 | 20,998 | - | 2,141 | (24,084) | - |
Reclassification from right-of-use assets | - | - | - | 785 | - | - | 785 |
Reclassification (from intangible assets) | - | - | - | - | - | (89) | (89) |
Reclassification between grant categories | - | - | (4,878) | - | (465) | 5,343 | - |
Off-set of grants against non-current assets | - | - | (914) | - | - | (86,705) | (87,619) |
Depreciation charge | - | (964) | (25,991) | (466) | (3,637) | - | (31,058) |
Reclassification to disposal group | - | - | - | - | (4) | - | (4) |
Net book amount as at 31 December 2022 | 682 | 26,060 | 536,683 | 1,472 | 13,328 | 77,496 | 655,721 |
Net book amount as at 31 December 2021 | 682 | 26,079 | 520,816 | 1,049 | 14,217 | 40,260 | 603,103 |
Acquisition/revaluation amount | 682 | 29,000 | 612,233 | 3,469 | 23,924 | 77,496 | 746,804 |
Accumulated depreciation | - | (2,940) | (75,550) | (1,997) | (10,596) | - | (91,083) |
Net book amount as at 31 December 2022 | 682 | 26,060 | 536,683 | 1,472 | 13,328 | 77,496 | 655,721 |
Net book amount as at 31 December 2022 | 682 | 26,060 | 536,683 | 1,472 | 13,328 | 77,496 | 655,721 |
Additions | - | 498 | 14,018 | 65 | 4,398 | 229,576 | 248,555 |
Change in prepayments for PP&E | - | - | - | - | - | (8,858) | (8,858) |
Sales | - | - | (110) | (43) | (17) | - | (170) |
Write-offs | - | (13) | (718) | - | 89 | - | (642) |
Revaluation | 9 | 889 | 584 | 498 | 143 | - | 2,123 |
Impairment loss | - | - | (57) | - | (108) | (17) | (182) |
Reversal of impairment | - | - | - | - | - | 29 | 29 |
Put into operation (from construction work in progress) | - | 2,152 | 54,135 | - | 3,632 | (59,919) | - |
Reclassification to/from inventories | - | - | (50) | - | (200) | - | (250) |
Reclassification to intangible assets | - | - | - | - | - | (350) | (350) |
Off-set of grants against non-current assets | - | (492) | (13,886) | - | (1,078) | (142,486) | (157,942) |
Depreciation charge | - | (941) | (25,748) | (405) | (3,711) | - | (30,805) |
Net book amount as at 31 December 2023 | 691 | 28,153 | 564,851 | 1,587 | 16,476 | 95,471 | 707,229 |
Net book amount as at 31 December 2022 | 682 | 26,060 | 536,683 | 1,472 | 13,328 | 77,496 | 655,721 |
Acquisition/revaluation amount | 691 | 28,156 | 565,090 | 1,615 | 16,584 | 95,471 | 707,607 |
Accumulated depreciation after revaluation | - | (3) | (239) | (28) | (108) | - | (378) |
Net book amount as at 31 December 2023 | 691 | 28,153 | 564,851 | 1,587 | 16,476 | 95,471 | 707,229 |
2023 | 2022 | |
Carrying amount at the beginning of the period | 26,304 | 12,713 |
Prepayments paid for PPE over the period | 15,386 | 23,056 |
Transfer to construction work in progress | (23,965) | (9,465) |
Carrying amount at the end of the period | 17,725 | 26,304 |
As at 31 December 2023, the Group’s interest capitalised as part of property, plant and equipment amounted to EUR 329
thousand; the annual interest capitalisation rate was 3.53% (2022: EUR 57 and 1.16%, respectively).
EPSO-G ANNUAL REPORT FOR 2023
213
EPSO-G ANNUAL REPORT FOR 2023
214
Segment | Recognised in other | Recognised through | Total revaluation result by |
comprehensive income | profit or loss | segments | |
EE TSO | 27,434 | (21,623) | 5,811 |
NG TSO | 3,255 | (7,940) | (4,685) |
Other segments | 1,006 | (9) | 997 |
Total | 31,695 | (29,572) | 2,123 |
EPSO-G ANNUAL REPORT FOR 2023
215
EPSO-G ANNUAL REPORT FOR 2023
216
Additional component for the financing of investments, % of forecast | Change in asset value, EUR million |
0% | -92.1 |
33% | -61.4 |
67% | -30.7 |
100% | 0 |
133% | 30.7 |
Change in rate of investment return from 2025, % | Change in asset value, EUR million |
-0.50% | -15.2 |
-0.25% | -7.6 |
0.00% | 0 |
0.25% | 7.6 |
0.50% | 15.3 |
Change in discount rate (return on investments is recalculated from 2025 accordingly), % | Change in asset value, EUR million |
-1.00% | 1.5 |
-0.50% | 0.7 |
0.00% | 0 |
0.50% | -0.6 |
EPSO-G ANNUAL REPORT FOR 2023
217
EPSO-G ANNUAL REPORT FOR 2023
218
WACC (pre-tax return on investments approved by the Council) | ||||
Change | 4.04% | 5.04% | 6.04% | |
-1.0% | 0.0% | 1.0% | ||
4.16% | -1.0% | 2,189 | 12,181 | 22,174 |
5.16% | 0.0% | -9,727 | - | 9,727 |
6.16% | 1.0% | -21,017 | -11,544 | -2,070 |
Structures | Other property, plant | Construction | |||||
Land | Buildings | and | Transport | and equipment | in progress | Total | |
machinery | |||||||
As at 31 December | 682 | 27,655 | 596,546 | 1,115 | 16,235 | 95,472 | 737,705 |
2023 | |||||||
As at 31 December | 682 | 26,319 | 695,984 | 1,523 | 12,985 | 55,141 | 792,634 |
2022 |
As at 31 | As at 31 | |
December 2023 | December 2022 | |
Carrying amount at the beginning of the period | 532,859 | 459,500 |
Additions | 157,942 | 87,619 |
Depreciation charge | (17,594) | (13,998) |
Write-off | (362) | (262) |
Carrying amount at the end of the period | 672,845 | 532,859 |
EPSO-G ANNUAL REPORT FOR 2023
219
Group | Land | Buildings | Vehicles | Total |
Net book amount as at 31 December 2021 | 5,894 | 2,747 | 2,486 | 11,127 |
New contracts | - | 229 | 2,437 | 2,666 |
Indexation | - | 3 | - | 3 |
Write-offs | - | (35) | (661) | (696) |
Reclassification to property, plant and equipment | - | - | (785) | (785) |
Depreciation charge | (60) | (590) | (251) | (899) |
Reclassification to disposal group | - | (83) | (2) | (85) |
Net book amount as at 31 December 2022 | 5,834 | 2,271 | 3,224 | 11,329 |
Acquisition cost | 6,070 | 4,184 | 6,730 | 16,984 |
Accumulated depreciation | (236) | (1,913) | (3,506) | (5,655) |
Net book amount as at 31 December 2022 | 5,834 | 2,271 | 3,224 | 11,329 |
Net book amount as at 31 December 2022 | 5,834 | 2,271 | 3,224 | 11,329 |
Reclassifications between groups | - | 156 | (156) | - |
New contracts | 61 | 884 | 414 | 1,359 |
Indexation | - | 5 | 143 | 148 |
Write-offs | - | (120) | (59) | (179) |
Depreciation charge | (62) | (609) | (1,176) | (1,847) |
Net book amount as at 31 December 2023 | 5,833 | 2,587 | 2,390 | 10,810 |
Acquisition cost | 6,131 | 3,512 | 4,543 | 14,186 |
Accumulated depreciation | (298) | (925) | (2,153) | (3,376) |
Net book amount as at 31 December 2023 | 5,833 | 2,587 | 2,390 | 10,810 |
Company | ||||
Net book amount as at 31 December 2021 | 197 | 16 | 213 | |
New contracts | - | - | 107 | 107 |
Depreciation charge | - | (62) | (23) | (85) |
Net book amount as at 31 December 2022 | - | 135 | 100 | 235 |
Acquisition cost | - | 369 | 190 | 559 |
Accumulated depreciation | - | (234) | (90) | (324) |
Net book amount as at 31 December 2022 | - | 135 | 100 | 235 |
Net book amount as at 31 December 2022 | - | 135 | 100 | 235 |
New contracts | - | 629 | 18 | 647 |
Write-offs | - | (73) | - | (73) |
Depreciation charge | - | (83) | (32) | (115) |
Net book amount as at 31 December 2023 | - | 608 | 86 | 694 |
Acquisition cost | - | 629 | 125 | 754 |
Accumulated depreciation | - | (21) | (39) | (60) |
Net book amount as at 31 December 2023 | - | 608 | 86 | 694 |
Acquisition | Carrying | Ownership interest | |
Group companies | Impairment | ||
cost | amount | (%) | |
As at 31 December 2023 |
EPSO-G ANNUAL REPORT FOR 2023
220
Company name | Current assets and liabilities | Non-current assets and liabilities | Net assets | ||||
Year | Total net current | Total net non- | |||||
Assets | Liabilities | Assets | Liabilities | ||||
| assets | current assets | ||||||
Litgrid | |||||||
As at 31 December 2023 | 264,797 | 138,673 | 126,124 | 412,619 | 300,057 | 112,562 | 238,686 |
Net assets attributable to minority interest as at 31 Dec 2023 | 5,942 | ||||||
| As at 31 December | 334,621 | 412,553 | (77,932) | 383,924 | 139,012 | 244,912 | 166,980 |
| 2022 | Net assets attributable to minority interest as at 31 Dec 2022 | 4,175 | |||||
Amber Grid | |||||||
| As at 31 December | 34,421 | 79,572 | (45,151) | 297,908 | 66,093 | 231,815 | 186,664 |
| 2023 | |||||||
| As at 31 December | Net assets attributable to minority interest as at 31 Dec 2023 | 6,387 | |||||
| 2022 | 53,168 | 83,178 | (30,010) | 292,179 | 78,777 | 213,402 | 183,392 |
Net assets attributable to minority interest as at 31 Dec 2022 | 6,272 |
Income tax | Total | Comprehensive income | Dividends paid to | |||
Company name Year | Revenue | Profit before | (expense) | comprehensive | attributable to non- | non-controlling |
income tax | benefit | income for the | controlling interest | interest | ||
| period | ||||||
Litgrid | ||||||
As at 31 December 2023 | 369,838 | 41,078 | 7,308 | 71,706 | 1,792 | - |
As at 31 December 2022 | 420,308 | (58,347) | 8,898 | (49,449) | (1,236) | (126) |
Amber Grid | ||||||
As at 31 December 2023 | 81,338 | 13,130 | (567) | 15,330 | 524 | (413) |
As at 31 December 2022 | 96,652 | 18,088 | (2,368) | 15,720 | 538 | (339) |
Net cash flows | Net cash flows | Net cash flows | Net increase | Cash and cash | Cash and cash | |
Company name Year | from operating | from investing | from financing | (decrease) in cash | equivalents at the | equivalents at the end of |
activities | activities | activities | flows | beginning of the | year | |
| year | ||||||
Litgrid | ||||||
As at 31 December 2023 | 58,388 | (51,168) | (7,085) | 135 | 499 | 634 |
As at 31 December 2022 | (52,482) | 82,711 | (31,549) | (1,320) | 1,819 | 499 |
Amber Grid | ||||||
As at 31 December 2023 | 39,437 | (15,567) | (23,770) | 100 | 21 | 121 |
As at 31 December 2022 | 18,992 | (4,267) | (14,716) | 9 | 12 | 21 |
EPSO-G ANNUAL REPORT FOR 2023
221
EPSO-G ANNUAL REPORT FOR 2023
222
2023 | |
Revenue | 16,535 |
Profit before income tax | 4,740 |
Income tax benefit (expenses) | (998) |
Net profit (loss) | 3,742 |
Other comprehensive income | - |
Total comprehensive income for the period | 3,742 |
Comprehensive income attributable to non-controlling interest | 1,482 |
Balance of comprehensive income attributable to the Group | 1,480 |
2023 | |
Revenue | 1,111 |
Profit before income tax | 1,027 |
Income tax benefit (expenses) | (159) |
Net profit (loss) | 868 |
Other comprehensive income | - |
Total comprehensive income for the period | 868 |
Comprehensive income attributable to non-controlling interest | 295 |
EPSO-G ANNUAL REPORT FOR 2023
223
2023 | |
Gain on disposal of control in subsidiary, cash | 6,500 |
Revaluation of the remaining part (34%) of the investment | 3,348 |
Total effect of the loss of control and revaluation | 9,848 |
Net assets of subsidiary | (1,429) |
Gain on loss of control and revaluation of associates | 8,419 |
As at 31 May 2023 | |
Non-current assets | 498 |
Current assets | 41,791 |
Total assets: | 42,289 |
Non-current liabilities | 48 |
Current liabilities | 40,812 |
Total liabilities: | 40,860 |
Net assets | 1,429 |
As at 31 May 2023 | As at 31 December 2022 | |
Net cash flows from operating activities | 494 | 752 |
Net cash flows used in investing activities | 437 | (80) |
Net cash flows from/used in financing activities | (555) | (749) |
Net increase in cash generated by the subsidiary | 376 | (77) |
As at 31 May 2023 | ||
Share of the carrying amount of net assets attributable to associate | (EUR thousand) | 486 |
Perceived goodwill | 2,862 | |
Cost of investment in associate | 3,348 |
Non-current assets | As at 31 December 2023 |
Other non-current assets (put option of GET Baltic) | 166 |
Current liabilities | |
Other current payables | - |
Call option of GET Baltic | 166 |
Fair value of option | |||||
Share option | Subscription date | Maturity | Exercise price | As at 31 May 2023 | As at 31 December |
| 2023 | |||||
Put option | As at 31 May 2023 | As at 31 May 2025 | 3.22 | 202 | 166 |
Call option | As at 31 May 2023 | As at 31 May 2025 | 3.22 | 202 | 166 |
Group | ||
| As at 31 | As at 31 December | |
| December 2023 | 2022 | |
Materials, inventories and assets held for sale | 4,364 | 4,771 |
Natural gas | 4,339 | 12,250 |
Less: impairment | (1,147) | (810) |
Carrying amount | 7,556 | 16,211 |
EPSO-G ANNUAL REPORT FOR 2023
224
EPSO-G ANNUAL REPORT FOR 2023
225
Group | As at 31 December | |
As at 31 December 2023 | 2022 | |
Prepayments | 699 | 843 |
Deferred expenses | 2,842 | 2,710 |
Contract assets | 2,607 | 6,363 |
Accrued revenue from contract works | 930 | 3,468 |
Accrued revenue from natural gas transmission and related services | 1,677 | 2,780 |
Accrued other income | - | 115 |
Carrying amount | 6,148 | 9,916 |
Group | Company | |||
As at 31 | As at 31 | As at 31 | As at 31 December | |
I. Trade receivables under contracts with customers | December 2023 | December 2022 | December 2023 | 2022 |
I.1 Trade receivables after one year | 10 | 10 | - | - |
Less: expected credit losses of non-current receivables | - | - | ||
Net book amount of receivables after one year: | 10 | 10 | - | - |
I.2 Current trade receivables | ||||
Receivables for electricity transmission and related | ||||
services | 19,058 | 61,080 | - | - |
Receivables for transmission and transit of natural gas | 6,770 | 18,284 | - | - |
Receivables for contract works and other services | 5,195 | 4,420 | 383 | 197 |
Less: expected credit losses of trade receivables | (249) | (17) | - | - |
Net book amount of trade receivables under contracts | ||||
with customers | 30,774 | 83,767 | 383 | 197 |
- | - | - | - | |
II. Trade receivables under other contracts: | - | - | - | - |
Accrued receivables for the services related to electricity | ||||
transmission | 10,270 | 1,477 | - | - |
Congestion management revenue receivable | 770 | 649 | ||
Other trade receivables | 74 | 286 | ||
Less: expected credit losses of trade receivables | - | - | - | - |
Net book amount of trade receivables under other contracts: | 11,114 | 2,412 | - | - |
Total current trade receivables: | 41,888 | 86,179 | 383 | 197 |
Trade receivables | Not past due | Past due | Total | |||
1-30 days | 31-90 | 91-180 | 181 and more | |||
| days | days | days | ||||
As at 31 December 2023 | ||||||
Current portion of trade receivables, of which: | 40,121 | 1000 | 191 | 575 | 1 | 41,888 |
State-owned companies | 31,792 | - | - | - | - | 31,792 |
Expected credit losses, % | 0% | 0% | 0% | 0% | 0% | 0% |
Other customers | 8,255 | 1,000 | 191 | 575 | 1 | 10,021 |
Trade receivables assessed | 7,950 | 956 | 140 | 575 | 0 | 9,622 |
individually | ||||||
Impairment | - | 0 | 8 | 240 | - | 248 |
Trade receivables assessed | 379 | 44 | 51 | 0 | 0 | 474 |
collectively | ||||||
Expected credit losses, % | 0 | 1.4% | 2% | 15% | 100% | |
Impairment | - | 1 | 0 | 0 | 0 | 1 |
Total expected credit losses | - | 1 | 2 | 230 | 1 | 249 |
2023 | 2022 | |
Carrying amount as at 1 January | 17 | 112 |
Increase in impairment (reversal of impairment) | (232) | (95) |
Carrying amount as at 31 December | 249 | 17 |
Group | Company | |||
| As at 31 December | As at 31 December | As at 31 December | As at 31 December | |
| 2023 | 2022 | 2023 | 2022 | |
Administered PSO funds receivable | 33,429 | 28,307 | - | - |
Administered LNG terminal funds receivable | 9,377 | 7,802 | - | - |
VAT receivable from the state budget | 1,050 | 2,061 | - | - |
Grants receivable | 52,199 | 32,726 | - | - |
Loans to subsidiaries | - | - | 44,889 | 20,991 |
Other receivables | 2,611 | 791 | 1,336 | 68 |
Less: expected credit losses of other receivables | (23) | (23) | - | - |
Carrying amount | 98,643 | 71,664 | 46,225 | 21,059 |
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Group | Company | |||
As at 31 December | As at 31 December | As at 31 December | As at 31 December | |
2023 | 2022 | 2023 | 2022 | |
Cash at bank | 123,236 | 248,096 | 120,015 | 244,310 |
Carrying amount | 123,236 | 248,096 | 123,236 | 244,310 |
Group | Revaluation reserve | Deferred income tax | Less: deferred |
| income tax | |||
Balance as at 31 December 2021 | 363 | (53) | 310 |
Depreciation of revaluation reserve | (34) | 1 | (33) |
Balance as at 31 December 2022 | 329 | (52) | 277 |
Revaluation of property, plant and equipment | 30,070 | (4,510) | 25,560 |
Depreciation of revaluation reserve | (45) | 7 | (38) |
Balance as at 31 December 2023 | 30,354 | (4,555) | 25,799 |
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Group | ||
Opening balance | 2023 | 2022 |
Grants receivable (Note 14) | 32,726 | 20,230 |
Grants received in advance (non-current liabilities) (Note 29) | (32,802) | (1,677) |
Grants received in advance (current liabilities) (Note 26) | (35,193) | (9,887) |
Recognised grants | (35,269) | 8,666 |
Transfer to property, plant and equipment (Note 7) | 157,942 | 87,619 |
Transfer to intangible assets (Note 6) | 2,415 | - |
Grants used for compensation of expenses (Note 32) | 315 | 197 |
Grants received | 160,672 | 87,816 |
Monetary grants (CFS) | (71,455) | (107,795) |
Congestion revenue transferred to grants (Note 27) | (13,457) | (22,992) |
(84,912) | (130,787) | |
Grants received in the form of assets | (16,875) | (964) |
Closing balance | ||
Grants receivable (Note 14) | 52,199 | 32,726 |
Grants received in advance (non-current liabilities) (Note 29) | - | (32,802) |
Grants received in advance (current liabilities) (Note 26) | (28,583) | (35,193) |
23,616 | (35,269) |
22 Borrowings
Group | Company | |||
| As at 31 December | As at 31 December | As at 31 December | As at 31 December | |
Non-current borrowings | 2023 | 2022 | 2023 | 2022 |
Bonds issued | 74,849 | 74,805 | 74,849 | 74,805 |
Bank borrowings | 89,105 | 107,781 | - | - |
Current borrowings | ||||
Current portion of non-current borrowings | 11,792 | 24,038 | - | - |
Accrued interest | 2,166 | 1,550 | 1,992 | 1,326 |
Current borrowing from the Group companies | - | - | 214,141 | 331,562 |
Overdraft | 17,981 | - | 17,981 | - |
Total borrowings | 195,893 | 208,174 | 308,963 | 407,693 |
Group | Company | |||
| As at 31 December | As at 31 December | As at 31 December | As at 31 December | |
| 2023 | 2022 | 2023 | 2022 | |
Between 1 and 2 years | 11,792 | 12,251 | - | - |
Between 2 and 5 years | 103,900 | 107,272 | 74,849 | 74,805 |
More than 5 years | 48,262 | 63,063 | - | - |
Total | 163,954 | 182,586 | 74,849 | 74,805 |
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Group | Company | |||
As at 31 | As at 31 | As at 31 | ||
December | December | December | As at 31 | |
2023 | 2022 | 2023 | December 2022 | |
Carrying amount at the beginning of the period | 11,361 | 10,423 | 236 | 219 |
Concluded lease contracts | 1,254 | 2,666 | 629 | 108 |
Terminated lease contracts | (120) | (28) | (74) | - |
Interest charged | 154 | 130 | 6 | 1 |
Lease payments (principal and interest) | (1,994) | (1,744) | (115) | (92) |
Indexation | 226 | - | 19 | - |
Reclassification to disposal group | - | (86) | - | - |
Carrying amount at the end of the period | 10,881 | 11,361 | 701 | 236 |
Non-current lease liabilities | 9,282 | 9,640 | 552 | 142 |
Current lease payments | 1,599 | 1,721 | 149 | 94 |
Group | Company | |||
As at 31 | As at 31 | As at 31 | As at 31 | |
December 2023 | December 2022 | December 2023 | December 2022 | |
Total lease liabilities: | 10,881 | 11,361 | 701 | 236 |
Current portion | 1,599 | 1,721 | 149 | 94 |
Repayment terms of non-current liabilities: | 9,282 | 9,640 | 552 | 142 |
Between 1 and 2 years | 1,211 | 1,302 | 154 | 95 |
Between 2 and 3 years | 961 | 899 | 150 | 27 |
Between 3 and 5 years | 743 | 952 | 248 | 20 |
Over 5 year | 6,367 | 6,487 | - | - |
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Other non- | |||||
Cash | Borrowings | current | Lease liabilities | Total | |
financial | |||||
Group | liabilities | ||||
Net debt as at 31 December 2021 | 41,284 | (167,402) | (84,226) | (10,423) | (220,767) |
Bonds issued | - | (74,805) | - | - | (74,805) |
New Leases | - | - | - | (2,670) | (2,670) |
Increase/(decrease) in cash and cash | 207,629 | - | - | - | 207,629 |
equivalents | |||||
Repayment of borrowings | - | 35,423 | - | - | 35,423 |
Terminated lease contracts | - | - | - | 10 | 10 |
Settlement of other non-current financial | - | - | 84,226 | - | 84,226 |
liabilities | |||||
Lease payments | - | - | - | 1,636 | 1,636 |
Transfer to disposal group | (817) | - | - | 86 | (731) |
Other changes | |||||
Interest charged (included in expenses and capitalised) | - | (3,077) | (67) | (130) | (3,274) |
Interest payments | - | 1,687 | 67 | 130 | 1,884 |
Net debt as at 31 December 2022 | 248,096 | (208,174) | - | (11,361) | 28,561 |
Proceeds from borrowings | - | (17,981) | - | (17,981) | |
New Leases | (1,254) | (1,254) | |||
Lease indexation | - | - | - | (226) | (226) |
Increase/(decrease) in cash and cash | (124,484) | - | - | - | (124,484) |
equivalents | |||||
Repayment of borrowings | - | 30,878 | - | - | 30,878 |
Terminated lease contracts | - | - | - | 120 | 120 |
Lease payments | - | - | - | 1840 | 1,840 |
Change in cash and cash equivalents in disposal group | (376) | - | - | - | (376) |
Other changes | |||||
Interest charged | - | (6,094) | - | (154) | (6,248) |
Interest payments | - | 5,478 | - | 154 | 5,632 |
Net debt as at 31 December 2023 | 123,236 | (195,893) | - | (10,881) | (83,538) |
| Other non- | |||||
Cash | Borrowings | current | Lease liabilities | Total | |
| financial | |||||
Company | liabilities | ||||
Net debt as at 31 December 2021 | 36,868 | (94,652) | (84,226) | (219) | (142,229) |
Increase in cash and cash equivalents | 207,442 | - | - | - | 207,442 |
Bonds issued | - | (74,805) | - | - | (74,805) |
New Leases | - | - | - | (108) | (108) |
Lease payments | - | - | - | 91 | 91 |
Change in Group cash pool account | - | (236,910) | - | - | (236,910) |
| Settlement of other non-current financial | - | - | 84,226 | - | 84,226 |
| liabilities | |||||
Other changes | |||||
Interest charged (included in expenses and capitalisation) | - | (1,663) | (67) | (1) | (1,730) |
Interest payments | - | 337 | 67 | 1 | 405 |
Net debt as at 31 December 2022 | 244,310 | (407,693) | - | (236) | (163,619) |
Proceeds from borrowings/new leases | - | (17,981) | - | (629) | (18,610) |
(Decrease) in cash and cash equivalents | (124,295) | - | - | - | (124,295) |
Lease payments | - | - | - | 109 | 109 |
Indexation/Amortisation of bond liability | - | (43) | - | (19) | (62) |
Change in Group cash pool account | - | 117,420 | - | - | 117,420 |
Terminated lease contracts | - | - | - | 74 | 74 |
Other changes | |||||
Interest charged (included in expenses and capitalisation) | - | (9,502) | - | (6) | (9,508) |
Interest payments | - | 8,836 | - | 6 | 8,842 |
Net debt as at 31 December 2023 | 120,015 | (308,963) | - | (701) | (189,649) |
Group | Company | |||
| As at 31 December | As at 31 December | As at 31 December | As at 31 December | |
| 2023 | 2022 | 2023 | 2022 | |
Payables for electricity | 26,684 | 53,737 | - | - |
Payables for natural gas | - | 2,600 | - | - |
Payables in performing natural gas balancing | 2,416 | 5,622 | - | - |
Payables for property, plant and equipment | 29,530 | 44,917 | - | - |
Payables for repairs, services | 9,414 | 10,476 | - | - |
Other trade payables | 296 | 10 | 153 | 222 |
Carrying amount | 68,341 | 117,362 | 153 | 222 |
Group | ||
| As at 31 December | As at 31 December | |
| 2023 | 2022 | |
Security deposits received | 14,343 | 16,598 |
Grants received in advance | 28,583 | 35,193 |
Prepayments received from new consumers | 217 | 568 |
Other prepayments received | 1,269 | - |
Carrying amount | 44,412 | 52,359 |
EPSO-G ANNUAL REPORT FOR 2023
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27 Congestion management funds liabilities
2023 | 2022 | |
Congestion management funds liabilities as at 1 January | 351,495 | 109,087 |
Congestion management funds received during the period* | 108,527 | 267,296 |
Used to finance property, plant and equipment | (13,457) | (22,992) |
Congestion management funds recognised as income during the period | (145,491) | (1,896) |
Congestion management funds liabilities as at 31 December | 301,074 | 351,495 |
| Non-current portion of congestion management funds liabilities | 264,173 | 64,095 |
Current portion of congestion management funds liabilities | 36,901 | 287,400 |
The principles of the receipt and use of congestion management funds are set out in Note 2.14. A revenue balance unused
according to the purposes set out in Regulation (EC) No 714/2009 of the European Parliament and of the Council amounted to
EUR 301,074 thousand as at 31 December 2023, and EUR 351,495 thousand as at 31 December 2022.
The congestion management funds collected in 2023 are presented in the statement of cash flows under operating activities. In
2022, congestion management funds were used only to finance property plant and equipment acquisitions, therefore were
recorded in the statement of cash flows under the cash flows from investment activities.
Under the Council’s Resolution No O3E-1330 of 30 September 2022 On the Adjustment of the Service Price Cap of Litgrid AB in
2023. In 2023, the congestion management revenue was used to reduce the tariff amounted to EUR 142,300 thousand, and the
remaining amount of EUR 3,191 thousand was used to compensate loss on disconnection of interconnectors.
28 Provisions
Group | ||
| As at 31 December | As at 31 December | |
| 2023 | 2022 | |
Provisions for pension benefits to employees | 1,341 | 1,446 |
Provisions for servitude liabilities | 419 | 468 |
Provisions for registration of protection zones | 532 | 1,391 |
Provisions for litigations/claims | 11,054 | 100 |
Provisions for warranties | 1,392 | 1,452 |
Carrying amount | 14,738 | 4,857 |
Non-current provisions | 2,528 | 2,956 |
Current provisions | 12,210 | 1,901 |
Description of the Group’s provisions and the expected timing of realisation of economic benefit
| Provisions | Provisions for | Provisions for | Provision for | Provisions for | ||
| for pension | servitude | registration of | warranties | litigations/claims | Total | |
| benefits | compensations | protection zones | ||||
Carrying amount at 31 December 2021 | 924 | 277 | 3,803 | 7 | 661 | 5,672 |
Calculated | - | - | - | 1,445 | 100 | 1,545 |
Revised estimate | 522 | 260 | (1,944) | - | - | (1,162) |
Payments made | - | (69) | (468) | - | (661) | (1,198) |
Carrying amount at 31 December 2022 | 1,446 | 468 | 1,391 | 1,452 | 100 | 4,857 |
Calculated | - | - | 176 | 14 | 11,054 | 11,244 |
Revised estimate | (105) | 201 | (264) | - | - | (168) |
Payments made | - | (250) | (771) | (74) | (100) | (1,195) |
Carrying amount at 31 December 2022 | 1,341 | 419 | 532 | 1,392 | 11,054 | 14,738 |
Provisions for litigations/claims
Energy Cells, the Group company, in line with the provisions of the Contract for the Design, Manufacture and Installation of the
Battery Energy Storage System (hereinafter the “Contract”), charged EUR 9,697 thousand of default interest to a contractor
Fluence Energy GmbH ir Siemens Energy Oy (Lithuanian branch) (hereinafter the “Contractor”) for the delays in the design,
manufacture and installation of the Battery Energy Storage System. The principal amount of the said default interest was settled
(offset) using performance bank guarantee, and the remaining amount offset against obligation to the contractor for the contract
works performed. The Group assesses that there is a high probability that the contractor will seek full or partial recovery of the
performance bank guarantee through legal proceedings, and will demand payment of the part contract works settled with (offset
against) default interest. Due to the uncertainties of the possible outcome of the legal proceedings and the lack of arguments and
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Group | ||
As at 31 December | As at 31 December | |
Prepayments received from connection of new | 2023 | 2022 |
consumers | 1,595 | 1,115 |
Grants received in advance | - | 32,802 |
Contractual obligations under connection agreements | 1,531 | 1,271 |
Non-current trade payables | 285 | 475 |
Carrying amount | 3,411 | 35,663 |
Group | PP&E | Impairment | Congestio | Differences | Unused | |||
revaluation | for other | n | in | investment | Accumulat | Other | Total | |
(impairment) assets | managem | depreciation | relief | ed tax loss | ||||
Deferred tax assets: | ent funds | rates | ||||||
| As at 31 December | ||||||||
| 2021 | 3,950 | 217 | 18,611 | 214 | 4,608 | 1,754 | 29,354 | |
Recognised in profit or loss | (327) | (30) | (16,233) | 419 | (2,416) | 8,796 | 260 | (9,531) |
| Deferred tax assets | ||||||||
| offset against deferred | - | - | - | - | - | (489) | (489) | |
| tax liabilities (tax loss | ||||||||
| utilised) | ||||||||
| As at 31 December | 3,623 | 187 | 2,378 | 633 | 2,192 | 8,796 | 1,525 | 19,334 |
| 2022 | ||||||||
Recognised in profit or loss | 3,829 | 164 | (58) | -566 | 1,421 | (6,463) | 440 | (1,233) |
| As at 31 December | 7,452 | 351 | 2,320 | 67 | 3,613 | 2,333 | 1,965 | 18,101 |
| 2023 | Revaluation of | Tax relief on | ||||||
| PP&E (increase in | acquisition of | |||||||
Deferred tax liabilities | value) | PP&E | Other | Total | ||||
As at 31 December 2021 | (46) | (1,287) | (1,003) | (2,336) | ||||
Recognised in profit or loss | - | (87) | 126 | 39 | ||||
As at 31 December 2022 | (46) | (1,374) | (877) | (2,297) | ||||
Recognised in profit or loss | 9 | 247 | 799 | 1,055 | ||||
Recognised in the item of other comprehensive income | (4,754) | - | - | (4,754) | ||||
As at 31 December 2023 | (4,791) | (1,127) | (78) | (5,996) | ||||
Deferred tax assets, net, as at 31 December 2022 | 17,037 | |||||||
Deferred tax assets, net, as at 31 December 2023 | 12,105 | |||||||
Group | ||
| As at 31 December | As at 31 December | |
Deferred tax assets: | 2023 | 2022 |
Deferred tax assets to be realised after more than 12 months | 12,105 | 10,156 |
Deferred tax assets to be realised within 12 months | 5,996 | 9,178 |
Total: | 18,101 | 19,334 |
Deferred tax liabilities to be settled after more than 12 months | (5,791) | (1,923) |
Deferred tax liabilities to be settled within 12 months | (205) | (374) |
Total: | (5,996) | (2,297) |
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Group | Company | |||
As at 31 | As at 31 December | As at 31 | As at 31 | |
December 2023 | 2022 | December 2023 | December 2022 | |
Profit (loss) before income tax | 53,801 | (49,677) | 25,079 | 5,514 |
Income tax calculated at a rate of 15% | 8,070 | (7,452) | 3,762 | 827 |
Effect of investment incentive | (2,796) | (266) | - | - |
Deferred income tax (unused investment incentive) | (3,165) | - | - | - |
Tax effect of non-taxable income and non-deductible | (1,459) | 933 | (3,762)* | (1,605)* |
expenses | ||||
Prior year adjustment due to recognition of investment | (7,156) | (377) | - | - |
incentive | ||||
Effect of unrecognised tax losses | - | - | 250 | 787 |
Income tax expenses/(benefit) through profit or loss | (6,506) | (7,162) | 250 | 9 |
Income tax expenses/(benefit) through other comprehensive income | 4,754 | - | - | - |
Group | Company | |||
As at 31 December | As at 31 December | As at 31 December | As at 31 December | |
2023 | 2022 | 2023 | 2022 | |
Administered PSO funds payable | 68,998 | 159,310 | - | - |
Administered LNG terminal funds payable | 8,906 | 7,635 | - | - |
Accrued administered LNG terminal funds* | 471 | 328 | - | - |
Accrued administered Emergency | 12,348 | - | - | - |
intervention funds* | ||||
Employment-related liabilities | 3,986 | 4,661 | 402 | 680 |
Accrued expenses relating to vacation | 4,755 | 3,676 | 297 | 198 |
reserve | ||||
VAT payable | 135 | 5,291 | 35 | 16 |
Real estate tax payable | 753 | 1,288 | - | - |
Dividends payable | 561 | 580 | - | - |
Accrued liabilities for non-current assets | 27,450 | 27,450 | - | - |
(CBCA contribution)** | ||||
Accrued other expenses | 1,667 | 2,137 | 190 | 98 |
Other payables | 2,514 | 1,730 | - | - |
Carrying amount | 132,544 | 214,086 | 924 | 992 |
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238
Group | ||
2023 | 2022 | |
Group | ||
As at 31 December | As at 31 December | |
2023 | 2022 | |
Revenue grants | 315 | - |
Income from lease of assets | 786 | 741 |
Interest on late payment and default charges | 1,030 | 723 |
Other income | 2,332 | 703 |
Total other revenue: | 4,463 | 2,167 |
Other expenses | (4,812) | (1,854) |
Total other expenses: | (33,313) | (28,851) |
Group | Company | |||
2023 | 2022 | 2023 | 2022 | |
Finance income | ||||
Interest income | 6,474 | 213 | 8,001 | 430 |
Finance costs | 6,474 | 213 | 8,001 | 430 |
Interest on borrowings | (6,230) | (3,054) | (9,453) | (1,662) |
Other finance expenses | (18) | (178) | (55) | - |
(6,248) | (3,232) | (9,508) | (1,662) | |
Total finance costs, net | 226 | (3,019) | (1,507) | (1,232) |
Group | Company | ||||
2023 | 2022 | 2023 | 2022 | ||
Dividend income | 0 | 43 | 13,357 | 14,479 | |
Total dividends and income from investing activities | 0 | 43 | 13,357 | 14,479 |
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241
241
The Group’s transactions conducted with the related parties during the twelve-month period of 2023 and balances arising on these transactions as at 31 December 2023 were as
follows:
Purchases of | Purchases of | Sales of | Sales of gas | Payables | Payables for gas, | Receivables for | ||
Related party | services | gas on | services | on exchange, | for | LNG terminal funds | services | Receivables for |
exchange, LNG | LNG terminal | services | and PSO funds* | gas, LNG funds | ||||
terminal funds | funds and | and PSO funds | ||||||
and PSO funds* | PSO funds* | |||||||
Ignitis group companies: | ||||||||
Ignitis Grupė AB | ||||||||
Energijos Skirstymo Operatorius AB | 2,301 | 79,520 | 103,582 | (13,398) | 1,170 | 8,710 | 16,280 | 14 |
Ignitis UAB | 14,926 | 11,235 | 42,846 | 2,796 | 1,618 | 4,932 | 2,440 | 528 |
Ignitis Gamyba AB | 133,126 | - | 9,033 | 3,172 | 12,886 | - | 1,102 | 640 |
Ignitis Grupės Paslaugų Centras UAB | 9 | - | 285 | - | - | - | 29 | - |
Ignitis Polska Sp.z.o.o. | - | - | 121 | - | - | - | - | - |
Vilniaus Kogeneracinė Jėgainė UAB | 616 | - | 592 | - | 100 | - | 123 | - |
Kauno Kogeneracinė Jėgainė UAB | 276 | - | 89 | - | 36 | - | 1 | - |
Transporto Valdymas UAB | 456 | - | - | - | 48 | - | - | - |
Other state-owned companies: | ||||||||
State Enterprise Ignalina Nuclear Power | - | - | 535 | (382) | - | 41 | 55 | - |
Plant | ||||||||
Klaipėdos Nafta AB | - | - | - | - | - | 3,975 | - | - |
LTG Infra AB | 1 | - | 296 | (160) | 75 | 23 | 37 | - |
Other state-owned companies | 653 | - | 1,378 | - | 60 | - | 69 | - |
Total | 152,364 | 90,755 | 158,757 | (7,972) | 15,993 | 17,681 | 20,136 | 1,182 |
* Purchases and sales of the gas product of the gas exchange operator as well as the Group’s purchases and sales of LNG terminal funds and PSO funds are not presented in the
Group’s statement of profit or loss, as the Group acts as an agent in respect of these funds when collecting and allocating these funds.
EPSO-G ANNUAL REPORT FOR 2023
242
242
The Group’s transactions conducted with the related parties during the twelve-month period of 2022 and balances arising on these transactions as at 31 December 2022 were as
follows:
Purchases of | Sales of gas on | Payables for gas, | ||||||||
Purchases | gas on | Sales of | exchange, LNG | Payables | LNG terminal | Receivabl | Receivables for | Finance | ||
Related party | of services | exchange, LNG | services | terminal funds | for | funds and PSO | es for | gas, LNG funds | costs | |
terminal funds | and PSO funds* | services | funds* | services | and PSO funds | |||||
and PSO funds* | ||||||||||
Ignitis group companies: | ||||||||||
Ignitis Grupė AB | - | - | - | - | - | - | - | - | 67 | |
Energijos Skirstymo Operatorius AB | 6,831 | (5,844) | 208,476 | 10,588 | 1,001 | - | 35,104 | 493 | - | |
Ignitis UAB | 133,667 | 18,996 | 71,662 | 33,572 | 2,384 | 3,660 | 15,867 | 402 | - | |
Ignitis Gamyba AB | 183,545 | (59,119) | 35,165 | 97,989 | 110,066 | - | 4,733 | 1,566 | - | |
Ignitis Grupės Paslaugų Centras UAB | 6 | - | 299 | - | - | - | 27 | - | - | |
Vilniaus Kogeneracinė Jėgainė UAB | 579 | - | 259 | 2 | 250 | - | 23 | - | - | |
Kauno Kogeneracinė Jėgainė UAB | 771 | - | 202 | 1 | 81 | - | 1 | - | - | |
Transporto Valdymas UAB | 688 | - | - | - | 62 | - | - | - | - | |
Other state-owned companies: | ||||||||||
State Enterprise Ignalina Nuclear | - | - | 1,156 | 98 | - | - | 159 | - | - | |
Power Plant | ||||||||||
Klaipėdos Nafta AB | - | 10,729 | 4 | - | - | 3,975 | 1 | - | - | |
State Enterprise Geoterma | - | - | - | - | - | - | - | - | - | |
LTG Infra AB | - | - | 652 | 37 | 15 | - | 127 | - | - | |
State Border Guard Service under the Ministry of Interior | - | - | 52,752 | - | - | - | - | - | - | |
Other state-owned companies | 1,603 | - | 207 | - | 61 | 205 | 52 | - | - | |
Total | 327,690 | (35,238) | 370,834 | 142,287 | 113,920 | 7,840 | 56,094 | 2,461 | 67 |
* Purchases and sales of the gas product of the gas exchange operator as well as the Group’s purchases and sales of LNG terminal funds and PSO funds are not presented in the
Group’s statement of profit or loss, as the Group acts as an agent in respect of these funds when collecting and allocating these funds.
EPSO-G ANNUAL REPORT FOR 2023
243
Receivables | Loans | Finance | |||||
Payables and | Purchase | income/divi | Finance | ||||
Related parties | and accrued | Sales | granted/(rec | ||||
accrued expenses | revenue | s | eived) | dend | costs | ||
income | |||||||
State-owned companies | |||||||
Group companies | |||||||
Litgrid AB | 482 | 150 | 505 | - | (166,600) | - | 4,849 |
Amber Grid AB | 227 | 349 | - | 25,009 | 12,329 | - | |
Tetas UAB | - | 295 | 172 | - | 4,842 | 537 | - |
Baltpool UAB | 146 | 26 | 101 | - | (47,541) | 305 | 2,069 |
GET Baltic UAB | - | - | 12 | - | - | - | - |
Energy Cells UAB | - | 172 | 209 | - | 15,038 | 815 | - |
Total: | 628 | 870 | 1,348 | (169,252) | 13,986 | 6,918 |
Receivables | Loans | Finance | |||||||
Related parties | Payables and | and accrued | Sales | Purchases | granted/(rec income/dividen | Finance | |||
accrued expenses | revenue | eived) | d income | costs | |||||
Ignitis Grupė AB | - | - | - | - | - | - | 67 | ||
State-owned companies | |||||||||
Transporto Valdymas UAB | - | - | - | 25 | - | - | - | ||
State Border Guard Service under the Ministry of Interior | - | - | 974 | - | - | - | - | ||
Group companies | |||||||||
Litgrid AB | 25 | 79 | 242 | 13,830 | (232,008) | 4,917 | 20 | ||
Amber Grid AB | - | 54 | 127 | - | 9,571 | 9,643 | - | ||
Tetas UAB | - | 77 | 134 | - | 8,793 | 172 | - | ||
Baltpool UAB | - | 9 | 72 | - | (99,554) | - | - | ||
GET Baltic UAB | - | 2 | 29 | - | - | - | - | ||
Energy Cells UAB | - | 39 | 123 | - | 5,327 | 41 | - | ||
Total: | 25 | 260 | 1,701 | 13,855 | (307,871) | 14,773 | 87 | ||
Group | Company | |||
As at 31 | As at 31 | As at 31 | As at 31 | |
Payments to key management personnel | December 2023 | December | December | December 2022 |
2022 | 2023 | |||
Employment-related payments | 3,629 | 3,401 | 870 | 744 |
Whereof: termination benefits | 35 | 227 | 30 | 114 |
Number of key management personnel (average) | 32 | 31 | 7 | 6 |
EPSO-G ANNUAL REPORT FOR 2023
244
Group | Company | |||
Financial assets | As at 31 December | As at 31 December | As at 31 December | As at 31 |
2023 | 2022 | 2023 | December 2022 | |
Long-term loans granted | - | - | - | 2,700 |
Trade receivables (Note 13) | 41,888 | 86,179 | 383 | 197 |
Other receivables (Note 14) | 2,588 | 768 | 46,225 | 21,059 |
Other financial assets (Note 15) | 15,898 | 21,664 | - | - |
Cash and cash equivalents (Note 16) | 123,236 | 248,096 | 120,015 | 244,310 |
Financial assets at amortised cost | 183,610 | 356,707 | 166,623 | 268,266 |
Other financial assets | ||||
Financial assets measured at fair value through profit or loss | 166 | - | - | - |
Total financial assets: | 183,776 | 356,707 | 166,623 | 268,266 |
Group | Company | |||
Financial liabilities | As at 31 December | As at 31 December | As at 31 December | As at 31 |
2023 | 2022 | 2023 | December 2022 | |
Borrowings (Note 22) | 195,893 | 208,174 | 308,297 | 407,693 |
Lease liabilities (Note 23) | 10,881 | 11,361 | 701 | 236 |
Trade payables (Note 25) | 68,341 | 117,362 | 153 | 222 |
Other payables and liabilities (Note 31) | 32,192 | 31,897 | 190 | 98 |
Total | 307,307 | 368,794 | 309,341 | 408,249 |
Group | Company | |||
As at 31 December | As at 31 December | As at 31 December | As at 31 December | |
2023 | 2022 | 2023 | 2022 | |
Contract assets | 2,607 | 6,363 | - | - |
Financial assets at amortised cost* | 183,610 | 356,707 | 166,623 | 268,266 |
Maximum credit risk | 186,217 | 363,070 | 166,623 | 268,266 |
S&P | Moody’s | |
EPSO-G ANNUAL REPORT FOR 2023
245
Liquidity risk
The Group’s policy is to ensure a sustainable financial position enabling to maintain an investment grade credit rating and provide
sufficient liquidity, i.e. to ensure that the Group will have sufficient cash and/or committed credit facilities and overdrafts to meet
its contractual obligations at any time. Liquidity risk is managed centrally by forecasting and regularly updating cash flows for the
Group companies and by ensuring efficient management of liquid funds through the Group’s account.
The Group’s cash flows from operating activities were positive in 2023, therefore its exposure to liquidity risk is not significant. As
at 31 December 2023, the Group’s current ratio (total current assets / total current liabilities) and quick ratio ((total current assets
– inventories) / total current liabilities) were 0.98 and 0.96, respectively (31 December 2022: 0.74 and 0.71, respectively). As at 31
December 2023, the Group’s net debt was negative, i.e. the Group companies’ liabilities to creditors exceeded their cash. As
indicated below, like the Company, the Group has overdraft contracts to meet its financial liabilities and plans to apply for the
overdraft limit increase.
As at 31 December 2023, the Company’s current and quick ratios were 0.71 (31 December 2022: 0.79). The Company’s liquidity
ratios weakened due to a decrease in balance of cash and cash equivalents and additional loans granted to the Group companies,
as well as due to a decrease in current liabilities after the repayment of short-term loans to the Group companies under the cash
pool agreements. As at 31 December 2023, the Company and the Group had undrawn credit limit of EUR 32,019 thousand under
the agreement with OP Corporate bank, effective until 2 March 2024. As described in note on the events after reporting period,
the Company carry outs public procurement of the credit limit services, and the award of the contract is scheduled in April 2024.
The credit line agreement will be concluded for the period of 24 months with the option to extend for additional 12 months and
the maximum credit line of EUR 100 million. Additionally, the Company plans to extend the cash pool agreement with Litgrid,
effective until 24 May 2024, by applying variable interest rate linked to EURIBOR. As at 31 December 2023, the Company’s
borrowing limits under the cash pool agreement with the subsidiaries LITGRID and Baltpool amounted to EUR 450,000 thousand
(undrawn amount was EUR 235,859 thousand). As at 31 December 2023, the Company’s lending limits applicable to the
subsidiaries Amber Grid, Tetas and Emergency Cells amounted to EUR 86,000 thousand (undrawn amount was EUR 41,111
thousand).
The table below discloses the contractual maturities of the Group’s and the Company’s financial liabilities. This information has
been prepared based on undiscounted cash flows of financial liabilities based on the earliest date on which the Group and the
Company can be required to pay. Balances due within 12 months equal their carrying balances as the impact of discounting is not
significant.
Less than 3 | Between 4 | Between 2 and | More than 5 | ||
Group | months | months and 1 | 5 years | years | Total liabilities |
As at 31 December 2023 | year | ||||
Trade and other payables | 70,991 | 29,500 | 42 | - | 100,533 |
Borrowings | 2,456 | 31,764 | 125,698 | 50,644 | 210,562 |
Lease liabilities | 445 | 1,248 | 3,614 | 10,864 | 16,171 |
As at 31 December 2022 | |||||
Trade and other payables | 120,777 | 28,401 | - | - | 149,178 |
Borrowings | 8,302 | 19,805 | 131,161 | 65,916 | 225,184 |
Lease liabilities | 410 | 1,427 | 3,587 | 10,935 | 16,359 |
Less than 3 | Between 4 | Between 2 and | More than 5 | |||
Company | months | months and 1 | 5 years | years | Total liabilities | |
year | ||||||
As at 31 December 2023 | ||||||
Trade and other payables | 153 | 190 | - | - | 343 | |
Borrowings | 238,711 | - | 80,688 | - | 319,399 | |
Lease liabilities | 43 | 130 | 593 | - | 766 | |
As at 31 December 2022 | ||||||
Trade and other payables | 222 | 992 | - | - | 1,214 | |
Borrowings | 580 | 333,525 | 82,786 | - | 416,821 | |
Lease liabilities | 30 | 65 | 143 | - | 238 |
EPSO-G ANNUAL REPORT FOR 2023
246
Group | Company | |||
As at 31 December | As at 31 December | As at 31 December | As at 31 December | |
2023 | 2022 | 2023 | 2022 | |
Audit services, in Eur | ||||
Total audit services | 284,000 | 166,887 | 56,000 | 30,635 |
Non-audit services, in Eur | ||||
Assurance and other related services | 49,565 | 59,788 | 14,935 | 25,000 |
Other services | 16,125 | 16,992 | 4,335 | 4,903 |
Total non-audit services: | 65,690 | 76,780 | 19,285 | 29,903 |
EPSO-G ANNUAL REPORT FOR 2023
247
RESPONSIBILITY STATEMENT,
INDEPENDENT AUDITORS REPORT
13.1. Responsibility Statement
13.2. Independent Auditors Report
13
EPSO-G ANNUAL REPORT FOR 2023
249
13. RESPONSIBILITY STATEMENT, INDEPENDENT AUDITORS
REPORT
13.1. Responsibility Statement
22-03-2024
Following the Law on Securities of the Republic of Lithuania and the Rules on Information Disclosure of the Bank of Lithuania, we,
Mindaugas Keizeris, Chief Executive Officer of UAB EPSO-G, Darius Kašauskas, Chief Financial Officer of the Group and Žydrūnas
Augutis, Chief Financier, hereby confirm that, to the best of our knowledge, the attached UAB EPSO-G consolidated and separate
financial statements, for the period ended 31 December 2023, prepared in accordance with International Financial Reporting
Standards adopted by the European Union, give a true and fair view of the UAB EPSO-G and Group assets, liabilities, financial
position, profit and cash flows. UAB EPSO-G consolidated annual report for 2023 year gives a true and fair view of business
developments and operating activities and UAB EPSO-G and Group situation including a survey report of the principal risks and
uncertainties.
Chief Executive Officer
Mindaugas Keizeris
Chief Financial Officer
Darius Kašauskas
Chief Financier
Žydrūnas Augutis
EPSO-G ANNUAL REPORT FOR 2023
250
13.2. Independent Auditors Report
PricewaterhouseCoopers UAB, J. Jasinskio str. 16B, 03163 Vilnius, Lithuania
+370 (5) 239 2300, lt_vilnius@pwc.com, www.pwc.lt
Company code 111473315, registered with the Legal Entities’ Register of the Republic of Lithuania
Independent Auditor’s Report
To the shareholder of EPSO-G UAB
Report on the audit of the separate and consolidated financial statements
Our opinion
In our opinion, the separate and consolidated financial statements give a true and fair view of the
separate and consolidated financial position of EPSO-G UAB (the “Company”) and its subsidiaries
(together - the “Group”) as at 31 December 2023, and of the Company’s and of the Group’s separate
and consolidated financial performance and separate and consolidated cash flows for the year then
ended in accordance with International Financial Reporting Standards as adopted by the European
Union.
Our opinion is consistent with our additional report to the Audit Committee dated 22 March 2024.
What we have audited
The Company’s and the Group’s separate and consolidated financial statements comprise:
● the consolidated and the Company’s statement of financial position as at 31 December 2023;
● the consolidated and the Company’s statements of comprehensive income for the year then
ended;
● the consolidated and the Company’s statements of changes in equity for the year then ended;
● the consolidated and the Company’s statements of cash flows for the year then ended; and
● the notes to the consolidated and the Company’s financial statements, comprising material
accounting policy information and other explanatory information.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (ISAs). Our
responsibilities under those standards are further described in the Auditor’s responsibilities for the
audit of the financial statements section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Independence
We are independent of the Company and the Group in accordance with the International Code of
Ethics for Professional Accountants (including International Independence Standards) issued by the
International Ethics Standards Board for Accountants (IESBA Code) and the Law of the Republic of
Lithuania on the Audit of Financial Statements that are relevant to our audit of the separate and
consolidated financial statements in the Republic of Lithuania. We have fulfilled our other ethical
responsibilities in accordance with the IESBA Code and the Law of the Republic of Lithuania on the
Audit of Financial Statements.
To the best of our knowledge and belief, we declare that non-audit services that we have provided to
the Company and the Group are in accordance with the applicable law and regulations in the Republic
of Lithuania and that we have not provided non-audit services that are prohibited under Article 5(1) of
Regulation (EU) No 537/2014 considering the exemptions of Regulation (EU) No 537/2014 endorsed
in the Law of the Republic of Lithuania on the Audit of Financial Statements.
The non-audit services that we have provided to the Company and the Group, in the period from
1 January 2023 to 31 December 2023, are disclosed in note 38 to the separate and consolidated
financial statements.
Our audit approach
Overview
● Overall Group and Company materiality: EUR 4,700 thousand and
EUR 2,200 thousand, respectively
● We performed a full scope audit of the Company. At the Group level
we tested the consolidation process, performed full scope audit of 3
significant components as well as audit procedures over the selected
financial statement line items of other components, material at the
Group level, to be able to report on the consolidated financial
statements as a whole. Our audit addressed 93% of the Group’s
assets and 99% of the Group’s revenue.
● Property, plant and equipment at revalued amount
As part of designing our audit, we determined materiality and assessed the risks of material
misstatement in the separate and consolidated financial statements (together “the financial
statements”). In particular, we considered where management made subjective judgements; for
example, in respect of significant accounting estimates that involved making assumptions and
considering future events that are inherently uncertain. As in all of our audits, we also addressed the
risk of management override of internal controls, including, among other matters, consideration of
whether there was evidence of bias that represented a risk of material misstatement due to fraud.
Materiality
The scope of our audit was influenced by our application of materiality. An audit is designed to obtain
reasonable assurance whether the financial statements are free from material misstatement.
Misstatements may arise due to fraud or error. They are considered material if individually or in
aggregate, they could reasonably be expected to influence the economic decisions of users taken on
the basis of the financial statements.
Based on our professional judgement, we determined certain quantitative thresholds for materiality,
including the overall Company and Group materiality for the financial statements as a whole as set out
in the table below. These, together with qualitative considerations, helped us to determine the scope
of our audit and the nature, timing and extent of our audit procedures and to evaluate the effect of
misstatements, if any, both individually and in aggregate on the financial statements as a whole.
Overall Company materiality
EUR 2,200 thousand (2022: EUR 1,970 thousand)
Overall Group materiality
EUR 4,700 thousand (2022: EUR 4,000 thousand)
How we determined it
• Overall Company materiality represents 1% of net assets
• Overall Group materiality represents 1% of average
annual revenue for 3-year period
Materiality
Group
scoping
Key audit
matters
Rationale for the materiality
benchmark applied
We chose net assets as the benchmark for the overall
Company materiality because, in our view, it is the most
appropriate measure for the Company as a holding company
with no external revenue.
We chose revenue as the benchmark for the overall Group
materiality because it is the measure against which the
performance of the Group is assessed by the regulatory
bodies as well as external creditors and other stakeholders.
The Group’s results depend on approved tariffs for regulated
activities, therefore the Group‘s profit before tax fluctuates
widely year over year, whereas its revenue is more stable
and growth-oriented indicator which can be compared to
other market participants. Because of 2021-2023 revenue
fluctuations due to changes in energy prices, we chose
average 3-year revenue figure as the benchmark.
We chose to apply 1% of net assets to overall Company
materiality and 1% of average annual revenue for 3-year
period to overall Group materiality, which are within the range
of acceptable quantitative materiality thresholds for these
benchmarks.
We agreed with the Audit Committee that we would report to them misstatements identified during our
audit above EUR 235 thousand for the Group and above EUR 100 thousand for the Company, as well
as misstatements below that amount that, in our view, warranted reporting for qualitative reasons.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in
our audit of the financial statements of the current period. These matters were addressed in the
context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we
do not provide a separate opinion on these matters.
Key audit matter
How our audit addressed the key audit matter
Property, plant and equipment at revalued
amount
(refer to Notes 2.4, 2.5, 3 and 7)
The Group applies the revaluation model for
subsequent measurement of property, plant
and equipment (‘PPE’). As at 31 December
2023 the carrying value of PPE amounted to
EUR 707,229 thousand, being its fair value at
the date of the revaluation, less subsequent
accumulated depreciation and impairment
losses recognized until 31 December 2023.
The Group’s management performed the PPE
revaluation in 2023. The total net revaluation
gain for the Group amounted to EUR 2,123
thousand, of which the increase of EUR 31,695
thousand was recognised directly in equity, and
We obtained an understanding and evaluated
management’s policies, processes and controls in
determination of fair values of items of PPE.
We analysed management’s valuation
methodology and their assessment of changes in
tariff setting regulations that occurred during 2023.
We obtained the models for calculating the RCN
and DRC, tested the reasonableness of inputs
used and the determination of the physical
deterioration and functional obsolescence of the
assets for selected items, by comparing to recent
construction prices of comparable new assets and
verifying formulas and data used to arrive from
RCN to DRC.
We obtained the cash flow models used by the
management to determine the economic
obsolescence of PPE. We checked the models and
the decrease of EUR 29,572 thousand was
recognised in profit or loss.
The valuation of electricity and gas
transmission networks assets was carried out in
the following stages: (i) replacement costs of
new assets (RCN) were estimated; (ii) the
physical deterioration and functional
obsolescence of the assets was determined;
and (iii) the economic obsolescence of the
assets was assessed (using the income
approach).
In determining the replacement costs, the
management took into account asset-specific
current information such as the cost of materials
and works, or overall construction costs.
Then physical deterioration and functional
obsolescence of the assets was determined to
estimate depreciated replacement cost (DRC)
for each individual asset.
The income approach was used to determine
the economic obsolescence of the assets.
Based on the results of the economic
obsolescence test, the values of the assets
determined by DRC method were reduced on a
pro rata basis, except for assets for which such
allocation would have resulted in a value lower
than the asset’s regulated asset base or
estimated regulated cash flows from individual
items (hereinafter – RAB value). For such
assets the RAB value was considered to be
their fair value. The amount of reduction that
would otherwise have been allocated to an
asset was allocated pro rata to the other assets.
Finally, the management compared previous
carrying values of individual assets against
revalued amounts determined using the
approach described above, and calculated the
revaluation gains or losses to be accounted
through profit and loss, or other comprehensive
income as appropriate.
We focused on this area due to the significance
of the PPE balance to the consolidated
statement of financial position and because the
management’s assessment of fair values of
PPE is an area of significant management
judgement.
tested whether they are mathematically accurate
and that the results were accurately compared to
the carrying values of PPE.
We examined the management’s assumptions
which had material impact on the valuation results:
the rate of return on regulated assets and the
discount rate, expected capital expenditures, the
additional tariff component to finance investments
and values of regulated assets. As appropriate, we
traced these assumptions to external or to the
Group’s internal sources of information.
We involved our internal valuation specialists to
assist us in discount rate assessment and overall
assessment of the methodology used in developing
the valuation models.
Also, we assessed sensitivity of the cash flow
model to the changes in the rate of return, the
discount rate, and the additional tariff component to
finance investments.
We also checked the allocation of the fair value
surplus or reduction to individual items based on
economic obsolescence principles and performed
detailed fair value allocation testing for selected
items.
We also considered whether or not there was a
bias in determining fair value.
We have considered the adequacy and
completeness of disclosures in Notes 2.4, 2.5, 3
and 7.
How we tailored our Group audit scope
We tailored the scope of our audit in order to perform sufficient work to enable us to provide an
opinion on the financial statements as a whole, taking into account the structure of the Group, the
accounting processes and controls, and the industry in which the Group operates.
The Group comprises 5 subsidiaries which operate in Lithuania (refer to Note 1). For Group audit
purposes, based on our risk and materiality assessment we determined that a full scope audit was
required for the following Group entities (in addition to the Company itself):
• LITGRID AB
• Amber Grid AB
• TETAS UAB
The audit of these entities was performed by PwC Lithuania and covered 99% of the Group’s revenue
and 89% of the Group’s assets. In addition, the Group engagement team carried out selected audit
procedures on other amounts receivable and other financial assets of Baltpool UAB relating to PSO
funds, and assessed other significant areas that may impact the consolidated financial statements.
Reporting on other information including the consolidated annual report
Management is responsible for the other information. The other information comprises the
consolidated annual report, including the corporate governance report, the remuneration report and
the social responsibility report (the “sustainability report”) (but does not include the financial
statements and our auditor’s report thereon).
Our opinion on the financial statements does not cover the other information, including the
consolidated annual report.
In connection with our audit of the financial statements, our responsibility is to read the other
information identified above and, in doing so, consider whether the other information is materially
inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears
to be materially misstated.
With respect to the consolidated annual report, including the corporate governance report and the
remuneration report, we considered whether the consolidated annual report, including the corporate
governance report and the remuneration report, includes the disclosures required by the Law of the
Republic of Lithuania on Consolidated Reporting by Groups of Undertakings, the Law of the Republic
of Lithuania on Reporting by Undertakings.
Based on the work undertaken in the course of our audit, in our opinion:
● the information given in the consolidated annual report, including the corporate governance report
and the remuneration report, for the financial year for which the financial statements are prepared,
is consistent with the financial statements; and
● the consolidated annual report, including the corporate governance report and the remuneration
report, has been prepared in accordance with the Law of the Republic of Lithuania on
Consolidated Reporting by Groups of Undertakings and the Law of the Republic of Lithuania on
Reporting by Undertakings.
The Company and the Group presented the social responsibility (sustainability) report as a part of the
consolidated annual report.
In addition, in light of the knowledge and understanding of the Company and the Group and their
environment obtained in the course of the audit, we are required to report if we have identified material
misstatements in the consolidated annual report which we obtained prior to the date of this auditor’s
report. We have nothing to report in this regard.
Responsibilities of management and those charged with governance for the financial
statements
Management is responsible for the preparation of the financial statements that give a true and fair
view in accordance with International Financial Reporting Standards as adopted by the European
Union, and for such internal control as management determines is necessary to enable the
preparation of financial statements that are free from material misstatement, whether due to fraud or
error.
In preparing the financial statements, management is responsible for assessing the Company’s and
the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless management either intends to
liquidate the Company and the Group or to cease operations, or has no realistic alternative but to do
so.
Those charged with governance are responsible for overseeing the Company’s and the Group’s
financial reporting process.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole
are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that
an audit conducted in accordance with ISAs will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on
the basis of these financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgment and maintain
professional scepticism throughout the audit. We also:
● Identify and assess the risks of material misstatement of the financial statements, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not
detecting a material misstatement resulting from fraud is higher than for one resulting from error,
as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override
of internal control.
● Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company’s and the Group’s internal control.
● Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.
● Conclude on the appropriateness of management’s use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to events
or conditions that may cast significant doubt on the Company’s and the Group’s ability to continue
as a going concern. If we conclude that a material uncertainty exists, we are required to draw
attention in our auditor’s report to the related disclosures in the financial statements or, if such
disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit
evidence obtained up to the date of our auditor’s report. However, future events or conditions may
cause the Company and the Group to cease to continue as a going concern.
● Evaluate the overall presentation, structure and content of the financial statements, including the
disclosures, and whether the financial statements represent the underlying transactions and
events in a manner that achieves fair presentation.
● Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the consolidated financial
statements. We are responsible for the direction, supervision and performance of the Group audit.
We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned
scope and timing of the audit and significant audit findings, including any significant deficiencies in
internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant
ethical requirements regarding independence, and have communicated with them all relationships and
other matters that may reasonably be thought to bear on our independence, and where applicable,
actions taken to eliminate threats or safeguards applied.
From the matters communicated with those charged with governance, we determine those matters
that were of most significance in the audit of the financial statements of the current period and are
therefore the key audit matters. We describe these matters in our auditor’s report unless law or
regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we
determine that a matter should not be communicated in our report because the adverse
consequences of doing so would reasonably be expected to outweigh the public interest benefits of
such communication.
Report on other legal and regulatory requirements
Report on the compliance of the format of the separate and consolidated financial statements
with the requirements of the European Single Electronic Reporting Format
We have been engaged based on our audit agreement by the management of the Company to
conduct a reasonable assurance engagement for the verification of compliance with the applicable
requirements of the European single electronic reporting format of the Company’s separate and the
Group’s consolidated financial statements, including the consolidated annual report, for the year
ended 31 December 2023 (the “Single Electronic Reporting Format of the separate and consolidated
financial statements”).
Description of a subject matter and applicable criteria
The Single Electronic Reporting Format of the separate and consolidated financial statements has
been applied by the management of the Company to comply with the requirements of art. 3 and 4 of
the Commission Delegated Regulation (EU) 2019/815 of 17 December 2018 supplementing Directive
2004/109/EC of the European Parliament and of the Council with regard to regulatory technical
standards on the specification of a single electronic reporting format (the “ESEF Regulation”). The
applicable requirements regarding the Single Electronic Reporting Format of the separate and
consolidated financial statements are contained in the ESEF Regulation.
The requirements described in the preceding sentence determine the basis for application of the
Single Electronic Reporting Format of the separate and consolidated financial statements and, in our
view, constitute appropriate criteria to form a reasonable assurance conclusion.
Responsibility of the management and those charged with governance
The management of the Company is responsible for the application of the Single Electronic Reporting
Format of the separate and consolidated financial statements that complies with the requirements of
the ESEF Regulation.
This responsibility includes the selection and application of appropriate markups in iXBRL using ESEF
taxonomy and designing, implementing and maintaining internal controls relevant for the preparation
of the Single Electronic Reporting Format of the separate and consolidated financial statements which
is free from material non-compliance with the requirements of the ESEF Regulation.
Those charged with governance are responsible for overseeing the financial reporting process, which
should also be understood as the preparation of financial statements in accordance with the format
resulting from the ESEF Regulation.
Our responsibility
Our responsibility was to express a reasonable assurance conclusion whether the Single Electronic
Reporting Format of the separate and consolidated financial statements complies, in all material
aspects, with the ESEF
Regulation.
We conducted our engagement in accordance with International Standard on Assurance
Engagements 3000 (Revised) ‘Assurance Engagements other than Audits and Reviews of Historical
Financial Information’ (“ISAE 3000 (R)”). This standard requires that we comply with ethical
requirements, plan and perform procedures to obtain reasonable assurance whether the Single
Electronic Reporting Format of the separate and consolidated financial statements complies, in all
material aspects, with the applicable requirements.
Reasonable assurance is a high level of assurance, but it does not guarantee that the service
performed in accordance ISAE 3000 (R) will always detect the existing material misstatement
(significant non-compliance with the requirements).
Summary of the work performed
Our planned and performed procedures were aimed at obtaining reasonable assurance that the
Single Electronic Reporting Format of the separate and consolidated financial statements was applied,
in all material aspects, in accordance with the applicable requirements and such application is free
from material errors or omissions. Our procedures included in particular:
• obtaining an understanding of the internal control system and processes relevant to the
application of the Single Electronic Reporting Format of the separate and consolidated financial
statements, including the preparation of the XHTML format and marking up the separate and
consolidated financial statements;
• verification whether the XHTML format was applied properly;
• evaluating the completeness of marking up the separate and consolidated financial statements
using the iXBRL markup language according to the requirements of the implementation of single
electronic format as described in the ESEF Regulation;
• evaluating the appropriateness of the Company’s and the Group’s' use of XBRL markups selected
from the ESEF taxonomy and the creation of extension markups where no suitable element in the
ESEF taxonomy has been identified; and
• evaluating the appropriateness of anchoring of the extension elements to the ESEF taxonomy.
We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our
conclusion.
Conclusion
In our opinion, the Single Electronic Reporting Format of the separate and consolidated financial
statements for the year ended 31 December 2023 complies, in all material aspects, with the ESEF
Regulation.
Appointment
We were first appointed as auditors of the Company and the Group on 30 April 2015 and had an
engagement appointment of 3 years for 2015-2017 audits. After a 2-year break our appointment was
renewed for 2020-2022 audits and renewed again for 2023 audit on 29 August 2023, representing a
total period of engagement appointment of 7 years, out of which 4 years represent the latest
uninterrupted period of engagement.
The key audit partner on the audit resulting in this independent auditor’s report is Rasa Radzevičienė.
On behalf of PricewaterhouseCoopers UAB
Rasa Radzevičienė
Partner
Auditor's Certificate No.000377
Vilnius, Republic of Lithuania
22 March 2024
The auditor's electronic signature is used herein to sign only the Independent Auditor's Report