Ignitis Grupe

Audit Report / Information • Feb 28, 2024

KPMG Baltics, UAB Lvivo St. 101 LT-08104, Vilnius Lithuania

+370 5 2102600 vilnius@kpmg.lt home.kpmg/lt

Independent Auditor's Report

To the Shareholders of AB "Ignitis grupė"

Report on the Audit of the Separate and the Consolidated Financial Statements

Opinion

We have audited the separate financial statements of AB "Ignitis grupė" ("the Company") and the consolidated financial statements of AB "Ignitis grupė" and its subsidiaries ("the Group") contained in the file abignitisgrupe-2023-12-31-en.zip (ParsePort generated hashcode: 7WeM034QHDlnyh8=). The Company's separate and the Group's consolidated financial statements comprise:

• the separate and the consolidated statement of financial position as at 31 December 2023,
• the separate and the consolidated statement of profit or loss for the year then ended,
• the separate and the consolidated other comprehensive income for the year then ended,
• the separate and the consolidated statement of changes in equity for the year then ended,
• the separate and the consolidated statement of cash flows for the year then ended, and
• the notes to the separate and the consolidated financial statements, comprising material accounting policies and other explanatory information.

In our opinion, the accompanying separate and consolidated financial statements give a true and fair view of the non-consolidated financial position of the Company and the consolidated financial position of the Group as at 31 December 2023, and of their non-consolidated and consolidated financial performance and their non-consolidated and consolidated cash flows for the year then ended in accordance with IFRS Accounting Standards, as adopted by the European Union.

Basis for Opinion

We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities unde standards are further described in the Auditor's Responsibilities for the Audit of the Separate and Consolidated Statements section of our report. We are independent of the Company and the Group in accordance with the In Code of Ethics for Professional Accountants (including International Independence Standards) (IESBA Code) is the International Ethics Standards Board for Accountants and the requirements of the Law on Audit of Financial Statements of the Republic of Lithuania that are relevant to audit in the Republic of Lithuania, and we have fulfil other ethical responsibilities in accordance with the Law on Audit of Financial Statements of the Republic of Lith the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the separate and consolidated financial statements of the current period. These matters were addressed in the context of our audit of the separate and consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Each audit matter and our respective response are described below.

Revenue recognition related to the estimation of overdeclaration /underdeclaration of electricity and natural gas usage (consolidated financial statements)

We refer to the financial statements:

Revenue recognized in the consolidated statement of profit or loss in 2023 amounts to EUR 2,542.4 million.

Material accounting policies – 1.4 "Revenue from contracts with customers"; financial disclosures - Note 6 "Revenue from contracts with customers", Note 27 "Deferred income and advances received".

The key audit matter	How the matter was addressed in our audit
The Group's electricity revenue and natural gas revenue depend on declarations of electricity consumed by private customers together with automated readings of meters from business and part of private customers. The Group has identified that private customers that do not have automated meter readings tend to over/underdeclare the consumption of electricity and natural gas in the last months of the year.	Our audit procedures in the area included, among others: • Obtaining understanding of and evaluating the Group's revenue recognition process; • Assessing whether the revenue recognition accounting policy applied to all revenue streams complies with the requirements of the relevant financial reporting framework;
At each reporting date, the Group estimates the amount of the overdeclared / underdeclared consumption in order to calculate the actually earned revenue to be recognized in the statement of profit or loss and other comprehensive income for the year.	• For the estimation of revenue overdeclaration/underdeclaration of electricity and natural gas usage: - Evaluating the design and implementation of key controls over the revenues recognition
The estimate takes into account, among other things, historical consumption by private customers and the Group's assessment of technological losses in the electricity grid and gas network at the reporting date. Due to the materiality of the recognized revenue and judgements of the management involved in revenue recognition above, the area required our increased attention in the audit and as such was determined to be a key audit matter.	processes; - Testing the internal consistency, underlying formulas and mathematical accuracy of the calculation of over/underdeclaration impact; - Challenging the reasonableness of the Group's key assumptions and judgment used in estimating the overdeclared/underdeclared usage of electricity and natural gas, by tracing main inputs to supporting evidence; - Assessing completeness and accuracy of estimated amount by performing independent analytical analysis of overdeclared consumption based on the key performance indicators, including historical revenue and technological grid losses information, changes in approved tariffs, and comparing result to actual amounts recognised; • Evaluating whether the disclosures in the consolidated financial statements in respect of the overdeclared/underdeclared usage of electricity and natural gas satisfy the requirements of the relevant financial reporting standards.

Fair value assessment of Property, plant and equipment used in electricity distribution (consolidated financial statements)

We refer to the financial statements:

The carrying amount of property, plant and equipment used in electricity distribution as at 31 December 2023: EUR 1,691.6 million.

Material accounting policies – Note 1.6 "Property, plant and equipment"; financial disclosures - Note 12 "Property, plant and equipment".

The key audit matter How the matter was addressed in our audit Our audit procedures performed included: Property, plant and equipment (thereafter "PPE") allocated to electricity distribution cash generating • unit ("CGU") is accounted for at revalued amounts standards; less subsequent accumulated depreciation and • Involving our internal valuation specialists who impairment losses. assisted us at: In 2021, the Group performed a revaluation of
property, plant and equipment of the electricity PPE methodology applied by the management of the and accounted for revaluation results. IAS 16 Group, requires the Group to perform a further revaluation of assets, when the fair value of a revalued asset - differs materially from its carrying amount. volumes and profit margins to historical results As disclosed in Note 12.1.1. to the financial and regulation data as well as comparing the statements, the management of the Group assessed possible change in fair value by using discounted the ones used in the industry and set by the cashflow model. regulator, We identified determination of fair value of PPE as a - Considering sensitivity of the discounted focus area in our audit because of the significance cash flow model to changes in key assumptions of the amounts involved, the judgments required in to understand the impact of such changes on selection of appropriate valuation methods and levels of headroom; the key assumptions estimation uncertainty related to assumptions made included sales volumes, profit margins, by the management of the Group. Accordingly, we forecasted growth rate and discount rate; have identified this area as a key audit matter. • Evaluating the budgeting process (upon which forecasts are based) by comparing the actual results for the year with original forecasts and taking these observations into consideration into the sensitivity analysis performed; • Checking mathematical accuracy of the discounted cash flow model; • Considering adequacy of disclosure in the Group's consolidated financial statements in respect to the assessment of fair value of PPE allocated to electricity distribution cash	Assessing compliance with applicable accounting - Assessing the appropriateness of the Challenging the key assumptions used in the discounted cash flow model by comparing sales forecasted growth rates and the discount rate to

Allowances for impairment losses in trade receivables (consolidated financial statements)

We refer to the financial statements:

The carrying value of trade receivable in the consolidated statement of financial position as at 31 December 2023 amounts to EUR 265.9 million. The total impairment loss recognized in the consolidated statement of profit or loss for the year ended 31 December 2023 amounts to EUR 0 million.

Material accounting policies – Note 1.9 "Financial assets"; financial disclosures – Note 36 "Financial risk management", Note 20 "Trade receivables".

losses, the area required our increased attention in the audit and was determined to be a key audit

matter.

Business combination (consolidated financial statements)

We refer to the financial statements:

Identifiable net assets acquired as part of business combinations recognized in the consolidated statement of financial position as at 31 December 2023 amounts to EUR 196 million. Goodwill arising from the acquisition of subsidiaries amounts to EUR 10.6 million.

Material accounting policies – 1.2.2 "Business combinations"; financial disclosures - Note 32.5 "Business combinations".

The key audit matter

How the matter was addressed in our audit

The assets, liabilities and contingent liabilities acquired were stated at their fair values which were determined by the Group during purchase price allocation and fair value determination exercizes. This resulted in net assets measured at fair value in the amount of EUR 196 million. Management has the discretion to make judgements, estimates and assumptions in allocating the purchase price and determining fair value. Changes in these assumptions could have a significant effect on the purchase price allocation and fair values. Due to the matter described above, we considered the business combination and in particular the purchase price allocation and fair value determination as a key audit matter in our audit.

Among others, we performed the following audit procedures: • We have gained knowledge of the management process related to acquisition accounting. We analyzed the underlying documentation, terms and conditions of the transaction and assessed the accounting treatment of the consideration transferred and the assets and liabilities acquired in accordance with IFRS 3 'Business Combinations'. • We read the contracts signed by the Group in 2022 and 2023 where the Group acquired controlling stake in SP Venta SIA, BRVE SIA, CVE SIA, UAB "Vėjas LT", UAB "WINDLIT". • We have engaged our valuation specialists to assist us in reviewing the Group's purchase price allocaion and in assessing the methodology used to determine the assets acquired and liabilities assumed, in particular: - the methodologies and key assumptions, such as discount rates, used in the purchase price allocation of the acquired business, - a reconciliation of the key inputs used in the fair value measurement and purchase price allocation models, - checking the mathematical accuracy of calculations used in fair value measurement and purchase price allocation models. • We assessed the adequacy of disclosures of financial information, including disclosure of key assumptions and estimates based on requirements of the relevant financial reporting standard.

Other Information

The other information comprises the information included in the 2023 Integrated Annual report (pages 5- 367), including Sustainability report (Corporate social responsibility report) (pages 163-310), Governance report (pages 87-142), Remuneration report (pages 143-162), but does not include the separate and consolidated financial statements and our auditor's report thereon. Management is responsible for the other information.

Our opinion on the separate and consolidated financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.

In connection with our audit of the separate and consolidated financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the separate and consolidated financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

In addition, our responsibility is to consider whether information included in the 2023 Integrated Annual report, including Governance Report and Remuneration Report, for the financial year for which the separate and consolidated financial statements are prepared is consistent with the separate and consolidated financial statements and whether 2023 Integrated Annual report has been prepared in compliance with applicable legal requirements. Based on the work carried out in the course of audit of the separate and consolidated financial statements, in our opinion, in all material respects:

• The information given in the 2023 Integrated Annual report, including Governance Report and Remuneration Report, for the financial year for which the separate and consolidated financial statements are prepared is consistent with the separate and consolidated financial statements; and
• The the 2023 Integrated Annual report, including Governance Report and Remuneration Report, has been prepared in accordance with the requirements of the Law on Consolidated Financial Reporting by Groups of Undertakings of the Republic of Lithuania.

We also need to check that the Sustainability report (Corporate Social Responsibility Report) has been provided. If we identify that Sustainability report (Corporate Social Responsibility Report) has not been provided, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of Management and Those Charged with Governance for the Separate and Consolidated Financial Statements

Management is responsible for the preparation of the separate and consolidated financial statements that give a true and fair view in accordance with IFRS Accounting Standards, as adopted by the European Union, and for such internal control as management determines is necessary to enable the preparation of separate and consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the separate and consolidated 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 Separate and Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the separate and consolidated 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 separate and consolidated 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 separate and consolidated 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 separate and consolidated 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 separate and consolidated financial statements, including the disclosures, and whether the separate and consolidated 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 communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the separate and consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditors' 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

Under decision of the general shareholders' meeting we were appointed on 27 September 2021 for the first time to audit the Company's and the Group's separate and consolidated financial statements. Our appointment to audit the Company's and the Group's separate and consolidated financial statements was renewed on 30 March 2023 under decision of the general shareholders' meeting, and the total uninterrupted period of engagement is 3 years.

We confirm that our audit opinion expressed in the Opinion section of our report is consistent with the additional report which we have submitted to the Company and the Group and their Audit Committee.

We confirm that in light of our knowledge and belief, services provided to the Company and the Group are consistent with the requirements of the law and regulations and do not comprise non-audit services referred to in Article 5(1) of the Regulation (EU) No 537/2014 of the European Parliament and of the Council.

In addition to services provided to the Company and the Group in the course of audit and disclosed in the Integrated Annual report, we have provided translation of the financial statements and limited assurance services on ESG information.

Report on the compliance of format of the separate and consolidated financial statements with the requirements for European Single Electronic Reporting Format

We have been engaged based our 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 separate and consolidated financial statements, including Integrated Annual management report, for the year ended 31 December 2023 (the "Single Electronic Reporting Format of the separate and consolidated financial statements") contained in the file abignitisgrupe-2023-12-31-en.zip (ParsePort generated hashcode: 7WeM034QHDlnyh8).

Description of a subject 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, these requirements constitute appropriate criteria to form a reasonable assurance conclusion.

Responsibilities of 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.

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 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' (the "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 is prepared, in all material aspects, in accordance 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 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 respects, with the ESEF Regulation.

The engagement partner on the audit resulting in this independent auditor's report is Rokas Kasperavičius.

On behalf of KPMG Baltics, UAB ROKAS KASPERAVIČIUS Digitally signed by ROKAS KASPERAVIČIUS Date: 2024.02.28 07:54:55 +02'00'

Rokas Kasperavičius Partner Certified Auditor

Vilnius, the Republic of Lithuania 28 February 2024