Kauno Energija

Quarterly Report • Aug 7, 2009

JSC "KAUNO ENERGIJA"

CONSOLIDATED AND COMPANY'S FINANCIAL STATEMENTS FOR THE I HALF, 2009 PREPARED ACCORDING TO INTERNATIONAL FINANCIAL REPORTING STANDARDS AS ADOPTED BY THE EUROPEAN UNION

Balance sheets

	Group		Company
	30	31	30	31 June, 2009 December, 2008
	1.407	1.783	1.401	1.683
3
	30.135	30.692	28.579	29.108
	119.940	117.555	119.925	117.525
	837	1.109	725	937
	6.177	7.062	6.090	6.966
	7.557	8.681	7.557	8.681
	164.646	165.099	162.876	163.217
1			6.053	6.053
4	65	65	65	65
	88	88
5	433	433	433	433
	586	586	6.551	6.551
	166.639	167.468	170.828	171.451
	6.082	5.581	5.925	5.541
	696	511	700	499
	6.778	6.092	6.625	6.040
6
	44.608	54.797	44.488	55.032
	7.731	8.547	7.763	8.655
	52.339	63.344	52.251	63.687
$\overline{7}$	2.048	3.616	2.043	3.604
	61.165	73.052	60.919	73.331
	227.804	240.520	231.747	244.782
	Notes		June, 2009 December, 2008

(cont'd on the next page)
The accompaying notes are an integral part of these financial statements.

JSC "KAUNO ENERGIJA", enterprise code 235014830, Raudondvario rd. 84, Kaunas, Lithuania
CONSOLIDATED AND COMPANY'S FINANCIAL STATEMENTS FOR THE I HALF, 2009 (thousand litas, if not otherwise stated)

Balance sheets (cont'd)

	Notes	Group 30	31 June, 2009 December, 2008	Company 30	31 June, 2009 December, 2008
EQUITY AND LIABILITIES
Equity
Share capital	1	119.510	119.510	119.510	119.510
Legal reserve	8	233	3.041		2.808
Other reserve
Retained earnings (deficit)
Profit (loss) for the current year		21.237	(4.235)	21.375	(4.343)
Profit (loss) for the previous year		(6.466)	(5.039)	(2.883)	(1.348)
Total retained earnings (deficit)		14.771	(9.274)	18.492	(5.691)
Total equity		134.514	113.277	138.002	116.627
Payables and liabilities
Non-current payables and liabilities
Non-current financial debts	9	37.869	33.921	37.869	33.921
Lease (financial lease)	10	95	95
Deferred tax liability				805	805
Grants (deferred income)	11	9.875	10.253	9.875	10.253
Employee benefit liability	12	1.605	1.612	1.605	1.612
Other non-current liabilities		795	824	795	824
Total non-current payables and liabilities		50.239	46.705	50.949	47.415
Current payables and liabilities
Non-current portion of financial debts and
lease (financial lease) of the current year	9, 10	4.828	8.834	4.803	8.785
Current financial debts	9	28.479	15.720	28.479	15.720
Trade payables	13	6.185	50.929	6.199	51.361
Payroll related liabilities		1.319	2.054	1.107	1.933
Advances received		892	932	892	920
Taxes payable		40	775	10	727
Derivative financial instruments	14	864	567	864	567
Other current payables and liabilities		444	727	442	727
Total current payables and liabilities		43.051	80.538	42.796	80.740
Total payables and liabilities		93.290	127.243	93.745	128.155
Total equity and liabilities		227.804	240.520	231.747	244.782

The accompanying notes are an integral part of these financial statements.

General director	Generalinio direktoriaus pavaduotolas- - pardavimų ir rinkodaros departamento Rimantas Bakas direktorius	20 July, 2009
Chief accountant	- Stanislovas Karčiauskas 10fluence Violeta Staškūnienė	20 July, 2009

Income (loss) statements

	Notes 2009	Group Il quater, I half,	2009	Il quater, 2008	I half, 2008	2008	2007
Operating income
Sales income Other operating income	15 16	31.108 293	178.039 554	26.864 126	112.660 401	205.974 1.337	169.528 1.319
Total operating income		31.401	178.593	26.990	113.061	207.311	170.847
Operating expenses
Fuel and heat purchased		(21.524)	(124.374)	(17.920)	(67.689)	(137.604)	(112.195)
Salaries and social security 12 Raw materials		(5.777) (417)	(9.985) (860)	(6.351) (683)	(10.568) (1.272)	(24.999) (2.404)	(23.121) (2.356)
Taxes other than income tax		(873)	(1.859)	(825)	(1.682)	(3.462)	(3.409)
Electricity		(442)	(1.468)	(529)	(1.523)	(2.891)	(3.976)
Depreciation and amortisation	3	(4.115)	(8.365)	(4.683)	(9.994)	(18.982)	(20.540)
Repairs and maintenance		(649)	(1.028)	(2.208)	(2.732)	(5.160)	(2.807)
Water		(187)	(257)	(94)	(178)	(517)	(801)
Change in allowance for
accounts receivable Change in allowance for	6	(1.126)	(1.466)	144	582	1	1.133
inventories Petrašiūnai power plant						181	8
operator expenses	1	(585)	(1.170)	(522)	(1.037)	(2.184)	(2.193)
Other expenses		(2.219)	(4.731)	(3.186)	(6.244)	(10.760)	(9.363)
Other operating expenses	16	(224)	(373)	(490)	(860)	(1.363)	(1.025)
Total operating expenses		(38.138)	(155.936)	(37.347)	(103.197)	(210.144)	(180.645)
Operating profit		(6.737)	22.657	(10.357)	9.864	(2.833)	(9.798)
Income from financial and
investment activity Expenses from financial and	17	426	692	353	656	1.281	1.314
investment activity	18	(1.050)	(2.112)	(571)	(1.267)	(3.343)	(2.008)
Net profit for financial and investment activity		(624)	(1.420)	(218)	(611)	(2.062)	(694)
Profit before tax
		(7.361)	21.237	(10.575)	9.253	(4.895)	(10.492)
Income tax						$-660$	$-1.866$
Net profit		(7.361)	21.237	(10.575)	9.253	(4.235)	(8.626)
Basic earnings per share (LTL)	19	(0, 37)	1,07	(0, 54)	0.47	(0, 21)	(0.44)

The accompanying notes are an integral part of these financial statements.

General director	Rimantas Bakas pardavimų ir rinkodaros departamento	AB "Kauno energija" Generalinio direktoriaus pavaduotojas- direktorius	20 July, 2009
Chief accountant	Violeta Staškūnienė	Stanislovas Karčiauskas Welecece	20 July, 2009

		Company
	Notes 2009	Il quater, I half,	2009	Il quater, 2008	I half, 2008	2008	2007
Operating income
Sales income	15	31.051	177.930.	26.699	112.150.	205.233	168.003
Other operating income	16	269	515	122	401	1.322	1.370
Total operating income		31.320	178.445	26.821	112.551	206.555	169.373
Operating expenses
Fuel and heat purchased
		(21.524)	(124.374)	(17.920)	(67.689)	(137.604)	(112.195)
Salaries and social security 12		(5.358)	(9.155)	(5.627)	(9.158)	(22.396)	(20.098)
Raw materials		(286)	(791)	(521)	(987)	(1.991)	(2.013)
Taxes other than income
tax		(861)	(1.836)	(813)	(1.659)	(3.402)	(3.354)
Electricity		(438)	(1.457)	(523)	(1.508)	(2.863)	(3.956)
Depreciation and
amortisation	3	(4.072)	(8.279)	(4.632)	(9.896)	(18.784)	(20.389)
Repairs and maintenance		(649)	(1.028)	(2.208)	(2.732)	(5.181)	(2.804)
Water		(185)	(253)	(90)	(170)	(502)	(787)
Change in allowance for accounts receivable	6	(1.126)	(1.466)	144	582	1	1.133
Change in allowance for
inventories						181	8
Heating and hot water
systems supervision
expenses	1	(399)	(852)	(688)	(1.417)	(2.485)	(2.801)
Petrašiūnai power plant
operator expenses Other expenses	1	(585)	(1.170) (4.630)	(522)	(1.037)	(2.184)	(2.193)
		(2.166)		(3.001)	(5.922)	(10.248)	(8.791)
Other operating expenses	16	(220)	(362)	(489)	(858)	(1.357)	(986)
Total operating expenses		(37.969)	(155.653)	(36.890)	(102.451)	(208.815)	(179.226)
Operating profit		(6.649)	22.792	(10.069)	10.100	(2.260)	(9.853)
Income from financial and investment activity	17	426	692	353	656	1.281	1.364
Expenses from financial
and investment activity	18	(1.049)	(2.109)	(569)	(1.263)	(3.800)	(2.003)
Net profit for financial and
investment activity
		(623)	(1.417)	(216)	(607)	(2.519)	(639)
Profit before tax
		(7.272)	21.375	(10.285)	9.493	(4.779)	(10.492)
Income tax						-436	$-1.871$
Net profit		(7.272)	21.375	(10.285)	9.493	(4.343)	(8.621)
Basic earnings per share
(LTL)		(0, 37)	1,07	(0, 52)	0,48	(0, 22)	(0, 44)
The accompanying notes are an integral part of these financial statements.
				Generalinio direktoriaus pavaduotojas- pardavimų ir rinkodaros departamento
General director		Rimantas Bakas		direktorius		20 July, 2009
				Stanislovas Karčiauskas

Violeta Staškūnienė

Chief accountant

hife.eeu

20 July, 2009

$\mathbf 5$

Statements of changes in equity

Group	Notes	Share capital	Legal reserve	Other reserve	Retained (deficit)	Total
Balance as of 31 December,
2007		118.310	11.373	163	(13.534)	116.312
Net profit (loss) for the year					9.253	9.253
Transferred to reserves	8		(8.332)	(163)	8.495
Balance as of 30 June, 2008		118.310	3.041		4.214	125.565
Increase in share capital		1.200				1.200
Net profit (loss) for the year					(13.488)	(13.488)
Balance as of 31 December,
2008		119.510	3.041		(9.274)	113.277
Transferred to reserves	8		(2.808)		2.808
Net profit (loss) for the year				$\overline{\phantom{a}}$	21.237	21.237
Balance as of 30 June, 2009		119.510	233		14.771	134.514

Company	Notes	Share capital	Legal reserve	Other reserves	Retained (deficit)	Total
Balance as of 31 December,
2007		118.310	11.323		(9.863)	119.770
Net profit (loss) for the year			-		9.493	9.493
Transferred to reserves	8		(8.515)		8.515	٠
Balance as of 30 June, 2008		118.310	2.808	$\blacksquare$	8.145	129.263
Increase in share capital		1.200		$\blacksquare$		1.200
Net profit (loss) for the year					(13.836)	(13.836)
Balance as of 31 December, 2008		119.510	2.808	$\blacksquare$	(5.691)	116.627
Transferred to reserves	8		(2.808)		2.808
Net profit (loss) for the year					21.375	21.375
Balance as of 30 June, 2009		119.510			18.492	138.002

	The accompanying notes are an integral part of three firms periodic statements.
General director	pardavimų ir rinkodaros departamente direktorius : Rimantas Bakas - Stanislovas Karčiauskas	20 July, 2009
Chief accountant	Violeta Staškūnienė Mucca	20 July, 2009

Cash flow statements

		Group I half, 2009	I half, 2008	Company I half, 2009	I half, 2008
Cash flows from 9to) operating activities
Net (loss)		21.237	9.253	21.375	9.493
Adjustments for non-cash items		9.922	9.116	9.812	9.027
Depreciation and amortisation		8.792	10.686	8.706	10.585
Write-offs and change in allowance for accounts
receivable		1.466	(582)	1.466	(582)
Loss from sale and write-off of non-current assets		75	457	73	457
Accruals		(1.443)	(1.519)	(1.462)	(1503)
Grants (amortisation)		378)	(659)	(378)	(659)
Derivative financial instruments		297		297
Interest expenses		1.695	1.266	1.692	1.262
Elimination of other financial and investment activity results		(582)	(533)	(582)	(533)
Changes in working capital		(36.277)	2.308	(36.207)	1.998
Decrease in inventories		(501)	393	(384)	333
(increase) in prepayments		(185)	(186)	(201)	(152)
(increase) in trade receivables		8.723	18.453	9.078	18.009
(increase) decrease in other receivables		816	(1)	892	(76)
Increase (decrease) in non-current liabilities		(36)		(36)
Increase (decrease) in current trade payables and
advances received		(44.784)	(16.088)	(45.190)	(15.783)
Increase in payroll related liabilities		708	627	636	530
(decrease) in other liabilities to budget		(735)	(831)	(717)	(803)
Increase in other current liabilities		(283)	(59)	(285)	(60)
Net cash flows from operating activities		(5.118)	20.677	(5.020)	20.518
(acquisition) of tangible and intangible assets		(8.125)	(9.755)	(8.112)	(9.636)
Proceeds from sale of tangible assets		87	75	(44)	75
Interest for delayed receivables		688	623	688	623
Increase in cash flows from non-current accounts receivable			(5)		(5)
Interest received		4		4
Net cash flows from investment activities		(7.346)	(9.062)	(7.464)	(8.943)
Proceeds from loans		16.732	4.305	16.732	4.305
(repayment) of loans		(3.987)	(16.873)	(3.987)	(16.873)
(paid) interest		(1.685)	(1.355)	(1.682)	(1.351)
(payments) lease (financial lease)		(44)	(42)	(20)	(19)
(paid) penalty interest and fines		(120)	(1)	(120)	(1)
Net cash flows from financing activity		10.896	(13.966)	10.923	(13.939)
Net (decrease) increase in cash and cash
equivalents	Cash and cash equivalents at the beginning of the	(1.568)	(2.351)	(1.561)	(2.364)
year		3.616	4.886	3.604	4.864
	Cash and cash equivalents at the end of the year-raile 2.048		2.535	2.043	2.500
	The accompanying notes are an in Generalisis direktoriaus par	BSA linancial	statements
General director	Rimantas Ba k	čiauskas			20 July, 2009
Chief accountant	Violeta Staškūnienė				20 July, 2009

Notes to the financial statements

General information

JSC "Kauno energija" (hereinafter the Company) is joint stock company registered in the Republic of Lithuania. The address of its registered office is as follows:

Raudondvario Rd. 84, Kaunas. Lithuania.

AB Kauno Energija consists of the Company's head office and subsidiary "Jurbarko šilumos tinklai".

The Company is involved in heat, electricity generation and distribution and maintenance of the heating and hot water systems. The Company was registered on 1 July 1997 after the reorganisation of JSC "Lietuvos energiia". The Company's shares are traded on the Baltic Secondary List of the NASDAQ OMX Vilnius.

As of 31 December, 2008 and 30 June, 2009 the shareholders of the Company were as follows:

	Number shares (units)	оf ownedPercentage ownership	оf
Kaunas city municipality administration Kaunas district municipality		16.954.892	85,12
administration administracija Jurbarkas district municipality		1.606.168	8,07
administration administracija		643.810	3,23
Other minor shareholders		713.512	3,58
		19.918.382	100,00

All the shares with a par value of LTL 6 each are ordinary shares. The Company did not hold its own shares in 2008 and on 30 June. 2009.

On 26 June, 2008 in the Company's shareholders meeting it was decided to increase the share capital by issuing 200,000 ordinary shares with the par value LTL 6 each. Priority right to acquire issued shares was granted to Jurbarkas district municipality council. The issue price of shares is equal to their nominal value. 100,000 from 200,000 shares were not paid as of 31 December, 2008. All shares were fully paid as of 30 June. 2009.

On 11 June, 2009 Council of Kaunas city municipality made the decision in the extraordinary shareholders meeting of the Company to vote for the increase of share capital by issueing 22.700.000 ordinary shares with the par value LTL 6 each, paying for them by Kaunas city municipality asset input. For this issue extraordinary shareholders meeting, which will be held on 23 July, 2009, is convened.

The Company is also involved in maintenance of heating systems. On 1 July, 2006 on the basis of Kaunas Energy Services Department Company established daughter company closed-end company "Pastatu priežiūros" paslaugos" (hereinafter the daughter company). The main activity of the daughter company is exploitation and maintenance of building heating network and heating consumption equipment, internal engineering networks and systems as well as building structures. After establishing of subsidiary the employees of the Company working at Kaunas Energy Services Department were dismissed from the Company and hired by closed-end company "Pastaty priežiūros paslaugos". From 1 July, 2006 the Company is contracting closed-end company "Pastatu priežiūros paslaugos" for permanent technical maintenance of heating and hot water supply systems.

The Group consists of the Company JSC "Kauno energija" and it's daughter company closed-end company "Pastatu priežiūros paslaugos" (hereinafter-Group):

				Profit	(loss)
	Registration stock held byCost	Shares of the		for ofreporting	the Total
Company	address	the Group	investment	period	equity	Main activity
Closed-end "Pastaty	companySavanoriy 347. priežiūrosave.					Maintenan-ce heating οt
paslaugos"	Kaunas	100 %	6.518	(196)	5.857	systems

As of 31 December, 2008 impairment loss of investment in closed-end company "Pastatų priežiūros paslaugos" in amount of LTL 465 thousand was recognised in the Parent's financial statements.

Operations of the Company are regulated by the Heating Law No. IX-1565 of 20 May, 2003 of the Republic of Lithuania. Starting 1 January, 2008, the Law amending the Heating Law No. X-1329 of 20 November, 2007 of the Republic of Lithuania came in to force.

According to the Heating Law of the Republic of Lithuania, the Company's activities are licensed and regulated by the State Price Requisition Commission of Energy Resources (hereinafter the Commission). On 26 February, 2004 the Commission granted the Company the heat distribution license. The license has indefinite maturity, but is subject to meeting certain requirements and may be revoked based on the respective decision of the Commission. The Commission also sets price cap for the heat supply. On 12 September, 2008 by the decision of the Commission, the territory in which the Company can provide heat distribution activity was re-defined, as the Company sold Paliai boiler house in Marijampole district.

In 2003 the Company sold part of the assets of the subdivision Kauno Elektrine to closed-end company Kauno Termofikacijos Elektrinė (hereinafter KTE) and committed to purchase at least 80 % of the annual demand of the integrated heating network in Kaunas from this company. The contract is valid for 15 years from the sales agreement date. The contract established that the purchase price of heat energy from KTE would not increase during the first 5 years from the date of signing the contract. New heat sale price for KTE and the Company was approved by the Commission and became effective starting 1 December, 2008. As described in note 21 the Company participates as a third party in administrative litigation between KTE and the Commission. After the reduction of KTE heat sales price, the Commission coordinated new heat price for the Company 22,2 percent lower that was valid, which came into effect from the 1 June, 2009.

On 8 June, 2006 the Company signed the agreement with closed-end company Energijos Sistemu Servisas regarding the operation of Petrašiūnai power plant and its assets located at Jegaines str. 12, Kaunas. The contract is valid for a period of three vears. Starting from 4 July, 2006, closed-end company "Energijos sistemu servisas" started to provide operation services of Petrašiūnai power plant. The employees of the Company that used to work at a subdivision of Petrašiūnai power plant were dismissed from the Company and hired by closed-end company "Energijos sistemy servisas". On 22 June 2006 the Company signed a lease agreement with closed-end company KTE regarding the equipment used in production of heating energy operated by closed-end company "Energijos sistemy servisas". For the purchase of this service on 2 July, 2009 with the closed-end company "Energijos sistemy servisas" was signed new agreement, valid till the 3 August, 2010.

The Company's generation capacity includes a power plant in Petrašiūnai, 3 district boiler-houses in Kaunas integrated network. 7 regional boiler-houses in Kaunas region, 14 isolated networks and 50 local gas burning boiler-houses. On 25 June, 2008 the Company sold Paliai boiler house, located in Marijampole district, to Marijampolė city municipality.

The Company's total heat and electricity generation capacity is 534.2 MW and 8.75 MW, respectively, out of which 265.8 MW of heat generation and 8 MW of electric capacity are located at the power plant in Petrašiūnai. The total Company's power generation capacity is 542.95 MW.

On 30 June, 2009 Group's average number of employees was 641 (663 employees in 2008). On 30 June, 2009 the average number of employees in the Company was 592 (609 employees in 2008).

2.1. Financial statements form

These financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS), as adopted by the European Union (hereinafter the EU).

2.2. Financial statements currency

Group managers accounting and in the amounts shown in these financial statements are measured and presented in the local currency of the Republic of Lithuania, litas (LTL) and all values are rounded to the nearest thousand, except when otherwise indicated.

Starting from 2 February, 2002, Lithuanian litas is pegged to EUR at the rate of 3.4528 litas for 1 euro, and the exchange rates in relation to other currencies are set daily by the Bank of Lithuania.

2.3. Principles of consolidation

The consolidated financial statements of the Group include Company and it's daughter company. The control is normally evidenced when the Group owns, either directly or indirectly, more than 50 % of the voting rights of a company's share capital and/or is able to govern the financial and operating policies of an enterprise so as to benefit from its activities. The equity and net income attributable to minority shareholders' interests are shown separately in the consolidated balance sheet and consolidated income statement.

2.4. Non-current tangible assets

Property, plant and equipment of the Group and the Company are stated at cost less accumulated depreciation and impairment losses.

Depreciation is computed on a straight-line basis over the following estimated useful lives:

	Years
Buildings	$7 - 50$
Structures and machinery	$5 - 60$
Vehicles	$3 - 10$
Equipment and tools	$2 - 20$

The useful lives are reviewed annually to ensure that the period of depreciation is consistent with the expected pattern of economic benefits from the items in property, plant and equipment. Depreciation periods were revised as of 1 September, 2008. Group and Company evaluated non-current tangible asset useful life and from the 1 September, 2008 increased heating networks depreciation period from 20 years up to 30 years, for heat exchangers and other special equipments from 10 years up to 15 years. If the Group and Company further would use 20 years and 10 years depreciation periods, in the year 2008 depreciation expenses would amounted to LTL 1.200 thousand higher and the balance of non-current tangible asset would be LTL 1.200 thousand lower.

2.5. Segments

Group and Company implements activity in one business and geographical segment.

3. Non-current tangible assets

Group's and Company's depreciation of non-current tangible asset on 30 June. 2009 amounts to LTL 8.736 thousand and LTL 8.656 thousand respectively (in 2008 - LTL 19.207 thousand and LTL 18.971 thousand respectively). LTL 8.309 thousand and LTL 8.229 thousand sums (in 2008 - LTL 19.050 thousand and LTL 18.894 thousand) in Group's and Company's profit (loss) statement are included in the operating expenses.

Acquisition value of Company's non-current tangible asset, which acquisition value on 30 June, 2009 amounted to LTL 48.469 thousand respectively was fully depreciated (LTL 50.828 thousand as of 31 December, 2008), but still used in the activity.

On 30 June, 2009 and on 31 December, 2008 Group's and Company's large portion of not finished construction consists of heat supply networks capital repair works.

On 30 June, 2009 Group's and Company's non-current tangible asset which balance value amounted to LTL 68.479 thousand (LTL 73.691 thousand as of 31 December, 2008), was pledged for the banks as collateral for the loans (9 note).

4. Non-current accounts receivable

	Group		Company
		31		31
	30 June, 2009	December, 2008	30 2009	June, December, 2008
Long-term loans granted to the Company's employees		56 56		56	56
Other		9 9		9	9
		65 65		65	65

Long-term loans granted to the employees of the Company are non-interest bearing and mature from 2008 to 2023. These loans are accounted for at discounted value using 8.0 % interest rate.

All non-current accounts receivable as of 31 December, 2008 and 30 June, 2009 are neither past due nor impaired.

5. Other financial assets

	Group			Company
	31				31
	30 2009	June,December, 2008		30 2009	June,December, 2008
Ordinary shares - unquoted		433	433		433	433

Carrying value of the unquoted ordinary shares is estimated using recent arm's length market transactions.

6. Current accounts receivable

	Group	Company
		31	31
	30	June, December,	30	June, December,
	2009	2008	2009	2008
Trade receivables, gross	65.558	74.277	65.438	74.512
Less: impairment of doubtful receivables	(20.950)	(19.480)	(20.950)	(19.480)
Trade receivables, net	44.608	54.797	44.488	55.032

Change in impairment of doubtful receivables on 30 June, 2009 and 31 December, 2008 is included into the change in allowance for doubtful receivables caption in the Group's and the Company's income statement.

As of 30 June, 2009 trade receivables with the nominal value of LTL 20.950 thousand (LTL 19.480 thousand aso f 31 December, 2008), were impaired and fully provided for.

Movements in the allowance for impairment of the Group's and the Company's receivables were as follows:

	Total
Balance as of 31 December, 2006	22.370
Unused amounts reversed	(1.014)
Utilized	(957)
Balance as of 31 December, 2007	20.399
Unused amounts reversed	(241)
Utilized	(678)
Balance as of 31 December, 2008	19.480
Depreciation	1.470
Balance as of 30 June, 2009	20.950

In I half, 2009. Group and Company received LTL 9 thousand (in 2008 - LTL 67 thousand) of bad debts, which were written off in the previous periods.

The ageing analysis of the Group's trade receivables as of 31 December and 30 June, 2009 is:

Trade receivables past due but not impaired

	Trade receivables neitherLess than60 - 150151 - 240241 - 360More than past due nor impaired	60 days davs	davs	davs	360 davs	Total
2009-06-30 2008-12-31	6.512 43.602	14.299 6.338	19.323 1.569	2.513 1.612	312 817	1.649. 44.608 859 54.797

The ageing analysis of the Company's trade receivables as of 31 December, 2008 and 30 June, 2009 is as follows:

		Trade receivables past due but not impaired
	Trade receivables neitherLess than60 - 150151 - 240241 past due nor impaired	60 davs davs	davs	days	- 360More than $360$ davs	Total
2009-06-30	6.452	14.239	19.323	2.513	312 1.649	44.488
2008-12-31	43.851	6.336	1.557	1.612	817 859	55.032

Trade receivables are non-interest bearing and are generally on 30 days terms or individually agreed.

The Group's and the Company's trade receivables, past due more than 360 days, comprise the accounts receivable from budget organisations, financed from budgets of the State and municipalities, and from institutions financed by Patient's Funds, for which the allowance is not accrued by the Group and the Company.

On June, 2009 Group's and Company's other receivables amounted to LTL 7.731 thousand and LTL 7.763 thousand (LTL 8.547 thousand and LTL 8.655 thousand as of 31 December, 2008), which larger portion makes debt of municipalities for the compensations for low income families, receivable value added tax, receivable sums for sold inventories (metal, heating systems equipments) and provided services (transportation and permenent heating systems supervision services).

The ageing analysis of the other Group's trade receivables (except receivable taxes) as of 31 December, 2008 and 30 June, 2009 is as follows:

	Trade receivables past due but not impaired
	Trade receivables neither Less than 60 - 150151 - 240241 - 360 More than past due nor impaired	60 davs davs	davs	davs		360 davs	Total
2009-06-30	392	3.701	507	28	8	301	4.937
2008-12-31	2.305	63	39	$\overline{\phantom{0}}$		242	2.651

The ageing analysis of the other Company's trade receivables (except receivable taxes) as of 31 December, 2008 and 30 June, 2009 is as follows:

	Trade receivables past due but not impaired
	Trade receivables neitherLess than60 - 150151 - 240241 - 360More than past due nor impaired	60 days davs	davs	davs	360 days		Total
2009-06-30	390	3.701	507	28	8	336	4.970
2008-12-31	2.413	63	39	$\blacksquare$	2	242	2.759

Group's and Company's other receivables are without interest and usuallu their term is 30 - 45 days.

From buyers and other receivable sums, which period is not passed and for which there is not calculated value reduction at the balance day their wer no any features that debtors would not can to implement their liabilities.

7. Cash and cash equivalents

	Group	Company
	30 2009 m.	31 June, December, 2008	31 30 2009	June, December, 2008
Cash in transit	1.034	2.158	1.034	2.158
Cash at bank	966	1.437	962	1.426
Cash on hand	48	21	47	20
	2.048	3.616	2.043	3.604

Group's and Company's accounts in litas, which balance on 30 June, 2009 amounted to LTL 779 thousand (LTL 801 thousand as of 31 December, 2008), is pledged for the banks as collateral for the loans (9 note).

8. Reserves

Legal and other reserve

A legal reserve is a compulsory reserve under Lithuanian legislation. Annual transfers of not less than 5 % of net profit calculated in accordance with IFRS are compulsory until the reserve reaches 10 % of the share capital. The legal reserve cannot be distributed as dividends but can be used to cover any future losses. On 29 April 2008, based on the decision of the shareholders the Group and the Company transferred an amount of LTL 8,515 thousand from legal reserve to cover losses of 2007. On 14 May 2007 the Group and the Company transferred LTL 7.689 thousand to the legal reserve. On 7 March, 2008 based on the decision of the shareholders the Subsidiary transferred an amount of LTL 183 thousand from other reserve and retained earnings to the legal reserve. On 14 March 2007 based on the decision of the shareholders the Subsidiary transferred an amount of LTL 50 thousand to the legal reserve and an amount of LTL 163 thousand to the other reserve for the purpose of investment. On 28 April, 2009 Company by the decision of shareholders transferred LTL 2.808 thousand from the compulsory reserve to cover losses of the year 2008.

9. Financial debts

	Group		Company
			31		31
	30 2009		June, December, 2008	30 2009		June,December, 2008
Non-current financial debts
Non-current loans		37.869	33.921		37.869	33.921
Current loans
Non-current portion of current year loans		4.786	8.748		4.786	8.748
Current bank loans (included credit line)		16.129	15.720		16.129	15.720
Factorised trade debts		12.350	15.720		12.350	15.720
		33.265	24.468		33.265	24.468
Total		71.134	58.389		71.134	58.389

Non-current loans payment periods (all loans are with variable interest norm):

	Group			Company
		31			31
	30 2009	June, December, 2008		30 2009	2008	June, December,
2009		4.786	8.748		4.786	8.748
2010		9.570	9.570		9.570	9.570
2011		9.940	9.940		9.940	9.940
2012		4.682	4.682		4.682	4.682
2013		3.987	3.987		3.987	3.987
2014		3.987	3.987		3.987	3.987
2015		3.987	1.406		3.987	1.406
2016		1.716	349		1.716	349
		42.655	42.669		42.655	42.669

At the end of the period not paid loans balance in litas and foreign currency is:

		Group			Company
		31				31
	30		June, December,	30	June, December,
	2009		2008	2009		2008
Loan currency
EUR		55.298	32.913		55.298	32.913
LTL		15.836	25.476		15.836	25.476
		71.134	58.389		71.134	58.389

On 1 August, 2005 the Group and the Company signed a long-term loan agreement with AB Bankas Hansabankas for the amount of LTL 5,000 thousand. The maturity date of the last portion of the loan is 1 August 2012. As of 30 June, 2009 the outstanding balance of the loan amounted to LTL 2,505 thousand of which LTL 416 thousand was accounted for as the current portion of non-current borrowings in the financial statements of the Group and the Company. The loan bears 6-month VILIBOR plus 0.77 % interest rate.

On 23 August, 2005 the Group and the Company signed a long-term loan agreement with AB SEB Bankas for the amount of EUR 8,776 thousand (the equivalent of LTL 30,300 thousand). The maturity date of the last portion of the loan is 31 December, 2014. The outstanding balance of the loan amounted to EUR 3.982 thousand (the equivalent of LTL 13.750 thousand) as of 30 June, 2009, of which LTL 1.250 thousand was accounted for as the current portion of non-current borrowings in the financial statements of the Group and the Company. The loan bears 6-month EUR LIBOR plus 1.9 % interest rate.

On 1 December 2006 the Group and the Company signed a long-term loan agreement with Nordea Bank Finland Plc. Lithuanian branch for the amount of LTL 2.090 thousand. On 18 April 2007 the loan amount increased up to LTL 6.090 thousand. The maturity date of the last portion of the loan is 31 October, 2015. As of 31 March, 2009 the outstanding balance of the loan amounted to LTL 5,406 thousand, of which LTL 424 thousand was accounted for as the current portion of non-current borrowings in the financial statements of the Group and the Company. The loan bears 3-month VILIBOR plus 0.45 % interest rate.

On 21 December 2006 the Group and the Company signed a long-term loan agreement with AB SEB Bankas for the amount of EUR 2,059 thousand (the equivalent of LTL 7,108 thousand). The maturity date of the last portion of the loan is 30 November 2016. As of 30 June, 2009 the outstanding balance of the loan amounted to EUR 773 thousand (the equivalent of LTL 2,668 thousand), of which LTL 198 thousand was accounted for as the current portion of non-current borrowings in the financial statements of the Group and the Company. The loan bears 6-month EUR LIBOR plus 0.4 % interest rate.

On 14 November 2007 the Group and the Company signed a long-term loan agreement with AB DnB NORD Bankas for the amount of EUR 576 thousand (the equivalent of LTL 1.989 thousand). The maturity date of the last portion of the loan is 31 December 2016. As of 30 June, 2009 the outstanding balance of the loan amounted to EUR 540 thousand (the equivalent of LTL 1.864 thousand), of which LTL 124 thousand was accounted for as the current portion of non-current borrowings in the financial statements of the Group and the Company. The loan bears 12-month EUR LIBOR plus 0.59 % interest rate.

On 20 April 2007 the Group and the Company signed an overdraft agreement with Danske Bank A/S Lithuania Branch for the amount of LTL 1.010 thousand, with the maturity date of 20 October 2009. As of 30 June, 2009 the Group's and the Company's balance of used overdraft was LTL 991 thousand (LTL 1.010 thousand as of 31 December 2007). The overdraft bears 3-month VILIBOR plus 0.44 % interest rate.

On 31 July 2008 the Group and the Company signed a long-term investment credit agreement with Danske Bank A/S Lithuania Branch for the amount of EUR 984 thousand (the equivalent of LTL 3,398 thousand). The maturity date of the last portion of the loan is 2018. As of 30 June, 2009 the outstanding balance of the investment credit amounted to EUR 552 thousand (the equivalent of LTL 1,907 thousand), of which LTL 175 thousand with maturity date 31 December 2012 was accounted for as the current portion of non-current borrowings in the financial statements of the Group and the Company. The loan bears 3-month EURIBOR plus 0.385 % interest rate.

On 31 July 2008 the Group and the Company signed a long-term investment credit agreement with Danske Bank A/S Lithuania Branch for the amount of EUR 1,158 thousand (the equivalent of LTL 4.000 thousand). The maturity date of the last portion of the loan is 30 September 2017. As of 30 June, 2009 the outstanding balance of the investment credit amounted to EUR 1.146 thousand (the equivalent of LTL 3.955 thousand). All amount with maturity date 31 December 2011 was accounted for as the non-current borrowing in the financial statements of the Group and the Company. The loan bears 3-month EURIBOR plus 0.7 % interest rate.

On 22 September, 2008 Group and Company signed non-current loan agreemet with JSC SEB bank for EUR 3.333 thousand (LTL 11.508 thousand equivalent) sum. Last portion of loan repayment period is 31 December. 2011. Loan balance on 30 June, 2009 is EUR 2.783 thousand (LTL 9.609 thousand equivalent), from which LTL 1.208 thousand in Group's and Company's financial statements accounted in non-current loans current vear portion article. The loan bears 1 month EUR LIBOR + 0.7 % interest rate.

On 5 September, 2008 Group and Company had signed current loan agreement with JSC SEB bank for EUR 174 thousand (LTL 601 thousand equivalent) sum. Loan portion repayment period is 31 May, 2009. Loan is repaved.

On 4, 1999 Group and Company signed credit line agreement with JSC SEB bank for the LTL 7.000 thousand sum. Agreement term is 19 July, 2009. Company's used credit line funds on 30 June, 2009 amounted to LTL 6.934 thousand (LTL 6.960 thousand as of 31 December, 2008). For the credit line OVER'N VILIBOR + 1.9 percent interest are payed. Agreement validity term if foreseen to change for the calendar year period.

On 8 July, 2004 Group and Company signed overdraft agreement with JSC AB DnB NORD bank for LTL 18.000 thousand. Overdraft limit validity term is 31 May, 2008. On 27 May, 2008 overdraft sum was reduced to LTL 10.000 and the payment period prolonged to 31 May, 2009. On 29 May, 2009 agreement validity prolonged to 29 May, 2010, by changing it's amount to EUR 2,896 thousand (LTL 9,999 thousand equivalent). Group's and Company's used overdraft sum on 30 June, 2009 amounted to LTL 9.194 thousand (LTL 8.760 thousand as of 31 December, 2008). For the overdraft are payed 1-months EURIBOR + 3 percent annual interest.

On 26 February, 2009 Company, JSC Nordea Finance Lithuania and closed-end company Kauno termofikacijos elektrine had signed the agreement on the settlement for the heat energy period delay for the additional 30 days period than determined in heat purchase-sale agreement (as described in 1 paragraph). This agreement is signed according to that on 26 February, 2009 JSC Nordea Finance Lithuania and closed-end company Kauno termofikacijos elektrinė signed Factoring agreement for the to the Company provided bills for the heat energy. Liability amount on 30 June, 2009 is EUR 3.577 thousand (LTL 12.350 thousand equivalent).

Group's and Company's non-current tangible asset (3 note) and accounts in bank (7 note) were pledged to banks as collateral for the loans.

10. Lease (financial lease)

According to the financial lease agreements leased Group's asset consists of vehicles. Financial lease terms are from 2 till 5 years. Further is provided asset balance value acquired by the way of financial lease:

	Group			Company
	31			31
	30 2009	June, December, 2008		30 2009	June, December, 2008
Vehicles		155	186		50	55
		155	186		50	55

On 30 June, 2009 financial lease interest norm is variable and fixed. Fixed interest norm is equal 3.99 percent and 5.77 percent. Variable interest norm fluctuates from 6 months VILIBOR + 1.5 percent.

Financial lease balance is denominated in litas.

Financial lease payments in the future according to the lease agreements on 30 June, 2009 consists of:

	Group			Company
		31			31
	30 2009	June, December, 2008		30 2009	June, December, 2008
Per one year		46	93		18	38
From one to five years		101	101			$\overline{\phantom{0}}$
Total financial lease liabilities		147	194		18	38
Interest		(10)	(13)		(1)	(1)
Current value of financial lease liabilities		137	181		17	37
Financial lease liabilities as
-current		42	86		17	37
-non current		95	95

11. Grants (deferred income)

	Group	Company
		31		31
	30 2009	June, December, 2008	30 2009	June, December, 2008
Balance at the beginning of the period	10.253	10.503	10.253	10.503
Received per year
Non-current asset received without payments	0	889	0	889
	0	889	0	889
Amortisation and write-offs	(378)	(1.139)	(378)	(1.139)
Balance at the end of the period	9.875	10.253	9.875	10.253

In the year 2008 Group and Company received heat networks without payments in Žemgaliy str. and Raudondvario rd., which vale at the moment of transfer amounted to LTL 149 thousand. Also in the vear 2008 Group and Company received telecommunication equipment, which value is at the moment of transfer LTL 140 thousand. On 10 October, 2008 Company's subsidiary "Jurbarko šilumos tinklai" received LTL 600 thousand subsidy for the change of boiler burned by mazut into burned by gas from public institution Lietuvos aplinkos apsaugos investicijų fondas (LAAIF). On 31 December, 2008 public institution LAAIF transferred to the Company LTL 360 thousand and remained LTL 240 thousand portion was recognised in Group's and Company's other receivables article. On 30 June, 2009 public institution LAAIF fully settled with the Company.

12. Employee benefits liability

Every employee, leaving work and who reached pension age according to the laws of the Republic of Lithuania and collective agreement has to receive compensation of 2 - 6 months salaries.

Compensation liability for the Group and Company employees were:

	Group		Company
	30 2009		31 June, December, 2008	30 2009	31 June, December, 2008
Non-current employee benefits		1605	1.612		1605	1.612
Non-current portion of employee benefits for the current year			408			408
		1.605	2.020		1.605	2.020

On 30 June, 2009 at the finished half of the year Group's and Company's paid benefits for the employees were LTL 415 thousand (LTL 335 thousand as of 31 December, 2008) and are recognised in salaries and social security costs in Group's and Company's profit (loss) statement.

Main presumptions used for the Group and Company planned payments liabilities are provided below:

	30 2009	June, December, 2008
Discount norm, percent	7.0	7.0
Employee change index, percent Planned annual increase of salaries, percent	18.9 3,0	18.9 3,0

13. Trade debts

Trade debts are without interest and usually for them 30 - 90 days period is set.

14. Derivative financial instruments

On 29 October, 2008 Group and Company made the transaction on interest exchange. From 24 November, 2008 till 22 November, 2010 Group and Company set 3.86 percent fixed interrest norm for the variable 1-month EURIBOR interest norm. On 30 June, 2009 nominal transaction value is LTL 2.958 thousand EUR (LTL 10.213 thousand equivalent). LTL 3.133 thousand EUR as of 31 December, 2008 (LTL 10.818 thousand equivalent). Transaction market value pn 30 June, 2009 - LTL 277 thousand.

On 24 October, 2008 Group and Company set interest exchange transaction. From 22 October, 2008 till 23 August, 2010 Group and Company set 4.24 percent fixed interest norm for the variable 6-months EURIBOR interest norm. On 30 June, 2009 nominal transaction value is LTL 4.163 thousand EUR (LTL 14.375 thousand equivalent), as of 31 December, 2008 nominal transaction value is LTL 4.344 thousand EUR (LTL 15.000 thousand equivalent). Company has broken off this transaction on the state of 9 April, 2009.

On 9 April, 2009 Group and Company set interest exchange transaction. From 24 August, 2009 till 22 August. 2014 Group and Company set 4.15 percent fixed interest norm for the variable 6-months EUR LIBOR interest norm. On 30 June, 2009 nominal transaction value is LTL 3.862 thousand EUR (LTL 13.333 thousand equivalent). Transaction market value on 30 June. 2009 - LTL 587 thousand.

15. Sales income

Group and Company makes heat energy supply, buildings heating and hot water supply systems supervision. electricity production and supervision of collectors. These activities are related, thats why for the management aims it is considered that Group and Company organizes activity in the one segment – heat energy supply. Sales income according to the Group's and Company's activities are provided below:

	Group I half, 2009 2008		Company half, 2009 2008
Heat energy	176.684	201.760	176.719	201.793
Buildings heating and hot water supply supervision	1.183	3.708	1.039	2.934
Electricity	171	506	171	506
Supervision of collectors		$\overline{\phantom{a}}$
	178.039	205 974	177 930	205.233

$C$ roun

Company

16. Other activity income and costs

	uuuu I half, 2009 2008	COMPANY I half, 2009 2008
Other activity income
Company's services	497	1.003	460	992
Sold tangible asset	26	111	26	112
Non-current asset sales income	1	162		157
Other	30	61	28	61
	554	1.337	515	1.322
Other activity costs
Cost of company's services	(275)	(631)	(266)	(625)
Sold tangible asset	(22)	(253)	(22)	(253)
Non-current asset sales losses	(76)	(475)	(73)	(475)
Other		(4)	(1)	(4)
	(373)	(1.363)	(362)	(1.357)
Net profit: profit (losses)	181	(26)	153	(35)

17. Financial activity income

	Group I half, 2009 2008		Company I half, 2009 2008
Financial and investment activity income
Interest for delayed receivables	675	1.230	675	1.230
Bank interest	2	18	2	18
Dividends				$\blacksquare$
Other	15	33	15	33
	692	1.281	692	.281

18. Financial activity costs

	Group I half, 2009 2008		Company I half, 2009 2008
Bank loans and overdrafts interest receivables	(1.695)	(2.772)	(1692)	(2.764)
Net loss on financial liabilities at fair value through profit or
loss	(297)	(567)	(297)	(567)
Investments into daughter company value decrease losses				(465)
Interest from late payment of accounts receivable	(120)		(120)
Other		(4)		(4)
	(2.112)	(3.343)	(2.109)	(3.800)

19. Basic and diluted (loss) per share

Calculations of the basic and diluted (loss) per share of the Group are presented below:

	Group half, 2009 2008
Net profit (loss)	21.237	(4.235)
Number of shares (thousand) at the beginning of the period Number of shares (thousand) at the end of the period Average number of shares (thousand)	19.918 19.918 19.918	19.718 19.918 19.818
Basic and diluted (loss) per share (LTL)	1.07	(0, 21)

20. Financial asset, liabilities and risk management

Credit risk

The Group and the Company do not have any credit concentration risk because they work with a large number of customers.

The Group and the Company do not guarantee obligations of the other parties, except as described in Note 21.

With respect to trade receivables and other receivables that are neither impaired nor past due, there are no indications as of the reporting date that the debtors will not meet their payments obligations since receivables balances are monitored on an ongoing basis. The Group and the Company consider that their maximum exposure to credit risk is reflected by the amount of trade receivables and other receivables, net of allowance for doubtful accounts recognised at the balance sheet date (Note 6).

With respect to credit risk arising from the other financial assets of the Group and the Company, which comprise cash and cash equivalents and available-for-sale financial investments, the Group's and the Company's exposure to credit risk arises from default of the counterparty, with a maximum exposure equal to the carrying amount of these instruments.

Interest rate risk

All of the Group's and the Company's borrowings are at variable interest rates, therefore the Group and the Company faces an interest rate risk. In 2009 and 2008 to manage variable rate risk the Company has entered into interest rate swaps agreements, in which the Company agrees to exchange, at specified intervals, the difference between fixed and variable rate interest amounts as described in Note 14, calculated by the reference to an agreed upon notional principal amount. In 2007 the Group and the Company did not have financial instruments for managing the interest rate risk.

Liquidity risk

The Group's and the Company's policy is to maintain sufficient cash and cash equivalents or have available funding through an adequate amount of overdrafts and committed credit facilities to meet its commitments at a given date in accordance with its strategic plans. The Group's liquidity (total current assets / total current liabilities) and quick ((total current assets - inventories) / total current liabilities) ratios as of 30 June, 2008 were 1.42 and 1.28, respectively (0.91 and 0.84 as of 31 December, 2008). The Company's liquidity and quick ratios as of 30 June, 2009 were 1,42 and 1,29 respectively (0,91 and 0,84 as of 31 December, 2008).

The Group and the Company expects to overcome liquidity issues implementing the following action plan:

(1) the heat price 24.56 ct/kWh is effective starting from 1 December, 2008 till 31 May, 2009. Fuel and purchased heat price change let the Company by 23,5 percent to reduce heat price till 19.11 ct/kWh. in which it is evaluated and realized heat amount and investment depreciation change, which conditioned price increase by 1,3 percent. From 1 December, 2008 and from 1 June, 2009 in the valid heat price there are calculated experienced costs for the fuel and purchased heat. From the 1 October, 2009 heat price for the consumers will be calculated according to 2 heat price indexes. Constant heat price index during the calculation period will be constant, variable would change according to the fuel process changes, what would let Company to reduce possible loss, when fuel prices would rise.

(2) the Company attempts to receive part of investments funds from the EU Structural Funds. The Company has submitted 5 projects, the support for three of them (50 % of the cost of the project, but not more than LTL 6 million) is expected to be received in 2009; (4) in addition, the Group and the Company implements the cost reduction means: temporary termination of membership in various associations, implementation of production and transfer loss reduction plan; etc.(5) considering the increase in heat price, decrease in gas prices and other cost reducing plans, the Group and the Company expects to gain net profit for 2009 which could cover accumulated losses of prior periods.

Risk of foreign currency

All sales and purchases transactions as well as the financial debt portfolio of the Group and the Company are denominated in LTL and EUR. Therefore, the foreign currency risk is not incurred.

Monetary assets and liabilities denominated in national and foregin currency on 30 June, 2009, were (stated in $LTL$ :

	Group				Company
	Asset		Liabilities	Asset		Liabilities
LTL		54.387	24.638		54.294	24.383
EUR			56.162			56.162
		54.387	80.800		54.294	80.545

Fair value of financial asset and liabilities

The Company's principal financial instruments accounted for at amortised cost are trade and other current and non-current receivables, trade and other payables, long-term and short-term borrowings. The net book value of these amounts is similar to their fair value.

Fair value is defined as the amount at which the instrument could be exchanged between knowledgeable willing parties in an arm's length transaction, other than in forced or liquidation sale. Fair values are obtained from quoted market prices, discounted cash flow models and option pricing models as appropriate.

The following methods and assumptions are used to estimate the fair value of each class of financial instruments:

a)The carrying amount of current trade accounts receivable, current trade accounts payable, other receivables and other payables and current borrowings approximate their fair value.

b)The fair value of trade and other payables, long-term and short-term borrowings is based on the quoted market price for the same or similar issues or on the current rates available for borrowings with the same maturity profile. The fair value of non-current borrowings with variable and fixed interest rates approximates their carrying amounts.

Capital management

The primary objectives of the Group's and the Company's capital management are to ensure that the Group and the Company comply with externally imposed capital requirements and that the Group and the Company maintains healthy capital ratios in order to support its business and to maximise shareholders' value.

The Group and the Company manages its capital structure and makes adjustments to it in the light of changes in economics conditions and the risk characteristics of its activities. To maintain or adiust the capital structure, the Group and the Company may issue new shares, adjust the dividend payment to shareholders, return capital to shareholders. No changes were made in the objectives, policies or processes of capital management during the years ended 31 December, 2008 and 30 June, 2009.

The Group and the Company is obliged to upkeep its equity of not less than 50 % of its share capital, as imposed by the Law on Companies of Republic of Lithuania. The Group and the Company complies with equity requirements imposed by the Law on Companies of Republic of Lithuania. There were no other externally imposed capital requirements on the Group and the Company.

The Group and the Company monitor capital using debt to equity ratio. Capital includes ordinary shares, reserves, retained earnings attributable to the equity holders of the parent. There is no specific debt to equity ratio target set out by the Group's and the Company's management, however current ratios presented below are treated as sustainable performance indicators.

	Group			Company
			31			31
	30 2009		June, December, 2008	30 2009		June, December, 2008
Non-current liabilities (including deferred tax
and grants)		50.239	46.705		50.949	47.415
Current liabilities		43.051	80.538		42.796	80.740
Total liabilities		93.290	127.243		93.745	128.155
Equity		134.514	113.277		138.002	116.627
Debt to equity ratio		69,35 proc.	112,33 proc.	67,93 proc.		109,88 proc.

* Debt contains all non-current (including deferred income tax liability and grants (deferred revenues)) and current liabilities.

21. Commitments and contingencies

On 10 October, 2008 the Company has given a guarantee for the public enterprise Krepšinio Perspektyvos for a credit line agreement with AB DnB Nord Bankas in the amount of LTL 5 million for a period till 30 June, 2009. In addition the Company has signed the agreement with Kaunas city municipality, in accordance to which Kaunas city municipality is liable to repay the liabilities to the Company, in case the Company will have to make payments to the bank on behalf of the public enterprise. On the day of these statements issuing public enterprise Krepšinio Perspektyvos fulfilled it's liabilities to the bank. Guarantee agreement stopped to be valid.

The Company participates as a third party in the administrative litigation regarding the closed-end company Kauno Termofikacijos Elektrinė complaint on the Commission decree "On the closed-end company Kauno Termofikacijos Elektrinė heat production base price fixing" annulment on 24 October, 2008. KTE claims that the heat production price, calculated on 31 March, 2003 according to the terms of Heat energy purchase and sales agreement, should continue to be applied, not the revised price determined by the Commission. Based on the Civil Code of the Republic of Lithuania, decrees of the courts of the Republic of Lithuania and responses of Kaunas city municipality and the Commission, the Company believes that the Heating Law of the Republic of Lithuania which came into force on 1 January 2008 prevails over the Heat energy purchase and sales agreement signed on 31 March, 2003 by the Company and KTE, therefore the possibility that the claim will be set by KTE is remote and no provision related to this possible case was recognized in the Group's and the Company's financial statements. If the court's verdict is opposite, and KTE decides to bring the claim against the Company due to the incurred losses, this exposure would amount to the difference between the heat production price calculated in accordance with methodology agreed in Heat energy purchase and sales agreement and the price determined by the Commission to KTE.

On 31 March, 2003 Company and KTE signed the Investment agreement. Considering that KTE does not making investment liabilities based on the agreement. KTE must pay LTL 17.7 million claim for the not implemented investments for the Company, there was negotiations between the parties concerning Investment agreement change and investment terms change. On 30 June, 2009 there was not made any decision suitable to both parties concerning Investment agreement change. LTL 17,7 million claim will be discussed in Arbitration to the Association International trade chamber - Lithuania.

22. Related parties transactions

$11.167000$

The parties are considered related when one party has the possibility to control the other or have significant influence over the other party in making financial and operating decisions.

In I half, 2009 and 2008 the Group and the Company did not have any significant transactions with the other companies owned by Kaunas city municipality except for the purchases or sales of the utility services. The services provided to the Kaunas city municipality and the companies owned by the Kaunas city municipality were executed at market prices.

In I half, 2009 and 2008 the Group's and the Company's transactions with Jurbarkas city municipality. Kaunas city municipality and the entities, controlled by Kaunas city municipality and the balances at the end of the year were as follows:

I nait, 2009	Purcnases	sales		Receivables Payables
Entities controlled financed and by Kaunas city municipality		40	16.826	19.895	10
2008	Purchases	Sales		Receivables Payables
Kaunas city municipality Budgetary institutions under control of		125*	2.587	839
Kaunas city municipality			13.205	6.236
Jurbarkas district municipality				600**
city Entities controlled Kaunas by municipality		1.254	4.878 22	1.108	100

* represents real estate taxes paid to Kaunas city municipality.

** represents receivable amount from shareholder for issued, but not paid capital, as described in Note 1.

In I half, 2009 and 2008 the Company's transactions with the daughter company and the balances at the end of the year were as follows:

I half, 2009			Purchases	Sales		Receivables Pavables
Closed-end paslaugos"	company	"Pastatų	priežiūros	885	106	35	131
2008			Purchases	Sales		Receivables Payables
Closed-end company "Pastatu paslaugos"			priežiūros	2.569	261	51	157

Remuneration of the management and other payments

Per I half, 2009 the Group's and Company's management remuneration amounted to LTL 404 thousand and LTL 322 thousand respectively (LTL 775 thousand and LTL 582 thousand in 2008). Post-employment benefits liability for the Group's and the Company's management amounted to LTL 75 thousand on 30 June, 2009 (LTL 103 thousand as of 31 December, 2008). To the Group's and Company's management per I half, 2009 post employment benefits amounted to LTL 93 thousand (there was no such payments in the 2008). Per I half, 2009 and 2008 the management of the Group and the Company did not receive any loans or quarantees; no other payments or property transfers were made or accrued.

23. Subsequent events

On 2 June, 2009 Kaunas city municipality administration obliged Company to implement engineering constructions (collectors) – tunnels supervision. On 23 July, 2009 extraordinary shareholders meeting is convened, in which it is hoped to confirm decision that Kaunas city municipality would transfer to the ownership of the Company engineering constructions (collectors) – tunnels, which market value is LTL 136.200 thousand. This decision would let Company to provide additional collectors supervision service to Kaunas city companies.

In order to manage Company's activity more efficiently and to reduce management and production costs, it was made the decision from 1 August. 2009 to change the management structure of the Company by separating from the Company some it's divisions, related to the not main production or services provision.