Litgrid AB

Annual Report (ESEF) • Apr 8, 2025

529900CTIUKTEFNNH1572024-01-012024-12-31529900CTIUKTEFNNH1572024-12-31529900CTIUKTEFNNH1572023-12-31529900CTIUKTEFNNH1572023-01-012023-12-31529900CTIUKTEFNNH1572022-12-31ifrs-full:IssuedCapitalMember529900CTIUKTEFNNH1572022-12-31ifrs-full:SharePremiumMember529900CTIUKTEFNNH1572022-12-31ifrs-full:StatutoryReserveMember529900CTIUKTEFNNH1572022-12-31ifrs-full:RevaluationSurplusMember529900CTIUKTEFNNH1572022-12-31ifrs-full:OtherReservesMemberiso4217:EURiso4217:EURxbrli:shares529900CTIUKTEFNNH1572022-12-31ifrs-full:RetainedEarningsMember529900CTIUKTEFNNH1572022-12-31529900CTIUKTEFNNH1572023-01-012023-12-31ifrs-full:IssuedCapitalMember529900CTIUKTEFNNH1572023-01-012023-12-31ifrs-full:SharePremiumMember529900CTIUKTEFNNH1572023-01-012023-12-31ifrs-full:StatutoryReserveMember529900CTIUKTEFNNH1572023-01-012023-12-31ifrs-full:RevaluationSurplusMember529900CTIUKTEFNNH1572023-01-012023-12-31ifrs-full:OtherReservesMember529900CTIUKTEFNNH1572023-01-012023-12-31ifrs-full:RetainedEarningsMember529900CTIUKTEFNNH1572023-12-31ifrs-full:IssuedCapitalMember529900CTIUKTEFNNH1572023-12-31ifrs-full:SharePremiumMember529900CTIUKTEFNNH1572023-12-31ifrs-full:StatutoryReserveMember529900CTIUKTEFNNH1572023-12-31ifrs-full:RevaluationSurplusMember529900CTIUKTEFNNH1572023-12-31ifrs-full:OtherReservesMember529900CTIUKTEFNNH1572023-12-31ifrs-full:RetainedEarningsMember529900CTIUKTEFNNH1572024-01-012024-12-31ifrs-full:IssuedCapitalMember529900CTIUKTEFNNH1572024-01-012024-12-31ifrs-full:SharePremiumMember529900CTIUKTEFNNH1572024-01-012024-12-31ifrs-full:StatutoryReserveMember529900CTIUKTEFNNH1572024-01-012024-12-31ifrs-full:RevaluationSurplusMember529900CTIUKTEFNNH1572024-01-012024-12-31ifrs-full:OtherReservesMember529900CTIUKTEFNNH1572024-01-012024-12-31ifrs-full:RetainedEarningsMember529900CTIUKTEFNNH1572024-12-31ifrs-full:IssuedCapitalMember529900CTIUKTEFNNH1572024-12-31ifrs-full:SharePremiumMember529900CTIUKTEFNNH1572024-12-31ifrs-full:StatutoryReserveMember529900CTIUKTEFNNH1572024-12-31ifrs-full:RevaluationSurplusMember529900CTIUKTEFNNH1572024-12-31ifrs-full:OtherReservesMember529900CTIUKTEFNNH1572024-12-31ifrs-full:RetainedEarningsMember THE COMPANY’S MANAGEMENT REPORT, FINANCIAL STATEMENTS AND INDEPENDENT AUDITOR’S REPORT FOR THE YEAR ENDED 31 DECEMBER 2024 CONFIRMATION OF RESPONSIBLE PERSONS 7 April, 2025 Vilnius Following the Law on Securities of the Republic of Lithuania and Rules on Information Disclosure approved by the Bank of Lithuania, we, Rokas Masiulis, Chief Executive Officer of LITGRID AB, Vytautas Tauras, Chief Financial Officer of LITGRID AB and Asta Vičkačkienė, Head of Accounting Division of LITGRID AB, hereby confirm that, to the best of our knowledge, the attached LITGRID AB unaudited condensed interim financial statements for the period ended 31 December 2024 are prepared in accordance with the International Financial Reporting Standards adopted by the European Union give a true and fair view of the Company’s assets, liabilities, financial position, profit and loss and cash flows; the management report for the year 2024 presents a fair overview of the business development and performance, the Company’s financial position together with the description of its exposure to key risks and contingencies. Rokas Masiulis Chief Executive Officer (The document is signed by a qualified electronic signature) Vytautas Tauras Chief Financial Officer (The document is signed by a qualified electronic signature) Asta Vičkačkienė Head of Accounting Division (The document is signed by a qualified electronic signature) Translation note This version of the accompanying documents is a translation from the original, which was prepared in Lithuanian. All possible care has been taken to ensure that the translation is an accurate representation of the original. However, in all matters of interpretation of information, views or opinions, the original language version of the accompanying documents takes precedence over this translation. TABLE OF CONTENTS Management report Interim statement of financial position Interim statements of comprehensive income Interim statement of changes in equity Interim statement of cash flows Condensed notes to interim statements Independent auditor’s report 4 187 188 189 190 191 229 The financial statements were signed on 7 April, 2025.. Rokas Masiulis Chief Executive Officer (The document is signed by qualified electronic signature) Vytautas Tauras Chief Financial Officer (The document is signed by qualified electronic signature) Asta Vičkačkienė Head of Accounting Division (The document is signed by qualified electronic signature) 3 MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 5 Statement of the Chairman of the Board Dear all In 2024, we have made significant progress towards Lithuania’s energy independence. We have successfully completed the necessary preparations to ensure that the Baltic countries synchronise with continental Europe on time and as planned. Over the past year, we have continued to ensure the reliability of electricity supply, and our adjusted financial results have surpassed those of 2023. At the beginning of the year, we completed the automatic generation management system project and the first phase of the reconstruction of the Neris transformer substation. In July, together with our partners in Latvia and Estonia, we issued a formal notice of withdrawal from the Russian-controlled electricity system. In the autumn, we activated the first synchronous compensator in Telšiai and connected to the European balancing platform MARI. We have also strengthened our energy independence by facilitating the rapid development of renewable energy resources. Notably, on 11 March last year, for the first time since the closure of the Ignalina Nuclear Power Plant, Lithuania’s electricity system produced more energy than it consumed. Sustainability remains central to our work. We have taken steps to reduce Litgrid’s environmental impact by installing solar power plants at substations and generating our own electricity from renewable sources. Additionally, we have upgraded our facilities to enhance environmental safety, assessed the ecological impact of our infrastructure, marked power lines along bird migration routes, monitored noise levels, and introduced noise reduction measures. Looking ahead, in the final quarter of the year, we launched the North-Western and Eastern Interconnection project. In collaboration with the Polish operator PSE, we also reached financial investment decisions for the construction of the Harmony Link onshore interconnector. Beyond enabling the expansion of electricity generation from renewable sources, we are planning for the integration of new energy carriers. We will continue to foster regional cooperation, working with partners to establish an energy hub that unlocks the full potential of offshore wind and green hydrogen production. The transformation of the electricity sector requires close cooperation between industries, investors, and public authorities. Litgrid is committed to remaining a reliable partner in the development of sustainable infrastructure and markets, while continuing to actively integrate renewable energy sources into the transmission grid. With the planned expansion of the transmission network, Litgrid envisions the possibility of connecting 12 GW of renewable generation capacity to Lithuania’s electricity system by 2035. Finally, I would like to extend my sincere gratitude to all those who have contributed to strengthening the Baltic region’s energy independence and synchronising the electricity grids with those of continental Europe. From local communities near transmission nodes to contractors, international partners, the entire EPSO-G Group, and Litgrid employees—your efforts have made Lithuania more energy-independent than ever before. Tomas Varneckas, Chairman of the Board of Litgrid MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 6 Statement of the CEO of Litgrid Dear all I am pleased to present Litgrid's 2024 Activity Report. In 2024, the Litgrid team prioritized the implementation of key strategic projects for synchronizing with the continental European grids, ensuring reliable electricity transmission, managing innovation and sustainability initiatives, developing renewable energy sources, and executing grid renewal projects. Over the past year, we have diligently prepared for the final steps in disconnecting the Lithuanian and Baltic electricity grids from the Russian-controlled system and connecting to the Continental European synchronous zone. The recent successful synchronisation was the culmination of years of sustained effort by hundreds of employees. However, this is just the beginning. To enhance our competitiveness, we must increase electricity generation from renewable energy sources. One of our primary goals is to be a reliable partner in integrating large solar, wind, and energy storage parks into the Lithuanian electricity grid. Currently, there are letters of intent to connect 3.1 GW of onshore wind farms to the transmission grid. For solar development, a total of 4.0 GW of permitted generation capacity is covered by letters of intent. The capacity of solar and wind power plants already in operation in Lithuania, combined with the transmission and distribution grids, amounts to 3.7 GW, representing about half of the country's total electricity generation capacity. 2024 was a historic year for domestic electricity generation in Lithuania. The country generated nearly 8 terawatt-hours (7.761 TWh) of electricity, a 37% increase from 2023 (5.664 TWh). The most significant contributor to this growth was the electricity generated by renewable energy plants, which accounted for more than two-thirds (69.8%) of the country's total electricity generation. Last year, in collaboration with the EPSO-G Group, we renewed Litgrid's strategy, focusing on several priority areas. Key among them is building infrastructure for the future to strengthen energy independence, enable decarbonization, open export markets, and ensure system reliability and security. We emphasize cross-sectoral partnerships and sustainability. In 2024, Litgrid significantly strengthened its sustainability initiatives. We updated our GHG emissions reduction plan, set even more ambitious targets for 2025, announced the procurement of long-term contracts for purchasing electricity from renewable energy sources, and initiated the supplier evaluation process. These efforts have led to a more transparent and sustainable supply chain, further reinforcing our contribution to a sustainable energy future. Our activities directly contribute to the United Nations Sustainable Development Goals, particularly in combating climate change. We focus on providing access to clean and modern energy, developing innovative infrastructure, ensuring safe working conditions, promoting employee welfare, and maintaining a responsible supply chain. Our activities play a direct role in advancing the United Nations Sustainable Development Goals, with a particular focus on combating climate change. We prioritize access to clean and modern energy, the development of innovative infrastructure, the promotion of safe working conditions, employee well-being, and the establishment of a responsible supply chain. We remain committed to enhancing our disclosures to ensure transparency and provide stakeholders with a comprehensive view of our performance and progress. Rokas Masiulis Litgrid CEO MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 7 1.BASIC DETAILS The report has been prepared for the period ending 31 st December 2024. 1.1 The issuer and its contact details: Name LITGRID AB (Litgrid or the Company) Legal form Public limited liability company Date and place of registration 16 November 2010, the Register of Legal Entities of the Republic of Lithuania Company code 302564383 Registered office address Karlo Gustavo Emilio Manerheimo g. 8, LT-05131, Vilnius LEI code 529900CTIUKTEFNNH157 Registry State registry centre Address for correspondence Karlo Gustavo Emilio Manerheimo g. 8, LT-05131, Vilnius Telephone +370 707 02171 Email and website info@litgrid.eu; www.litgrid.eu Litgrid is a part of the EPSO-G group of companies: EPSO-G UAB is a state-owned group of energy transmission and exchange companies. The rights and obligations of the shareholder of holding company EPSO-G UAB are implemented by the Ministry of Energy of the Republic of Lithuania. EPSO-G UAB owns 97.5 % of shares of Litgrid. Shares of other companies owned by Litgrid: Title Baltic RCC OÜ Country of incorporation The Republic of Estonia Registered office address Harju maakond, Tallinn, Mustamäe linnaosa, Kadaka tee 42, 12915 Litgrid’s shares 33,3 of shares and voting rights attached thereto Major changes No major changes MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 8 Baltic RCC The Baltic Regional Coordination Center (RCC) provides network security services to the electricity transmission system operators of the Baltic countries - Litgrid of Lithuania, Elering of Estonia and AST of Latvia. RCC was established by the operators of the Baltic electricity transmission system of the three states in accordance with the requirements of the European Union's Clean Energy Package. The Baltic RCC is one of six European regional coordination centers. The RCC implements five main tasks: calculates the capacity of the power line between countries, assesses the reliability and adequacy of the systems, plans to disconnect the line, and develops a model of the overall network. All this helps to ensure the smooth operation of the countries, which work more and more closely every day to prepare for synchronization, and after maintaining close relations, operating in the common network of continental Europe. 1.2. Activities of Litgrid Litgrid is Lithuanian electricity transmission system operator (TSO). Litgrid's main activities: The company is responsible for maintaining the balance of electricity consumed and produced in the Lithuanian electricity system and reliable transmission of electricity, carries out strategic Lithuanian electricity projects, bases its vision and strategic operational guidelines on the principles established in the National Energy Independence Strategy (hereinafter - NEIS) for long-term purposes. The most important areas of activity and responsibilities of Litgrid: support of the country's electricity infrastructure and integration with continental and Northern European electricity infrastructure; development of the electricity market and participation in the creation of a common electricity market of the Baltic States and Europe; Integration of the electricity systems of Lithuania and continental Europe for work in synchronous mode. By implementing the program of synchronization with continental European networks, in which the Company is tasked with implementing projects of strategic importance approved by the Government of the Republic of Lithuania. By systematically performing daily functions, ensuring uninterrupted and smooth operation of the electricity transmission system, implementing projects of national importance, the Company aims to create value for its customers - the Lithuanian society. Litgrid not only transmits electricity through high-voltage lines, but also takes care of the reliability of the entire transmission network: it is important for us that electricity is always supplied to electricity consumers, and if a fault occurs, it is removed as soon as possible. Reliability of electricity supply is a guarantee of economic growth. 2. BUSINESS ENVIRONMENT 2.1 Business model Litgrid is a Lithuanian-wide electricity transmission system operator. The Company maintains high-voltage electricity transmission networks and secures the stable operation of the country’s electricity system, manages electricity flows, and creates conditions for competition in the free electricity market, it is responsible for the integration of the Lithuanian electricity system into the European electricity infrastructure and the single electricity market. Electricity transmission is an intermediate link between electricity generation and distribution to consumers. The voltage of transmission networks is high or very high (110-440 kV). Electricity transmission networks consist of electricity transmission lines with substations. Electricity lines are connected in the electricity substations that contain the switchyards of a higher and lower voltage and the transformers linking them. In the substation transformers voltage is reduced to the voltage of distribution networks. Electricity transmission is a licensed activity. Prices of the electricity transmission service are regulated by the National Energy Regulatory Council (NERC) that sets the price caps for these services. 2.2 Services provided by electricity transmission system operator Litgrid Electricity transmission over high voltage (110-400 kV) electrical installations MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 9 The electricity transmission service is electricity transmission over high voltage (400, 330, 300 and 110 kV) electrical installations. The transmission system operator transmits electricity from producers to consumers that are connected to the transmission network, and to the operators of the distribution networks. The main activities of the TSO include the management of the high voltage electricity transmission network and securing reliable, effective, high-quality, transparent and safe transmission of electricity. Additional services Additional services - services purchased by the transmission system operator from electricity market participants, necessary for the operation of electricity networks, including balancing services and additional services not related to frequency regulation. For the provision of additional services, Litgrid purchases from electricity market participants: frequency maintenance, recovery and replacement reserves; steady voltage regulation services; system restart services after a total accident; electricity generation equipment availability services; isolated operating reserve services. Trade in imbalance and balancing electricity Litgrid ensures the country's electricity production and consumption balance. Imbalance electricity is electricity that is consumed or produced without complying with established electricity consumption or production schedules. Litgrid organizes trade in imbalance electricity, buys and sells imbalance electricity necessary to ensure the country's electricity production and consumption balance. Balancing electricity - electricity purchased and/or sold at the request of the transmission system operator, required to perform the function of balancing the country's electricity consumption and production. Imbalance – the calculated amount of energy of a balance responsible party (BRP), corresponding to the difference between the assigned amount attributed to the balance responsible party and its final position, including the Imbalance Adjustment applied to that party, during a certain Imbalance Settlement Period. Issuance and administration of guarantees of origin Under the regulation of the Minister of Energy of the Republic of Lithuania, Litgrid has been appointed as an entity authorized to carry out the supervision and control of the issuance, transfer and cancellation of guarantees of origin of electricity produced from renewable energy sources, as well as the use of guarantees of origin, as well as guarantees of origin issued by other member states and third countries. functions of recognition in the Republic of Lithuania. Guarantee of origin - an electronic document, the sole purpose of which is to prove to the end user that all or a certain part of the energy was produced from renewable energy resources. 2.3 Customers of the transmission system operator Litgrid's direct customers are electricity transmission grid users and suppliers of disbalance and balancing electricity. The clients of the transmission network are as follows: Distribution network operators ESO, Dainavos Elektra UAB, AB Achema, AB Akmenės cementAs; Electricity consumers whose electrical installations are connected to the electricity transmission network and who purchase electricity for use; Electricity producers and battery parts connected to the electricity transmission network. The suppliers of imbalance and balancing electricity include the electricity producers, battery parks and suppliers. MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 10 2.4 Operating indicators of electricity transmission and the network’s reliability In accordance with the requirements approved by the NERC for reliability and quality of service of electricity transmission, the following indicators are used to determine the transmission reliability level: ENS (energy not supplied), i.e. the quantity of electricity not transmitted due to interruptions, and AIT (average interruption time), i.e. the average interruption duration in electricity transmission. TSO’s operating indicators 2024 2023 2022 2021 Quantity of electricity transmitted million kWh 9,523 9,525 10,234 10,936 ENS (Energy Not Supplied due to interruptions), MWh * 24.275 23.232 10.617 3.356 AIT (Average Interruption Time), min. * 0.855 0.835 0.356 0.112 NERC has determined that AIT should not exceed 0.934 min and ENS should not exceed 27.251 MWh throughout the year. 2.5 Electricity interconnections The reliably functioning interconnections are an essential part of the system enabling it to operate together with the energy systems of other Western and Northern European countries and to develop a single European market. LitPol Link is a double-circuit transmission line from Alytus in Lithuania to Elk in Poland and the Alytus back-to-back converter. The LitPol Link interconnection was available to the market 97.61% of the time throughout 2024. Scheduled works for the the interconnection had a major impact on the unavailability of the LitPol Link interconnection. The NordBalt electricity interconnection is one of the longest submarine cables in the world, the operation of which significantly increases safety of energy supply to Lithuania and the Baltic States. The NordBalt interconnection was available to the market 98.02% of the time in 2024. Scheduled repair works had a major impact on the unavailability of the NordBalt interconnection. 2.6 Maintenance In Lithuania, Litgrid employees maintain 7082.65 km of overhead lines and 328.3 km of cable kilometers of high-voltage lines and 246 transformer substations and switchyeards, 2 high-voltage direct current converters. In order to maintain a stable service life of overhead lines and ensure stable operation of equipment, during 2024, repair and maintenance works of main equipment were carried out in 34 110-330-400 kV transformer substations and switchgears, as well as inspection of the operation of relay protection and automation equipment, all planned works were carried out for which disconnections of electrical equipment were obtained, planned maintenance works of 110 kV and higher voltage overhead lines were carried out (a total of 1569.75 kilometers), a total of 207 pcs. supports were replaced during the repair. To ensure stable electricity supply, overhead lines and equipment, 1717.44 hectares of overhead line routes were cleared in 2024, and 120688 trees posing a threat to the reliable operation of lines were removed. Constant repair and maintenance work of transmission network objects directly affects the operation of the electricity system and the reliability of electricity transmission. Scheduled work in the transmission network is carried out at the frequency established in the legal acts of the Republic of Lithuania, however, when assessing the quantities and scope of work, the actual condition of the equipment and the need to ensure reliable operation of the network and use financial funds efficiently are considered. The Diagnostics Group of the Infrastructure Maintenance Center in 2024 significantly increased the quality of diagnostics of transmission network equipment: It performed reliable measurements of ground loop resistance, has real-time thermal imaging analysis data and detailed protocols for determining the characteristics of battery batteries. Preparations have also been made for the expansion of the Diagnostics Group's activities by performing chromatographic analysis of transformer oil at facilities and determining partial discharges of primary equipment and power transmission lines. In cooperation with KTU scientists, the first scans of internal partial discharges of autotransformers were performed, which will be continued in 2025. Inspections of power transmission overhead lines with drones are also regularly carried out. MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 11 Increasing the resilience of operations, the Company has purchased equipment and materials for emergency reserve. Preparatory work is underway to acquire larger quantities of 400 kV equipment for even faster restoration of the functionality of the LitPol Link connection. For faster restoration of overhead lines after accidents, the Company purchased 14 temporary prefabricated and dismantled support sets. In 2024, their assembly and disassembly were successfully tested with line repair and construction contractors participating in the market. The assembly of temporary supports does not require the installation of any foundations, which means that the erection of the support takes 24 hours. 3.OPERATING AND REGULATORY ENVIRONMENT The strategic goal of Litgrid is the integration into the European market. The Company’s activities are also affected by the development trends of the objectives and targets of the European Union. 3.1 Energy sector environment in the EU Last year, electricity generation in Lithuania grew by 37% from 5.7 TWh to 7.8 TWh, which was the highest volume since 2009, when the Ignalina Nuclear Power Plant was shut down. During the year, electricity consumption increased by 4.4% from 11.8 TWh to 12.4 TWh. Local generation sources provided around 63% of Lithuania’s energy consumption and that is another record since the closure of the nuclear power plant. In 2023, we witnessed a turning point, when Lithuania’s renewable energy (RE) production increased significantly and started to break production records. These trends continued unabated, and in 2024, RES capacity continued to grow at a very high rate, with their electricity generation now becoming a major component of the country’s energy balance. In 2024, the RES generation was as high as 5.4 TWh. Wind farms generated the most electricity, producing 3.5 TWh, up from 2.5 TWh a year ago. During the year, photovoltaic generation more than doubled, going from 0.6 TWh in 2023 to 1.3 TWh last year. Generation of other types of RES sources remained similar at around 0.7 TWh. Thermal and other type power plant generation also increased over the year. In 2024, they produced 2.3 TWh, which is a quarter more than in 2023 (1.8 TWh). This shows that so far, the growth of RES in the country has little effect on the local thermal and other power plants, finding their niche in the electricity market. The biggest impact of RES generation on the system balance is seen in the analysis of import and export flows in recent years. In 2024, our imports totalled 8.5 TWh, while in previous years it amounted to 10-12 TWh. Imports from Sweden via NordBalt remained similar to last year at 5.3 TWh. Flows from Poland increased by 58% from 1.2 TWh to 1.8 TWh, while imports from Latvia fell by 69% from 3.3 TWh to 1.0 TWh. Imports from Estonia remained similar at 0.3 TWh. Export flows increased slightly from 2.9 TWh to 3.1 TWh. However, the direction of exports shifted: normally we exported mainly to Poland, but this year this has fallen from 1.7 TWh to 0.9 TWh, while the largest export flows have been directed to Latvia, more than tripling from 0.4 TWh to 1.4 TWh. In 2024, Lithuania consumed 12.4 TWh of electricity, with electricity growth observed in almost all sectors. Compared to 2023, electricity consumption in the industrial sector increased by 5.7%, from 4.053 TWh to 4.284 TWh. A similar increase in electricity consumption was witnessed in services with 5.4% from 3.427 TWh to 3.612 TWh. Compared to 2023, electricity consumption in the household sector increased by 3.8%, from 3.138 TWh to 3.257 TWh. In agriculture, electricity consumption increased from 0.248 TWh to 0.265 TWh, while only the transport sector saw a decrease, from 0.091 to 0.086 TWh. In Lithuania, the average wholesale electricity price decreased from EUR 94 per MWh to EUR 87 per MWh last year. Similar prices were observed in Latvia and Estonia, while in neighbouring Poland the electricity price was slightly higher at EUR 96 per MWh. While average prices stabilised after the record high levels in 2022, Europe's rapidly growing renewable power capacity is increasingly influencing hourly prices. During the year 2023, 136 hours were recorded in Lithuania when the price of electricity was 0 EUR/MWh or negative. In 2024, this number raised to 235 hours, the highest number of such hours in the Baltic Sea region was recorded in Finland - as many as 900 hours, the highest in Europe. Finland also had high hourly prices, with the highest hourly electricity price recorded on January 5 at 20:00 - as much as 1,896 Eur/MWh. These emerging trends point to changes in the electricity market and a stronger price message for storage technologies and innovative solutions. MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 12 3.2 Regulatory environment in Lithuania Electricity transmission activities carried out by Litgrid are licensed activities. The licence grants exclusive rights to provide transmission services in Lithuania, thus the prices of services are regulated by the state. The regulatory function and supervision of the licensed activities in Lithuania are performed by the National Energy Regulatory Council. The decisions taken by the regulator directly affect Litgrid's financial performance, the funds available for necessary operating costs, investments to ensure the reliability of the electricity transmission system, as well as the ability to finance strategic and other development projects with own or borrowed funds. The price of the electricity transmission service shall be regulated by setting a price cap for the five-year regulatory period and a component for the acquisition of ancillary services on top of the price of the transmission service. The price cap shall be adjusted each year in response to changes in the volume of services, inflation and other objective factors beyond the control of the operator and may be adjusted no more than twice a year. The price cap shall consider the reasonable indispensable costs of the regulated activity and a reasonable return on investment, calculated as the product of the rate of return on investment (WACC) and the value of the regulated assets (RAB). 3.3 Public procurement In 2024, Litgrid’s Procurement Department successfully pursued ambitious strategic projects, ensured the development of social criteria, and achieved positive results in digitising procurement processes and making them more efficient. The coordinated procurement policies, the Supplier Code of Conduct and the screening systems enable to manage risks, foster a sustainable supply chain and implement major infrastructure projects in transparent manner. In 2024, Litgrid’s Procurement Department focused on the implementation of strategically important projects to ensure the stability, security and sustainable development of Lithuania’s electricity transmission network. Key objectives stayed the same: to ensure quality and timely procurement, to promote sustainability and innovation, and to optimise costs, while maintaining transparency and efficient relations with suppliers. Litgrid is a part of the EPSO-G Group, where the procurement function is seen as one of the main implementers of the strategy. Sustainable supply chain and procurement strategy. The key principles of procurement include long-term planning, fostering competition, digitisation, resilience, sustainability. Procurement activities and performance overview In 2024, the value of contracts awarded by Litgrid though public procurement procedures was EUR 131 million. All procurement organised by the Company were 100% compliant with sustainable development criteria (i.e. were “green”). Consistently built partnership with suppliers led to a good competitive performance in tenders, with an average of 3.13 suppliers participating in tenders. The Company continuously arranges training for its employees with certified procurement practitioners of the most important and significant procurements on efficiency in social and environmental topics. Since 2024, Litgrid applied supplier screening system: Before awarding a contract, suppliers shall complete a questionnaire, outlining their policies on environmental protection, social responsibility and governance; In 2024, screening was initiated for 368 suppliers, 41% of them responded and provided data on their activities; Based on the data collected, indicators such as supplier compliance with SCC, implementation of GHG emission reduction measures, etc. will be monitored from 2025 onwards. Like all the EPSO-G Group companies, Litgrid has a harmonised Contract Management and Control Process, which enables effective monitoring of contracts, identification of risks and unified decisions, the main principles of which are: compliance with the Supplier Code of Conduct; contracts set with the contract performance mechanisms; provisions on compliance with Environmental, Social and Governance (ESG) requirements. MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 13 In organising its activities, Litgrid is guided by a coherent international sanctions regime and a national security policy that: prohibits the award of contracts to suppliers subject to sanctions; encourages to avoid awarding contracts with groups of entities from hostile states or territories; provides additional security requirements for the procurement of equipment, software or maintenance services. 4. COMPANY’S STRATEGY AND STRATEGIC PRIORITIES, PLANNING 4.1 Litgrid strategy In 2025, aiming to contribute to the development of a reliable and climate-neutral energy system, to foster the growth of high value-added industries and to support the development of exports of green energy and its products, Litgrid updated its Strategy 2035. More details on the new Energy Strategy by 2035 of the EPSO-G are available on Company’s website. Vision, mission and purpose The updated Litgrid’s Strategy, together with the companies of the EPSO-G Group, highlights the Group’s common mission - to accelerate energy independence and increase system reliability, and its vision - to enable green transformation, while ensuring the interests of energy and national security. Values Implementation of the mission, pursuit of the vision and all activities Litgrid are based on the fundamental human and professional values: openness, responsibility and reliability. Litgrid team’s behaviour is reflected in values: MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 14 Three fundamental commitments and strategy structure We base Litgrid Strategy 2035 on fundamental commitments to our stakeholders: to build the infrastructure of future, to ensure reliability and security, and to be reliable strategic partner. To deliver on our strategic objectives, we rely on a range of empowerment tools: financing, innovation and digitalisation, partnerships, asset development and management, improving supply chains and procurement. In its strategy, the Company is committed to expanding existing main activities and to build new ones. Their interconnections are reflected in the strategy structure. MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 15 Sustainability commitments are integral to the Strategy. Litgrid Strategy 2035 and pals are presented in the Sustainability Report. 4.2 Measures for the implementation of the strategy Litgrid Strategy is based on the value created for the key stakeholders. The Company has defined the value it creates through strategic indicators (financial, sustainability and performance (operational), which are grouped according to their benefits to stakeholders. They represent Litgrid’s main objectives to 2035 that will be used as a benchmark in assessing the Company’s Strategy success. MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 16 4.3 Major projects of Litgrid to 2035 and the value they create The implementation of Litgrid’s new strategy envisages numerous ambitious projects to deliver strategic objectives. Below are the most important projects to be developed: While the synchronization with the Continental European networks took place on 9 February 2025, the projects to complete the synchronisation programme are underway. They will strengthen the integration of electricity markets and increase the stability of the electricity system. Plans for 2025 include the connection of a third, the Neris synchronous condenser, completion of the construction of the 330 kV overhead transmission lines Vilnius–Neris and Kruonis PSHP-Bitėnai, and completion of the reconstructions of the 330kV Neris transformer substations and 330 kV Darbėnai and Mūša switchyards. After project changes in 2024, the construction of Harmony Link interconnector continues, and will increase electricity trade with Western Europe. The design works of the Link are scheduled to be launched already in 2025, and to have it developed in 2031. Following the decision of the participating countries for the onshore construction of the line, the options for early completion of the project by 2030 are being explored. MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 17 In the context of Russia’s large-scale invasion of Ukraine from February 2022, the scale of the destruction of strategic energy infrastructure and the geopolitical circumstances in the region, called for the decision to strengthen the resilience of energy infrastructure of strategic and major importance to Lithuania against hybrid threats. The programme is designed to ensure the protection of the critical electricity transmission system infrastructure operated by the Company from destruction or disruption, and to put in place the necessary measures to ensure the resilience of the electricity system, to prevent threats and to prepare for potential crises. 4.4 Studies and research The ambitious goals of the National Energy Independence Strategy regarding the integration of renewable energy sources and the ongoing project of simultaneous synchronisation of the Baltic power system with the continental European grids encourage to seek new innovative solutions for the reliable operation of Lithuania’s power system. Research and studies, and the planning and implementation of innovation activities, encourage the Company to improve the efficiency of their operations by applying new methods, tools and best practices. Litgrid experts are actively participating in the model study of the Lithuanian energy system (LT100) implemented by the Lithuanian Energy Agency together with the US National Renewable Energy Laboratory (NREL). Its purpose is to prepare a model for the transformation of Lithuania’s energy system after a comprehensive assessment of the Lithuanian energy sector and to present proposals on how Lithuania can become a fully self-sufficient country with electricity as soon as possible and achieve 100% electricity consumed in Lithuania would be produced from renewable energy sources (RES). The Lithuanian Energy Institute was commissioned by Litgrid to prepare a study on Estimation of the Value of Lost Load (VoLL) in Lithuanian Electricity Trading Zone. The aim of the study is to estimate the national value of lost load, following the methodology approved by ACER, the European Agency for the Cooperation of Energy Regulators. The study included a survey of Lithuanian consumers on their hypothetical willingness to pay to avoid a loss of electricity supply. The One Network for Europe (OneNet) project aims to contribute to the vision of a unified European electricity grid by creating a common trading and exchange platform. This project aims to create a flexibility service delivery framework that defines the roles of stakeholders, data exchange, standard implementation and details of new flexibility products, and demonstrates the procurement and operation model of these products among the different parties involved. Litgrid, within the scope of this project, together with ESO and Kaunas University of Technology (KTU), performed demonstrations in which KTU’s hybrid energy system was connected to the distribution network. 4.5 Planned Investments by 2035 Major investments in new infrastructure development are planned as part of the implementation of key projects and the Group’s Strategy by 2035. The potential major sources to fund new investments are EU support and other external funding; attracting partners for investment; and optimising the debt and equity structure. MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 18 Planned distribution of investments and sources of funding to 2035, EUR billion. MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 19 4.6 Company’s objectives for 2025 Litgrid’s Board has set 2025 targets for the Company, based on the updated operational goals and planned initiatives set out in the Company’s Strategy. They include projects rolled over from 2024 and new unique initiatives: 4.7 10-year development plan of the electricity transmission networks In accordance with the provisions of the Law on Electricity of the Republic of Lithuania, the electricity transmission system operator Litgrid shall, at least every two years by 1 July of the current year, after consulting with interested institutions in the field of electricity sector management and other interested parties, submit a 10-year transmission network development plan to the NERT. It shall present an assessment of the current and expected electricity supply and demand, the conclusions of the probabilistic assessment of the adequacy of the electricity system and shall indicate effective measures to ensure the adequacy of system capacity and security of supply. The ten-year (2024–2033) development plan for the 400-110 kV networks of the Lithuanian electricity system of Litgrid provides that over the next 10 years, about 2.7 billion euros may be required for the reconstruction and development of the transmission network (excluding the projects of electricity network users, investments would amount to about 2.3 billion euros). These indicative investments are planned to be used for the implementation of strategic state projects, the effective use and systematic renewal of the electricity transmission network managed by the Company, taking into account the needs of producers and consumers, and ensuring system reliability indicators (END and AIT). In October 2024, NERC publised and approved Litgrid's 10-year 400-110 kV network development plan. MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 20 4.8 The process of updating the strategy and other planning documents In October 2024, the substantially updated EPSO-G Group New Energy Strategy 2035 was publicly presented. The strategy, business plan, annual objectives and other planning-related documents are reviewed annually, in accordance with the deadlines set by the Group’s Integrated Planning and Monitoring Policy. The plan updates are guided by the letter of expectations of the Ministry of Energy, as the implementer of EPSO-G shareholder rights (the latest letter of expectations dated July 18, 2023); the National Energy Independence Strategy (NENS, updated June 28, 2024); other European Union and national legal acts and changes in strategies; changes in the business environment. To ensure that the objectives of each strategic direction are properly implemented, the Group evaluates and monitors the progress of the strategy implementation at the end of each quarter. 5. PROJECT IMPLEMENTATION One of the fundamental directions of the implementation of the National Energy Independence Strategy of the Republic of Lithuania adopted by the decision of the Parliament on 21 June 2018 establishes the connection of the electricity system of the Republic of Lithuania to the continental European networks for operation in a synchronised mode (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. A timely implementation of the synchronisation programme in the most economically efficient manner is one of the most important objectives of Litgrid. The synchronous operation with the continental European networks will ensure: reliable operation of energy systems and secure transmission of electricity; coordinated actions in facility maintenance and network development planning; common rules for the management of energy systems – network codes which will be applied uniformly in all countries in the European Union; availability of electricity from energy systems of Western Europe. In March 2024 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 18 out of 19 projects included in this list. According to the requirements of the Republic of Lithuania Law on the Protection of Objects of Importance to Ensuring National Security, before the conclusion of transactions that comply with the requirements of this law, in all cases Litgrid informs the Commission for Coordination of Protection of Objects of Importance to Ensuring National Security about such transactions. Such transactions are concluded only upon the receipt of the commission’s conclusions. MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 21 MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 22 5.1 The status of the implementation of the main strategic projects The stage of completion of the strategic projects under the synchronisation programme reached 86 % on December 31 th , 2024. Status of synchronisation projects: 5.2 Strategic infrastructure projects Reconstruction of the 330/110/10 kV Neris transformer substation The aim of the project is to reconstruct the Neris transformer substation to enable the planned connection of one of three synchronous compensators to the transmission network and the launch of operation of to be constructed 330 kV Vilnius-Neris electricity transmission line. This is one of the most important projects related to the synchronisation with the continental European networks that strengthens the country’s network for electricity transmission. In the first half of 2024, part of the facilities of stage I were switched on, and a new autotransformer was built on the foundation. Reconstruction works are planned to be completed in second quarter of 2025. Construction of the 330 kV Kruonis PSHP-Bitėnai electricity transmission line The aim of the project is to strengthen the electricity transmission network in the western part of Lithuania and to ensure its reliable operation by forming a new 330 kV transmission line, which is important for the smooth synchronous operation of the Lithuanian electricity system with the continental European electricity networks. The project covers the reconstruction of a part of the already existing line Jurbarkas-Bitėnai by replacing a single-circuit line with a double-circuit line, the construction of a new section between the line Jurbarkas-Bitėnai and the line Kruonis PSHP-Sovetsk and the reconstruction of the Bitėnai transformer substation. In 2024, in the second stage of the project, all supports were installed and wires were pulled, and construction completion procedures were initiated. In the third stage, the expansion works of the Bitėnai TP 330 kV switchyard were completed, and preparations are underway to connect the 330 kV overhead line Kruonis HAE-Bitėnai and the 330 kV overhead line Darbėnai- Bitėnai to the expanded Bitėnai switchyard. The project is planned to be completed in the fourth quarter of 2025. MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 23 Construction of the 330 kV Darbėnai-Bitėnai electricity transmission line The aim of the project is to strengthen the electricity transmission network in the western part of Lithuania and to ensure its reliable operation by forming a new 330 kV transmission line, which is important for the smooth synchronous operation of the Lithuanian electricity system with the continental European electricity networks. In 2024, the cable laying works were completed, preparations are underway for the connection of overhead lines, and construction completion procedures are underway, which are planned to be completed at the beginning of the first quarter of 2025. Installation of new synchronous condensers in the Lithuanian electricity system The aim of the project is to implement the necessary measures for the synchronisation with the continental European networks: installation of three synchronous condensers, thus ensuring the required quantity of inertia and the dynamic stability of the system in the most efficient way. In 2024, a synchronous condenser or was delivered to the Neris TP and placed on its foundations, and its installation is planned to be completed in 2025. Perhaps the most important event in the 2024 period in preparation for ensuring isolated operation is the completion of the trial operation of the Telšiai synchronous condenser and its takeover from the contractor for permanent operation by the company. The Alytus synchronous condenser has been installed, successfully synchronized with the network, and its main tests have begun. The project is planned to be completed in the second quarter of 2025. Construction of the 330 kV Mūša switchyard The project’s aim is to strengthen the electricity transmission network of Western Lithuania and ensure its reliable operation by building a new 330 kV Mūša switchyard and connecting to it three overhead lines to Telšiai, Šiauliai and Viskali. In 2024, all metal structures in the switchyard area were installed. The work is planned to be completed in the fourth quarter of 2025. Construction of a new 330 kV Vilnius-Neris electricity transmission line The project’s aim is to strengthen the electricity hub in Vilnius by ensuring the reliability of electricity supply after the synchronisation with the continental European networks and meeting an increasing demand for electricity in the capital, by constructing the 330 kV electricity transmission line linking the Vilnius and Neris 330 kV transformer substations. To this purpose, a part of the existing 330 kV overhead line Vilnius-Molodečno will be reconstructed and a section of the new line to the Neris 330 kV substation will be constructed. In 2024, all the metal structures of the supports and half of the cables and linear reinforcement planned in the project were installed. The work is planned to be completed in the fourth quarter of 2025. Construction of the 330 kV Darbėnai switchyard The project’s aim is to enhance the reliability of the transmission network and security of electricity supply during the synchronous operation of the Lithuanian electricity system with the continental European networks by building a new 330 kV Darbėnai switchyard and connecting to it three overhead lines with the voltage of 330 kV to Bitėnai, Klaipėda, Grobinė. The interconnections with the wind power parks will also be designed at the 330 kV switchyard. In 2024, all primary equipment of the first stage was installed, the relay protection and automation coordination works of the second stage are underway, and preparations are underway to turn on the 10 kV switchgear. The work is planned to be completed in the third quarter of 2025. Construction of the Harmony Link interconnection The aim of the project is to ensure the integration of the electricity market after synchronisation with the continental European networks by building a new connection (Harmony Link) with Poland. Harmony Link will ensure commercial electricity trade after the synchronisation of the Baltic States with the continental European networks. The project is being implemented by Litgrid together with the Polish electricity transmission system operator PSE. In 2024, a cooperation agreement was signed with PSE on the construction of the Harmony Link land connection by 2030. The connection corridor and the Polish-Lithuanian border crossing area near the Via Baltica infrastructure corridor have been agreed. Financial investment decisions adopted by the shareholders of both countries to jointly finance and implement the land connection project have come into force. MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 24 Construction of 330 kV electricity transmission lines Darbėnai-Varduva-Mūša and Panevėžys-Mūša After assessing the security aspects of the Lithuanian electricity system in emergency synchronous operation with Poland or isolated operation scenarios, especially after desynchronization and disconnection of all lines with Russia and Belarus, the need to connect the eastern and northwestern parts of the Lithuanian EES, increasing national energy security, ensuring reliable electricity transmission, supplying consumers of new technologies (for example, the hydrogen industry) and creating better conditions for the development of offshore and onshore wind and solar parks, electricity market integration, maintaining and increasing the level of throughput of the interconnection with Latvia, the "Interconnection of Northwestern and Eastern Electricity Transmission Networks" project has been launched. In May 2024, this project was recognized as a project of special national importance. It consists of the construction of the 330 kV Darbėnai-Varduva-Mūša electricity transmission line, the 330 kV Panevėžys-Mūša electricity transmission line, the 330 kV Varduva transformer substation, and the installation of shunt reactors at the 330 kV Darbėnai and Mūša switchyards. Construction of the 330 kV transformer substation Vilnia Taking into account not only the synchronous operation of the Baltic States with the continental European system, but also the growth of electricity demand in the Vilnius region, the construction of a new 330 kV TP "Vilnia" is underway. This 330 / 110 / 10 kV transformer substation will not only reduce the loads on the autotransformers in the Vilnius and Neris transformer substations but will also ensure the reliability of electricity supply and increase the security of electricity supply in the city of Vilnius. A new 330 kV line Vilnius-Neris will be connected to the new 330 kV switchyard. The demand of the city of Vilnius is ensured through the 110 kV Vilnius and Šeškinė, Šiaurinė, Centrinė, Baltupis and Žvėrynas substations, therefore the electrical connection between these substations is important. For reliable electricity transmission between these substations, the construction project of the 110 kV EPL Vilnius-Šiaurinė is also underway. 5.3 Strategic energy system management projects Installation of the Frequency Stability Assessment System (FSAS) The aim of the project is to install a system to ensure the frequency stability of the Baltic electricity system in the event of an unforeseen disconnection from the continental European grids and in the event of islanding of the Baltic electricity system. In 2024, a common methodology and procedures for assessing frequency stability for the Baltic States were developed, FSAS functionalities were implemented for local testing, and a tool testing plan was coordinated between the Baltic States.. Development of a new energy balance and ancillary services management system In May 2019, Litgrid, together with the Estonian and Latvian transmission system operators, signed an agreement on the connection of the Baltic electricity systems to the Continental European electricity networks, which provides for technical requirements (hereinafter the Catalogue requirements) that must be implemented to ensure the reliable operation of the Baltic electricity systems and the Continental European synchronous area. By the time of final synchronization with the Continental European networks, most of the balance and system service management processes will be updated. In the implementation of European Commission Regulation 2017/2195 of 23 November 2017 establishing guidelines for electricity balancing, Litgrid will update the processes related to balancing and imbalance accounting and balance management. In 2024, Litgrid joined the MARI platform, and the first balancing energy trading period began. All accounting processes necessary for synchronization are being prepared for use. NordBalt control system upgrade to ensure frequency stability The project objective is to upgrade the NordBalt control system by implementing accident prevention measures to ensure frequency stability in the Lithuanian EES operating synchronously with the KET and in isolated operation. The NordBalt connection is one of the most important objects in the electricity sector of the Baltic States: both in terms of market impact and importance for grid stability. This upgrade will provide new opportunities to ensure the security and reliability of the Baltic States' electricity systems. In 2024, a contract was signed for the collection and transmission of signals to NordBalt. Also, Litgrid, together with the Swedish electricity transmission system operator Svenska kraftnät, signed a contract with Hitachi Energy for the upgrade of the control system of the high-voltage direct current connection NordBalt. The work has started and is due to be completed in Q2 2026. MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 25 5.4 Other projects Litgrid’s activities contribute to the development of green energy in Lithuania and, in its role as the electricity transmission network operator, Litgrid implements projects for the connection of renewable energy sources to the transmission network. These projects result in the connection of green electricity producers to the transmission network, enabling electricity consumers to use clean and sustainable energy. In 2024, Litgrid launched 14 wind farm connection projects, with a capacity of 987 MW, and plans to launch additional solar or battery projects in 2024 for 47 RES producers. The implementation of the projects on the connection of consumers to the transmission network contributes to the development of the electrification of the infrastructure of the Lithuanian railways. The projects on the electrification of the Lithuanian railways that comprise connections to the electricity transmission network and securing electricity supply are one of the activity directions of Litgrid in the upcoming year. The implementation of these projects will smooth the transition from fossil fuels to the use of renewable energy sources, ensure rational consumption of electricity and use of green energy thereby contributing towards the achievement of the objectives laid down in the European Green Deal. In 2024, 10 transmission line construction/reconstruction projects were launched, which will contribute to ensuring the stability and reliability level of the transmission network and the necessary bandwidths for connecting RES producers to the transmission network. There are also plans to complete, continue or start the reconstructions of about 108 330-110 kV substations between 2024 and 2033. In 2024, the reconstruction projects of 10 transformer substations were completed, and the reconstruction projects of 54 transformer substations are being implemented. Newly built and renovated existing transformer substations are equipped with advanced remotely controlled electrical equipment. According to the data of December 2024, out of 1,287 operated transmission system devices, 78% of them were controlled remotely (a 2.7% increase compared to 2023), i.e approx. 1,007 units of connected equipment. In 2025, around 77% of all transmission network switches is expected to be controlled remotely. This will allow to significantly reduce the cost of operational switching and ensure the safety of people working in substations by phasing out the post of duty personnel in substations. The total number of projects to modernise and development Litgrid’s network is growing rapidly and is expected to reach 135 in 2025. 5.5 Financing of strategic projects Infrastructure Networks Facility, of which EUR 68.1 million has been received/received through 2024 and EUR 163.1 million since the start of the projects. For the financing of strategic projects, EUR 43.5 million of congestion management funds were used in 2024. Other investment projects in 2024 were financed by own and network users’ funds, as well as temporarily available congestion management funds. 5.6 Project portfolio Stable, reliable operation of the electricity system, capacity and energy balances depend not only on the behaviour of market participants, but also on the establishment of proper parameters of the operation of the power plants being connected, coordination of the operation of the power plants and timely expansion. Litgrid, as the Lithuanian TSO, plans the operation of the electricity system in the long-term by assessing the requirements for electricity supply and safety, reliability, quality, efficiency, consumption, management and environmental protection. The ten-year plan for the development of the 400-110 kV networks of the Lithuanian electricity system is being developed for that purpose which, among other objectives, aims to project the transmission network’s development directions, restoration volumes, preliminary investments in the expansion and restoration of the network by drafting a long-term investment plan. MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 26 Each year, Litgrid sets up its project portfolio consisting of projects that are necessary for the achievement of the strategic objectives of the state, assurance of the reliability of the transmission network and electricity supply, update or introduction of information technologies, or projects that are initiated by users of the transmission network. In 2024, Litgrid shifted from a one- year portfolio model to a three-year portfolio, which is planned to be updated annually and complemented with third-year projects. This model results in a more accurate list of medium-term projects and helps Litgrid to re-prioritise more quickly and redirect resources to other projects as and when required. 5.7 Innovations The transformation is of the energy sector is a fundamental change driving the EPSO-G Group’s companies to respond to emerging challenges, improve existing processes, discover new technologies and methods and grow competences in a constantly changing environment. For this reason, we need to place greater emphasis on research, development and innovation (R&D&I) activities to develop a net-zero energy infrastructure and to ensure the reliable and safe operation of an integrated system. In accordance with the EPSO-G Group’s R&D&I Guidelines, the Company implements the most innovative energy solutions and pilot projects in the scope of the Group’s innovation process. By teaming up with European and Lithuanian research institutions and business, Litgrid conducts research, studies and testing and supports a culture of innovation within the Group to drive efficiency and improvements in our operations. In 2024, 17 innovation projects were implemented in the Group, 6 were rejected and 19 new measures were initiated. Currently, the Group’s innovation portfolio consists of 36 ongoing projects. In 2024, Litgrid implemented 11 innovation projects (2 in ITT and digitalisation; 3 in asset management; 5 in systems management; 1 in business organisation and new services), of which 6 were initiated in 2024. 6. FINANCIAL INFORMATION 6.1. Revenue In 2024, compared to 2023, total revenue increased by EUR 8.5 million to EUR 378.3 million. The highest increase of revenue was observed in ancillary services, whereas largest decrease was in transmission services. Revenue from electricity transmission decreased by 37.5% to EUR 129.1 million compared to 2023 (2023: EUR 142.3 million of congestion management revenues were recorded in the transmission income, which were used to reduce the transmission tariff for 2023). The main reason for the increase in transmission revenue – at the time of approving the price cap for electricity transmission, the compensated expenses for electricity technological needs were set at EUR 98.3 million higher in 2023 than in 2024, due to the high electricity purchase price forecast at that time. Revenue from ancillary services increased almost 5-fold to EUR 139.2 million, driven by a 5.5-fold increase in the component for the acquisition of ancillary services on top of the price of the transmission service, while the volume of services provided decreased by 0.1%. According to the regulated pricing of the ancillary services, revenue must compensate expenses, including the Company’s internal expenses, attributable to this activity according to the description of the regulation accounting. Difference MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 27 between revenue and expenses for the N-year is taken into consideration when approving the acquisition component of ancillary services for the N+2 year. Sales volumes of imbalance and balancing (hereinafter the “balancing”) electricity increased by 69%, however revenue from balancing electricity decreased 5% to EUR 102.8 million due to a 44% lower average selling price. Until October 2024, the change in these revenues did not have an impact on the Company’s short-term profitability as, under regulated imbalance pricing, revenues were compensating costs, including the Company’s internal costs, attributable to these activities in accordance with the Regulatory Accounting Description. Imbalance pricing has changed since October 2024, when the Company connected to a single European platform for the exchange of balancing energy from frequency restoration reserves with manual activation (MARI). The neutrality component, which is added to (deducted from) the balancing energy reference price, before the connection to MARI, was calculated based on the actual balancing trade data for the reporting month, to socialise the expenses and/or income, which Litgrid incurred. After the connection to MARI, the neutrality component is calculated in advance and adjusted for subsequent months using actual data from previous months, which may result in a significant difference between the balancing and imbalance income and expenses during the reporting period. In 2024, revenues were below costs by EUR 4.7 million, but this difference did not affect long-term profitability as it will be considered in future corrections. Other income related to the transmission activity include: Income from Inter-Transmission System Operator Compensation (ITC) is income from the compensation paid by the ITC Fund for the costs of hosting European cross-border flows in the Company’s transmission networks and using infrastructure. ITS income were negative (EUR -0.3 million) due to corrections (reductions) made to income accrued in 2023. The revenue does not affect the long-term profitability as is assessed when determining the price of the transmission service and calculating the actual return on investments in the transmission service. Revenue from congestion management services amounting to EUR 2.3 million. The revenue does not affect the Company’s profitability because revenue compensates expenses incurred in ensuring the use of allocated capacity of the interconnections. Reactive energy revenue amounting to EUR 2.6 million. The revenue does not affect the long-term profitability as is assessed when determining the price of the transmission service and calculating the actual return on investments in the transmission service. Revenue from administration of guarantees of electricity origin amounting to EUR 0.2 million. Other income decreased by 18.4% to EUR 2.5 million, mostly due to EUR 0.7 million decrease in calculated damages for contractors for late works. The rest of other income increased by EUR 0.1 million. 6.2 Expenses The Company’s operating expenses totalled EUR 341 million in 2024, a 2.3% increase compared to 2023. MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 28 Expenses of purchase of electricity and related services accounted for a major portion of the Company’s operating expenses: EUR 271.6 million (79.7% of the Company’s total expenses), an 8.1% increase compared to 2023. Expenses for ancillary services increased by 24% to EUR 121.6 million. Balancing electricity expenses decreased by 0.9% due to a lower purchase price though the volume acquired was higher. Expenses of compensating for electricity purchase technological losses in the transmission network decreased 3.5% to EUR 36.9 million due to a 5.8% lower average electricity purchase price. ITC costs, i.e. payments to the ITC Fund to compensate for power losses and infrastructure usage of other countries when hosting cross-border power flows to import and export electricity to/from Lithuania, were EUR 3.1 million, the costs of ensuring the bandwidth of distributed intersystem connections – EUR 2.3 million. Operating expenses increased by 14.6% to EUR 46.2 million compared to 2023. Increase in remuneration expenses by EUR 3 million was affected by an 8% increase in the average number of employees due to the intensive implementation of the synchronisation project and a higher average salary. Other expenses increased by EUR 2.9 million, with the highest increase recorded in repair and maintenance expenses of the electricity network due to the cyclical nature of the multi-year work plan and increases in market tariffs. The Company’s depreciation and amortisation expenses in 2024 increased by EUR 2.8 million due to a higher value of non- current assets. Impairment of non-current assets and other expenses decreased by EUR 21.3 million, as, in 2023, an impairment loss of EUR 21.7 million was recorded in profit or loss and a gain of EUR 27.4 million on the revaluation of non-current assets was recorded in other comprehensive income. 6.3 Return and other financial ratios EBITDA = operating profit + depreciation and amortisation + (increase) decrease in assets (excl. inventories) impairment expenses + write-offs. Adjusted EBITDA is a recalculated EBITDA by considering temporary regulatory deviations from the regulated profitability indicator approved by NERC. The adjusted EBITDA is calculated by assessing a revenue adjustment for the prior periods, which has already been approved by NERC’s decision when establishing regulated prices for the reporting period, and by assessing deviation of an actual profitability from a reporting period profitability permitted (regulated) by NERC, which will be assessed when establishing regulated prices for the upcoming year by NERC. MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 29 Adjusted net profit = actual net profit + (adjusted EBITDA - EBITDA) x (1-15%) +/- other one-off adjustments. MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 30 MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 31 During the year the Company’s assets increased by EUR 143 million (+21%) and amounted to EUR 820 million as at 31 December 2024. Non-current assets representing 57% of the Company’s total assets increased by EUR 55 million (+13%), the main reason – the capital investments were higher than depreciation costs even after the investments set off against grants. Current assets increased by EUR 88 million (+33%), mainly due to the EUR 99 million rise in loans granted (temporarily unused accumulated congestion management revenue connected to the Group account and temporary borrowed to EPSO-G). Shareholders’ equity increased by EUR 19 million (+39%) during the year due to the gross revenue in 2024 and accounted for 31% of the total assets at the end of 2024. Non-current liabilities increased by EUR 51 million (+17%) mainly due to the following: congestion management revenues earned and accumulated in 2024 (EUR +45 million) and a higher prepayments received from network users for future investments (EUR +9 million). Current liabilities increased by EUR 73 million mainly due to the following: increased congestion management funds (EUR +44 million) planned to be used within one year (to reduce tariff and finance investments); increased payments for investments (EUR +35 million) an electricity-related debts (EUR + 20 million), offset of grants (prepayments) against assets (EUR -29 million). MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 32 Cash flows, EUR million 2024 2023 Change CFO 105.4 58.9 46.6 CFI -69.9 -51.6 -18.3 CFF -36.1 -7.1 -29.0 Increase/decrease in cash and cash equivalents -0.5 0.1 -0.7 CFI In 2024, cash flows from investing activities (CFI) amounted to EUR -69.9 million. Compared to 2023, CFI was reduced by higher lending and a EUR 44.3 million increase in payments for the acquisition of property, plant and equipment and intangible assets; and CFI was increased by EUR 53 million higher grant inflows and EUR 135.7 million of congestion management funds received and the change thereof. CFO In 2024, cash from operating activities (CFO) totalled EUR 105.4 million. Compared to 2023, CFO increased by EUR 46.6 million, mainly due to the increase in change in working capital (EUR +64.4 million). CFF In 2024, cash from financing activities (CFF) amounted to EUR -36.1 million. Compared to 2023, CFF were decreased by EUR 29.1 million of dividends paid in 2024. Free cash flows, EUR million 2024 2023 Change Change, % CFO 105.4 58.9 46.6 79.1% CFI -69.9 -51.6 -18.3 35.4% Change in loans granted 99.0 -65.4 164.4 -251.3% FCF 134.5 -58.2 192.7 -331.1% The Company’s net cash flows excluding cash flows from financing activities and from loans granted by the Company and their repayments (free cash flow, FCF) totalled EUR 134.5 million in 2024. In 2024, congestion management revenue amounted to EUR 134.9 million During 2024, it was used as follows: to secure allocated capacity - EUR 2.3 million and to finance investments - EUR 43.5 million Accumulated congestion management revenue balance amounted to EUR 389.5 million as at 31 December 2024, of which EUR 124 million were temporarily used for the financing of the Company’s activities and EUR 265.5 million were linked to the EPSO-G Group account. MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 33 6.4 Five-year summary Key financial indicators 2024 2023 2022 2021 2020 Change in 2024-2023 Change, % Revenue EUR million 378.3 369.8 420.3 270.9 208.4 8.5 2.3% EBITDA EUR million 60.6 78.3 -36.5 46.2 51.8 -17.7 -22.6% EBITDA margin % 0.16 0.212 -0.087 0.171 0.248 -5.2 pp -24.4% EBIT EUR million 37.4 36.6 -57.5 24.8 31 0.7 2.0% EBIT margin % 0.099 0.099 -0.137 0.092 0.149 0 pp -0.3% Net profit EUR million 49 48.4 -49.5 20 26.6 0.6 1.3% Net profit margin % 0.13 0.131 -0.118 0.074 0.128 -0.1 pp -0.9% ROE % 0.197 0.239 -0.255 0.091 0.129 -4.1 pp -17.3% ROA % 0.065 0.069 -0.082 0.044 0.067 -0.4 pp -5.6% Shareholders’ equity / Assets % 0.315 0.352 0.232 0.452 0.526 -3.8 pp -10.7% Net financial debt EUR million 33.1 39.2 45.6 68.5 84.7 -6.1 -15.5% Net financial debt/EBITDA times 0.5 0.5 -1.3 1.5 1.6 0 9.3% Investments EUR million 213.6 153.5 56.2 52 54.3 60.2 39.2% Basic earnings per share (EPS) Eur 0.097 0.096 -0.098 0.04 0.053 0.001 1.3% Total assets EUR million 820.3 677.4 718.5 489.8 414.4 142.9 21.1% Equity EUR million 258.2 238.7 167 221.5 218 19.5 8.2% Liquidity ratio times 1.67 1.91 0.81 1.01 0.59 -0.24 -12.5% Assets turnover ratio times 0.51 0.53 0.7 0.6 0.53 0 -4.7% Adjusted indicators Adjusted EBITDA EUR million 47.6 37.1 34.6 39.8 32.5 10.4 28.1% Adjusted EBITDA margin % 0.126 0.1 0.082 0.147 0.156 2.5 pp 25.2% Adjusted net profit EUR million 34.3 25.5 13.8 16.4 13.5 8.8 34.6% Adjusted net profit margin % 0.091 0.069 0.033 0.061 0.065 2.2 pp 31.6% Adjusted ROE % 0.138 0.126 0.056 0.066 0.049 1.2 pp 9.9% Net financial debt/adj. EBITDA times 0.7 1.1 1.3 1.7 2.6 -0.4 -34% 7. COMPANY TARGETS AND THEIR IMPLEMENTATION Implementation of annual goals for 2024 Based on the operational goals stated in the Letter of Expectations of the Ministry of Energy of the Republic of Lithuania and approved in the Strategy, the Litgrid’s Board set the following operational goals for the Company for 2024: MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 34 No Annual goal Annual goal delivery Goal’s weight, % 1. Implementation of the CEN synchronisation programme (1) Implemented synchronisation actions and measures 50% (2) Finalised preparations for synchronisation with CEN 2. Enabling energy transformation (1) Implementation of flexibility measures 30% (2) Litgrid’s long-term strategy as an integral part of the Group strategy (3) Enabling RES 3. Financial and operational sustainability (1) AdjROE, AdjEBITDA 10% (2) Sustainable development of activities 4. Effective organisation (1) Implementation of the investments for the network’s restoration and modernisation 10% (2) Development of future competencies Litgrid’s CEO reports to the Board for the achievement of the set goals. The financial and non-financial goals set for the Company are identical to those of Litgrid’s CEO. Each year, the Board carries out the annual goal implementation assessment. The goals set for Litgrid, according to the Board, were met by 97,69 % in 2024. The partial achievement of the goals is attributable to external (changed shareholders’ expectations) and internal factors (delayed coordination of work). 8. INFORMATION ON THE SHARE CAPITAL AND THE SHAREHOLDERS AND THEIR RIGHTS Since 22 nd December 2010, Litgrid’s shares are traded on the Secondary List on the NASDAQ OMX Vilnius exchange, ISIN code of securities: LT0000128415. During the reporting period Litgrid neither acquired nor disposed of its own shares. The share capital of Litgrid amounts to EUR 146,256,100.2, and it is divided into 504,331,380 ordinary registered shares with the nominal value of EUR 0.29 each. EPSO-G UAB (Laisvės avenue 10, Vilnius, company code 302826889), a company wholly owned by the Ministry of Energy of the Republic of Lithuania, controls 97.5% of Litgrid ’s shares. EPSO-G UAB possesses a decisive vote in making decisions at the general meeting of shareholders. The Company has not received any information on mutual agreements between the shareholders due to which restrictions on transfer of securities and/or voting rights may be imposed. There are no restrictions regarding voting rights at the Company. SEB Bankas AB was the provider of accounting and related services for Litgrid ’s securities from September 15th 2020. MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 35 Data on trading in Litgrid securities on the regulated markets: INDICATOR 2021 2022 2023 2024 Opening price, EUR 0.58 0.805 0.702 0.685 Highest price, EUR 0.89 0.805 0.78 0.8 Lowest price, EUR 0.575 0.63 0.65 0.5 Closing price, EUR 0.795 0.7 0.685 0.78 Turnover, units 894 468 435 981 386 009 558 821 Turnover, EUR million 0.67 0.33 0.27 0.39 Capitalisation, EUR million 400.94 353.03 345.47 393.38 8.1 Turnover and prices of Litgrid’s shares during the reporting period, in EUR: https://nasdaqbaltic.com/statistics/lt/instrument/LT0000128415/trading MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 36 8.2 Benchmark of LGD1L,OMX Baltic Benchmark GI (OMXBBGI) and OMX Vilnius (OMXV) 8.3 Dividend policy On the 18 th August 2017 The Board of Litgrid has adopted a decision to apply the dividend policy of UAB EPSO-G Group, approved by the decision of the Board of Directors of UAB EPSO-G on 14 July 2017 (renewed 7 th February 2020), to Litgrid in full. EPSO- G's Dividend Policy regulates the procedure for setting, paying and declaring dividends for all the companies in the group, sets clear guidelines for the expected return on equity and investment for existing and potential shareholders, while ensuring sustainable long-term growth of corporate value, timely implementation of nationally important strategic projects, and purposefully building trust in the entire group of energy transmission and exchange companies The ordinary general meeting of shareholders of Litgrid on April 11 th 2024, decided to distribute the company's profit of 2023 and allocate a dividend of 0.058 euro per share. Year 2023 2022 2021 2020 2019 Dividends, Eur per share 0.058 0.00 0.01 0.0328 0.0081 9. GOVERNANCE 9.1The Company’s management bodies The Company’s management bodies are set out in the Articles of Association and comprise the General Meeting of Shareholders, the Board and the Company’s director. MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 37 EPSO-G UAB (the Company’s parent) has the Remuneration and Nomination Committee and the Audit Committee, which act as the Remuneration and Nomination Committee the Audit Committee of the Group as a whole, inter alia, by performing the functions of the Remuneration and Nomination Committee and the Audit Committee of the Company. Information on the Remuneration and Nomination Committee and the Audit Committee is available on website of EPSO-G UAB (the Company’s parent) at www.epsog.lt. Information on the committees is also disclosed in the annual reports of EPSO-G UAB. Litgrid’s management and organisational structure ensures optimal organisation, accountability, process efficiency and responsibility. 9.2 Management principles In the reporting period, the corporate governance of the EPSO-G Group’s was carried out in accordance with the new version of the Guidelines on Corporate Governance of EPSO-G Group approved by the Ministry of Energy of the Republic of Lithuania, the sole shareholder of EPSO-G, on 29 December 2022. The Guidelines establish uniform principles of corporate governance to be applied to the entire EPSO-G Group of companies and prescribe the purpose of the group of companies, its operational objectives, corporate governance organisation model, governance structure, as well as the system for accountability, supervision and control of operations. The updated version of the Guidelines established 7 main principles of the 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 UAB 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. MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 38 The EPSO-G Group draws on good governance practices set out in the Good Governance Recommendations published by the Organisation for Economic Co-operation and Development (OECD), the 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 2024, the Governance Coordination Center assessed the quality of the new strategies of the EPSO-G group companies until 2035 with the highest possible scores and awarded an A+ rating for transparency, governance and sustainability disclosure. 9.3 Articles of association The Articles of Association of Litgrid are amended in accordance with the procedure set out in the Law on Companies of the Republic of Lithuania, according to which amendments to the Company’s Articles of Association must be approved by a qualified majority vote that must be not less than 2/3 of all the votes carried by the shares held by the shareholders attending the meeting. During the reporting period, the Company’s Articles of Association were revised 1 time. On April 30th, 2024, the decision of the general meeting of shareholders approved the new version of the Litgrid statute, which was registered in the Register of Legal Entities on May 10 th , 2024. The main changes to the articles of association: the competence of the board to decide on the conclusion of peace agreements and/or the refusal of a claim (counterclaim, complaint, statement) regardless of the amount is established. If the value of the claim is equal to or greater than EUR 30 million, the approval of the general meeting of shareholders is required. clarifications have been made related to issues of sustainability, and it is stipulated that the board analyses and evaluates the material submitted by the company on strategic issues of development of sustainability (environmental protection, social and human rights and governance), ensures appropriate organizational and technical measures for the company's activities in this area. it is stipulated that the board and the general meeting of shareholders decide on the provision of humanitarian aid in accordance with the Law on Development Cooperation and Humanitarian Aid of the Republic of Lithuania. made clarifications related to the (non)suspension of board members and decision-making in such cases, i.e. i.e. it is specified that in cases where none of the board members can vote on the relevant issue due to a conflict of interest, the general meeting of shareholders decides on the suspension and on the substance of the issue for which the board was suspended. revised amounts of transactions approved by the board and the general meeting of shareholders, i.e. i.e. of the board - equal to or greater than EUR 3 million of the general meeting of shareholders - equal to or greater than EUR 30 million. The Company’s Articles of Association are available on its website at https://www.litgrid.eu 9.4 General Meeting of Shareholders The General Meeting of Shareholders is the supreme body of the Company. The competence of the General Meeting of Shareholders, the rights of shareholders and their exercise are provided for in the Law on Companies of the Republic of Lithuania, while additional competence is provided for in the Articles of Association. The additional competence of the General Meeting of Shareholders is the following: Appointment and removal of Board members, fixing the remuneration of Board members, conclusion of contracts with Board members and their standard terms and conditions. Suspension or non-expulsion of members of the Board and the adoption of a decision in the event of a conflict of interest between members of the Board, in the cases provided for in the Articles of Association; Approval of the decisions of the Board, as provided for in the Articles of Association. On 31 st December, according to the data, there were more than 5 800 natural and legal persons as shareholders of Litgrid. The parentcompany, UAB EPSO-G is the majority shareholder, owning 97.5 percent. company shares. MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 39 Each shareholder entered in the company's shareholders' register before the accounting day (fifth working day before the general meeting of shareholders) has the right to participate in the general meeting of shareholders and exercise his right to participate in decision-making on issues within the competence of the general meeting of shareholders. Notices on the convening of the general meeting of shareholders, as well as all necessary information, appendices to the issues to be resolved at the meeting and decisions of the general meeting of shareholders are published on the company's website. Meetings are also reported to Nasdaq Vilnius by submitting a notice in the notice system. During the reporting period, 4 General Meetings of Shareholders were convened, and the following decisions were taken: Date Key decisions 02-12 Decision to conclude the contract of the Electricity Generating Facilities Availability Service with the related party Ignitis gamyba AB and to approve the material terms of the contract. 04-30 Approval of Litgrid AB financial statements of 2023. Approval of the distribution of Litgrid’s profit for 2023. Approval of Litgrid’s Remuneration Report for 2023. Approval of the new wording of Litgrid’s Articles of Association. Approval of the new wording of Litgrid’s Remuneration Policy for the Chief Executive Officer and members of the Board. Election of a Board for a new term of office. Approval of an updated standard contract for the Board members to serve on the Litgrid’s Board. Setting the remuneration of the Board members for their activities on the Board. 09-13 Adoption of Financial Investment Decision for the implementation of the technical solution for the overland link of the project “Construction of the Harmony Link Interconnector” in the territory of the Republic of Lithuania, and adoption of the material terms and conditions of the financial investments. Approval of the Litgrid Board’s decision of 22/08/2024 regarding termination of the Cooperation Agreement for the Implementation Phase of the Submarine Poland-Lithuania HVDC Harmony Link interconnector project (IPCA), which was concluded on the basis of the Litgrid Board’s decision of 04/05/2020 and approved by the General Meeting of Shareholders on 25/05/2020, between Litgrid and the Polish electricity transmission system operator PSE S.A. Approval of the Litgrid Board’s decision of 22/08/2024 to declare the decision of the Litgrid Board of 23/04/2021 „Regarding the adoption of the investment decision for the implementation stage of the Harmony project and the convening of an Extraordinary General Meeting of Shareholders“, which was approved on 17/05/2021 by the Extraordinary General Meeting of Shareholders, null and void. 12-30 Decision to conclude the contract of the Electricity Generating Facilities Availability Service with the related party Ignitis gamyba AB and to approve the material terms of the contract. 9.5 The Board The Board is a collegial management body of the Company. The competence of the Board, the decision-making procedure and the procedure for election and removal of members shall be established by laws and the Articles of Association. Under the current version of the Articles of Association, the Board shall consist of 5 (five) members. The members of the Board shall be elected by the Meeting for a term of office of four years and shall be accountable to the Board. MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 40 A member of the Board may not serve as a member of the Board for more than two consecutive full Board terms and in any case may not serve as a member of the Board for 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. The Articles of Association require to ensure that the Board is composed of at least 2 (two) independent members, whose independence shall be determined by reference to the independence criteria set out in the Law on the Management, Use and Disposal of State and Municipal Assets of the Republic of Lithuania. When forming the Board, it must be ensured that at least 3 (three) members of the Board have no employment relationship with the Company and, when possible, that employees of the Company are not appointed to the Board. The Board elects the Chairperson of the Board from among its members. The Chairperson of the Board is elected from among the Board members nominated by the Parent Company. In its activities, the Board follows the laws, the Company’s the Articles of Association, the decisions of the General Meeting of Shareholders and the Rules of Procedure of the Board. The competence of the Board is not different from the competence of the board established in the Law on Companies, except for the additional competence provided for in the Articles of Association. The Company’s Board reserves the competence to: approve the Company’s business strategy (including long-term and short-term, financial and non-financial targets and/or performance indicators); approve the Company’s budget; approve the Company’s annual performance objectives; take decisions on the Company’s significant transactions in an amount of EUR 3 million (three million euros) or higher, and approves material terms a condition of such transactions; take decisions on the prices of electricity transmission and other state-regulated services and the procedure for their application; take decisions on the 10 (ten) year plan for the development of the Company’s electricity transmission network; take decisions on the commencement of a new activity of the Company or on the discontinuation of a specific ongoing activity; take decisions relating to the exercise of the Company’s rights as a shareholder at General Meetings of subsidiaries and associates; perform supervisory functions as provided for in the Law on Companies of the Republic of Lithuania; take other decisions within the competence of the Board as provided for in the Articles of Association and the Law on Companies of the Republic of Lithuania. During the reporting period, a new Board was elected at the end of the four-year term (i.e. 20/04/2020–20/04/2024). The term of office of the current Board is 30/04/2024–30/04/2028. CVs of the Board members and the Company’s CEO are also available at https://www.litgrid.eu MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 41 9.6 The composition of the Board During the reporting period, the Board of Litgrid consisted of the following members: Board member  Position  Term of office  Other positions  Education  Tomas Varneckas  Member, chairman of the bord (chairman of the board elected from 2022-12-29 – 2024- 04-20 and also 2024- 05-22)    From 2022-04- 20 to 2024-04- 20 and from 2024-04- 30 Head of Infrastructure and Project Management at EPSO- G Group Vilnius Tech, Bachelor in Environmental Engineering, Master in Engineering IT Mindaugas Keizeris  Member  From 2022-12-22 to 2024-04-20 and from 2024-04-30  CEO of EPSO-G UAB Vilnius University, Master in International Business; Baltic Institute of Corporate Governance, the Board member education program Gediminas Karalius Member  From 2022-04-20 to 2024-04-20 and from 2024-04-30  Senior Advisor of Energy Security Group at the Ministry of Energy of the Republic of Lithuania Mykolas Romeris University, Bachelor in Law and Management, Master in EU Law ISM University of Management and Economics, Master in Business Administration Domas Sidaravičius  Independent member of the Board  From 2016-07- 29  (also, from 2020-04-20 to 2024-04-20)   CEO at Tuvlita UAB Vilnius University, bachelor’s in business administration and management, master’s in international Trade Andrius Šemeškevičius Independent member of the Board  From 2023-06-12 to 2024-04-20 CTO at Telia Lietuva AB Vilnius Tech, bachelor and master’s in IT engineering Tim Meyerjürgens Independent member of the Board  From 2024-04-30 COO of TenneT Holding BV" in Netherlands and Germany Oldenburg/Ostfriesland/ Wilhelmshaven applied science university Pierre-Henri D’haene Independent member of the Board  From 2024-04-30 Director of Transformation, Strategy and Sustainability at Elia Transmission Belgium Polytechnic School of Louvain, Cornell SC Johnson College of Business None of the Board members holds shares in Litgrid. MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 42 Board members on the reporting period: Tomas Varneckas Chairman of the Board Head of Infrastructure and Project Management at EPSO-G UAB (company code 302826889, Laisvės avenue 10, 04215 Vilnius). CEO of UAB EPSO-G Invest (company code 306949519, Laisvės avenue 10, 04215 Vilnius). Mindaugas Keizeris Member of the Board CEO at EPSO-G UAB (company code 302826889, Laisvės avenue. 10, 04215 Vilnius). Gediminas Karalius Member of the Board Senior Advisor of Energy Security Group at the Ministry of Energy of the Republic of Lithuania MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 43 Domas Sidaravičius Independent Member of the Board CEO at Tuvlita UAB (company code 1105840917, Lentvario st. 7A, LT-02300, Vilnius). Andrius Šemeškevičius Independent Member of the Board CTO at Telia Lietuva AB (company code 121215434, Saltoniškių st. 7A, LT-08105 Vilnius) Tim Meyerjürgens Independent Member of the Board COO at Tennet Holding BV in Netherlands and Germany, from 1 st January 2025 - CEO of Tennet Germany. MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 44 Pierre-Henri D’haene Independent Member of the Board Transformation, Strategy and sustainability director at Elia Transmission Belgium 9.7 Activities of the board In line with the guidelines for the annual performance assessment of the Group's collegiate bodies approved by EPSO-G’s Remuneration and Nomination Committee, Litgrid’s Board of Directors completed its performance evaluation for 2024 at the beginning of 2025. The Board’s self-assessment session on 23 January 2025 identified areas for improvement and agreed on improvement actions in 2025 in the areas of the Strategy implementation, security and sustainability. In accordance with the Guidelines for the annual performance assessment of the Group's collegiate bodies, the overall assessment of the performance of all the Group's collegiate bodies shall be summarised by the Remuneration and Nomination Committee of the EPSO-G and submitted to the Board of Directors together with a report. During the reporting period, 18 meetings of the Board were held, in 5 meetings decisions were adopted by a written vote. Attendance at the Board meetings during 2024: Did not attend Attended – 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. MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 45 Attendance of the meetings of the Board of Litgrid and decisions taken: The Board plans and executes its activities in accordance with the Board’s annual activity plan. On 22 December 2023, the Board approved the Board’s Action Plan for 2024, which was duly implemented in 2024. Matters discussed and decisions made by the Litgrid’s Board in 2024: January Approval of Litgrid’s strategy, action plan for 2030. Approval of Litgrid’s goals for 2024 identical to those of the manager. Approval of Litgrid’s budget for 2024. Consent to the contract of the Electricity Generating Facilities Availability Service with the related party Ignitis gamyba AB and to approve the material terms of the contract; adoption of the decision to convene the Extraordinary General Meeting of Shareholders. Adoption of the decision regarding the employee remuneration band starting from 2024. February Consent to the amendments to the material special terms of the Loan and Borrowing Agreement between Litgrid and UAB EPSO-G. Instructing CEO to apply to the Commission for Coordination of Protection of Objects of Importance to Ensuring National Security for the destruction of interconnectors. Decision on the terms and conditions of employment and the delegation of powers to CEO. The Board’s performance appraisal session, during which a plan for improvement of the Board’s performance in 2024 was drawn up. MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 46 March Approval of the Report on the implementation of the Litgrid’s 2030 Strategy in 2023. Approval of the Litgrid’s Annual Report for 2023 and the Litgrid’s Remuneration Report for 2023. Consent to the Company’s financial statements for 2023 and the profit distribution project, and making the decision to convene Litgrid’s Ordinary General Meeting of Shareholders. Decision on the review of the performance evaluation, financial incentives and remuneration of Litgrid’s CEO. Approval of a new version of the list of Litgrid’s compliance priorities. Approval of the standard material terms of the contract for design and construction works. Consent to the acquisition of contract works for more than EUR 3 million through the conclusion of a contract with Eltirema UAB for the operation of 110-400 kV overhead lines in the Eastern Region, and approval of the material terms of the contract. April Adoption of the decisions on voting in the General Meeting of Shareholders of Litgrid’s associate Baltic RCC OÜ (approval of the annual financial statement for 2023 and the profit appropriation for 2023). May Election of Tomas Varneckas as the Chair of the Board. Assessment of the independence of the Board members. Consent to the amendments to the material special terms of the Loan and Borrowing Agreement between Litgrid and UAB EPSO-G. Decision regarding the provision of support for the reconstruction of damaged and/or destroyed energy infrastructure in Ukraine, for Ukrainians affected by the war and for Lithuanian Universities. Approval of the updated Litgrid Board’s meeting calendar and activity plan for 2024. June Consent to the conclusion of the transaction regarding the construction of the 110/27.5 kV Žeimių traction TP 110 kV switchgear and construction works for connection to the transmission network; approval of the material conditions of this transaction. Consent to the conclusion of the transaction on the reconstruction works of 110 kV OL Kaunas - Murava I, Kaunas - Murava II; approval of the material conditions of this transaction. Consent to the design and construction of the contract for the reconstruction of the 110/10 kV Šventoji TP 110 kV switchboard with the installation of a communication tower; approval of the material conditions of this transaction Consent to the conclusion of the contract for the design and construction works of the 110/35/10 kV Usėnai TP 110 kV switchboard; approval of the material conditions of this transaction. Consent to the Development Plan for the 400-110 kV Networks of the Lithuanian Power System for 2024-2033. July Decision to conclude the Harmony Link Cooperation Agreement (HLCA) with the Polish electricity transmission system operator PSE; approval of the material conditions of the HLCA. August Decisions to terminate of the Cooperation Agreement for the Implementation Phase of the Submarine Poland- Lithuania HVDC Harmony Link interconnector project (IPCA), to declare the Financial Investment Decision (FID) 2021 null and void and to convene the Extraordinary General Meeting of Shareholders. Consent to the conclusion of the contract for the purchase of services for the renewal of the NordBalt control system; approval of the material conditions of this transaction. September Consent to the conclusion of the contract for the physical protection and response services; approval of the material conditions of this transaction. Consent to the conclusion of the contract for the reconstruction of 110 kV OL Kvietiškis-Kapsai-Prienai and the installation of lightning protection cables with fiber-optic cable; approval of the material conditions of this transaction. Consent to the conclusion of the contract for the operation of 110-400 kV overhead lines in the IPC Northern Region; approval of the material conditions of this transaction. October Consent to Litgrid’s, the Lithuanian electricity transmission system operator’s, draft strategy 2035 and its submission to the Public Enterprise Governance Coordination Centre for review. Decision on the introduction of insurance derivatives in Lithuania. MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 47 Approval of the differentiated prices for electricity transmission services for 2025 calculated on the basis of the transmission service price cap and the component for the acquisition of ancillary services approved by the National Energy Regulatory Council (NERC), the procedure for their application and submission of the prices to NERC. November Consent to the conclusion of the transaction regarding the construction of the 110 kV switchgear of the Linkaičiai traction transformer substation and the connection to the transmission network; approval of the material conditions of this transaction. Consent to the conclusion of the transaction regarding the construction of the 110 kV switchgear of the Tarvainiai traction transformer substation and the connection to the transmission network; approval of the material conditions of this transaction. Consent to the conclusion of the contract for the operation of 110-400 kV transformer sub-stations in the IPC Eastern Region; approval of the material conditions of this transaction. Consent to the conclusion of the contract for the operation of 110-400 kV transformer sub-stations in the IPC Western Region; approval of the material conditions of this transaction. Consent to the conclusion of the contract for the 110-330 kV overhead line clearing works in the IPC Eastern Region; approval of the material conditions of this transaction. December Consent to the conclusion of the contract for the electricity generating facilities availability service; approval of the material conditions of this transaction Decision to convene an Extraordinary General Meeting of Shareholders regarding the conclusion of one of these contracts with a related party Ignitis Gamyba AB. Determination of Litgrid’s risk appetite and approval of the plan of risk management measures for 2025. Adoption of the decision regarding the employee remuneration band starting from 2025. Approval of the calendar of the Litgrid Board’s meetings and activity plan for 2025. 9.8 Areas of CEO activities The CEO is the sole governing body of the Company. The Company CEO competence does not differ from the competence of the head of the company established by the Law on Companies of the Republic of Lithuania, except for the additional competence provided for in the Articles of Association. The CEO reserves the competence to: organise and control day-to-day activities of the Company, take decisions on activities of the Company. ensure implementation of the strategy of the Company, implementation of resolutions of the Meeting and the Board in the Company. enters into transactions on behalf of the Company in accordance with the procedures established by the Board. The remuneration of the CEO is determined in accordance with the "Remuneration of the CEO and Board Members" policy. The remuneration system of the Company's CEO is composed of the following components: (i) Monthly remuneration; (ii) Bonuses as provided for in the Labour Code of the Republic of Lithuania, the Company's internal regulations and collective agreements; (iii) Financial incentives; (iv) One-off bonuses for outstanding performance and innovation; (v) Fringe Benefits; (vi) Non-financial remuneration. The basis for determining the monthly remuneration of the Chief Executive Officer of the Company is the level of the Chief Executive Officer of the Company, as approved by the Board of the Company. To assess and determine the level of the Company's CEO, the EPSO-G Group of companies adopts a method that is recognised in international practice and widely used in Lithuania. The starting point for the monthly remuneration of the Company's CEO is determined by assessing the general level of remuneration of CEOs of similar size and/or strategic importance in state-owned companies, considering the data of an independent salary survey and market trends, and considering the recommendations of the Government of the Republic of Lithuania on remuneration of executives of state-owned companies. The monthly remuneration of the Company's Chief Executive Officer is determined and changed by decision of the Company's Board, considering the experience, competence and performance of the Company's Chief Executive Officer. The Company's Board, in accordance with the remuneration, performance evaluation and development policy of the employees of the EPSO-G Group of companies, sets objectives and performance criteria for the Company's CEO, evaluates their achievement and grants financial incentives. The specific amount of the incentive for the Company's Chief Executive Officer is determined by the Company's Board, considering the achievement of the Company's targets. No remuneration is payable to the Chief Executive Officer in respect of the grant of shares in the Company. MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 48 In the event of termination of employment, the Chief Executive Officer of the Company may, by decision of the Board, be paid a severance payment, except in the case of termination of employment due to the fault of the Chief Executive Officer of the Company, or in the case of termination of employment at the initiative of the Chief Executive Officer of the Company without valid reasons. The amount of the severance payment shall be set out in the employment contract concluded with the Chief Executive Officer of the Company, considering the recommendation of the Remuneration Committee, which may be provided separately or by adopting a standard form of employment contract with the Chief Executive Officer. The employment contract of the Chief Executive Officer of the Company shall not contain arrangements for supplementary pension or early retirement. Rokas Masiulis CEO Other positions: Independent Board Member at Connect Pay UAB (company code 304696889, Algirdo st. 48, LT- 03218 Vilnius). Education: Vilnius University Master of Economics; Vilnius University Bachelor of International Relations; Baltic Institute of Corporate Governance, Professional Board Member Training Program Mr. Masiulis does not hold any shares of Litgrid. 9.9 Governance and control The requirements for the governance of the Company are set forth by the Lithuanian laws on the governance of state-owned or state-controlled companies, insofar as they apply to the EPSO-G Group companies, and the Governance Code, insofar as the Company’s Articles of Association do not state otherwise. In accordance with the Integrated Planning and Monitoring Policy of the EPSO-G Group of Companies, which was approved at the meeting of the Board of the Company No 12 held on 19 May 2017 and which is directly applied at the Company in its entirety, the Company is preparing the strategy of the Company for a period of 5–10 years. The period of the strategy must coincide with the period of the parent company’s strategy. The prepared strategy of the Company currently covers the period of 10 years up to 2031. The implementation of the strategic objectives set out in the strategy of the Company is ensured by the Company’s performance, control, and risk management systems. The strategy of the Company is approved, and its implementation is controlled by the Board. A monthly strategy implementation supervision system is introduced at the Company and is linked with the Company’s administrative staff remuneration system. The Company’s activities of the transmission system operator are regulated by the national regulatory authority, i.e. the National Energy Regulatory Council (hereinafter the “Council”). Within its competence, the Council performs the functions of the state regulation in the electricity sector in the Republic of Lithuania, by ensuring, inter alia, the supervision of and control over the performance of regulated activities in the energy sector, as well as the proper implementation of the rights and duties of electricity undertakings and consumers. The strategy and operational plan of the Company are implemented by Company’s administrative staff and are organised by the Company’s CEO. The Company’s administrative management personnel consist of the CEO, the Head of Finance Department, the Head of System Department, the Head of Transmission Network Department, the Head of Strategic Infrastructure Department, the Head of Strategy Department, and the Head of ITT and the Head of Administration Department. The composition of the Company’s management is disclosed on the Company’s website. Corporate governance accommodates the principles of good governance practice. In its activities, the Company is guided by the EPSO-G Group’s policies which are made available on the Company’s website. MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 49 The internal control systems of the Company are supported by the organisational structure, management culture and implemented good governance practices, as well as process management which is currently being implemented. It should be noted that the supervisory functions are carried out by the Board of EPSO-G UAB, meanwhile recommendations, proposals and conclusions on matters which are key to the Company’s activities are provided by the Group’s Remuneration and Nomination Committee and the Audit Committee. The internal control system is initiated by the Company’s Board and implemented by the administrative staff, assisted by the Audit Committee of EPSO-G UAB, the external independent audit, and divisions supporting the principal activity. The procedures and policies effective at the Company ensure the reliability of accounting and financial reporting, the compliance of the Company’s activities with legal acts, operational efficiency, and achievement of operational objectives. During the reporting period, the corporate governance of the EPSO-G Group’s was carried out in accordance with the new version of the Guidelines on Corporate Governance of EPSO-G Group approved on 29 December 2022 by the Ministry of Energy of the Republic of Lithuania, the sole shareholder of EPSO-G. The Guidelines establish uniform principles of corporate governance to be applied to the entire EPSO-G Group of companies and prescribe the purpose of the group of companies, its operational objectives, corporate governance organisation model, governance structure, as well as the system for accountability, supervision and control of operations. 10. REMUNERATION REPORT 10.1 Remuneration of collegial management bodies The procedure for payment of the remuneration to the Board members for the activities in the Board of both EPSO-G UAB and Litgrid is set out in the Procedure for Payment of Remuneration to the Members of Collegial Bodies of State-Owned Enterprises and Municipal-Owned Enterprises approved by the Resolution of the Government of the Republic of Lithuania of 14 October 2015 No 1092 (including new amendments of 3 August 2023), and the new version of the Guidelines for Determining the Remuneration for Activities in the Management Bodies of EPSO-G UAB and EPSO-G Group of Companies (hereinafter the “Remuneration Guidelines”), approved by the sole shareholder of EPSO-G UAB, the Ministry of Energy of the Republic of Lithuania, on 26 April 2024, available on EPSO-G UAB website www.epsog.lt. The Company is also guided by the new version of the CEO and the Board Remuneration Policy approved by the General Meeting of Shareholders on 30 April 2024, which is made public on the Company’s website. 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.  Employees of the EPSO-G Group companies and/or employees of shareholders of the Group companies are not remunerated for the for work on the Board. Position Monthly average salary Chairman of the board 1/3 CEO average remuneration * Board member 1/4 CEO remuneration Board member (civil servant)) 1/5 CEO remuneration ** * CEO average remuneration - the average monthly salary of the CEO of Litgrid. ** in case that a board member (civil servant) goes and performs activities in the collegial body of another state-owned company/state-owned company and/or municipal company/municipally owned company, he is paid 1/8 of the average monthly salary of the company CEO. Fixed and variable remuneration for the Chief Executive Officer is determined by the Board of Directors, and for the most senior executives by the Chief Executive Officer, in accordance with a remuneration policy approved by the Board. The variable remuneration is paid once a year to the CEO and the senior management after the Board has approved the achievement of the company's objectives. MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 50 The variable part of the remuneration for the board members is not determined, so the ratio between the variable and fixed part: 100 percent fixed part. On 30th of April 2024 by the decision of the general meeting of shareholders of Litgrid, the following fixed monthly remuneration amounts (excluding payable taxes) were established, which apply from 2024 April 30th: Position Monthly fixed amount (Eur) Chairman of the Board (independent) 4 600 Member of the Board (independent) 3 500 Member of the Board (civil servant), if the civil servant neither holds the position nor engages in activities of the collegial body of another SE/SOE and/or ME/MOE 2 800 Member of the Board (civil servant), if the civil servant holds the position and engages in activities of the collegial body of another SE/SOE and/or ME/MOE 1 800 * SE - state enterprise, SOE - state-owned enterprise, ME - municipal enterprise, MOE - municipality-owned enterprise Civil contracts have been concluded with all members of the company's board regarding their activities on the board, detailing the board member's responsibilities, duties, rights and functions. Remuneration of the Litgrid Board members over the five-year period, EUR: 2024 2023 2022 2021 2020 Domas Sidaravičius 9,408 28,224 17,107 16,800 16,800 Tomas Varneckas - - - - - Mindaugas Keizeris - - - - - Andrius Šemeškevičius 9,408 15,602 - - - Gediminas Karalius 29,390 22,572 607 - - Tim Meyerjürgens 28,117 - - - - Pierre-Henri D’haene 28,117 - - - - Total 104,000 66,398 40,084 37,800 37,414 No other bonuses, royalties or other benefits were paid to the members of the Board. The remuneration and financial reward for the Company’s CEO are determined by the Board, for the top-level managers - the CEO, based on remuneration policy. Financial incentives are paid to the CEO and management once a year, after the Board has approved the implementation of the company’s goals. During the reporting period, the ratio of men to women on the Board was 100 percent men. The Group’s selection policy is applied to the election of the CEO, and the description of the selection of candidates for state or municipal enterprises, collegial supervisory or management bodies of state or municipally controlled companies or their subsidiaries, approved by Resolution No. 631 of the Government of the Republic of Lithuania of 15 June 2015, and the Group’s selection policy are applied to the election of Board members. Group Selection Policy - to establish the principles and practices of the Group's selection of joint ventures, with the aim of transparently selecting the best candidates, who meet the necessary qualifications, experience, expertise and values, for college bodies, management and staff positions at all levels, who would effectively contribute to the achievement of the goals of individual group companies and enterprises. MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 51 The Group's Equal Opportunities Policy defines the key principles that apply to the EPSO-G group company, in order to ensure that the principles of equal opportunities and non-discrimination are observed in all areas of employment relations. 10.2 Employee remuneration Litgrid's goal is to create an advanced organizational culture that adheres to the principles of sustainability. The elements of this culture are inseparable: caring for the well-being of employees, development, fostering a safe work culture, equal opportunities, creating open and mutually trusting relationships with local communities and ensuring customer satisfaction with the services provided. The company aims to become an organization that the majority of suppliers, producers, consumers, employees, communities and representatives of other interested parties would consider as an organization that adheres to the principles of sustainability. Litgrid follows the Employee remuneration, performance evaluation and education policy valid in the EPSO-G group of companies, the main principles of which are: Create motivating incentives and prerequisites to encourage employees to achieve better performance, to contribute more actively to the achievement of the Company's and Group's goals, and to perform more than the formal performance of duties. Encourage employees to create innovative, non-standard solutions and improve operations. To ensure equivalent payment for equivalent work in terms of responsibility, competencies and contribution to the result. Attract and retain qualified employees. The principles of remuneration policy are the same for managers and employees. The remuneration fund is approved by the company boards. The Remuneration and Nomination Committee monitors the balance between control of payroll costs and incentives for employees performing their duties appropriately. The remuneration of EPSO-G managers and employees consists of two parts - a monthly remuneration and a financial incentive. The monthly remuneration depends on the level of the employee's position and competences, the financial promotion depends on the achievement of the annual goals of the relevant Group company and on the individual evaluation of the employee's performance. The financial incentive is not paid to the employee in case the performance does not meet the expectations according to the established evaluation criteria. The amount of the financial incentive is estimated in the company's budget and accounted for in the financial result, which is audited and published publicly. The financial promotion of the company's manager depends on the result of the company's annual goals, which are related to the implementation of the company's strategy and are published publicly on the company's website. The severance pay of managers and employees does not exceed the amount determined by the legal acts of the Republic of Lithuania. It is envisaged that a bonus may be awarded for results of special importance. MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 52 The relevant board of the group company must be informed about the planned financial incentives and bonuses at its next meeting. Prior agreements on the amounts of severance payments, except for company managers, whose working conditions are determined by the board, are not concluded. Severance pay is paid to employees in accordance with the procedure established by the Labor Code and employment contracts. The remuneration policy does not provide for any remuneration that gives the manager, collegial body member or employee the right to shares, stock options or the right to receive remuneration based on changes in the share price or other financial instruments. Based on these principles, the company's reward system is focused on a set of financial and non-financial reward elements. The elements of the remuneration package are the fixed part of the remuneration (i.e. monthly salary), financial incentives (remuneration paid at the initiative and discretion of the company, depending on the results achieved by the company and the performance evaluation results of the employee(s), one-time bonuses, fringe benefits and emotional rewards. Emotional reward is a non-financial component of the total reward, which enriches the well-being of employees and encourages employee effort, involvement in the company's activities and loyalty. Additional benefits provided to employees are provided to everyone, they are described in the Litgrid Collective Agreement and other internal documents of the Company. On 31 st December 2024 Litgrid had 458 employees. Employee remuneration over the last five years: Bendrovės darbuotojų vidutinis darbo užmokestis 2020-2024 metais, Eur 2024 m. 2023 m. 2022 m. 2021 m. 2020 m. Vadovas 13,322 12,557 11,769 9,387 12,317 Aukščiausio lygio vadovai 9,719 9,783 8,348 8,709 8,551 Vidurinio lygmens vadovai 6,067 6,111 5,051 4,701 4,415 Ekspertai - specialistai 3,795 3,775 3,093 2,986 2,674 Iš viso 4,259 4,265 3,510 3,336 3,054 The maximum variable financial incentive that can be granted to a company's CEO is up to 30% of the fixed part of the annual remuneration. The specific amount of the incentive for the Company's CEO shall be determined by the Company's Board of Directors considering the achievement of the Company's objectives. 10.3 Formulation and monitoring of remuneration and nomination policies The company's board is responsible for formulating and supervising the implementation of the group's remuneration and award policy. In order to ensure proper Remuneration Policy formulation, monitoring and payroll management, EPSO-G has established and operates a three-member Remuneration and Nomination Committee, the majority of which are independent members. In carrying out this function, the EPSO-G Remuneration and Nomination Committee shall: in the cases provided for in the company's statutes or at the request of the bodies of the company or Group companies, provides them with recommendations regarding the appointment of members of collegial bodies and the conditions of contracts with them, including regarding the amount of remuneration for these persons in accordance with the provisions of the Remuneration Guidelines. MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 53 provides recommendations on the appointment of managers of Group companies, typical forms of employment contracts for managers and conditions of contracts with appointed managers, including remuneration and/or the range of the remuneration amount. evaluates the structure, size, composition and activities of the management bodies of the Group companies at least once a year, can assess the skills, knowledge, and experience of individual members of the management body, and provides recommendations for improving performance. provides recommendations regarding the remuneration structure, amount of remuneration, main performance evaluation criteria and remuneration review for the Group company managers in implementing the Group's remuneration, performance evaluation and training policy. can make recommendations regarding the implementation of the Group's remuneration policy and recommend the necessary measures for the implementation of the remuneration policy. provides recommendations regarding the implementation of the Group's top-level managers' and board members' remuneration policy, including the transparency of the remuneration system. assesses the size and structure of the remuneration of the members of the Group's collegial management bodies, supervises the implementation of the remuneration guidelines. at the request of the meeting, may make recommendations on remuneration guidelines. provides recommendations on the system of rotation of managers and critical positions of Group companies. provides recommendations on the system of strengthening equal opportunities, inclusion and diversity in the Group. The bodies of the group companies have the right to apply to the ASK, requesting recommendations and conclusions on the specific issues referred to by them, if these issues fall within the competence of the RNC. 11. RISK FACTORS Litgrid views risk management as a structured approach to managing uncertainties to effectively achieve the company’s objectives. Litgrid is guided by the EPSO-G Group Risk Management Policy and Risk Management Methodology. These documents embed 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 international practice. The Risk Management Policy defines the key risk management principles and responsibilities to ensure a unified corporate risk management process based on common principles. The Risk Management Policy is available and accessible on Litgrid’s website. In managing risks, it is important for the Company to appropriately determine the significance of the risk, which is calculated by multiplying the probability and impact of the risk, and it is important to tailor targeted risk management measures that address the causes of the risk (where possible) and/or mitigate the impact of the risk. 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. Sustainability risks are treated as an integral part of the Company’s day-to-day operations and are integrated into the risk management process. The Company 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. The risk management process comprises the following stages: 1. 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. MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 54 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. For risks scoring above 15, a plan for additional risk management measures is developed to manage these risks, with the most appropriate method for risk management: 3.1. Risk reduction, where risk management measures are used to decrease the likelihood or impact of a risk. 3.2. Risk transfer, where a risk is passed on to a third party by delegating functions and associated responsibilities, and establishing an appropriate reallocation of duties and responsibilities. 3.3. Risk avoidance, where a risk is avoided by not engaging in or not continuing activities that present risk. 3.4. Risk acceptance, where the risk factors are known, but due to the Company’s perceived limited ability to manage the risk, or where risk management is too costly, or where the risk is within the risk appetite, the risk is tolerated. Such risks are continuously monitored, and, in the event of material adverse changes, the risk owner proposes a response to the increased risk. 3.5. Risk elimination, where targeted risk management measures successfully eliminate (close) a risk. 4. Monitoring 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. The monitoring results are communicated to the Company’s manager, the Executive Board, the Board, EPSO-G’s 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 has an 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 through staff meetings, the Executive Board format and the regular sharing of relevant information on the Company’s intranet. Stages in the risk management process Each year, Litgrid identifies, assesses risks, sets risk monitoring indicators and provides risk management measures. In 2024, as every year, the Board of Litgrid assessed the risks identified, their level determined and values of risk appetite and approved the List of Risks and the Plan on Risk Management Measures. MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 55 On a quarterly basis, EPSO-G’s Audit Committee, Litgrid’s Board and Litgrid’s Executive Board assess changes in key risk indicators, the effectiveness of risk management measures, the relevance of risks in a constantly and rapidly changing environment and make recommendations for improving the system. To reinforce the risk management process and its integrity, the Risk Management Information System (Power App), IT tool, has been rolled out across the EPSO-G Group companies. The tool allows users to record relevant information about the risk in the risk card, to conveniently filter relevant risks in the report section, monitor changes in key risk indicators and the effectiveness and timeliness of the management measures, and provides with the possibility to send a reminder or a comment to the risk owner. The risk management information system is constantly evolving. It should be noted that information related to risks, risk indicators and risk management reports is regarded as confidential, and therefore this report contains more generic (abstract) information related to the risks managed at the Group level. 11.1 Key risks and their management In 2024, 99 risks were identified in the Company’s risk register, of which 11 were managed at the Group level, 27 were managed at the Company level and 61 were managed at the business unit level. In 2024, 4 risks were closed, and their potential occurrence was prevented by using targeted risk management measures. Risk No Title of the Group-level risk Trends in a risk level L-12 L-13 L-14 L-32 L-33 Risk of delays in strategic projects L-27 Risk of disruption to systems used in core business L-02 Risks of non-compliance with occupational safety requirements L-20 Risk of too little competition in procurement procedures carried out L-16 L-17 Cybersecurity risk L-38 Environmental impact mitigation risk Explication: Increase No change Decrease Key risks and their materiality level are presented in the risk map. 6 risks exceeded the Company’s risk tolerance threshold and therefore special attention was paid to their monitoring and management. MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 56 Map of risks managed at the Group level MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 57 11.2 Description of the map of risks managed at the Group level MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 58 MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 59 MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 60 11.3Climate 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 assessment 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 Section Risk management framework). 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 sustainability objectives, will pay particular attention to the management of these risks, better disclosures and integration of risk-related opportunities into business strategy. MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 61 12. ANTI-CORRUPTION AND ANTI-COMPETITIVE BEHAVIOUR The Company’s business decisions are guided by the principles of objectivity, impartiality, transparency, accountability and the rule of law, combined with the zero tolerance to corruption or any other forms and manifestations thereof. With the aim to build a transparent and trust-based Company, we continuously assess and implement measures to manage corruption risks. Litgrid’s anti-corruption activities are based on the international standard ISO 37001:2016 Anti-bribery management systems — Requirements with guidance for use, as well as the following measures: In 2024, an international management accreditation body issued certificates to Litgrid confirming its anti-corruption management system compliance with the standard requirements. It demonstrates the Company’s ability of companies to prevent corruption risks, build trust in the supply chain and protect their reputation through tangible and organised measures. The Company also approved the Corruption Prevention Plan (CPP) for 2024, which aims to consistently and efficiently improve the company's transparency system, to ensure the implementation of prevention and control measures and the continuity of the existing ones, by positively influencing the company's most sensitive areas of activity and by increasing the transparency of the company. Each measure in the Action Plan is evaluated according to a set of evaluation criteria and an outcome. The Company’s key documents on anti-corruption activities are published and made available to all stakeholders and organisations on our website. MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 62 Key anti-corruption indicators are disclosed below: Indicator 2024 2023 2022 2021 Cases of corruption identified 0 0 0 0 Staff members sanctioned and dismissed for corruption 0 0 0 0 Corruption-related cases filed against the Company/employees 0 0 0 0 Corruption cases identified due to which contracts with business partners were not concluded/renewed 0 0 0 0 12.1 Corruption risk assessment and management Corruption risk assessments are carried out in the Company on an annual basis in accordance with the EPSO-G Group’s Risk Management Policy and methodology, and the status of implementation of the measures identified to manage corruption risk is assessed on quarterly basis. To better manage third-party corruption risk, in 2024, together with other EPSO-G Group companies, we developed a business partner screening system, defining procedures for assessing risks related to business partners. In 2024, the Company identified the following corruption-related risks that could have an impact on the Company’s reputation or financial position: conflicts of private interests; recruitment of people 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; abuse of office or underperformance. These risks are monitored and managed at defined periodicity, using measures provided for in the Group’s Anti-Corruption Policy and the Group’s Policy of Management of Interests of Members of Collegial and Supervisory Bodies and Employees. 12.2 Training and communication Anti-corruption training of employees is an important part of the Company’s anti-corruption activities, delivered in various forms: training sessions for external or in-house coaches, and communication messages on the current anti-corruption related issues. To ensure consistent anti-corruption awareness-rising among employees, interactive mandatory anti-corruption training was developed in 2024. All employees of the Company will be required to complete the training from 2025 onwards, starting with new hires. In 2024, the Company hosted a lecture on Whistleblower Protection by the Prosecutor General’s Office of the Republic of Lithuania, which was attended by 43% of the Company’s employees. We also built competences of our anti-corruption experts by inviting guest speakers to give a talk on practical topics of conflict of interest management. The Company employees’ corruption resilience is also enhanced through other measures, such as internal communication, and by bringing to the attention of employees and members of management bodies the most important Group’s and the Company’s internal anti-corruption legislation. In 2024, these internal documents were made available to all (100%) employees of the Company (of which 16% were management). All (100%) of the Board members were also communicated on key anti-corruption legislation. MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 63 12.3 Employee and contractor surveys The employee tolerance to corruption survey was conducted in 2024, which helps to determine employees’ approach to corruption and to identify aspects of anti-corruption requiring improvement. 207 employees participated in the survey (46%) (52% in 2023, 55% in 2022; and 54% in 2021). The survey shows that 98% of employees have not encountered any corruption in their work in the last years (98% in 2023, 99% in 2022 98% in 2021), and 92% of them know whom to contact if they encounter corruption (94% in 2023, 95% in 2022, 91% in 2021). Also, a contractor satisfaction survey was carried out asking for their views on the Company and cooperation. 6% of the invited contractors took part in the survey. The survey showed that, of all the respondents, none of the contractors encountered or were aware of cases of corruption in the Company. The trend in the survey results show that the anti-corruption objectives are being implemented purposefully. 12.4 Helpline The Company also has the Helpline, where employees and other stakeholders can directly or anonymously report, without fear of negative consequences, potential violations, unethical or unfair behaviour. Information on infringements can be submitted via the following helpline channels: Email: pranesk@litgrid.eu Send it by mail (the Company’s address) Fill in the form online https://www.litgrid.eu/index.php/apie- litgrid/pasitikejimo-linija/32290 Provide information to the Head of Prevention or prevention personnel In 2024, Helpline received a total of 4 reports (99 reports in 2023, 28 reports in 2022, 13 reports in 2021). The verification of the information in the report showed that the claims made were unsubstantiated, and no internal investigations were conducted. 12.5 Gift policy At the Company, we do not tolerate any gifts given in connection with employment or position, except for gifts permitted under the EPSO-G Group’s Anti-corruption Policy. Employees are prohibited from accepting any gifts of money, gift vouchers or alcoholic beverages, including gifts of low value, if the circumstances in which they are given or accepted could lead to a misunderstanding or contradiction and create the appearance of a conflict of interest. 12.6 Employee and partner screening To ensure that the Company employs only persons of impeccable repute, the measures provided for in the Laws on the Prevention of Corruption of the Republic of Lithuania and on the Protection of Objects Important to the National Security of the Republic of Lithuania are implemented to ensure the reliability of personnel (lists of positions for which applicants are screened in accordance with the procedure laid down by law have been approved and made publicly available on the Company’s external website; the responsible authorities have been contacted for each position (contacted in respect of 78 persons). The Company also carries out supplier (contractor) employees’ screening procedures as required by law. In all cases, when new contracts are concluded, persons are screened for compliance with the requirements of the Law on International Sanctions of the Republic of Lithuania and the Law of the Republic of Lithuania on the restrictive measures in connection with military aggression against Ukraine, by checking a person’s profile in various public registers. It should be noted that all (100%) of the Company’s suppliers/contractors are committed to our Supplier Code of Conduct. MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 64 12.7 Prevention of bribery of foreign officials The Company’s anti-corruption activities are targeted to managing corruption risks in Lithuania and abroad. The Company's employees cooperating with foreign officials or officials acting in foreign countries shall be guided in their activities by the principle of zero tolerance to corruption set out in the Anti-Corruption Policy and shall comply with other principles of anti-corruption activities. The EPSO-G Group companies’ Anti-Corruption Policy is available here. In 2024, no cases of bribery of officials, corruption or other corruption manifestations were detected in the Company’s international business transactions conducted abroad or in Lithuania. 12.8 Interest management The Company has an integral model of declaration of private interests, which includes declaration via the PINREG, a register managed by the State Ethics Commission, and, where required by the Law on the Harmonisation of Public and Private Interests of the Republic of Lithuania, 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 Company periodically verifies whether all employees have declared their private interests, and whether they have done so properly (by performing content analysis of declarations of private interests), and provides department managers and employees with preliminary recommendations. In addition, from 2021, periodic preventive checks are carried out of declarations of private interests submitted through PINREG to assess whether the provisions of the Law on the Harmonisation of Public and Private Interests of the Republic of Lithuania are being properly implemented (no breaches identified). The declaration of private interests is one of the critical responsibilities of employees, enabling the Company to ensure early management of conflicts of interest. The Company’s employees avoid situations where their private interests are, or may be, in conflict (conflict of interest), and, if they are in a conflict, they 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 EPSO-G Group’s management personnel. As part of the implementation of the Policy of Management of Interests of Employees and Members of Collegial Bodies, and to ensure the proper functioning of the conflict of interest framework, the legislation governing the management of interests in the Company was updated in 2024, clarifying the procedures for declaring, and refraining, removing, monitoring, supervising and controlling in the context of private interests. Key conflicts of interest management indicators are disclosed below. Indicator 2024 2023 2022 2021 Ratio of employees declaring their interests to the total number of employees for which the declaration of interests is mandatory 100% 100% 100% 100% Number of incidents when decisions were adopted due to conflict of interest 0 0 0 0 13. SPECIAL OBLIGATIONS There are no special obligations assigned to Litgrid. MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 65 14. SIGNIFICANT EVENTS DURING THE REPORTING PERIOD As the Company is executing its duties in accordance with the applicable laws regulating the securities market, it publishes information on significant events and other regulated information on the EU-wide basis. This information is available on the website of the Company (www.litgrid.eu) and on the website of NASDAQ Vilnius stock exchange (www.nasdaqbaltic.com). Summary of Litgrid operations and achievements during 2024 January On January 8, 2024, Litgrid informed that during the morning peak electricity consumption in Lithuania reached a new record, the hourly total electricity consumption in the country was 2280 MW. The last such record was recorded in 2021. on December 8, when the total consumption reached 2217 MW in one hour. On January 19, 2024, Litgrid informed the market that from 2024 new electricity transmission service contracts signed by market participants with the operator of the Lithuanian electricity transmission system will enter into force on May 1. One of the most important changes is that electricity production and consumption will be calculated in 15-minute periods instead of 1 hour. By changing the time unit, the provisions of the balancing guidelines adopted by the European Commission are implemented. 2024 January 23rd Litgrid has completed trials of artificial intelligence and sensor technologies that can contribute to the successful operation of renewable energy power plants. During them, special devices installed on the airline lines measured the weather conditions, and the innovative model assessed the current and predicted the potential bandwidth of the lines. Test results show that using this technology, transmission line throughput has increased by an average of 52 percent compared to the established design throughput. After the successful tests, Litgrid plans to further implement this technology in electricity transmission lines. Dynamic Line Rating (DLR) technology is promising for creating more favorable conditions for renewable energy power plants to generate more electricity without restrictions. February 2024 February 8th the company completed the Automatic Generation Management System installation project. This is one of the most important projects to prepare for synchronization with continental European networks. This software will contribute to ensuring the stability of the country's electricity system and will open up additional opportunities for market participants to earn by providing balancing services. March 2024 March 21st Litgrid has acquired an emergency restoration system for electricity transmission overhead lines. The easily transportable modular system makes it possible to restore the damaged line faster and ensure the transmission of electricity. The company's specialists, together with instructors and airline construction contractors, deepened their theoretical knowledge and applied it in practice. During the training, the foundations were successfully installed, and the temporary supports of the airline lines were installed and erected. 2024 March 28th Litgrid has started the second stage of the reconstruction of the Neries transformer substation located in the Vilnius district. The Neries substation is one of the most important nodes of the electricity transmission network, related to three projects implemented in preparation for synchronization with continental European networks. The reconstruction of the Neries transformer substation is carried out in two stages in order to ensure uninterrupted operation of the substation. In the first stage, one of the two 330 kV autotransformers was replaced, half of the 330/110/10 kV switchboards were reconstructed. After completion since 1972 during the reconstruction of the operating substation, two new 300 MVA autotransformers will be installed, all switchgear devices will be replaced, and new devices will be built to connect the Vilnius-Neris line. The reconstruction of the Neries transformer substation is planned to be completed in 2025. April 2024 April 17th Litgrid announced the purchase of design works for the reconstruction of the 330 kV power line Aizkrauklė- Panevėžys. The renewal of the line will create conditions for increasing the electricity transmission capacity between Lithuania and Latvia and will contribute to the development of renewable energy resources (RES). MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 66 2024 April 29th Litgrid completed the reconstruction works of the 330 kV line Klaipėda-Šyša-Bitėnai in the section Klaipėda-Šyša. The reconstructed line is part of the future 330 kV electricity transmission line Darbėnai–Bitėnai, which will strengthen the electricity transmission network of Western Lithuania, preparing for synchronization with the electricity networks of continental Europe. 2024 April 30 at the shareholders' meeting of Litgrid, a new board of was elected for a four-year term. Three members who have served on the board until now and two new independent members from the management teams of the electricity transmission system operators in the Netherlands, Germany and Belgium have been elected. May On 9th May 2024 the Parliament of the Republic of Lithuania granted the status of special national importance to electricity transmission network development projects in the north-west of Lithuania. The construction of the infrastructure planned by the Lithuanian electricity transmission system operator Litgrid will increase energy security, ensure reliable electricity transmission, stable operation of the system and create conditions for the development of renewable energy resources. On 16th May 2024 due to the growing demand for electricity in Vilnius, Litgrid plans to build a new cable electricity transmission line from Žirmūnai to New Vilnius, expand the transformer substation in New Vilnius and connect it to the currently under construction 330 kV Vilnius-Neris electricity transmission line. The planned works will ensure the reliability of electricity supply and increase the security of supply to the consumers of the Vilnius region. On 22nd May 2024 Tomas Varneckas, Head of Infrastructure and Project Management of the group of energy transmission and exchange companies EPSO-G, was elected as the chairman of the Board of Litgrid during the meeting of the Board. On May 30th 2024 Litgrid signed a design and project execution supervision services contract for the reconstruction of the 330 kV electricity transmission line Aizkrauklė-Panevėžys. The renewal of the line will create conditions for increasing the electricity transmission capacity between Lithuania and Latvia and will contribute to the development of renewable energy resources (RES). June On June 5th, 2024, Litgrid signed the equipment works contract for the installation of noise barriers at the Alytus transformer substation. The construction of sound-absorbing barriers will reduce the noise level and improve the conditions for the surrounding residents. The contract for the installation of sound dampening barriers in the 330/110/10 kV Alytus transformer substation was signed with the contractor that submitted the most economically advantageous offer, UAB ES Energy. The contractor will build noise barriers to the existing two autotransformers in 11 months. On 7th June 2024 Litgrid has announced the purchase of design and contract works for the reconstruction of the 330 kV electricity transmission line Šiauliai–Tytuvėnai. After the reconstruction, the reliability of the electricity system will be ensured, the increased bandwidth of the line will make it possible to reduce electricity losses and prepare for the integration of rapidly renewable energy resources. On 20th June 2024 Litgrid is sending the third support package to Ukraine, which consists of an autotransformer and transmission network equipment. The package will help ensure the supply of electricity and rebuild the energy infrastructure of the country affected by the war. Litgrid's support consists of the main and most expensive transmission network substation equipment - the 330/110/10 kV autotransformer and other 330 kV and 110 kV transmission network equipment: disconnectors, compressors, isolators, inputs for autotransformers, relay protection and automation devices, current and voltage measuring transformers. July On 15 July 2024, Litgrid and the Polish electricity transmission system operator PSE prepared to construct the Harmony Link as overland electricity transmission link between Lithuania and Poland and have signed a cooperation agreement on the development of the link. The agreement defined the main principles of cooperation between Litgrid and PSE in jointly implementing the Harmony Link interconnection project. It includes the construction of a new double-strand 220 kV alternating current (AC) electricity transmission line between Ełk Bis (Poland) and the new Gižai substation (Lithuania), the construction of new substations in Norki and Wigry, and the reconstruction of the existing 220 kV Ostrołęka–Ełk Bis power line in Poland. The overland line is planned to partially utilize the existing and planned road infrastructure between Poland and Lithuania. 16 July 2024 The Baltic electricity transmission system operators Litgrid, AST and Elering have sent a notification to the Russian and Belarusian operators about the non-renewal of the BRELL contract. The notification informs that the contract will be terminated on February 7, 2025. On February 8, the Baltic operators will disconnect the Lithuanian, Latvian and Estonian electricity systems from the IPS/UPS system and start a joint isolated operation test. MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 67 It is planned that the synchronization of the Baltic electricity systems with the Continental European synchronous area will take place on February 9, 2025. August On August 8, 2024, Litgrid informed about the approval of the planning work program for the development plan of the engineering infrastructure of the construction of the 330 kV Darbėnai–Varduva–Mūša electricity transmission line, the 330 kV Panevėžys– Mūša electricity transmission line and the 330 kV Varduva transformer substation of the North-West and East electricity transmission network interconnection project of special national importance. On August 21, 2024, Litgrid began the installation of noise barriers at the Alytus transformer substation. The construction of sound- absorbing barriers will reduce the noise level and improve conditions for surrounding residents. On August 22, 2024, Litgrid announced that it had reached an important milestone on its path to transparency and accountability. The company has successfully implemented the international ISO 37001 anti-corruption management system standard, which means that Litgrid meets the highest ethical and transparency requirements. September On 23rd September 2024 Litgrid has connected the most powerful wind farm in Lithuania, a 105.4 MW wind farm in Kelme district, developed by Ignitis Renewables, an international renewable energy company, to the country's transmission grid. October On 8th October 2024 Lithuanian and Swedish electricity transmission system operators Litgrid and Svenska kraftnät have signed a contract with Hitachi Energy to upgrade the control system of the NordBalt high-voltage direct-current interconnector, which will increase the stability of the Baltic and Swedish electricity grids. On 10 October 2024, the Baltic TSOs Litgrid, Augstsprieguma tīkls and Elering joined MARI, the common balancing energy platform for European TSOs. Participation in the European balancing market will open up new opportunities for electricity generators and large consumers in the Baltic States to provide balancing services. The new balancing market will provide additional revenues for market participants and will give TSOs wider access to the resources needed to balance the electricity system. On 25th October 2024 The first of three synchronous compensators being installed by Litgrid, becomes operational at the Telšiai transformer substation. The commissioning of the synchronous compensators is a key step towards securing Lithuania's energy independence in February next year by disconnecting from the Russian electricity system and synchronising with the Continental European grid. November On 27th November 2024 Litgrid, Augstsprieguma tīkls and Elering, the Baltic electricity transmission system operators, sign the Baltic System Management Area Management Agreement, which describes the principles of cooperation after connection to the Continental European synchronous area. On 27 November 2024, the European TSOs managing the Continental Europe Synchronous Area approved the isolated operation test programme for the Baltic power systems and the synchronisation with the Continental European grid. The transmission system operators of Estonia, Latvia and Lithuania, Elering, Ausgstprieguma tīkls and Litgrid, plan to connect to the Continental European Synchronous Zone in February 2025. December On 10th December 2024 Litgrid, the Lithuanian electricity transmission system operator, starts design work for a new electricity transmission line in the Alytus and Varėna districts. A tender is also launched for design works for the reconstruction of the Griškoniai transformer substation. The 110 kV Griškonys-Varėna line will strengthen Lithuania's electricity transmission network and ensure reliable electricity supply. On 17 December 2024, the Baltic electricity market's intraday trading switched from 60-minute to 15-minute trading intervals. The change was successfully implemented in the first intraday auctions on 16 December and in the intraday transactions on 17 December. The shorter interval will improve market efficiency and support the integration of renewables. MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 68 On 23rd December 2024 PSE, the Polish electricity transmission system operator, approves the financial investment decision for the construction of the Harmony Link onshore link. In line with the cooperation agreement signed by the operators, the financial investment decision adopted in September by the Lithuanian electricity transmission system operator Litgrid also comes into force. This confirms the operators' commitment to finance and implement the link project. 15. MATERIAL EVENTS (https://nasdaqbaltic.com/statistics/lt/news?num=100&page=1&issuer=LGD&filter=1 ) Date Event 01.19 Notice on the convening of the extraordinary general meeting of shareholders of LITGRID AB 01.26 Notice of the examined case 02.06 LITGRID AB information regarding the publication of interim information and the 2024 investor calendar 02.13 Decisions made at the extraordinary general meeting of shareholders of LITGRID AB 02.29 LITGRID AB 2023 12-month unaudited condensed financial statements of the company 03.29 LITGRID AB announces the 2023 audited financial statements and annual report of the Company 03.29 Notice on the convening of the ordinary general meeting of shareholders of LITGRID AB 04.04 Correction: LITGRID AB information regarding the publication of interim information and the 2024 investor calendar 04.26 The proposal of UAB "EPSO-G" was received regarding the election of LITGRID AB board members, determination of remuneration amounts for board members and the budget of the board's activities in 2024 and setting for future years 04.30 Decisions made at the ordinary general meeting of shareholders of LITGRID AB 05.07 LITGRID AB 2023 ex-day and dividend payment procedure 05.10 LITGRID AB 2024 3-month performance results 05.16 A new version of the articles of association of LITGRID AB has been registered 05.22 Regarding the election of the Chairman of the Board of LITGRID AB 07.16 Regarding the withdrawal from the Russian-controlled electricity system in February 2025 08.09 LITGRID AB announces results for the first half of 2024 08.22 Notice on the convening of the Extraordinary General Meeting of Shareholders of LITGRID AB 09.13 Resolutions adopted at the Extraordinary General Meeting of Shareholders of LITGRID AB 11.08 LITGRID AB announces its results for the first nine months of 2024 12.04 Notice on the convening of the Extraordinary General Meeting of Shareholders of LITGRID AB 12.30 Resolutions adopted at the Extraordinary General Meeting of LITGRID AB MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 69 12.31 LITGRID AB information on the publication of interim information and the 2025 investor calendar 16.SIGNIFICANT EVENTS AFTER THE REPORTING PERIOD On February 8 th , 2025, the Baltic power systems successfully disconnected from the Russian-controlled IPS/UPS system and was operating independently in an island mode. The Estonian, Latvian and Lithuanian electricity transmission system operators Elering, Augstsprieguma tīkls and Litgrid were conducting an isolated operation test before synchronization with the continental European networks. On February 9 th , 2025 at 14:05, Estonia, Latvia and Lithuania successfully synchronized their power systems with the continental European synchronous area. This is an important event for the Baltic States and Europe, strengthening the energy independence and resilience of the entire region. 17. TRANSPARENCY REPORT Litgrid complies with the Business Transparency and Communication Policy of the EPSO-G UAB Group (approved by the Board of Litgrid AB on 23 October 2017 in its entirety), which considers in detail the requirements set forth in the Transparency Guidelines and defines their applicability to the companies of the EPSO-G group. The implementation of the Transparency Guidelines is largely ensured by LitgriD AB through disclosure of information in the annual report and on the official website of the Company and through notices on the NASDAQ stock exchange, where information is disclosed in the format that is acceptable and comprehensible to the stakeholders. Article 3 of Resolution No 1052 of 14 July 2010 of the Government of the Republic of Lithuania On the approval of the Description of Guidelines for Ensuring the Transparency of State-owned Enterprises (the Transparency Guidelines) stipulates that a state- owned enterprise (the “SOE”) complies with the provisions of the Corporate Governance Guidelines for the Companies Listed on Nasdaq Vilnius AB that are related to public disclosure of information. Below is structured information on the implementation of the Transparency Guidelines: The following information must be published/other requirements must be implemented on the official website of Litgrid AB www.litgrid.eu: Company’s name, code, registered address, and a register in which data on the Company is compiled and stored Implemented Legal form, in case Litgrid AB is restructured, reorganised (the way of reorganisation is to be indicated), under liquidation, in the process of bankruptcy or bankrupt Not applicable Information on the authority representing the State, i.e. the Ministry of Energy, and link to its official website Implemented Goals, vision and mission of the activities Implemented Structure Implemented Data on the chief executive officer Implemented Data on the chairperson and members of the board Implemented Data on the chairperson and members of the supervisory board Not applicable Names of the committees, data on their chairpersons and members Not applicable MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 70 * The following data must be provided: name, surname, start date of the term of office, other executive positions in other legal entities, education, qualification, and professional experience; indication of whether a member of a collegial body has been elected or appointed as an independent member. Sum of the nominal values (in euros and cents) of shares and interest (in percentage) held by the State in the share capital of Litgrid AB under the title of ownership Implemented Information on initiatives and measures of social responsibility, significant ongoing or planned investment projects Implemented If Litgrid AB is a member of other legal entities (not applicable to subsidiaries and second-tier subsidiaries), the name, code, and register in which data on the Company is compiled and stored, registered address, and official websites of such legal entities Implemented A set of Litgrid AB annual financial statements, Litgrid AB annual report, as well as an auditor’s report on Litgrid AB annual financial statements must be placed on Litgrid AB official website within 10 working days from the date of approval of the set of annual financial statements Implemented The sets of Litgrid AB interim financial statements and Litgrid AB interim reports must be placed on the official website not later than within 2 months after the end of the reporting period Implemented The following documents must be provided/other requirements must be implemented on the official website of Litgrid AB www.litgrid.eu: Articles of Association of Litgrid AB Implemented Operational strategy or its summary in cases when the operational strategy contains confidential information or information that is treated as a commercial (industrial) secret Implemented Remuneration policy that covers determination of remuneration for CEO and members of the collegial bodies and the committees of Litgrid AB Implemented Annual and interim reports of Litgrid AB Implemented The sets of annual and interim financial statements for at least 5 years and the auditor’s reports on the annual financial statements Implemented Data disclosure is performed in accordance with the requirements of Lithuanian legal acts and good practice Implemented The above-mentioned documents must be provided in a PDF format with a technical possibility to be printed out Implemented Litgrid AB keeps its accounting records in a way that ensures preparation of the financial statements in accordance with the International Accounting Standards Implemented Litgrid AB prepares a set of financial statements for the period of 6 months Implemented In addition to the annual report, Litgrid AB prepares an interim report for the period 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 Litgrid AB[1]: Brief description of the business model of Litgrid AB Implemented Information on significant events occurring during the financial year and after the end of the financial year (until the date of preparation of annual report) that had material impact on the activities of Litgrid Implemented Results of implementation of the objectives set in the operational strategy Implemented Profitability, liquidity, asset turnover, and debt ratios Implemented Implementation of special obligations Implemented MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 71 Implementation of the investment policy, ongoing and planned investment projects, and investments implemented during the reporting year Implemented Implementation of the risk management policy applied by Litgrid AB Implemented Implementation of the dividend policy Implemented Implementation of the remuneration policy Implemented Total annual wage bill, average monthly salary by category of employees and/or business units 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 includes the following information: structure of the group, name, code and register in which data on the company is compiled and stored, registered address of each of the group companies, interest (percentage) held in the share capital of a subsidiary, financial and non-financial performance during the financial year Not applicable The interim report of Litgrid AB includes the following information: analysis of financial performance during the reporting period, information on significant events occurring during the reporting period, profitability, liquidity, asset turnover and debt ratios and changes therein compared to the respective period in the previous year Implemented 18. Litgrid NOTICE OF COMPLIANCE WITH THE CORPORATE GOVERNANCE CODE FOR THE COMPANIES LISTED ON NASDAQ OMX AB In line with Article 23(3) of the Law on Securities of the Republic of Lithuania and paragraph 24.5 of the Listing Rules of Nasdaq Vilnius AB, public limited liability company Litgrid AB (the Company) discloses its compliance with the Corporate Governance Code for the Companies Listed on Nasdaq Vilnius and its specific provisions or recommendations. In case of non-compliance with this Code or some of its provisions or recommendations, the specific provisions or recommendations that are not complied with must be indicated, the reasons of such non-compliance must be specified and other explanatory information indicated in this form must be presented. Free-form summary of the Company’s corporate governance report Litgrid AB is part of the EPSO-G UAB group of companies (the Group). The Company’s corporate governance structure and the governance model are established by the Company’s Articles of Association, the Corporate Governance Guidelines of the EPSO- G Group of Companies approved by the Ministry of Energy (the ME), the sole shareholder of the parent company EPSO-G UAB, on 24 April 2018 and the Corporate Governance Policy of the EPSO-G Group of Companies. All the above-mentioned documents are published on the Company’s website and the website of EPSO-G UAB. MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 72 Chart 1. Main scheme of the implementation of corporate governance at the Group level. Being part of the Group does not deny the Company’s independence. The Company operates independently aiming to achieve the objectives set in the Company’s Articles of Association and has the obligation to independently assess whether compliance with the Group’s corporate governance documents does not harm interests of the Company, its creditors, shareholders or other stakeholders. The corporate governance structure established in the Company’s Articles of Association is as follows: The General Meeting of Shareholders; The Board (five members, two of whom are independent members, the other three members are nominated by the shareholder EPSO-G UAB); The committees operating at the Group level: The Remuneration and Nomination Committee (mainly composed of independent members); The Audit Committee (mainly composed of independent members). The Chief Executive Officer. The Group has a centralised internal audit function. In order to ensure the independence of the internal audit, it is established that the head of the internal audit function is appointed and dismissed by the Board of EPSO-G UAB, which is mainly composed of independent members. The internal audit is also accountable to the 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. On the basis of the Risk Management Policy of the EPSO-G UAB Group of Companies, the uniform risk management system of the Group is implemented at the Company according to the COSO ERM standards applicable in the international practice setting out risk identification, assessment and management principles and responsibilities. Risk management coordination is performed at the Group level. The aim of the Group’s operating policies is to introduce a consistent and effective management system of the organisation helping employees successfully implement important strategic projects and create value to residents and businesses of the country in a transparent and effective manner. To ensure the effectiveness of the operating policies, the Company annually reports on the progress of the implementation of the operating policies. On the basis of the Compliance Management Policy of the EPSO-G UAB Group of Companies, the uniform compliance management system of the Group is implemented at the Company. Compliance management coordination is performed at the Group level. The policies that are currently effective at the Company are published on corporate website www.litgrid.eu. MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 73 Structured table: PRINCIPLES/RECOMMENDATIONS YES/NO/ NOT APPLICABLE COMMENTARY Principle 1: General meeting of shareholders, equitable treatment of shareholders, and shareholders’ rights. The corporate governance framework should ensure the equitable treatment of all shareholders. The corporate governance framework should protect the rights of shareholders. 1.1. All shareholders should be provided with access to the infor- mation and/or documents established in the legal acts on equal terms. All shareholders should be furnished with equal opportunity to participate in the decision-making process where significant corporate matters are discussed. YES Pursuant to the Law on Companies of the Republic of Lithuania and Chapter IX of the Company’s Articles of Association, information on general meetings of shareholders being convened, their draft decisions and decisions made is published on the Company’s website and on NASDAQ OMX Vilnius stock exchange in the Lithuanian and English languages. 1.2. It is recommended that the company’s capital should consist only of the shares that grant the same rights to voting, ownership, dividend and other rights to their holders. YES Paragraphs 13–15 of the Company’s Articles of the Association define that all shares of the Company are ordinary registered shares with the nominal value of EUR 0.29 each. All shares are intangible and recorded in the personal securities accounts of the shareholders managed by the securities account manager contracted to manage the share accounting. 1.3. It is recommended that investors should have access to the information concerning the rights attached to the shares of the new issue or those issued earlier in advance, i.e. before they purchase shares. YES Please refer to the commentary in paragraph 1.2. Chapter IV of the Company’s Articles of Association also establishes shareholders’ rights and obligations. 1.4. Exclusive transactions that are particularly important to the company, such as transfer of all or almost all assets of the company which in principle would mean the transfer of the company, should be subject to approval of the general meeting of shareholders. YES Paragraph 38 of the Company’s Articles of Association specifies the cases when the Board’s decision regarding the transfer of the Company’s assets is subject to the approval of the General Meeting of Shareholders. MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 74 1.5. Procedures for convening and conducting a general meeting of shareholders should provide shareholders with equal opportunities to participate in the general meeting of shareholders and should not prejudice the rights and interests of shareholders. The chosen venue, date and time of the general meeting of shareholders should not prevent active participation of shareholders at the general meeting. In the notice of the general meeting of shareholders being convened, the company should specify the last day on which the proposed draft decisions should be submitted at the latest. YES Each time the General Meeting of Shareholders is convened, the general rights of the shareholders are published on the Company’s website. 1.6. With a view to ensure the right of shareholders living abroad to access the information, it is recommended, where possible, that documents prepared for the general meeting of shareholders in advance should be announced publicly not only in Lithuanian language but also in English and/or other foreign languages in advance. It is recommended that the minutes of the general meeting of shareholders after the signing thereof and/or adopted decisions should be made available publicly not only in Lithuanian language but also in English and/or other foreign languages. It is recommended that this information should be placed on the website of the company. Such documents may be published to the extent that their public disclosure is not detrimental to the company or the company's commercial secrets are not revealed. YES Please refer to the commentary in paragraph 1.1. 1.7. Shareholders who are entitled to vote should be furnished with the opportunity to vote at the general meeting of shareholders both in person and in absentia. Shareholders should not be prevented from voting in writing in advance by completing the general voting ballot. YES A standard notice on convening of the General Meeting of Shareholders always indicates a possibility for shareholders to vote in writing by filling in the attached form of a voting ballot. 1.8. With a view to increasing the shareholders’ opportunities to participate effectively at general meetings of shareholders, it is recommended that companies should apply modern technologies on a wider scale and thus provide shareholders with the conditions to participate and vote in general meetings of shareholders via electronic means of communication. In such cases, the security of transmitted information must be ensured and it must be possible to identify the participating and voting person. NO A standard notice on convening of the General Meeting of Shareholders always indicates that the participation and voting by electronic means of communication will not take place. So far there is no need to vote by electronic means of communication. Upon requests by the shareholders, the introduction of such a voting option would be considered. 1.9. It is recommended that the notice on the draft decisions of the general meeting of shareholders being convened should specify new candidatures of members of the collegial body, their proposed remuneration and the proposed audit company if these issues are included into the agenda of the general meeting of shareholders. Where it is proposed to elect a new member of the collegial body, it is recommended that the information about his/her educational background, work experience and other managerial positions held (or proposed) should be provided. YES A standard notice on convening of the General Meeting of Shareholders always indicates draft decisions containing information required by the Law on Companies of the Republic of Lithuania, including candidatures of members of new collegial bodies, their proposed remuneration, a proposed audit company and its proposed remuneration. Information on the collegial body member who is proposed to be elected is not released publicly, MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 75 however, the standard notice on convening of the General Meeting of Shareholders always specifies that the shareholders may additionally familiarise with documents related to the agenda of the meeting, draft decisions, a general voting ballot at the premises of LITGRID AB at the registered office during specifically indicated hours. 1.10. Members of the company’s collegial management body, heads of the administration (For the purposes of this Code, heads of the administration are the employees of the company who hold top level management positions) or other competent persons related to the company who can provide information related to the agenda of the general meeting of shareholders should take part in the general meeting of shareholders. Proposed candidates to member of the collegial body should also participate in the general meeting of shareholders in case the election of new members is included into the agenda of the general meeting of shareholders. YES/NO Relevant competent persons who can provide information related to the agenda of the General Meeting of Shareholders always attend the General Meeting of Shareholders. Meanwhile the proposed candidates to the members of the collegial body not always attend the General Meetings of Shareholders. MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 76 Principle 2: Supervisory board 2.1. Functions and liability of the supervisory board The supervisory board of the company should ensure representation of the interests of the company and its shareholders, accountability of this body to the shareholders and objective monitoring of the company’s operations and its management bodies as well as constantly provide recommendations to the management bodies of the company. The supervisory board should ensure the integrity and transparency of the company’s financial accounting and control system. 2.1.1. Members of the supervisory board should act in good faith, with care and responsibility for the benefit and in the interests of the company and its shareholders and represent their interests, having regard to the interests of employees and public welfare. NOT APPLICABLE The Supervisory Board is not formed at the Company. 2.1.2. Where decisions of the supervisory board may have a different effect on the interests of the company’s shareholders, the supervisory board should treat all shareholders impartially and fairly. It should ensure that shareholders are properly informed about the company’s strategy, risk management and control, and resolution of conflicts of interest. NOT APPLICABLE - 2.1.3. The supervisory board should be impartial in passing decisions that are significant for the company's operations and strategy. Members of the supervisory board should act and pass decisions without an external influence from the persons who elected them. NOT APPLICABLE - 2.1.4. Members of the supervisory board should clearly voice their objections in case they believe that a decision of the supervisory board is against the interests of the company. Independent (For the purposes of this Code, the criteria of independence of the members of the supervisory board are interpreted as the criteria of unrelated parties defined in Article 31(7) and (8) of the Law on Companies of the Republic of Lithuania.) members of the supervisory board should: a) maintain independence of their analysis and decision-making; b) not seek or accept any unjustified privileges that might compromise their independence. NOT APPLICABLE - 2.1.5. The supervisory board should oversee that the company’s tax planning strategies are designed and implemented in accordance with the legal acts in order to avoid faulty practice that is not related to the long-term interests of the company and its shareholders, which may give rise to reputational, legal or other risks. NOT APPLICABLE - 2.1.6. The company should ensure that the supervisory board is provided with sufficient resources (including financial ones) to discharge their duties, including the right to obtain all the necessary information or to seek independent professional advice from external legal, accounting or other experts on matters pertaining to the competence of the supervisory board and its committees. NOT APPLICABLE - MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 77 2.2. Formation of the supervisory board The procedure of the formation of the supervisory board should ensure proper resolution of conflicts of interest and effective and fair corporate governance. 2.2.1. The members of the supervisory board elected by the general meeting of shareholders should collectively ensure the diversity of qualifications, professional experience and competences and seek for gender equality. With a view to maintain a proper balance between the qualifications of the mem- bers of the supervisory board, it should be ensured that members of the supervisory board, as a whole, should have diverse knowledge, opinions and experience to duly perform their tasks. NOT APPLICABLE - 2.2.2. Members of the supervisory board should be appointed for a specific term, subject to individual re-election for a new term in office in order to ensure necessary development of professional experience. NOT APPLICABLE - 2.2.3. Chair of the supervisory board should be a person, whose current or past positions constituted no obstacle to carry out impartial activities. A former manager or management board member of the company should not be immediately appointed as chair of the supervisory board either. Where the company decides to depart from these recommendations, it should provide information on the measures taken to ensure impartiality of the supervision. NOT APPLICABLE - 2.2.4. Each member should devote sufficient time and attention to perform his duties as a member of the supervisory board. Each member of the supervisory board should undertake to limit his other professional obligations (particularly the managing positions in other companies) so that they would not interfere with the proper performance of the duties of a member of the supervisory board. Should a member of the supervisory board attend less than a half of the meetings of the supervisory board throughout the financial year of the company, the shareholders of the company should be notified thereof. NOT APPLICABLE - 2.2.5. When it is proposed to appoint a member of the supervisory board, it should be announced which members of the supervisory board are deemed to be independent. The supervisory board may decide that, despite the fact that a particular member meets all the criteria of independence, he/she cannot be considered independent due to special personal or company-related circumstances. NOT APPLICABLE - 2.2.6. The amount of remuneration to members of the supervisory board for their activity and participation in meetings of the supervisory board should be approved by the general meeting of shareholders. NOT APPLICABLE - MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 78 2.2.7. Every year the supervisory board should carry out an assessment of its activities. It should include evaluation of the structure of the supervisory board, its work organisation and ability to act as a group, evaluation of the competence and work efficiency of each member of the supervisory board, and evaluation whether the supervisory board has achieved its objectives. The supervisory board should, at least once a year, make public respective information about its internal structure and operational procedures. NOT APPLICABLE - Principle 3: Management board 3.1. Functions and liability of the management board The management board should ensure the implementation of the company’s strategy and good corporate governance with due regard to the interests of its shareholders, employees and other interest groups. 3.1.1. The management board should ensure the implementation of the company’s strategy approved by the supervisory board if the latter has been formed at the company. In such cases where the supervisory board is not formed, the management board is also responsible for the approval of the company’s strategy. YES Paragraph 36 of the Company’s Articles of Association defines that the Company’s Board approves the Company’s strategy. In addition, in carrying out its supervisory function the Board regularly reviews reports on the implementation of the strategy. 3.1.2. As a collegial management body of the company, the management board performs the functions assigned to it by the Law and in the articles of association of the company, and in such cases where the supervisory board is not formed in the company, it performs inter alia the supervisory functions established in the Law. By performing the functions assigned to it, the management board should take into account the needs of the company’s shareholders, employees and other interest groups by respectively striving to achieve sustainable business development. YES Paragraph 7.3 of the Company’s Articles of Association provides that the Company’s Board performs supervisory functions. 3.1.3. The management board should ensure compliance with the laws and the internal policy of the company applicable to the company or a group of companies to which this company belongs. It should also establish the respective risk management and control measures aimed at ensuring regular and direct liability of managers. YES Point (xi) of Paragraph 36 of the Company’s Articles of Association defines that the Company’s Board deliberates the documents of the group of companies (guidelines, policies, procedures, etc.) and decides on the scope of their application by the Company. In addition, by separate decisions, the Board instructs the CEO to provide regular reports on the indi- cators to be followed by the Board (e.g. the Company’s strategy, activity plan, budget, etc.). 3.1.4. Moreover, the management board should ensure that the measures included into the OECD Good Practice Guidance (Link to the OECD Good Practice Guidance on Internal Controls, Ethics and Compliance: https://www.oecd.org/daf/anti-bribery/44884389.pdf) 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 applies the following various documents in its activities that ensure implementation of the highest level internal control, ethics and compliance management tools: MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 79 - internal audit is accountable to the Board which is formed from external members (2 members are independent); - the Audit Committee is mainly composed of independent members to whom internal audit is also accountable; - The Company applies the Code of Conduct and the Corruption Prevention Policy of the EPSO- G UAB Group of Companies, the Sponsorship and Charity Policy of the EPSO-G UAB Group of Companies, the Policy of Management of Interests of the EPSO-G UAB Group of Companies, the Risk Management Policy of the EPSO-G UAB Group of Companies, the Transparency and Communication Policy of the EPSO-G UAB Group of Companies, the Compliance Management Policy of the EPSO-G UAB Group of Companies, etc. 3.1.5. When appointing the manager of the company, the management board should take into account the appropriate balance between the candidate’s qualifications, experience and competence. YES Paragraph 54 of the Company’s Articles of Association establishes that the Company’s CEO is appointed by the Board taking into account the recommendations of the Remuneration and Nomination Committee. Paragraph 56 of the Company’s Articles of Association defines that in assessment of suitability of the candidate for the position of the CEO the Board shall consider his/her compliance with the requirements specified by these Articles of Association and the legal acts, and therefore may require that the candidate submit documents supporting this compliance and/or contact competent authorities for obtaining necessary information about the candidate. MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 80 3.2. Formation of the management board 3.2.1. The members of the management board elected by the supervisory board or, if the supervisory board is not formed, by the general meeting of shareholders should collectively ensure the required diversity of qualifications, professional experience and competences and seek for gender equality. With a view to maintain a proper balance in terms of the current qualifications possessed by the members of the management board, it should be ensured that the members of the management board would have, as a whole, diverse knowledge, opinions and experience to duly perform their tasks. YES The selection of the members of the Company’s Board is carried out in compliance with the procedure set by the Government of the Republic of Lithuania. Paragraph 28 of the Company’s Articles of Association stipulates that in the process of selection of the Board members it is ensured that the Board consists of at least 2 (two) independent members. Their independence is established in accordance with the criteria laid down in the Corporate Governance Code and the Policy of Management of Interests of Members of Collegial Bodies, Executives and Employees of the Group of Companies (the “Policy of Management of Interests”) as well as the requirements set forth by other applicable legal acts. It is ensured that at least 3 (three) members of the Board have no employment relationship with the Company and, when possible, it is aimed that employees of the Company are not appointed to the Board and that the Board members have competences taking into account the areas of responsibility and functions of the Board. The selection of Company’s Board members is carried out by the Remuneration and Appointment Committee in accordance with the approved matrix of the Board competences. The Board members carry out an assessment of their activities every year. In addition, the Remuneration and Nomination Committee evaluates the performance of the Board on an annual basis and provides recommendations on performance improvement. MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 81 3.2.2. Names and surnames of the candidates to become members of the management board, information on their educational background, qualifications, professional experience, current positions, other important professional obligations and potential conflicts of interest should be disclosed without violating the requirements of the legal acts regulating the handling of perso- nal data at the meeting of the supervisory board in which the management board or individual members of the management board are elected. In the event that the supervisory board is not formed, the information specified in this paragraph should be submitted to the general meeting of shareholders. The management board should, on yearly basis, collect data provided in this paragraph on its members and disclose it in the company’s annual report. YES The indicated information is published and updated on the Company’s website. This information is not repeatedly disclosed in the Annual Report, however the Annual Report contains the information on the chairperson of the Board, the CEO, the chief accountant and the head of the Internal Audit Unit. 3.2.3. All new members of the management board should be familiarised with their duties and the structure and operations of the company. YES The members of the Board are in- troduced to the structure and ac- tivities of the Company during the first sitting. The key corporate documents of the Company are shared. 3.2.4. Members of the management board should be appointed for a specific term, subject to individual re-election for a new term in office in order to ensure necessary development of professional experience and sufficiently frequent reconfirmation of their status. YES Paragraph 27 of the Company’s Articles of the Association defines that the Board is a collegial management body of the Company consisting of 5 members. The Board members are elected for a term of 4 years by the General Meeting of Shareholders, for which the Board is accountable, taking into account recommendations of the Remuneration and Nomination Committee. A member of the Board may continuously serve maximum 2 subsequent full terms of office, i.e. no longer than 8 years in a row. 3.2.5. Chair of the management board should be a person, whose current or past positions constitute no obstacle to carry out impartial activity. Where the supervisory board is not formed, the former manager of the company should not be immediately appointed as chair of the management board. When a company decides to depart from these recommendations, it should furnish information on the measures it has taken to ensure the impartiality of supervision. YES Paragraph 29 of the Company’s Articles of Association provides the criteria according to which a person cannot be elected as a member of the Board. One of the measures for ensuring the impartiality of the chairperson of the Board is established in paragraph 46 of the Company’s Articles of Association which states that the chairperson of the Board cannot be elected from among the Company’s employees elected to the Company’s Board. MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 82 3.2.6. Each member should devote sufficient time and attention to perform his duties as a member of the management board. Should a member of the management board attend less than a half of the meetings of the management board throughout the financial year of the company, the supervisory board of the company or, if the supervisory board is not formed at the company, the general meeting of shareholders should be notified thereof. YES The Company’s minutes record the attendance and voting of the Board members during a decision-making process. As it is specified in paragraph 52 of the Company’s Articles of the Association, each year the Board members perform an assessment of their activities, the results of which are submitted to the shareholders and the Remuneration and Nomination Committee. The participation of the Board members in the sitting is disclosed in the annual report. 3.2.7. In the event that the management board is elected in the cases established by the Law where the supervisory board is not formed at the company, and some of its members will be independent (For the purposes of this Code, the criteria of independence of the members of the board are interpreted as the criteria of unrelated persons defined in Article 33(7) of the Law on Companies of the Republic of Lithuania), it should be announced which members of the management board are deemed as independent. The management board may decide that, despite the fact that a particular member meets all the criteria of independence established by the Law, he/she cannot be considered independent due to special personal or company related circumstances. YES The Company’s website and the annual report contain information about the members of the Company’s Board specifying the independent members. 3.2.8. The general meeting of shareholders of the company should approve the amount of remuneration to the members of the management board for their activity and participation in the meetings of the management board. YES Paragraph 34 of the Company’s Articles of Association provides that the General Meeting of Shareholders may adopt a decision regarding the payment of remunera- tion to the Board members. 3.2.9. The members of the management board should act in good faith, with care and responsibility for the benefit and the interests of the company and its shareholders with due regard to other stakeholders. When adopting decisions, they should not act in their personal interest; they should be subject to no-compete agreements and they should not use the business information or opportunities related to the company’s operations in violation of the company’s interests. YES Taking into account the objective to monitor the absence of conflicts of interest of the members of the Company’s Board, each year the members of the Board renew their declarations of interests. MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 83 In addition, paragraph 33 of the Company’s Articles of Association stipulates that the Board members may have another job or occupy another position compatible with their activities in the Board, including but not limited to executive positions in other legal entities, a job in a state or statutory service, duties at the Company and other legal entities (in conformity with restrictions set by Article 29 of the Articles of Association), as well as in legal entities, where the Company or the parent company acts as a participant, only by providing a prior notice to the Company’s Board. The Company has adopted the Policy of Management of Interests of Members of Collegial Bodies, Executives and Employees of the EPSO-G Group of Companies. The Board members have signed commitments to protect confidential information. No-compete agreements are not concluded with the members of the Board. The need for such agreements was not established because the Company conducts a monopoly business. 3.2.10. Every year the management board should carry out an assessment of its activities. It should include evaluation of the structure of the management board, its work organisation and ability to act as a group, evaluation of the competence and work efficiency of each member of the management board, and evaluation whether the management board has achieved its objectives. The management board should, at least once a year, make public respective information about its internal structure and working procedures in observance of the legal acts regulating the processing of personal data. YES The Board carries out an assess- ment of its activities every year and prepares a performance im- provement plan on its basis. In addition, the Remuneration and Nomination Committee and the Audit Committee acting at the level of the EPSO-G UAB group of companies evaluate annually decisions made by the Board and provide recommendations on performance improvement The results of the assessment of the Board’s performance are presented in the Company’s annual report. MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 84 Principle 4: Rules of procedure of the supervisory board and the management board of the company The rules of procedure of the supervisory board, if it is formed at the company, and of the management board should ensure efficient operation and decision-making of these bodies and promote active cooperation between the company’s management bodies. 4.1. The management board and the supervisory board, if the latter is formed at the company, should act in close cooperation in order to attain benefit for the company and its shareholders. Good corporate governance requires an open discussion between the management board and the supervisory board. The management board should regularly and, where necessary, immediately inform the supervisory board about any matters significant for the company that are related to planning, business development, risk management and control, and compliance with the obligations at the company. The management board should inform the supervisory board about any derogations in its business development from the previously formulated plans and objectives by specifying the reasons for this. NOT APPLICABLE The Supervisory Board is not formed at the Company. 4.2. It is recommended that meetings of the company's collegial bodies should be held at the respective intervals, according to the pre-approved schedule. Each company is free to decide how often meetings of the collegial bodies should be convened but it is recommended that these meetings should be convened at such intervals that uninterruptable resolution of essential corporate governance issues would be ensured. Meetings of the company’s collegial bodies should be convened at least once per quarter. YES Paragraph 45 of the Company’s Articles of Association stipulates that the Board takes its decisions at the Board’s meetings that are usually convened as often as it is necessary for the Board to be able to properly perform its functions and take decisions attributed to its competence, however not less than 12 times during a calendar year. At the beginning of each year, the Company’s Board approves the schedule for the current year meetings and the activity plan (preliminary questions for a respective meeting of the Board). 4.3. Members of a collegial body should be notified of the meeting being convened in advance so that they would have sufficient time for proper preparation for the issues to be considered at the meeting and a fruitful discussion could be held and appropriate decisions could be adopted. Along with the notice of the meeting being convened all materials relevant to the issues on the agenda of the meeting should be submitted to the members of the collegial body. The agenda of the meeting should not be changed or supplemented during the meeting, unless all members of the collegial body present at the meeting agree with such change or supplement to the agenda, or certain issues that are important to the company require immediate resolution. YES According to the Regulations of the Board, the material is submitted to the Board five working days before the date of the ordinary meeting. MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 85 4.4. In order to coordinate the activities of the company’s collegial bodies and ensure effective decision-making process, the chairs of the company’s collegial supervision and management bodies should mutually agree on the dates and agendas of the meetings and close cooperate in resolving other matters related to corporate governance. Meetings of the company’s supervisory board should be open to members of the management board, particularly in such cases where issues concerning the removal of the management board members, their responsibility or remuneration are discussed. NOT APPLICABLE The Supervisory Board is not formed at the Company. Principle 5: Nomination, remuneration and audit committees 5.1. Purpose and formation of committees The committees formed at the company should increase the work efficiency of the supervisory board or, where the supervisory board is not formed, of the management board which performs the supervisory functions by ensuring that decisions are based on due consideration and help organise its work in such a way that the decisions it takes would be free of material conflicts of interest. Committees should exercise independent judgment and integrity when performing their functions and provide the collegial body with recommendations concerning the decisions of the collegial body. However, the final decision should be adopted by the collegial body. Taking due account of the company-related circumstances and the chosen corporate governance structure, the supervisory board of the company or, in cases where the supervisory board is not formed, the management board which performs the supervisory functions, establishes committees. It is recommended that the collegial body should form the nomination, remuneration and audit committees (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)). YES The Company has the Remunera- tion and Nomination Committee formed by the Board of EPSO-G UAB acting in accordance with the regulations approved by the body that forms it; and the Audit Commi- ttee operating at the Group level formed by the sole shareholder EPSO-G UAB and acting in accordance with the regulations approved by the body that forms it. Given that the issues of remunera- tion and nomination are closely related and experts with the same qualifications are required to deal with these issues, it was decided to form a single Remuneration and Nomination Committee. 5.1.1. Companies may decide to set up less than three committees. In such case, companies should explain in detail why they have chosen the alternative approach, and how the chosen approach corresponds with the objectives set for the three different committees. YES 5.1.2. In the cases established by the legal acts the functions assigned to the committees formed at companies may be performed by the collegial body itself. In such case, the provisions of this Code pertaining to the committees (particularly those related to their role, operation and transparency) should apply, where relevant, to the collegial body as a whole. NOT APPLICABLE Please refer to the commentary in paragraph 5.1.1. MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 86 5.1.3. 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 Chapters 7.8 and 7.9 of the Articles of Association of EPSO-G UAB regulate the formation of the committees within the EPSO-G group of companies and the areas of their competence. The aforementioned Articles of Association stipulate that the Remuneration and Nomination Committee and the Audit Committee shall consist of not less than three members. It is ensured that from among three members there is at least one independent member in the Remuneration and Nomination Committee and at least two independent members in the Audit Committee. Not all members of the Remune- ration and Nomination Committee and the Audit Committee are appointed from 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. 5.1.4. The authority of each committee formed should be determined by the collegial body itself. Committees should perform their duties according to the authority delegated to them and regularly inform the collegial body about their activities and performance on a regular basis. The authority of each committee defining its role and specifying its rights and duties should be made public at least once a year (as part of the information disclosed by the company on its governance structure and practice on an annual basis). In compliance with the legal acts regulating the processing of personal data, companies should also include in their annual reports the statements of the existing committees on their composition, the number of meetings and attendance over the year as well as the main directions of their activities and performance. YES The authority of the committees is determined in the Articles of Association of EPSO-G UAB and under the decision of the body for- ming the committee – the Regulations of the Remuneration and Nomination Committee are approved by the decision of the Board of EPSO-G UAB, and the Regulations of the Audit Committee are approved by the decision of the sole shareholder EPSO-G UAB, as it is permitted by the Requirements for Members of the Audit Committee approved by the Bank of Lithuania (Article 5). The Regulations of the committees are published on the EPSO-G website. Information about the composition, activities of the committees and other information is presented in the consolidated Group’s annual report. MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 87 5.1.5. With a view to ensure the independence and impartiality of the committees, the members of the collegial body who are not members of the committees should normally have a right to participate in the meetings of the committee only if invited by the committee. A committee may invite or request that certain employees of the company or experts would participate in the meeting. Chair of each committee should have the possibility to maintain direct communication with the shareholders. Cases where such practice is to be applied should be specified in the rules regulating the activities of the committee. YES The Regulations of the Committees provide for the right of the members of the Committees to invite, at their discretion, to their meetings the members of the bodies of the companies of the EPSO-G UAB group of companies, employees, representatives, candidates for cer- tain positions or other persons and to obtain from them the necessary explanations within their compe- tence as well as require for that purpose that necessary actions would be carried out needed for the performance of the functions of the Committees. 5.2. Nomination committee 5.2.1. The key functions of the nomination committee should be the following: 1) to select candidates to fill vacancies in the membership of supervisory and management bodies and the administration and recommend the collegial body to approve them. The nomination committee should evaluate the balance of skills, knowledge and experience in the management body, prepare a description of the functions and capabilities required to assume a particular position and assess the time commitment expected; 2) assess, on a regular basis, the structure, size and composition of the supervisory and management bodies as well as the skills, knowledge and activity of its members, and provide the collegial body with recommendations on how the required changes should be sought; 3) devote the attention necessary to ensure succession planning. YES The Remuneration and Nomination Committee of EPSO-G UAB serves as the advisory body to the Board of EPSO-G UAB and to the Company’s Board. The main functions of the Committee are as follows: - assistance in the selection of candidates for members of the bodies in all entities of the group of companies; - provision of recommendations for the entities of the group of companies on the appointment of members of the management bodies, conclusion of contracts with them and determination of remuneration for them; - provision of recommendations on the policies of the group of companies that govern the remuneration policy and employee performance assessment; - provision of recommendations on the planning system of succession of critical positions. MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 88 5.2.2. When dealing with issues related to members of the collegial body who have employment relationships with the company and the heads of the administration, the manager of the company should be consulted by granting him/her the right to submit proposals to the Nomination Committee. YES The 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. Currently, this provision is not practically relevant, as employees of the Company are not included in the composition of the Board. 5.3. Remuneration committee The main functions of the remuneration committee should be the following: 1) submit to the collegial body proposals on the remuneration policy applied to members of the supervisory and management bodies and the heads of the administration for approval. Such policy should include all forms of remuneration, including the fixed-rate remuneration, performance-based remuneration, financial incentive schemes, pension arrangements and termination payments as well as conditions which would allow the company to recover the amounts or suspend the payments by specifying the circumstances under which it would be expedient to do so; 2) submit to the collegial body proposals regarding individual remuneration for members of the collegial bodies and the heads of the administration in order to ensure that they would be consistent with the company's remuneration policy and the evaluation of the performance of the persons concerned; 3) review, on a regular basis, the remuneration policy and its implementation. YES Please refer to the commentary in paragraph 5.2.1. MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 89 5.4. Audit committee YES The Audit Committee of EPSO-G UAB serves as the advisory body to the Board of EPSO-G UAB and to the Company’s Board. The main functions of the Committee are as follows: - supervision of the preparation of the financial statements of the companies of the Group and performance of their audit; - responsibility for ensuring compliance with the principles of independence and objectivity by the auditors and audit firms of the companies of the Group; - responsibility for the supervision of the internal control, risk management and internal audit systems, effectiveness of opera- tional processes of the companies of the Group; - responsibility for control of provision of non-audit services by the auditor and/or audit firm of the companies of the Group; - ensurance of the functioning of the complaints system and complaints handling; - evaluation of transactions with related parties. 5.4.1. The key functions of the audit committee are defined in the legal acts regulating the activities of the audit committee (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). 5.4.2. All members of the committee should be provided with detailed information on specific issues of the company’s accounting system, finances and operations. The heads of the company’s administration should inform the audit committee about the methods of accounting for significant and unusual transactions where the accounting may be subject to different approaches. 5.4.3. The audit committee should decide whether the participation of the chair of the management board, the manager of the company, the chief finance officer (or senior employees responsible for finance and accounting), the internal and external auditors in its meetings is required (and, if required, when). The committee should be entitled, when needed, to meet the relevant persons without members of the management bodies present. YES The 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, represen- tatives, candidates for certain po- sitions 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. MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 90 5.4.4. The audit committee should be informed about the internal auditor’s work programme and should be furnished with internal audit reports or periodic summaries. The audit committee should also be informed about the work programme of external auditors and should receive from the audit firm a report describing all relationships between the independent audit firm and the company and its group. YES The Audit Committee is regularly, at least quarterly, informed about the internal audit reports and at least once every six months, with the internal audit plan and it may provide recommendations with regard to them to the boards of the companies of the EPSO-G UAB group. 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 com- panies. 5.4.5. The audit committee should examine whether the company complies with the applicable provisions regulating the possibility of lodging a complaint or reporting anonymously his/her suspicions of potential violations committed at the company and should also ensure that there is a procedure in place for proportionate and independent investigation of such issues and appropriate follow- up actions. YES The 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 sub- mitted complaints. In the implementation of this function, the Chairperson of the Audit Committee is immediately informed about significant complaints received. In addition, the Audit Committee is regularly reported on all complaints received by the companies of the EPSO-G UAB group, their investi- gation and decisions made on the basis of the findings of investigations carried out. 5.4.6. The audit committee should submit to the supervisory board or, where the supervisory board is not formed, to the management board its activity report at least once in every six months, at the time that annual and half-yearly reports are approved. YES The Regulations of the Audit Committee stipulate that the Audit Committee shall submit a quarterly activity report to the Board. In addition, it shall submit a consolidated activity report to the Ordinary General Meeting of Shareholders and to the Board of EPSO-G UAB. MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 91 Principle 6: Prevention and disclosure of conflicts of interest The corporate governance framework should encourage members of the company’s supervisory and management bodies to avoid conflicts of interest and ensure a transparent and effective mechanism of disclosure of conflicts of interest related to members of the supervisory and management bodies. The corporate governance framework should recognise the rights of stakeholders established in the laws and encourage active cooperation between the company and stakeholders in creating the company value, jobs and financial sustainability. In the context of this principle, the concept “stakeholders” includes investors, employees, creditors, suppliers, clients, local community and other persons having certain interests in the company concerned. Any member of the company’s supervisory and management body should avoid a situation where his/her personal interests are or may be in conflict with the company’s interests. In case such a situation did occur, a member of the company’s supervisory or management body should, within a reasonable period of time, notify other members of the same body or the body of the company which elected him/her or the company’s shareholders of such situation of a conflict of interest, indicate the nature of interests and, where possible, their value. YES This obligation is set out in paragraphs 57-58 of the Company’s Articles of Association, the regulations of the management bodies and the Policy of Mana- gement of Interests of Members of Collegial Bodies, Executives and Employees of the EPSO-G Group of Companies. Principle 7: Remuneration policy of the Company The remuneration policy and the procedure for review and disclosure of such policy established at the company should prevent potential conflicts of interest and abuse in determining remuneration of members of the collegial bodies and heads of the administration, in addition it should ensure the publicity and transparency of the company’s remuneration policy and its long-term strategy. 7.1. The company should approve and post the remuneration policy on the website of the company; such policy should be reviewed on a regular basis and be consistent with the company’s long-term strategy. YES The Company applies the Guide- lines on the Establishment of Re- muneration for the Activity at the Bodies of EPSO-G UAB and the Companies of the EPSO-G UAB Group of Companies, which are approved by the sole shareholder of EPSO-G UAB and available in a public domain. The Company applies the Remu- neration Policy of the EPSO-G UAB Group of Companies and the Employee Performance Assessment Policy of the EPSO-G UAB Group of Companies in full. The Remuneration Policy is available in a public domain. MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 92 7.2. The remuneration policy should include all forms of remuneration, including the fixed-rate remuneration, performance- based remuneration, financial incentive schemes, pension arrangements and termination payments as well as the conditions specifying the cases where the company can recover the disbursed amounts or suspend the payments. YES All possible forms of remuneration of the collegial bodies and employees are established in the Guidelines on the Establishment of Remuneration for the Activity at the Bodies of EPSO-G UAB and the Companies of the EPSO-G UAB Group of Companies and the Remuneration Policy of the EPSO- G UAB Group of Companies. Both these documents are available in a public domain. 7.3. With a view to avoid potential conflicts of interest, the remuneration policy should provide that members of the collegial bodies which perform the supervisory functions should not receive remuneration based on the company’s performance. YES The Company applies the Guideli- nes on the Establishment of Remuneration for the Activity at the Bodies of EPSO-G UAB and the Companies of the EPSO-G UAB Group of Companies that regulate a fixed remuneration for members of the collegial bodies. The members of the Board do not receive remuneration based on the Compa- ny’s performance. 7.4. The remuneration policy should provide sufficient information on the policy regarding termination payments. Termination payments should not exceed a fixed amount or a fixed number of annual wages and in general should not be higher than the non- variable component of remuneration for two years or the equivalent thereof. Termination payments should not be paid if the contract is terminated due to inadequate performance. YES/NO The Remuneration Policy of the EPSO-G UAB Group of Companies stipulates that the companies of the Group do not conclude advance agreements on the amounts of termination benefits (except for the CEOs 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 higher benefits. The relevant Board of the Group company shall be informed of the disbursement of such benefits and the grounds for their payment at its forthcoming meeting. 7.5. In the event that the financial incentive scheme is applied at the company, the remuneration policy should contain sufficient information about the retention of shares after the award thereof. Where remuneration is based on the award of shares, shares should not be vested at least for three years after the award thereof. After vesting, members of the collegial bodies and heads of the administration should retain a certain number of shares until the end of their term in office, subject to the need to compensate for any costs related to the acquisition of shares. NOT APPLICABLE Such schemes are not applied at the Company. MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 93 7.6. The company should publish information about the implementation of the remuneration policy on its website, with a key focus on the remuneration policy in respect of the collegial bodies and managers in the next and, where relevant, subsequent financial years. It should also contain a review of how the remuneration policy was implemented during the previous financial year. The information of such nature should not include any details having a commercial value. Particular attention should be paid on the major changes in the company’s remuneration policy, compared to the previous financial year. YES General information on the implementation of the Company’s Remuneration Policy and average salary levels of individual employee groups are publicly disclosed in the Company’s annual report. According to Article 25(5) of the Law of Energy of the Republic of Lithuania, the Company discloses remuneration established to the members of the Company’s management bodies and other benefits related to the functions of the members of the management bodies. Information on remuneration of employees is published on the Company’s website on a quarterly basis. 7.7. It is recommended that the remuneration policy or any major change of the policy should be included on the agenda of the general meeting of shareholders. The schemes under which members and employees of a collegial body receive remuneration in shares or share options should be approved by the general meeting of shareholders. YES The remuneration of the members of the Company’s Board is de- termined by the General Meeting of Shareholders of the Company. Such schemes are not applied at the Company. Principle 8: Role of stakeholders 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, the concept “stakeholders” includes investors, employees, creditors, suppliers, clients, local community and other persons having certain interests in the company concerned. 8.1. The corporate governance framework should ensure that the rights and lawful interests of stakeholders are protected. YES The Company has adopted the Transparency and Communication Policy of the EPSO-G UAB Group of Companies, which establishes goals to increase awareness and unders- tanding of stakeholders about the activities of the EPSO-G UAB group of companies and individual group companies; to ensure employee engagement; to create and maintain sustainable relationship with stakeholders based on mutual respect. MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 94 8.2. The corporate governance framework should create conditions for stakeholders to participate in corporate governance in the manner prescribed by law. Examples of participation by stakeholders in corporate governance include the participation of employees or their representatives in the adoption of decisions that are important for the company, consultations with employees or their representatives on corporate governance and other important matters, participation of employees in the company’s authorised capital, involvement of creditors in corporate governance in the cases of the company's insolvency, etc. YES The Company, together with the representatives of the Company’s employees, conducts consultations, negotiations and briefings on the processes for improving efficiency of the Company’s activities. Under the Company’s collective agreement signed with the representatives of the Company’s employees, the Company informs the representatives of the trade unions about projected changes in the Company, the Company’s financial position, etc. Stakeholders can take part in the corporate governance to the extent permitted by law. 8.3. Where stakeholders participate in the corporate governance process, they should have access to relevant information. YES Please refer to commentary in paragraphs 8.1. and 8.2. 8.4. Stakeholders should be provided with the possibility of reporting confidentially any illegal or unethical practices to the collegial body performing the supervisory function. NO The Company’s website contains the Company’s Code of Conduct that indicates the Trust Line contacts. The Audit Committee operating at the level of the EPSO-G group of companies ensures the functioning of the system of lodging complaints and their handling. It is expected that a system will be developed in the near future to provide information to the Audit Committee operating at the Group level. MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 95 Principle 9: Disclosure of information The corporate governance framework should ensure the timely and accurate disclosure of all material corporate issues, including the financial situation, operations and governance of the company. 9.1. In accordance with the company’s procedure on confidential information and commercial secrets and the legal acts regulating the processing of personal data, the information publicly disclosed by the company should include but not be limited to the following: YES The Transparency and Communication Policy of the EPSO-G UAB Group of Companies has been adopted by the Company. Information indicated in this Policy is presented in the Company’s annual report and on the Company’s website. 9.1.1. operating and financial results of the company; YES 9.1.2. objectives and non-financial information of the company; YES 9.1.3. persons holding a stake in the company or controlling it directly and/ or indirectly and/or together with related persons as well as the structure of the group of companies and their relationships by specifying the final beneficiary; YES 9.1.4. members of the company’s supervisory and management bodies who are deemed independent, the manager of the company, the shares or votes held by them at the company, participation in corporate governance of other companies, their competence and remuneration; YES 9.1.5. reports of the existing committees on their composition, number of meetings and attendance of members during the last year as well as the main directions and results of their activities; YES 9.1.6. potential key risk factors, the company’s risk management and supervision policy; YES 9.1.7. the company’s transactions with related parties; YES 9.1.8. main issues related to employees and other stakeholders (for instance, human resource policy, participation of employees in corporate governance, award of the company’s shares or share options as incentives, relationships with creditors, suppliers, local community, etc.); YES 9.1.9. structure and strategy of corporate governance; YES 9.1.10. initiatives and measures of social responsibility policy and anti-corruption fight, significant current or planned investment projects. This list is deemed minimum and companies are encouraged not to restrict themselves to the disclosure of information included into this list. This principle of the Code does not exempt companies from their obligation to disclose information as provided for in the applicable legal acts. YES MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 96 9.2. 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 UAB, as a parent company, discloses consolidated information in the consolidated annual report. 9.3. 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. 9.4. Information should be disclosed in such manner that no shareholders or investors are discriminated in terms of the method of receipt and scope of information. Information should be disclosed to all parties concerned at the same time. YES The Company publishes information through the information system of the Vilnius Securities Exchange in Lithuanian and English at the same time. The Company publishes information prior to or after a trading session at Vilnius Securities Exchange and presents it at the same time to all markets in which the Company’s securities are traded. The Company does not disclose information that may influence the price of its securities in any comments, interviews or by any other means until such information is published in the information system of the securities exchange. MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 97 Principle 10: Selection of the company’s audit firm The company’s audit firm selection mechanism should ensure the independence of the report and opinion of the audit firm. 10.1. With a view to obtain an objective opinion on the company’s financial condition and financial results, the company’s annual financial statements and the financial information provided in its annual report should be audited by an independent audit firm. YES An independent auditor is appointed by the General Meeting of Shareholders. 10.2. It is recommended that the audit firm would be proposed to the general meeting of shareholders by the supervisory board or, if the supervisory board is not formed at the company, by the management board of the company. YES The Audit Committee operating at the Group level is actively involved in the selection process of an auditor. The Audit Committee provides a recommendation to the Company’s Board on the auditor’s nomination. The final decision is made by the General Meeting of Shareholders convened by the Board, which also proposes draft decisions. 10.3. In the event that the audit firm has received remuneration from the company for the non-audit services provided, the company should disclose this publicly. This information should also be available to the supervisory board or, if the supervisory board is not formed at the company, by the management board of the company when considering which audit firm should be proposed to the general meeting of shareholders. YES The audit firm provides non-audit services in accordance with the EPSO-G UAB policy on the procurement of non- audit services by EPSO-G UAB group of companies from an audit firm or from any other firm that is part of the audit firm network. The latter policy is approved by the Audit Committee. 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. VADOVYBĖS ATASKAITA (tūkst. eurų, jei nenurodyta kitaip) 98 MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 99 19. ABOUT THE REPORT BP-1 General basis for preparation of sustainability statements This section presents the public limited company Litgrid (hereinafter referred to as the "Company"sustainability information (hereinafter referred to as the "Sustainability Report") for 2024. This report is not yet subject to the provisions of the Corporate Sustainability Reporting Directive (hereinafter referred to as the "CSRD") requirements – it has been developed voluntarily to maximise its compliance with the European Sustainability Reporting Standards (hereinafter referred to as the "ESRS"). The Company will fully comply with ESRS starting from the 2025 reporting period when the sustainability report shall be prepared according to all applicable requirements and subjected to an external independent audit. Litgrid is a member of the EPSO-G group of companies (hereinafter referred to as the “Group”). Therefore, its sustainability information is also included in EPSO-G's Consolidated Sustainability Report for 2024, which complies with the ESRS requirements and has been verified by an external independent auditor. The Sustainability Report presents the Company's achievements and goals in the environmental, social and governance areas (ESG). The information provided covers all the Company's direct activities and its value chain. The Sustainability Report is prepared in cooperation with market sustainability reporting experts to ensure quality and comprehensiveness of the provided information. The report is published as part of the annual Management Report. Litgrid has not used the option to omit specific information corresponding to intellectual property, know-how, or the results of innovation or other confidential and sensitive information, as outlined in ESRS standard, part 1 (ESRS 1). According to Appendix C of ESRS 1, certain disclosure requirements or datapoints of disclosure requirements in ESRS may be omitted in the first year(s) of preparation of the sustainability statement under the ESRS (for the Company – for the reporting year 2025). Therefore, in this report, the Company does not disclose information under disclosure requirements SBM-1 40.b. and 40.c., SBM-3 48.e., E1-9, E2-6, E5-3, E4-6, and E5-6, to which this phase-in provision applies. BP-2 Disclosures in relation to specific circumstances For the purposes of this report, the Company uses the ESRS definitions of short-, medium- and long-term: short-term – up to 1 year, medium-term – 2 to 4 years and long-term – more than 5 years. This time perspective is consistent with the periods used by EPSO-G to ensure consistency across the group. In addition to the information required by the ESRS, the Company includes in its Sustainability Report information in accordance with Commission Delegated Regulation (EU) 2021/2178 supplementing Regulation (EU) 2020/852 of the European Parliament and of the Council (the "Taxonomy Regulation") – see section EU Taxonomy Regulation Indicators. For this reporting period, the Company applied the ESRS standard for the first time, ensuring that all disclosures were presented in compliance with ESRS requirements. The disclosed indicators include comparative information for the previous reporting periods of 2021–2023, except for GHG indicators, for which information is provided from the base year (2019). The methodology used to calculate Scope 3 GHG emissions is detailed in the E1 Climate Change chapter. No other value chain indicators covering upstream/downstream value chain data are included in the report. In 2024, based on updated emission factors, the baseline Scope 1 and 2 GHG emissions for 2019 were recalculated (rebaselining). To ensure data comparability and accurately track the progress of the Group's companies, similar recalculations were performed for GHG emissions data for 2020–2023. This update allows for a more precise assessment of emission changes, ensures consistent monitoring of emission reductions in line with the SBTi methodology, and guarantees compliance with industry best practices and regulatory requirements. The rebaselining of data in accordance with SBTi requirements resulted in a 17% reduction in the base year emissions value. Technological losses (Scope 2) incurred in the “NordBalt” and “LitPol Link” interconnections are not included in Lithuania's energy metering balance and are therefore not included in the Group's GHG emissions calculation (according to the activity- based control approach). “EPSO-G” subsidiary Litgrid AB is not responsible for the electricity purchased by the “NordBalt” and “LitPol Link” interconnectors to cover technological losses in accordance with the contracts between the system operators. There have been no other changes in the preparation or presentation of the Sustainability Report compared to the previous reporting period. No quantitative indicators with a high level of measurement uncertainty were identified, nor were any significant errors from the previous reporting period detected. MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 100 To ensure consistency and alignment with the Group’s report, the Company provides all material information required under the ESRS. 20. SUSTAINABILITY GOVERNANCE GOV-1 – The role of the administrative, management and supervisory bodies Litgrid contributes to the transformation of the energy sector by integrating environmental, social, and economic objectives. The Company upholds the highest standards of sustainability governance to ensure that sustainability principles are consistently embedded in strategic decisions and daily operations. EPSO-G’s corporate sustainability governance structure aligns with the Group's corporate governance framework. Management, supervisory, and advisory bodies oversee and manage sustainability issues within their respective areas of responsibility and expertise. Detailed information on sustainability management and monitoring at the Group level is provided in the EPSO-G's Consolidated Management Report 2024. Litgrid's Board is responsible for setting, reviewing, and monitoring long-term strategic goals and indicators. It also approves the Company’s annual targets, which include sustainability commitments, within its remit. Additionally, the Board analyses and assesses a list of Company-level risks, including those specific to sustainability, such as non-compliance with occupational safety requirements, skills shortages, employee turnover and motivation, and damage caused by natural phenomena. In the Company's risk register, each risk is categorised under a sustainability area (environmental protection, social responsibility, or good governance). EPSO-G's Head of Group Sustainability is responsible for overseeing and coordinating the implementation of sustainability objectives across the entire EPSO-G group. The Company’s environmental, social responsibility, and governance objectives are assigned to the relevant functional units based on their areas of expertise, including environmental protection, occupational safety, organisation development, and risk and compliance management. Additionally, the Company has a designated employee responsible for coordinating sustainability-related matters. Litgrid has also appointed a person responsible for safeguarding equal opportunities. This role falls under the responsibility of the Head of the People and Culture Unit. The composition of the administrative, management and supervisory bodies The Company has governing bodies: The Board (5 non-executive members). Chief Executive Officer (the sole executive management body). Litgrid's Board members are elected by the General Meeting of Shareholders for a four-year term, taking into account the recommendations of the Remuneration and Nomination Committee (the 'Nomination Committee'). The Board members do not hold any other management positions within the Company, and two of them are also part of the management team of EPSO-G. All (100%) Board members are male, resulting in a gender balance of 0:5. Two out of five Board members (40%) are independent. The administrative, management, and supervisory bodies do not have directly appointed employee representatives. The Company has a collective agreement with the Trade Union (employee representatives), ensuring that employees are adequately represented and involved in the organisation's decision-making process. The Company's supervisory bodies consist of the Audit Committee (AC) and the Nomination Committee. These committees are established within the Parent Company, operate on a group-wide basis, and fulfil the roles of Litgrid's Audit Committee and Remuneration and Nomination Committee. Additional committees may be established by a decision of the Parent Company's Board to operate as group-wide committees. Company committees and other governing bodies: Executive Officer Council Technical Committee Project Management Committee MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 101 Physical Safety Commission Occupational Health and Safety Committee Public Procurement Commission Ethics Committee Committee on Information Technology and Telecommunications Governance IT Architecture Commission Programme Monitoring Committee The Board General Meeting of Shareholders Sustainability-related knowledge and experience To ensure comprehensive and integrated sustainability management, the Company actively invests in strengthening sustainability- related knowledge, developing competencies, and attracting experts. Litgrid regularly organises training sessions and presentations on sustainability topics and engages external consultants to maintain a high level of expertise. Managers are routinely briefed on sustainability policies, legislative developments, and key initiatives in this area. Board member Pierre-Henri D'haene, Head of Strategy, Transformation, and Sustainability at Elia, the Belgian electricity transmission system operator, brings valuable insights and extensive experience in sustainability development. Sustainability education and the active involvement of managers not only help to achieve objectives more effectively but also strengthen their competencies by fostering a conscious and responsible approach to sustainable practices. More information on the Company's Board members is available on the Company's website: Board. GOV-2 – Information provided to, and sustainability matters addressed by, the undertaking’s administrative, management, and supervisory bodies The Company's governing bodies are regularly informed about material impacts, risks, and opportunities. The Board discusses relevant issues, including those related to sustainability, on a monthly basis. The Board plans and conducts its activities in accordance with its annual work plan. In the first year of reporting, the Double Materiality Assessment considered all topics from the ESRS list, as well as other sustainability topics relevant to the Company. GOV-3 – Integration of sustainability-related performance in incentive schemes Litgrid’s remuneration policy is outlined on the Remuneration, performance and training section of the Management Report. The Company does not have any sustainability-related incentive schemes or remuneration policies for members of the governing bodies. GOV-4 – Statement on due diligence So far, the Company is not subject to legal requirements for sustainability due diligence. Therefore, no specific due diligence system is in place. However, the Company continuously assesses potential negative impacts within its operations and value chain, strives to prevent them, and is committed to cooperating in addressing any negative impacts should they occur or should the Company contribute to them. Despite the absence of a formalised due diligence system, some elements have already been integrated into the Company's operations. The key aspects and steps outlined in ESRS 1, Chapter 4 Due Diligence correspond to several horizontal and topical disclosure requirements under ESRS. The table below outlines how and where the main aspects and steps of the due diligence process are reflected in the Company's Sustainability Report. MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 102 KEY ELEMENTS OF THE DUE DILIGENCE PARTS OF THE SUSTAINABILITY REPORT a) Integrating due diligence into governance, strategy and business model GOV-1, GOV-2, GOV-3, SBM-3 (b) Involvement of affected stakeholders in all key stages of due diligence GOV-2, SBM-2, IRO-1, MDR-P, E1, E2, E3, E4, E5, S1, S3, S4, G1 (c) Identification and assessment of negative impacts IRO-1, SBM-3 d) Taking action to address these negative impacts MDR-A, E1, E2, E3, E4, E5, S1, S3, S4, G1 e) Monitoring and communicating the effectiveness of these efforts MDR-T, E1, E2, E3, E4, E5, S1, S3, S4, G1 GOV-5 – Risk management and internal controls over sustainability reporting Sustainability reporting aligns with Group-level principles and processes related to regulatory compliance, risk management, and internal control. Internal control in sustainability reporting is based on risk identification, analysis, and a focus on the most significant identified risks. EPSO-G's risk management process follows the principles of the COSO ERM framework. EPSO-G has adopted a risk management policy that defines the key principles and responsibilities for risk management within EPSO-G, ensuring a unified risk management process across all companies based on shared principles. Sustainability risks are regarded as an integral part of EPSO-G's day-to-day operations and are embedded within the risk management process. The Company assesses risks against specific criteria within sustainability areas. Risks meeting these criteria are categorised under the appropriate risk type within the sustainability domain. Risks related to sustainability reporting primarily concern the accuracy and reliability of data and information. Role of Litgrid’s administrative and supervisory bodies in sustainability reporting: The Board – Defines strategic directions and objectives for sustainability, ensures their implementation, and approves sustainability-related policies. Role of EPSO-G's administrative and supervisory bodies in sustainability reporting: Nomination and Remuneration Committee – Oversees the activities of the governing bodies and the system for strengthening the remuneration policy, as well as promoting equal opportunities, inclusion, and diversity within the Group. Audit Committee – Supervises processes related to sustainability data and monitors third-party assurance checks. Internal Audit Department – Conducts audits under approved internal audit plans, following the specific functions defined by the Board for the centralised Internal Audit Department. EPSO-G Sustainability Function – Coordinates the sustainability function, sustainability reporting, and implementation. Decisions or recommendations taken by these bodies have a direct impact on Litgrid. MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 103 21. STRATEGY, BUSINESS MODEL AND VALUE CHAIN SBM-1 – Strategy, business model and value chain Litgrid is the Lithuanian electricity transmission system operator. The Company is responsible for maintaining the balance between electricity consumption and generation within the Lithuanian electricity system, ensuring reliable electricity transmission, and implementing strategic electricity projects. Its vision and strategic guidelines are based on the long-term goals outlined in the National Energy Independence Strategy (NEIS). Litgrid, as the electricity transmission system operator, plays a key role in ensuring Lithuania’s smooth and reliable transition to an energy system that integrates large amounts of Renewable Energy Sources (RES). This transition will enable the decarbonisation of the sector, initiate system interconnection projects, and facilitate the exchange of climate-neutral energy. Litgrid aims to transform the energy sector by balancing environmental, social, and economic objectives. Litgrid services: Transmission of electricity via high-voltage (110–400 kV) electrical installations. Trading in imbalance and balancing power to maintain the balance between production and consumption. System services. Public Interest Services (PIS). Litgrid customers: Litgrid’s customers are classified as new or existing and segmented based on their activities and services. Transmission customers: Distribution grid operators. Producers and consumers connected to the transmission grid. Providers of balancing and imbalance services. Beneficiaries of guarantees of origin. Connection service customers: Developers of renewable energy, hybrid parks, and new power plants. New users. At the end of the reporting period in 2024, the Company employed 458 people. Detailed information on its activities, services, environment, regulatory framework, objectives, and strategy is provided in the Management Report. For information on activities related to fossil gases, as required by the ESRS, see the chapter EU Taxonomy Regulation Indicators. Sustainability in Litgrid's strategy Sustainability is an integral part of the Company's activities, with its key objectives embedded in the EPSO-G Group's long-term corporate strategy. EPSO-G’s strategy was updated in 2024, and detailed information on Litgrid's strategy until 2035 is available here: Strategy 2035. Litgrid's activities are closely tied to Lithuania’s economy and geopolitical landscape. Historically, the country has relied on energy imports. To build a reliable and climate-neutral energy system and foster high-value-added industries, the Company aims to facilitate the export of green energy and its products. The Company's key environmental, social and governance objectives: Climate – Achieve a net-zero GHG emissions balance by 2050. MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 104 Impact – Ensure no net loss of biodiversity. Health and Safety – Safe, positive and accident free workspace and culture. People and Communities – Empowered people and positive impact on communities. Governance – Transparency, responsible governance and supply chain management and sustainable finance. Value chain The diagram below provides a visual representation of the Company's value chain, encompassing both the upstream value chain, which includes suppliers and resources, and the downstream value chain, where value is delivered to customers and society. It highlights the key resources and dependencies within the Company's operating model, from core business activities to final outcomes. MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 105 SBM-2 – Interests and views of stakeholders It is crucial for the Company to maintain regular dialogue with stakeholders, consider their expectations, and integrate them into the decision-making process. Stakeholders are groups whose activities significantly impact the Company or who may, in turn, be significantly impacted by the Company. The content of the Sustainability Report is shaped by the insights, needs, and expectations of key stakeholders. The table below outlines the main stakeholder groups, the methods of engagement, and how the Company addresses their concerns. The findings from this engagement process have also been incorporated into the double materiality assessment. When necessary, the Company's administrative, management, and supervisory bodies are appropriately informed of stakeholder concerns. Key stakeholders and methods of engagement Key stakeholders Company’s methods of engagement How Litgrid considers the results of the engagement Customers Initiating and organising informative events, publishing articles, newsletters and communicating with customers on social media. The Group's companies operate in a business-to-business (B2B) environment; therefore, it is essential to understand customer needs and develop tailored services and solutions that support the implementation of the Group's strategy. Employees ● Conducting regular employee engagement surveys. ● Applying uniform principles of equal pay and social responsibility towards employees. ● Organising employee meetings and sharing information via intranets. ● Setting team goals and monitoring results. Empowered, professional and values-driven employees are essential to achieving the Group's vision and strategic objectives. The Company is committed to creating a safe, positive working environment and culture as part of the Group's long-term strategy To do this, it develops internal policies and improvement plans. Shareholders and investors ● Publishing interim (quarterly) and annual reports on the Group's financial and operational performance. ● Holding regular meetings to discuss topical issues. The Company's business strategy is designed to align with both national and international expectations for the region. The success of our strategic projects relies directly on shareholder trust and timely decision-making. The Group considers shareholders' expectations when defining strategic priorities and enhancing sustainability-related governance. Foreign partners: electricity transmission system operators ● Initiating and participating in professional meetings and conferences to present strategic objectives. ● Engaging in joint working groups. ● Taking part in international organisations that bring together electricity transmission operators. The Company is actively engaged in national and international activities to safeguard the country's interests and strengthen its position in the Baltic region and Europe. Partnerships with foreign operators enable the Company to develop new markets, drive innovation, and enhance the overall sustainability and efficiency of the sector. MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 106 National regulatory authority ● Providing timely information to regulators. ● Cooperating on the implementation of new market mechanisms. ● Holding regular meetings to discuss key issues. Cooperation with the regulator enables the Company to ensure regulatory compliance, strengthen long-term operational stability, and foster social trust, thereby contributing to sustainable growth and an enhanced market reputation. Government representatives ● Holding regular meetings to discuss key issues. ● Presenting or speaking on relevant topics in Parliamentary Committees and Government and committee meetings of the Republic of Lithuania. ● Participating in inter-institutional working groups. Cooperation with government representatives is essential to ensuring a coherent, long-term vision for the energy sector and facilitating the smooth implementation of key national and regional projects. Suppliers of services and goods ● Consulting market players and conducting market research. ● Developing public procurement plans and policies. ● Organising Supplier Day events. The contribution of suppliers is essential to ensuring the continuity and efficiency of the Company’s activities, thereby strengthening and enhancing the value chain. Their role extends beyond maintaining a stable supply process; it also fosters compliance with quality standards, drives innovation, and supports sustainability objectives. Suppliers act as strategic partners, enhancing the efficiency, resilience, and adaptability of the value chain in response to dynamic market conditions and evolving environmental and social demands. Contractors ● Organising annual informational events for potential contractors. ● Announcing procurement plans and consultations in advance to promote stronger competition among bidders. ● Auditing the work carried out by contractors. Contracting extends beyond cost efficiency and process optimisation; it plays a key role in advancing sustainability objectives. By collaborating with sustainable contractors, the Company can minimise its ecological footprint, promote the responsible use of resources, and uphold higher environmental standards. This partnership model enhances the resilience of the value chain, improves environmental performance, and supports long-term sustainable development. Non-governmental organisations (NGOs) ● Cooperating on investment projects. ● Participating in associations as active members. ● Sharing information to drive collective progress. Collaborating with NGOs enables the Company to contribute to global progress while leveraging specialised knowledge and resources. It also provides an opportunity to engage with wider target audiences and enhance the impact of sustainability initiatives. MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 107 Trade unions ● Facilitating trade unions or labour councils. ● Negotiating collective agreements with trade unions or labour councils. ● Holding periodic meetings with employees or their representatives to discuss the implementation of collective agreements. ● Consulting and informing trade unions or labour councils when making decisions related to labour management relations. It is important for the Company to maintain an open dialogue, listen to employee expectations, and integrate them into performance improvement processes. General public and media ● Maintaining a constructive relationship with the media by providing relevant information to assess the Group's financial and non-financial position and to inform the public about ongoing projects. ● Organising press conferences. ● Publicly disclosing information for the benefit of society. ● Conducts representative surveys It is essential for the Group to remain aligned with the public interest and to provide up-to-date information on its progress. Local communities ● Organising informative events for local communities on planned and ongoing projects. ● Holding periodic meetings with community representatives. Community support is essential for the successful implementation of major energy projects. The Company strives to consider valid feedback when carrying out projects and, as part of its long-term strategy, is committed to creating a positive impact on communities. 22. DOUBLE MATERIALITY ASSESSMENT SBM-3, IRO-1 – Material impacts, risks, and opportunities, and their interaction with strategy and the business model – A description of the processes used to identify and assess material impacts, risks, and opportunities The information and indicators presented in this Sustainability Report have been selected based on a Double Materiality Assessment (DMA). This approach enables a comprehensive evaluation of sustainability matters by considering both their environmental and social impacts as well as their financial materiality, ensuring a balanced and responsible approach to sustainability management. In 2024, EPSO-G conducted a DMA for the first time, in accordance with the criteria established by the European Sustainability Reporting Standards (ESRS). The purpose of this assessment is to identify the key sustainability topics and sub-topics that should be included and disclosed in the sustainability report. The Group's assessment was guided by the general requirements of the ESRS and the European Financial Reporting Advisory Group (EFRAG) practical application guidelines. The materiality analysis considered both impact materiality and financial materiality, along with their interrelationships. The main steps in the assessment were: 1. Understanding the context – Analysing the company's operations, value chain partners, and stakeholders. 2. Preliminary assessment – Identifying potentially material sustainability issues for EPSO-G. 3. Double Materiality Assessment – Conducting a detailed evaluation of the identified sustainability issues in terms of their environmental, social, and financial impacts. MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 108 Stakeholders were actively involved in the Group's DMA. "Nature", recognised as a silent stakeholder, was also considered in the assessment. The methods and levels of stakeholder involvement were determined in accordance with the AA1000 Stakeholder Engagement Standard. Details of the EPSO-G's DMA methodology are provided in EPSO-G's Consolidated Management Report 2024. In line with the DMA results, this report provides a detailed account of how each material topic is managed, including its associated impacts, risks, and opportunities, in chapters structured according to ESRS topics. Double Materiality Matrix The sustainability topic matrix highlights the most relevant sustainability issues. According to EPSO-G’s methodology, a sustainability issue is considered material if it is classified as "critical" or "material" based on its final impact and/or financial materiality scores. An exception applies to the sustainability issue "Business Ethics (Whistleblower Protection)," which is classified as material specifically to the Company, given its status as a state-owned enterprise. MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 109 Climate Risk Assessment Given the significance of climate change challenges in the energy sector and the requirements of EU legislation (including the Taxonomy Regulation and European Sustainability Reporting Standards (ESRS)) on climate risk disclosures, EPSO-G carried out a comprehensive analysis of physical and transitional climate risks, opportunities, and climate scenarios in 2023. The analysis was conducted under the Intergovernmental Panel on Climate Change (IPCC) climate change scenarios for the short (2026), medium (2030), and long (2050) term. The Group's assessment was carried out in line with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD). The assessment and methodology developed allow for improving the evaluation and management of climate change risks, enhancing related disclosures to the EPSO-G’s stakeholders, and strengthening the EPSO-G’s governance of sustainability risks. The assessment covered climate change-related risks, both physical (likelihood of extreme events affecting infrastructure, buildings, and offices) and transitional (Policy and Legal, Technology, Market, and Reputation). Measures and indicators have been developed to manage these risks. The methodology and results of the climate risk assessment are reported in the EPSO-G Consolidated Management Report 2024 and a separate report, which can be found here: EPSO-G Climate risk report 2023. IRO-2 – Disclosure requirements in ESRS covered by the undertaking’s sustainability statement A table of contents listing the disclosure requirements met in the preparation of this Sustainability Report, based on the results of the materiality assessment, can be found in the chapter ESRS Index. A table of all data units required by other EU legislation, as specified in Appendix B of the ESRS standard, is available in the section List of data points in cross-cutting and topical standards that derive from other EU legislation. Climate change is a material topic for the Company and is included in this report. The material information to be disclosed has been determined by the Company based on the DMA conducted. MDR – Minimum Disclosure Requirements The Company applies and discloses information in accordance with the Minimum Disclosure Requirements on policies (MDR-P), actions (MDR-A), metrics (MDR-M), and targets (MDR-T), together with the relevant disclosure requirements set out in the topical ESRS throughout this report. VADOVYBĖS ATASKAITA (tūkst. eurų, jei nenurodyta kitaip) 110 MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 111 22.1 E1 CLIMATE CHANGE SBM-3 Material impacts, risks and opportunities and their interaction with strategy and business model The Double Materiality Assessment (DMA) of the EPSO-G group companies covered all the sustainability topics outlined in the ESRS. The ex-ante assessment of the topics, the impact and financial materiality assessments and the stakeholder survey showed that the topics Climate Change Adaptation, Climate Change Mitigation, and Energy are material. Below are the significant impacts, risks and opportunities related to climate change for EPSO-G Group companies. Sustainability matter Impacts Risks and opportunities Location in the value chain Climate change adaptation Actual negative impact on the value of biomass extraction upstream value chain. -* Upstream Climate change mitigation Actual negative impact due to the GHG emissions of EPSO-G companies. Risks arise from the need to finance the renewal of infrastructure and to provide for investment in new technologies to reduce the EPSO-G Group's impact on climate change (by reducing GHG emissions). Whole value chain Energy Actual negative impacts from the operations of EPSO-G companies and their supply chain. The risks stem from the need to invest in RES. Whole value chain * No significant risks and/or opportunities have been identified within the EPSO-G group. Impact not relevant to Litgrid's activities E1-1 Transition plan for climate change mitigation Litgrid has developed a Greenhouse Gas (GHG) Emissions Reduction Plan, setting a target of a 99.53% reduction in Scope 1 and Scope 2 GHG emissions by 2030. The plan, as currently drafted, does not yet address reductions in Scope 3 emissions. According to the European Sustainability Reporting Standards (ESRS), the Transition Plan is an undertaking’s overall strategy that lays out the undertaking’s targets, actions and resources for its transition towards a lower-carbon economy, including actions such as reducing its GHG emissions with regard to the objective of limiting global warming to 1.5°C and climate neutrality. As Litgrid has included in its GHG Emissions Reduction Plan targets, actions, and resources specifically aimed at counteracting climate impacts, the Company is considered to have a draft of the Transition Plan ("the GHG Reduction Plan") that will be revised and enhanced in the future. In 2024, the EPSO-G Group joined the Science Based Targets Initiative (SBTi). EPSO-G companies commit to ensuring that the mitigation targets and measures they set are in line with the latest scientific advice and contribute to the global goal of limiting MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 112 global warming to 1.5 °C. In 2024, a modelling exercise was carried out at EPSO-G group level to assess risks, analyse possible scenarios and set specific GHG reduction targets for Litgrid under the Science Based Targets initiative. Litgrid's GHG Reduction Plan was approved by the CEO of Litgrid (22 October 2024, Order No 24IS-226). The plan was also presented to Litgrid's Board as part of the presentation of the Terms and Conditions for the purchase of electricity from renewable energy sources on a fixed supply schedule, prior to the announcement of the purchase. In 2025, further modelling of the situation up to 2050 is planned, and a plan will be drawn up accordingly, with the aim of neutralising climate impacts by 2050. Litgrid's GHG emission reduction targets are described in more detail in section E1-4 Targets related to climate change mitigation and adaptation, and the actions and measures envisaged are described in section E1-3 Actions and resources in relation to climate change policies. GHG Reduction Plan and Company’s Strategy The measures in the GHG Reduction Plan are closely aligned with the Company's strategy and environmental policy. EPSO-G Group's GHG reduction targets are translated and aligned with Litgrid's strategy. Litgrid intends to update its existing strategy in line with the latest GHG modelling. Litgrid aims to contribute to achieving international and national climate change mitigation goals, including those outlined in the United Nations Agenda for Sustainable Development as well as the commitments under the Paris Agreement, European Green Deal, National Energy Independence Strategy, National Energy and Climate Plan, and the National Climate Change Management Agenda. To implement these commitments, Litgrid follows the Environmental Policy of the EPSO-G Group. The company is subject to the European Union's benchmarks in line with the Paris Agreement. E1-2 Policies related to climate change mitigation and adaptation Litgrid is guided by the EPSO-G Group's policies on climate change mitigation and energy issues. EPSO-G Group Sustainability Policy As an EPSO-G Group company, Litgrid is guided by the Group's Sustainability Policy, which sets out the strategic objectives for sustainable development. EPSO-G's policy objectives are to meet Lithuania's strategic energy goals, contribute to the transition to a climate-neutral economy, ensure the secure operation of energy transmission systems and facilitate the efficient use of infrastructure and the opportunities offered by energy exchanges, thus contributing to the well-being of society. EPSO-G Group's sustainability objective is to transform the energy sector by striking a balance between environmental, social and economic objectives, thereby contributing to a climate-neutral economy. The policies cover all EPSO-G's corporate activities, including both internal operations and interfaces with upstream and downstream parts of the value chain. There are no exceptions to the application of the policy; however, specific measures may vary depending on the operational specifics of each EPSO-G Group company. EPSO-G and Litgrid are committed to complying with the principles of human rights, labour, environment and anti-corruption outlined in the United Nations Global Compact. The EPSO-G Group also aims to contribute directly to the Sustainable Development Goals (SDGs) with a focus on: Ensuring access to clean and modern energy (SDG 7: Ensure access to affordable, reliable, sustainable, and modern energy for all). Combating climate change (SDG 13: Take urgent action to combat climate change and its impacts). Developing modern infrastructure and fostering innovation (SDG 9: Build resilient infrastructure, promote inclusive and sustainable industrialization, and foster innovation). Developing safe and decent working conditions, promoting employees' well-being, and ensuring sustainable supply chains (SDG 8: Promote sustained, inclusive, and sustainable economic growth, full and productive employment, and decent work for all; and SDG 12: Ensure sustainable consumption and production patterns). MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 113 EPSO-G's implements its strategic activities by following these principles: Environmental area – by enabling climate-neutral energy and reducing the environmental impact of its activities; Social area – by building a progressive and sustainable organisation; Governance and economics – by ensuring the transparent and efficient management and development of the energy exchange platform. Stakeholders can access the EPSO-G Group's Sustainability Policy, which also applies to Litgrid, on the Company's website. EPSO-G companies report on the fulfilling of their sustainability activities at least once a year, either through separate sustainability reports or through sustainability reports integrated into the EPSO-G consolidated annual report. EPSO-G Group's Environmental Policy EPSO-G Group’s Environmental Policy commits the Group to monitoring the environmental impact of its activities and implementing measures to mitigate climate change, improve energy efficiency and expand the use of renewable energy sources. EPSO-G and Litgrid have committed to: calculating GHG emissions, tracking the use/consumption of natural and energy resources, and waste generation deploying modern technologies to reduce GHG emissions and other environmental impacts by 2030 using certified green electricity in administrative activities expanding the use of renewable energy sources to meet the technological needs of transmission grid infrastructure prioritising and expanding the use of clean transport and consistently reducing the use of polluting fuels. encourage the implementation of measures to improve energy efficiency Facilitating the connection of green energy producers to the managed infrastructure. Disseminating information about the benefits of clean, renewable energy and promoting its usage among customers, suppliers, partners, communities, academia and administrative authorities. Stakeholders can access the EPSO-G Group's Environmental Policy, which also applies to Litgrid, on the Company's website. Both the EPSO-G Group's sustainability policy and the EPSO-G Group's environmental policy are kept under regular review, taking into account stakeholder surveys and materiality analysis, to ensure their relevance to companies and stakeholders. In designing and implementing its sustainability actions, the EPSO-G Group seeks the full involvement of its stakeholders and promotes transparent and fair cooperation with consumers, manufacturers, suppliers, the public, the owner, employees, the media and other stakeholders. Existing policies cover all the significant impacts and risks identified in the climate change materiality assessment. EPSO-G's corporate managers and Environmental Functional Mentors are responsible for the implementation of the policies, ensuring that environmental aspects are identified in a timely manner, environmental objectives are set, plans are drawn up, and targets are set to improve the environmental situation. They also ensure that sufficient resources are allocated to achieve the objectives, periodically monitor results, audit processes, and evaluate the technology and working methods used. E1-3 Actions and resources in relation to climate change policies To fulfil its strategic climate change mitigation targets and obligations to investors, banks, regulators and other stakeholders, Litgrid adopts a key measure: utilising green energy to cover technological losses and the Company’s own consumption (decarbonisation lever: usage of renewable energy). This measure, which significantly contributes to GHG reductions, along with other measures— whose effectiveness is not assessed in detail due to their lower materiality—is included in the GHG Reduction Plan for the period up to 2030. Other planned measures: MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 114 Technological measures to reduce the Company's own energy consumption: Installing efficient heating and ventilation systems (inverter air conditioners and electric radiators) in control panels of transformer substations and switchgears; installing solar power plants on the roof of control panels in the refurbished and new transformer substations and switchgears; substation refurbishment; Installing solar power plants on the roof of the office building (decarbonisation levers – energy efficiency and consumption reduction, usage of renewable energy). Technological measures to reduce the amount of process losses: Increasing the cross-section of the wire in reconstructed overhead lines where capacity is increased to accommodate system needs (decarbonisation lever – process modification). Other technological measures to reduce GHG emissions: the aim is to make the newly refurbished substations SF6-free (decarbonisation lever – process modification). Administrative measures: Purchasing hybrid cars or electric cars; in an office space in Vilnius, system settings control the operating time of the air conditioners outside working hours and by the outdoor-indoor temperature (decarbonisation levers – electrification, energy efficiency and consumption reduction). The implementation of the key measure—using green energy to cover technological losses and the company's own consumption—is planned gradually, year by year, until 2030, progressively achieving a higher percentage of GHG reductions. The implementation of the GHG Reduction Plan has been delegated to various Litgrid divisions. The Occupational Safety and Environment Department monitors the implementation of the measures and reports quarterly to Litgrid's Head of the Transmission Grid Department. Specific actions in the GHG Reduction Plan until 2030, based on GHG emission scopes: Scope 1 GHG emissions: Phasing out SF6 gas during the reconstruction of transformer substations by 2030 (with a planned replacement of 10 units). Acquiring hybrid cars and electric cars. Scope 2 GHG emissions: Purchasing green electricity to cover technological losses and for the Company’s own consumption. Using green electricity in Vilnius Central and Kaunas offices. Installing solar power plants on the roofs of transformer substations and switchgear control panels. Reconstruction projects, such as the modernisation of the Jonava, Jurbarkas and Kruonis PSHP substations. Increasing the cross-section of the conductor in overhead lines under reconstruction to meet system needs. Optimizing air conditioning system settings at the Vilnius central office to reduce energy consumption outside working hours. All these actions are integrated into Litgrid's strategic plans and regular monitoring processes. There is only a small risk that the GHG reduction measures in the GHG Reduction Plan will not be implemented on time. To manage this risk, the implementation of the GHG Plan measures is monitored and reported to management on a quarterly basis. As the largest part of the GHG emissions generated by the company's operations are technological losses and their GHG generation is managed in a reliable manner, a long-term green electricity contract is planned to cover process losses (PL) (for the period 2026-01-01 to 2032-12-31), which ensures the implementation of the GHG Reduction Plan. Process losses may increase as the electricity grid expands on demand, but as more renewable generation capacity is connected, the share of "green" electricity also increases. Litgrid reduces process losses by increasing the cross-section of wires and reconstructing overhead lines to increase their capacity. Resources to implement the measures The new GHG Reduction Plan will require additional costs to be planned in the Company's budget (planned resources from Company’s own operations). The main cost of using green electricity to cover process losses and the Company’s own power MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 115 consumption comes from the purchase of guarantees of origin. Expenses already incurred during the reporting period amount to EUR 19,000. These costs are included in the cost of production (cost of process losses). Projected expenses: €252,000 - during the year 2025 (already agreed with National Energy Regulatory Council), €486,000 - during the year 2026 (based on current market price). Preliminary investments in the implementation of the GHG Reduction Plan planned until 2030: purchase of green energy to cover technological losses and the Company’s own consumption – €390,000 (purchase of guarantees of origin for years 2024–2025); consumption of green electricity in Company offices with separate accounting – €25,632 (2024–2030); installation of solar power plants in transformer substations, switchgears under reconstruction and new constructions – €460,800; installation of a solar power plant on the roof of the central office building in Vilnius – €75,000; new refurbishment of substations (10 TS) to operate without SF 6 gas – €2 million. By purchasing guarantees of origin for electricity, it will be demonstrated that technological losses were incurred from electricity generated using renewable energy sources in Lithuania, thereby reducing GHG emissions (Scope 2 emissions, calculated using the market-based method). Measures implemented and results achieved In 2024, Litgrid updated its GHG Emission Reduction Measures Plan until 2030 (following a comprehensive GHG modeling for the period 2019–2030. The following actions have also been taken: base year (2019) GHG emissions have been recalculated based on updated global warming potential (GWP) emission factors. These recalculations have a direct impact on the effectiveness of the planned measures in achieving the reduction targets. To align the objectives with the Science Based Targets Initiative (SBTi) and to manage potential risks, the 2026 green energy consumption target has been adjusted to manage the GHG footprint of electricity consumed for technological losses and the Company’s own consumption. Company's supplier evaluations have been started (all Litgrid suppliers were given surveys with criteria agreed with EPSO-G, a measurement indicator was set out). procurement of long-term contracts for the purchase of electricity from renewable energy sources until 31 December 2024 has been announced. Other significant actions completed: ensuring green energy supply to cover process losses and the Company’s own power consumption. increasing the use of clean transport through the purchase of electric and hybrid cars. installing electric car charging stations. one transformer substation is equipped to operate without SF6 gas. the design of three SF6 gas-free transformer substations is underway. one substation is already under reconstruction. The impact on GHG emissions of measures already implemented: GHG emissions in 2022 decreased by 5.28% compared to 2019; GHG emissions in 2023 decreased by 7.28% compared to 2019; MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 116 GHG emissions in 2024 increased by 31.6% compared to 2019. Achievements of GHG reductions in previous periods are described in the GHG Annual Reports and Sustainability Reports. These actions are important for investors, banks, the National Energy Regulatory Council, relevant ministries and other stakeholders. E1-4 Targets related to climate change mitigation and adaptation Litgrid has set measurable, result-oriented and time-bound targets to measure progress on climate change. Emissions reductions (Scope 1 and Scope 2) are expected to follow the 2024 modelling, which projects a 99.53% reduction in annual GHG emissions in 2029 (compared to 2019). Litgrid's GHG emissions from its operations consist of the following main categories: technological losses – 90.5% the Company’s own consumption – 9% SF 6 gas – 0.15% Fuel – 0.14% Electricity consumption in Vilnius office – 0.04% Heating in Vilnius office – 0.004% Litgrid's GHG Reduction Plan covers all these categories, with the goal of reducing emissions in each. With regard to the main categories of GHG emissions, the main projected measure is the use of electricity from RES to cover technological losses and the Company’s ownconsumption. The measure outlines concluding contracts with green energy producers and suppliers and purchasing guarantees of origin to cover technological losses and the Company’s own consumption. The expected share of green energy (considering the electricity allocated for technological losses and own consumption, which accounts for 99.5% of GHG emissions) will be no less than: 10 % in 2024; 20 % in 2025; 70 % in 2026; 70 % in 2027; 80 % in 2028; 100 % in 2029. The Company's GHG reduction targets were based on modelling that assessed the projected amounts of process losses and the Company’s own consumption, as well as the impact of reduction initiatives both in financial terms (EUR) and in terms of CO₂ equivalent emissions (tCO₂e). Three distinct scenarios were utilised for the 2026 data, and four separate scenarios were used for 2030 to assess the risks to achieving the targets and set out actions to manage the risks that arise. All data have been recalculated using the updated emission factors to ensure their accuracy and relevance. As emission factors can change over time, the Company regularly reviews the data and performs pilot calculations to ensure that the reduction targets are met. A detailed description of the actions/measures foreseen can be found in section E1-3 Actions and resources in relation to climate change policies. The achievement of the targets is monitored through regular reporting and comparison with the 2019 baseline. Quarterly monitoring is also carried out by collecting information on the implementation of the measures from the responsible units and presenting it at management meetings. The key performance indicators under Commission Delegated Regulation (EU) 2021/2178 are disclosed in the section EU Taxonomy Regulation indicators. MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 117 This target and the intermediate targets are directly linked to the EPSO-G Group's Sustainability Policy, strategy and national and international targets, as well as to evidence-based science. In addition, the main measure in the GHG Reduction Plan – the use of green energy to cover technological losses and the Company’s own consumption – has been coordinated with the National Energy Regulatory Council and the relevant ministries. GHG emission reduction targets Base year 2019 2025 target 2026 target 2027 target 2028 target 2029 target 2030 target Scope 1 and 2 GHG emission reduction - 38.93% -42.61% -35.56% -56.89% -99.53% -99.53% Projected GHG emissions after initiatives tCO2e 141,339 196,361 81,115 91,076 60,937 658 658 Note: The reduction is relative to the base year (2019). The table is based on the 2024 modelling. It assesses the possible mitigation measures, the projected emissions and simulates the amount of green energy needed by Litgrid to cover technological losses and Company’s own consumption to meet the GHG reduction targets of Litgrid and the EPSO-G Group. Due to the increasing intensity of the residual mix and the growing volume of technological losses, total GHG emissions in 2025 are expected to be 38.93% higher compared to the base year. EPSO-G has set a group-wide GHG reduction target of 50% by 2030 compared to 2019 (Scope 1 and Scope 2 emissions reductions). A comprehensive GHG reduction plan has been developed to meet this objective, and measures are consistently implemented and monitored. EPSO-G is working towards a zero GHG emissions balance by 2050 (specific measures and targets not yet identified). E1-5 Energy consumption and mix The data in the following tables comes from the data controllers in the relevant domains (e.g. electricity, fuel, etc.). The data is collected by filling in an inventory form and converted using publicly available online systems. The data is audited at EPSO-G Group level. Energy consumption and mix Energy consumption and mix 2021 2022 Change 2022/2021, % 2022 2023 Change 2023/2022, % 2023 2024 Change 2024/2023, % (1) Fuel consumption from coal and coal products (MWh) - - - - - - - - - (2) Fuel consumption from crude oil and petroleum products (MWh) 933,00 1 497,40 60,6 1497,40 1 148 -23,3 1149 1 178 2.5 (3) Fuel consumption from natural gas (MWh) - - - - - - - - - MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 118 (4) Fuel consumption from other fossil sources (MWh) - - - - - - - - - (5) Consumption of purchased or acquired electricity, heat, steam, and cooling from fossil sources (MWh) 318,894 378,572 18.7 378,572 369,967 -2 369,967 358,656.59 -3.1 (6) Total fossil energy consumption (MWh) (calculated as the sum of lines 1 to 5) 319 827 380069 18,8 380069 371 115 -2,4 371 115 359 834 -3.0 Share of fossil sources in total energy consumption (%) 100.0 99.9 - 99.9 99.7 - 99.7 89.8 - (7) Total fossil energy consumption (MWh) (calculated as the sum of lines 1 to 5) - - - - - - - - - Share of consumption from nuclear sources in total energy consumption (%) - - - - - - - - - (8) Fuel consumption for renewable sources, including biomass (also comprising industrial and municipal waste of biologic origin, biogas, renewable hydrogen, etc.) (MWh) - - - - - - - - - (9) Consumption of purchased or acquired electricity, heat, steam, and cooling from renewable sources (MWh) 0 442 0 442 940 112,6 940 40,863 4,246.8 (10) The consumption of self-generated non-fuel renewable energy (MWh) - - - 0 20 0 20 16 -22,2 (11) Total renewable energy consumption (MWh) (calculated as the sum of lines 8 to 10) 0 442 0 442 960 117.2 960 40,879 2.3 Share of renewable sources in total energy consumption (%) - 0.1 - 0.1 0.3 - 0.3 10.2 - Total energy consumption (MWh) (calculated as the sum of lines 6, and 11) 319 827 380 511 - 380 511 372 075 - 372 075 400 713 - Note: Litgrid's solar power plants generated 20,183 kWh of electricity for own use, and 0 kWh in 2022 and 2021. The Company does not generate electricity from non-renewable sources. The table includes petrol and diesel consumption, thermal energy, the amount of electricity generated by its own solar power plants for the Company’s own consumption, and guarantees of origin. MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 119 Energy intensity The table below shows the energy-to-revenue ratio. Energy intensity per net revenue 2021 2022 Change2022/21, % 2022 2023 Change 2023/22, % 2023 2024 Change 2024/23, % Total energy consumption from activities in high climate impact sectors per net revenue from activities in high climate impact sectors (MWh/EUR) 0.0012 0.0009 -25 0.0009 0.0010 11 0.0010 0.0011 5 Note: The change column indicates the increase or decrease compared to the previous year. For determining Litgrid's energy consumption intensity, the Company's activities are classified under Sector E 1 (electricity transmission). E1-6 Gross Scopes 1, 2, 3 and Total GHG emissions GHG emissions calculation methodology The Company's GHG emissions have been calculated in accordance with the Greenhouse Gas Protocol (GHG) and ESRS standards and recommendations. This report presents the estimated GHG emissions of the Company's activities, expressed in CO₂ equivalent. The calculation was based on the knowledge and methodologies of the market financial institutions and suppliers of energy resources. The assessment includes carbon dioxide (CO₂) and also other greenhouse gases such as methane (CH₄), nitrous oxide (N₂O), fluorinated gases (HFCs), which are converted to CO₂ equivalent using standard conversion factors. Emission consolidation method: operational control. The baseline period for the GHG calculation is 2019, as this was the first year that Litgrid started to systematically measure and calculate emissions. Emission factors (EFs) have been selected based on reliable sources and national and international guidelines, with preference given to the geographically closest data. When choosing which factors to use, the EFs provided by the supplier are used first; if they are not available, the EFs closest to the area are used (Lithuanian data is preferred), and if they are not available, the most recently available EFs are used. Sources of emission factors used: Global Warming Potential Values (GWPVs) set by the Intergovernmental Panel on Climate Change (IPCC). UK Department for Environment, Food and Rural Affairs (DEFRA) databases. Association of Issuing Bodies (AIB) databases. One Click LCA databases. Exiobase databases. In 2024, based on updated emission factors and a refined natural gas calculation methodology, the baseline Scope 1 and 2 GHG emissions for 2019 were recalculated. Similar rebaselining has been carried out for the GHG emission data from 2020 to 2023 to ensure comparability of the data and to track the progress of the Group accurately. The latest GHG Protocol Methodology Statement specifies the use of AIB (Association of Issuing Bodies) as the source of the residual mix factor. This method has been applied to EPSO-G's GHG emissions calculations to ensure their accuracy and compliance with international standards. In the previous calculations, the market-based method used the derivative electricity factor of the third party system OneClickLCA. MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 120 The following categories are included in the calculation of Scope 3 GHG emissions: Category 1 Purchased goods and services, Category 2 Fixed assets, Category 3 Fuel extraction and transport, Category 4 Vehicle emissions, Category 5 Waste generation and disposal, Category 6 Business traveling, Category 7 Employee commuting. The largest amount of GHG emissions from the Company's operations derives from losses in the electricity transmission grid (Scope 2 emissions). GHG emissions data is audited at EPSO-G Group level. GHG emissions Emission type Retrospective Base year 2019 2021 2022 2023 2024 Comparative 2024/2019 Scope 1 GHG emissions Gross Scope 1 GHG emissions (tCO2eq) 773 673,8 829.5 605.5 733 -5 Percentage of Scope 1 GHG emissions from regulated schemes (%) - - - - - - Scope 2 GHG emissions Gross market-based Scope 2 GHG emissions (tCO2eq) 140,557 135,123.6 176,473.2 215,650.9 185 202,6 32 Gross location-based Scope 2 GHG emissions (tCO2eq) 59,563 76,788.5 90,089.1 56,039.3 54,179.4 -9 Significant scope 3 GHG emissions Total Gross indirect (Scope 3) GHG emissions (tCO2eq) 34,688.5 59,866.2 80002,9 1. Purchased goods and services - - 1,466.1 1,385.4 1 833,2 - 2. Capital goods - - 9,570.8 35,377.6 58,064,9 - 3. Fuel and energy related activities (not included in Scope 1 or 2). 23,036.1 22,497.8 19,274,2 MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 121 3. Fuel and energy- related activities included in Scope 1 or Scope 2 - - - - - - 4. Upstream transportation and distribution - - 85.2 25.7 63,8 - 5. Waste generated in operations - - 114.3 135.0 289,2 - 6. Business travel - - 415.9 444.7 477.6 - 7. Employee commuting - - - - - - 8. Upstream leased assets - - - - - - 9. Downstream transportation - - - - - - 10. Processing of sold products - - - - - - 11. Use of sold products - - - - - 12. End-of-life treatment of sold products - - - - - - 13. Downstream leased assets - - - - - - 14. Franchises - - - - - - Total GHG emissions Total GHG emissions (location-based) (tCO2eq) 60,335.1 77,462.3 125,607.1 116,510.9 134,915.0 - Total GHG emissions (market-based) (tCO2eq) 141,339.4 135,797.3 211,991.2 276,122.5 265, 938.5 - MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 122 Note: The Company does not own any other companies and therefore does not allocate additional GHG emissions. The definition of the Company and its value chain has not changed substantially since the base year, so there is no impact on GHG comparability. GHG intensity The table below shows the GHG emissions-to-revenue ratio. GHG intensity per net revenue 2021 2022 Change2022/21, % 2022 2023 Change 2023/22, % 2023 2024 Change 2024/23, % Total GHG emissions (market-based) per net revenue (tCO2eq/Monetary unit) 0.0003 0.0003 3.4 0.0003 0.0003 5.9 0.0003 0.0003 -20.3 Total GHG emissions (location-based) per net revenue (tCO2eq/Monetary unit) 0.0005 0.0005 -0.4 0.0005 0.0008 48.8 0.0008 0.0006 -20.5 Note: Financial statement line items disclosing the revenue amount used to calculate the GHG intensity indicator: Data for 2024, 2023, 2022, and 2021 is presented in the Company's total revenue of the financial statements as of December 31, 2024, 2023, 2022, and 2021, respectively. Financial statements and reports are publicly available on the Company's website. E1-7 GHG removals and GHG mitigation projects financed through carbon credits Litgrid does not absorb or store any GHG emissions. Litgrid does not finance and does not plan to finance mitigation projects outside its value chain through the purchase of carbon credits. E1-8 Internal carbon pricing The Company does not operate carbon pricing systems. 22.2 E4 BIODIVERSITY AND ECOSYSTEMS SBM-3 Material impacts, risks and opportunities and their interaction with strategy and business model The Double Materiality Assessment (DMA) of the EPSO-G group companies covered all the sustainability matters outlined in the ESRS. The preliminary assessment of the topics, the impact and financial impact materiality assessments and the stakeholder survey revealed that the activities of EPSO-G companies have no significant impact on the topics climate change, direct exploitation, invasive alien species, pollution, species global extinction risk, land degradation, desertification, soil sealing, impacts and dependencies on ecosystem services; and no significant risks or opportunities have been identified within the EPSO-G group, only significant impacts related to the topics land-use change, fresh water-use change and sea-use change, and species population size. MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 123 Sustainability matter Impacts Risks and opportunities Location in the value chain Land-use change, fresh water-use change and sea- use change Actual negative impacts are related to land-use changes resulting from the impact of network infrastructure on ecosystems and biomass extraction upstream value chain. * Upstream Species population size Potential negative impacts may be related to the development and maintenance of network infrastructure. * ** * No significant risks and/or opportunities have been identified within the EPSO-G Group. Impact on sustainability topics arises directly from the EPSO-G Group’s operations, so no value chain location is indicated. Litgrid is dedicated to protecting biodiversity during the operation, expansion, or upgrading of energy system infrastructure by monitoring biodiversity as needed, and, in cases of unavoidable objective circumstances, through the design and implementation of necessary mitigation or compensation measures. The main potential negative impact related to Litgrid's operations is the bird fatalities from collisions with overhead lines. Litgrid monitors bird fatalities in accordance with agreed environmental monitoring programmes. Monitoring of bird fatalities does not show significant negative impacts, with only sporadic cases recorded along the monitored section of the overhead line throughout the year. The number of monitored sections varies from year to year, depending on the amount of construction work being carried out and the tasks received from national environmental authorities. The Environmental Protection Agency has not calculated the significance of this impact on the Lithuanian bird population and does not use this indicator for wildlife monitoring. E4-1 Transition plan and consideration of biodiversity and ecosystems in strategy and business model Litgrid has not identified significant risks related to biodiversity and ecosystems. No resilience analysis of the existing business model and strategy was carried out. Biodiversity conservation is one of the strategic objectives of the EPSO-G group to ensure that its activities have no adverse impact on biodiversity. E4-2 Policies related to biodiversity and ecosystems Litgrid's objectives and measures seek to support the protection and restoration of biodiversity, in alignment with the EU Biodiversity Strategy 2030 and the Regulation on Nature Restoration. In 2024, Litgrid initiated the development of the EPSO-G Biodiversity Policy and its integration into Environmental Policy. The new Environmental Policy of the EPSO-G Group, which aims to protect the environment and achieve zero negative impact on biodiversity, is expected to be adopted in Q3 2025. This review and adjustment of the EPSO-G Group's Environmental Policy aims to integrate the principles of biodiversity conservation into EPSO-G's operations, comply with European requirements for the protection and restoration of biodiversity, and contribute to national targets. MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 124 A draft update of the policy is currently being prepared, with the following main provisions: assessing and managing impacts on biodiversity protecting natural habitats and species at all stages of development, and integrating biodiversity protection considerations from the outset of planning new infrastructure projects assessing the environmental impact of the construction of new facilities or refurbishments ensuring that biodiversity is protected when operating, expanding or upgrading energy system infrastructure, through the provision and implementation of mitigation or compensation measures adjusting management practices of compensatory measures in line with monitoring (environmental monitoring) data to improve the results of conservation and restoration of living and non-living nature participating in habitat restoration projects, applying sustainable land management practices to restore vegetation damaged by activities avoiding reducing forest cover installing overhead lines over forests, creating green corridors or other environmentally friendly landscaping where appropriate and feasible after the cessation of the activity, restoring the area where the activity took place to minimise negative impacts and maximise environmental benefits including biodiversity performance and initiatives in annual sustainability reports continuously assessing risks, developing prevention plans and aiming to avoid significant environmental incidents in the EPSO-G's operations. To achieve this goal, a culture of zero tolerance for environmental pollution and zero environmental incidents would be continuously developed and reinforced. requiring contractors and other partners to adhere to the principles of this policy, comply with relevant environmental legislation and standards, and take responsibility for the environmental impact of their activities. The Company also follows the EPSO-G Group's Sustainability Policy to manage impacts on biodiversity and ecosystems. EPSO- G undertakes to ensure the protection of biodiversity by monitoring biodiversity where necessary and, in the event of unavoidable objective circumstances, by planning and implementing the necessary mitigation or compensation measures. A more extensive description of the Sustainability Policy (including disclosures in line with the MDR-P ESRS requirements) is provided in climate change topic E1. The Sustainability Policy will also be reviewed, adjusted and adopted at EPSO-G level in 2025. All these commitments aim to ensure that Litgrid's significant impacts on biodiversity and ecosystems are minimised or fully compensated. Litgrid does not have any additional policies referenced in ESRS topical Standard E4 (e.g. sustainable land use/agriculture, sustainable marine use, policies aimed at reducing deforestation), as these are not pertinent to Litgrid's activities or, where applicable, are already encompassed in the commitments outlined in the Draft Environmental Policy. The Company addresses impacts on biodiversity and ecosystems (including social impacts) in accordance with the following principles: continuously assessing risks, developing prevention plans and aiming to avoid significant environmental incidents in the EPSO-G's operations. To achieve this goal, a culture of zero tolerance for environmental pollution and zero environmental incidents would be continuously developed and reinforced developing employees competences, a sustainable and responsible approach to environmental protection and encouraging their participation in environmental initiatives ensuring opportunities for local communities and other stakeholders to be involved in environmental impact assessment procedures communicating with customers, suppliers, partners, communities, academia, governments and other stakeholders about the benefits of renewable energy for building a climate-neutral economy, and actively seeking ways to engage the above stakeholders in prioritising clean RES-based energy MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 125 cooperating on environmental issues with business partners, public authorities and bodies, non-governmental organisations, academia and other interested parties ensuring that employees are aware of this policy and using a variety of means to encourage responsible behaviour and involvement in environmental activities both inside and outside the workplace communicating openly to stakeholders about the environmental activities implemented by EPSO-G Group companies and the indicators achieved. E4-3 Actions and resources related to biodiversity and ecosystems Measures to manage impacts Litgrid assesses and manages the impact of its activities on biodiversity by implementing various measures: environmental monitoring, tools to increase the visibility of overhead lines, preparation of Environmental Impact Assessment (EIA) documents, assessments of the significance of Natura 2000 sites, no work during sensitive periods for wildlife, nest boxes for owls, little owls and kestrels, and the use of local soil for the rehabilitation of damaged areas. The Company complies with legal requirements, monitors environmental impacts and engages with stakeholders. EIA documents contain specific restrictions, such as: no driving through grasslands in the Corncrake protection areas from 1 May to 1 July. no clearing of overhead lines or tree felling in the Lesser Spotted Eagle's habitat areas from 1 March to 31 August. No demolition and replacement of pylons in Important Bird Areas between April and July. After impacts are identified, additional monitoring is carried out or mitigation measures are immediately implemented, for example, to prevent bird collisions, visibility-enhancing markers, spirals, reflectors, and other measures are installed on high-voltage power lines to mark them. As already mentioned, Litgrid also voluntarily implements bird protection measures by installing nest boxes for protected species, including kestrels, of which there are already over 500 in Lithuania. The nesting boxes are regularly maintained and replaced, thus contributing to the conservation of this species population. Litgrid is currently expanding its protection measures for protected bird species by installing three different types of nest boxes. The erection of nest boxes on high-voltage electricity pylons acts as a countermeasure to potential negative impacts arising from the Company's activities, such as injuries or deaths of birds from collisions with overhead power lines, which reduce bird populations. The effectiveness of this measure is assessed by data from the Klaipėda Seaside Research Centre, which shows that various environmental measures can increase the bird population by 20% annually. When designing new or reconstructing existing overhead lines, the Company cooperates with the Lithuanian Ornithological Society, whose specialists assess bird migration corridors and recommend measures to increase the visibility of overhead lines. The Society's experts also advise on the use of nest boxes to increase bird populations in forested areas and to compensate for potential negative impacts on wildlife. Specific actions to address impacts related to bird fatalities caused by wire strikes or electrical circuits: assessing alternatives during the route selection phase for new overhead line routes to avoid sensitive areas (avoidance). carrying out environmental impact/materiality assessments to determine the need for mitigation measures and/or monitoring (avoidance), with mitigation measures (minimisation) being designed (in the technical design) if necessary. installing bird protection tools (pendants, spirals, nest boxes, "fork" type devices to prevent landing, isolators) (minimisation). designing and agreeing on a monitoring programme after the need is identified (restoration and management start). MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 126 Specific actions to manage the environmental impacts associated with the increase in the footprint of infrastructure (deforestation for new overhead lines, clearing of soil for the construction of substations and pylons): spatial planning and assessment of alternatives – preparation of planning documents, studies to select routes with the least environmental impact (avoidance). impact assessment and coordination – preparation of alternative justifications, Environmental Impact Assessment (EIA) procedures and assessment of the significance of Natura 2000 sites (avoidance). design and maintenance – preparation of the design brief, coordination of the technical design, maintenance (avoidance). final site analysis – a post-construction technical assessment of the site to ensure that environmental requirements have been met (avoidance). These measures are directly linked to the commitments contained in the current Environmental Policy update. Litgrid also analyses the information provided by stakeholders on the potential impacts of the activities and applies appropriate measures to mitigate these impacts. Environmental policy includes commitments to engage with stakeholders through active dialogue and responsible impact management. Resources to implement the measures The Company does not plan significant investments or capital expenditure in this area and is not dependent on external sources of funding or market developments. There are no specific financial instruments (e.g. green bonds or dedicated funding) and the actions are implemented in the context of general environmental initiatives. The commitment to protect biodiversity in the operation, expansion or modernisation of energy infrastructure is the focus of attention and financial resources. An analysis of the last 2–3 years of work has shown that Litgrid incurs the following costs related to biodiversity protection: Compensatory measures: the cost of producing nest boxes to increase bird populations ranges from €40 to €95 per piece, depending on the manufacturer and type. Nest box maintenance costs are also incurred, however these are not separately identified in the overhead line maintenance work orders. Environmental monitoring: a small-scale, three-year monitoring project costs around €20 000. Environmental impact assessments: An EIA screening costs around €14,000 and preparing an EIA report costs around €50,000. Hanging pendants on overhead lines: Installing pendants on one section between two pylons costs around EUR 40 000, depending on the number of pendants. E4-4 Targets related to biodiversity and ecosystems As a Group, EPSO-G aims to meet the target of no impact on biodiversity (this task is at the hierarchy of avoidance mitigation measures) and to fulfil the other obligations described in section E4-1 Policies related to biodiversity and ecosystems. Existing targets and commitments, as well as actions and measures, cover the entire territory of Lithuania where the high-voltage electricity grid extends (specific sites are selected for which particular actions are relevant, such as areas of higher bird migration). No new measurable targets are currently planned, unless the need for them is identified in new EIA documents or monitoring reports. The company monitors and assesses the impact of its activities on biodiversity through environmental monitoring and EIA. The results of these assessments show no significant negative impacts on either vegetation cover or wildlife and, therefore, conclude that the measures are effective. Litgrid did not apply ecological thresholds when setting biodiversity targets. MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 127 E4-5 Impact metrics related to biodiversity and ecosystems change The Company cannot specify the number and size of the operational units it manages, as the high-voltage electricity grid extends across the entire territory of Lithuania. The Company does not own the land underneath the transmission lines. Instead, the land is used by its owners for its current purpose, observing the buffer zones. There are no substations or transformer substations in the protected areas, and their activities do not adversely affect biodiversity. Litgrid's activities do not contribute directly to the impact factors leading to changes in land use, freshwater or marine use, and therefore the related Company indicators are not reported. 22.3 E5 CIRCULAR ECONOMY SBM-3 - Material impacts, risks, opportunities and their interaction with the strategy and business model The Double Materiality Assessment (DMA) of the EPSO-G Group companies assessed all of the sustainability matters identified in the ESRS. The preliminary assessment of the matters, the impact, financial materiality assessments, and the stakeholder survey, did not identify any material risks or opportunities for the EPSO-G Group, only material impacts. Matters including 'resource inflows including resource use’, 'resource outflows related to products and services' and 'waste' were assessed material. Sustainability matter Impacts Risks and opportunities Location in the value chain Resource inflows, including resource use. Resource outflows related to pro- ducts and services Potential negative impacts relate to the envisaged expansion of energy transmission infrastructure. -* - Waste Actual negative impacts arise from waste generated by the Group's operations and throughout the value chain. - Upstream downstream, own operation * No material risks/opportunities identified. Impact on sustainability topics arise directly from the Company's operations, so no value chain location is indicated. E5-1 - Policies related to resource use and circular economy Litgrid has not adopted a separate policy related to resource use and circular economy, as the nature of the Company‘s operations does not ensure a continuous and material flow of material resources (raw materials) and the directly related waste flow. However, the Company is guided by the EPSO-G group's Sustainability Policy and its commitments, and implements resource and waste reduction processes accordingly. EPSO-G group companies are committed to the principles of pollution prevention and to reducing the amount of waste generated by their activities through responsible waste management. For a more extensive description of the Sustainability Policy (including disclosures in line with MDR-P requirements), please refer to Climate Change topic E1. The reduction of the use of primary resources, including the relative increase in the use of secondary (recycled) resources, and the sustainable sourcing and use of renewable resources are not specifically identified in Litgrid's policies, but a number of processes are in place within Litgrid's operations in relation to these matters. MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 128 Litgrid consistently checks suppliers for environmental compliance. There is no specific policy on this issue. Further information on supplier relationship management is provided in the G1-2 disclosures E5-2 - Actions and resources related to resource use and circular economy The Company implements various processes focused on resource efficiency and waste reduction, aiming to maximize resource reuse and extend the lifespan of equipment: Regeneration of insulating oil and SF₆ gas: ○priority is given to on-site regeneration. If regeneration does not achieve the required technological parameters, the oil and gases are diverted to waste, and the equipment is refilled with new oil or gas. ○ when existing transformers are dismantled, the insulating oil in them is diverted to an oil depot for further use (if the required parameters are met). Prolonging the operational lifespan of steel supports: ○ Litgrid has imposed a requirement to increase the zinc layer thickness of steel supports, which extends their service life by up to 1.5 times. During facility reconstruction, equipment that is still fit for use is allocated to a reserve and later utilized to replace failed equipment. Litgrid has not developed a specific action plan on resource use, circular economy, due to the as yet unidentified need (the specific nature of the Company's activities does not ensure a continuous and material flow of material resources (raw materials) and the directly related waste flow). Therefore, there are no actions, scope, timeframes, or financial resources foreseen in this area. E5-3 - Targets related to resource use and circular economy The Company has not set targets related to resource use, circular economy, and waste reduction, as it has not yet identified the need for targets due to the specific nature of its operations - fluctuating resource and waste flows. E5-4 - Resource inflows Litgrid requires the following real estate/fixed assets to operate and provide services: Electricity transmission lines (overhead lines (overhead) and cable lines (underground, underwater)), Transformer substations, Switchyards, Dispatch centre, Administrative premises. The majority of materials and equipment used by Litgrid are for infrastructure reconstruction, repairs, and new construction projects. These works are carried out, and the necessary materials are procured, by contractors, with certain exceptions. The majority of materials used include concrete, steel, aluminium, copper and their alloys, glass, as well as high-voltage electrical equipment composed of various metals, ceramics, oil, and SF₆ gas. In most cases, contractors do not purchase individual materials separately (with certain exceptions, such as for concreting work) but instead procure finished products, including reinforced concrete and steel supports, conductors, cables, equipment, and other components. The Company usually orders and purchases the final product - built or reconstructed overhead transmission lines, transformer substations, switchyards etc. For its operational activities, Litgrid purchases insulating oil to fill electrical equipment. MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 129 Materials used to provide services, t 2021 2022 2023 2024 Insulating oil for transformers 18,261 24,397 20,735 14,996 Note: Quantities are based on actual measurements - weighing on scales. Consumption of insulating oil is treated when the Company fills its equipment (transformers). Later, if it meets the requirements, it can be and is returned from the equipment to the warehouse. The Company cannot provide precise data for this return quantity. Litgrid does not directly purchase or use materials for providing services (the final product is purchased from contractors). The Company does not have any consumed materials, and therefore, does not provide information regarding their weight. E5-5 - Resource outflows The largest waste flows in the Company's operations are generated by the reconstruction of infrastructure, the dismantling of existing overhead and cable transmission lines, transformer substations, switchyards, and buildings related to the Company's operations. Construction and demolition waste account for more than 90% of all waste, with the main components being concrete and various metals, including metal structures, equipment, and cables. The waste contains metals such as steel, iron, aluminium, copper, and metal alloys, as well as oil products found in insulating oil. The largest portion of hazardous waste consists of insulating oil and hazardous components removed from decommissioned equipment. Most of the waste is metals, which are almost 100% recyclable. Concrete waste and insulating oil are also diverted for recycling. Information on recycling and treatment options is obtained from waste managers/collectors. Data is collected on the basis of waste transfer notes and other documents received from waste management companies cooperating with the Company. Concrete waste is transferred by the contractor for management, as this waste is generated during construction/reconstruction when dismantling existing structures. Litgrid does not include this waste in its accounting. Most of the waste generated by the Company's operations comes from the replacement of equipment, reconstruction or replacement of structures and infrastructure. The amount of waste generated is directly related to the number of reconstruction and repair projects. For the volume of equipment replaced in a given year, year-on-year comparisons are not appropriate for assessing trends as positive or negative, as the process is not a linear production cycle of "raw materials-products-waste". For this reason, the amount of waste generated may vary when comparing data between different years. Litgrid does not produce or market any products or packaging. Waste from own operations, tonnes 2021 2022 2023 2024 Total quantity 2,804.564 2,250.344 1,444.329 1,849.869 Hazardous 175.25 136.622 132,925 162.065 Non-hazardous 2,629.314 2,113.722 1,311.404 1,687.804 Notes: no radioactive waste is generated by Litgrid's operations. MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 130 Breakdown of waste diverted from disposal, tonnes 2021 2022 2023 2024 Total quantity 2,803.302 2,249.026 1,443.326 1,794.823 Hazardous 174.974 136.068 132.14 159.542 Non-hazardous 2,628.328 2,112.958 1,311.186 1,635.281 Recycling Total quantity 2,803.302 2,249.026 1,443.326 1,666.264 Hazardous 174.974 136.068 132.14 30.983 Non-hazardous 2,628.328 2,112.958 1,311.186 1,635.281 Other recovery operations Total quantity 0 0 0 128.559 Hazardous 0 0 0 128.559 Non-hazardous 0 0 0 0 Notes: no waste diverted to secondary use. Breakdown of waste directed to disposal, tonnes 2021 2022 2023 2024 Total quantity 1.262 1.318 1.003 55.046 Hazardous 0.276 0.554 0.785 2.523 MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 131 Non-hazardous 0,986 0.764 0.218 52.523 Incineration (with energy recovery) Total quantity 1.262 1.318 1.003 48.207 Hazardous 0.276 0.554 0.785 0.574 Non-hazardous 0.986 0.764 0.218 47.633 Landfill Total quantity 0 0 0 6.839 Hazardous 0 0 0 1.949 Non-hazardous 0 0 0 4.89 Note: The increase in the amount of waste disposed of in 2024 is related to the waste management provider's updated methods for handling accepted waste. Non-recycled waste, tonnes, % Non-Recycled Waste Total quantity, t. Share, % 2024 55.046 2.98 2023 1.003 0.07 2022 1.318 0.06 2021 1.262 0.04 Notes: * Non-recycled waste refers to the amount and proportion of waste directed for disposal within the total waste generated. 132 MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 133 22.4 S1 OWN WORKFORCE SBM-3, S1 SBM-3 – Material impacts, risks, opportunities, and their interaction with strategy and the business model The double materiality assessment of the EPSO-G group assessed all sustainability matters identified by ESRS across the EPSO- G group companies' value chain. The double materiality assessment and the stakeholder survey revealed that the themes 'child labour', 'forced labour' and 'adequate housing' are not relevant to EPSO-G's activities, and that the single theme 'health and safety' has been identified as having a material risk. The following are the material impacts and risks related to own workforce that occur in the Company's direct activities. Sustainability matter Impacts Risks and opportunities Location in the value chain Working time. Work-life balance Actual negative impact on workers working in outdoor conditions (non-administrative). - - Adequate wages Actual positive impact due to a transparent remuneration policy. - - Social dialogue. Freedom of association, the existence of works councils and the information, consultation and participation rights of workers Collective bargaining, including rate of workers covered by collective agreements Actual positive impact is created through open and proactive communication and contact with trade unions, works councils and workers. -* - Health and safety Potential negative health and safety effects on workers due to specific working conditions, in particular for those working in on-site and outdoor conditions. Risks arise from non-compliance with health and safety requirements. - Training and skills development Actual positive impact comes from the provision of internal and external skills (including soft skills) development programmes and job development programmes for employees across the Group. -* - Employment and inclusion of persons with disabilities Actual negative impact due to minimal inclusion of people with disabilities. - - Privacy Potential negative effects due to the improper processing of personal data, improper processing of personal data by third parties, and personal data breaches, which may adversely affect the rights of employees as data subjects. - - MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 134 *No significant risks and/or opportunities have been identified within the EPSO-G Group. Impact on sustainability issues arises directly from EPSO-G Group companies' activities, so the location of the value chain is not specified. S1-1 – Policies related to own workforce Litgrid's management of significant sustainability matters in this topic is based on the individual policies of the EPSO-G Group, which are described in the table below. These policies apply to all employees of the Company. Sustainability matter Description and policy Working time/ Work- life balance EPSO-G complies with the provisions of the Labour Code of the Republic of Lithuania, which lays down general working time norms, rest, working hours, and guarantees for employees, including the possibility of flexible and remote work. The EPSO-G group companies offer flexible working arrangements, hybrid working options (where the job allows) and have well-established internal remote working policies. This provides employees with the opportunity to achieve a more flexible work-life balance, to work flexible and convenient working hours, and to increase their intrinsic motivation. The hybrid working model and remote work possibilities are great advantage for candidates, and allows us to attract candidates from all over Lithuania and, in the future, abroad. This increases EPSO-G's visibility, reputation, and competitiveness in the recruitment market (where it can attract and retain staff at lower costs). Working time and work-life balance at EPSO-G are governed by these documents: EPSO-G Group's Equal Opportunities Policy – defines measures to adapt working conditions and match individual needs to work processes. EPSO-G Group's Remuneration, Performance Appraisal and Development Policy – provides for performance appraisal, development opportunities, employee well-being, and flexibility in working conditions to ensure a work-life balance. Litgrid's Procedures for the Prevention of Discrimination, Violence and/or Harassment, and Sexual Harassment – provides for the protection of employees from discrimination on the basis of family responsibilities and promotes a favourable environment for the reconciliation of work and private life. Litgrid's Internal Rules of Procedure – defining standard working hours and the flexibility to schedule the start and end of working hours, internal company rules and agreements, and employee and employer obligations. The Litgrid Rules for Remote Work designed to ensure flexible working opportunities for employees, regulate the procedure for granting and organising remote work, the rights and obligations of employees, including those related to information and cyber security, and other issues related to working remotely. Training and skills EPSO-G companies have a unified remuneration, performance appraisal and development policy that sets out principles for staff development, training: 1. The principle of linking EPSO-G and the Company's strategy, values, performance assessment, competency model, shift planning, professional and technical qualifications. 2. The principle of personal responsibility, where the employee is responsible for his or her own learning outcomes, with the employer providing the conditions and opportunities for learning and development. MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 135 3. The 70-20-10 principle, whereby 70% of development, improvement and learning activities come from the staff member's work experience, 20% from interaction and collaboration with colleagues and managers with diverse experiences and competences, sharing of best practices, and 10% from structured training events which are often external. Equal Opportunities and Diversity The EPSO-G Group's Equal Opportunities Policy ensures equal opportunities for all employees, regardless of disability, gender, age or other personal characteristics. It regulates the application of non-discrimination principles in the areas of employment, working conditions, professional development and career advancement, promoting an inclusive and respectful working environment. The policy ensures that all employees work in an equal opportunity and non- discriminatory working environment. EPSO-G has a Diversity and Inclusion Strategy which sets out objectives and measures to promote an inclusive environment for all employees. The aim of the strategy is to strengthen tolerance, inclusion and equal opportunities throughout EPSO-G. Employment and inclusion of people with disabilities Employment and inclusion of people with disabilities is described in the following EPSO-G Group documents: The EPSO-G Group's Equal Opportunities Policy defines principles that ensure equal opportunities for all employees, regardless of disability or other personal characteristics. EPSO-G's Diversity and Inclusion Strategy – setting out objectives and measures to promote an inclusive environment for all employees. Litgrid's Procedures for the Prevention of Discrimination, Violence and/or Harassment, and Sexual Harassment, which regulates measures to ensure a respectful and safe working environment for all employees. Adequate wages All EPSO-G employees are paid more than the minimum wage and companies comply with the Labour Code. EPSO-G Group companies have a unified remuneration, performance appraisal, and development policy, based on the principles of responsibility, transparency, and accountability. The aim of this policy is to ensure the effective management of payroll costs and to create motivating incentives so that remuneration is directly linked to the achievement of annual targets, quality, and the assessment of the values and behaviour of companies and individual employees. The policy provides for clear pay criteria, incentives, and performance evaluation processes. The remuneration system is clear, transparent, and based on staff performance, competency assessment, and individual objectives. This policy is approved or amended by the EPSO-G Management Board on the recommendation of the Remuneration and Appointments Committee of EPSO-G. Privacy The EPSO-G group of companies has a personal data protection policy based on the principles of the General Data Protection Regulation, which defines the measures taken by the EPSO-G companies to ensure the security of personal data processed and the roles and responsibilities of the parties involved in the protection of personal data. All EPSO-G companies have set out the requirements for the processing of personal data in more detail in their internal regulations. These documents, which are based on uniform principles, establish a consistent practice across EPSO-G companies when concluding MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 136 personal data processing agreements, transferring personal data to third parties, managing personal data security incidents, and other processes. We comply with the principle of accountability as set out in the General Data Protection Regulation (EU) 2016/679, which is why EPSO-G companies keep a record of their personal data processing activities, prepare privacy notices, and carry out and document the other actions required by the General Data Protection Regulation (EU) 2016/679, We manage personal data protection risks by implementing technical and organisational measures, conducting compliance audits to assess the adequacy of these measures, and unifying personal data protection processes across the Group. In 2024, 6 compliance audits on personal data protection were carried out in EPSO-G Group companies. They did not reveal any significant non-compliances but identified processes for improvement in relation to the implementation of data subjects' rights. Health and safety EPSO-G has an Occupational Health and Safety Policy, which 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 that promotes a safe and healthy environment in which every employee strives to contribute to this goal. Litgrid has an Occupational Health and Safety Management System in place and is ISO 45001 certified. Respect for human rights Litgrid is guided by international human rights standards, including the UN Guiding Principles on Business and Human Rights, the ILO Declaration on Fundamental Principles and Rights at Work, the United Nations Global Compact, and the OECD Guidelines for Multinational Enterprises. These principles are incorporated into the Company's internal documents and applied in day-to-day operations to ensure a respectful and tolerant working environment and corporate culture. The Company adheres to the highest standards of ethical behaviour and is committed to ensuring that the rights and freedoms of all employees are protected. In accordance with the EPSO-G Group Code of Conduct, we promote honest and transparent communication based on facts and respect for everyone. The Company is committed to: ensuring the dignity, privacy, and respectful treatment of staff in the work environment. acting in a socially responsible way and respecting human rights. avoiding any discrimination on grounds of ethnic origin, gender, sexual orientation, marital or social status, religious or political beliefs, nationality, disability, age, trade union membership, or any other grounds not directly related to the performance of the job. Applying the highest standards of reliability, integrity and transparency, even where the legal framework is not clearly defined. Litgrid prohibits any form of discrimination and does not tolerate any form of psychological violence, bullying or abuse of position. EPSO-G group respects and protects the rights of every employee, treats them with respect and fairness, provides safe working conditions that meet their needs, promotes the personal and professional development of employees, and does not discriminate against them in any form. The Company ensures that employees have easy access to all documents relating to their rights in the management system and on the intranet. Litgrid complies with legal requirements prohibiting child, forced or compulsory labour. It is important to note that the Company's main operations are in Lithuania, where the risks of forced and child labour are low. Litgrid integrates human rights principles into its supply chain management, ensuring that suppliers comply with commitments on MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 137 occupational safety, prevention of forced labour and prohibition of child labour. The principles of human rights protection are set out in the Supplier Code of Conduct. These principles are regularly reviewed and integrated into the processes of engagement with partners. The mechanisms that are in place within the Company through which employees can raise concerns on this topic are described in more detail in section S1-3 – Processes to remediate negative impacts and channels for own workers to raise concerns. Employee involvement and equal opportunities The Company is bound by the EPSO-G and Litgrid Codes of Ethics and Conduct, the EPSO-G Group Equal Opportunities Policy, Litgrid's Equal Opportunities Procedures, and the Procedures for the Prevention of Discrimination, Violence and/or Harassment and Sexual Harassment. Through these documents, Litgrid is committed to preventing discrimination, promoting equal opportunities, and encouraging diversity and inclusion. EPSO-G's Diversity and Inclusion Strategy sets out to create a work culture where every employee feels respected and valued. The objectives of this strategy include strengthening the competences of managers by creating an inclusive working environment, including people from different groups in the labour market, and applying transparent and objective selection processes in line with the EPSO-G Group's selection policy. The Company encourages employees to take part in inclusion initiatives, such as sharing stories and internal training, which contribute to a tolerant and open environment. We create an inclusive working environment where all employees have equal opportunities to participate in work processes and decision-making, regardless of their personal characteristics. Litgrid prohibits any form of discrimination, including discrimination on the grounds of race, nationality, gender, sexual orientation, disability, age, religion, political opinion, social status, or any other grounds not directly related to the performance of work. Litgrid's Equal Opportunities Procedure also details the obligation to provide training to employees on equal opportunities, inclusion, prevention of discrimination, and other related topics. Commitments to the inclusion of vulnerable groups The Company has specific commitments related to inclusion of vulnerable groups, which are enshrined in the EPSO-G Group's Equal Opportunities Policy, EPSO-G's Diversity and Inclusion Strategy, and other documents. The Company aims to enable people with disabilities to apply for positions, work and develop, and to provide opportunities for employees to reconcile work and family life through flexible working conditions. It promotes gender equality, including women in leadership positions, and the integration of older employees and employees of different nationalities. The Company also organises training on the prevention of discrimination, inclusion and the prevention of psychological violence at work. S1-2 – Processes for engaging with own workers and workers’ representatives about impacts Litgrid ensures that employees have the opportunity to actively participate in shaping working conditions, express their needs, and receive feedback. The Company has a trade union that represents employees' interests and participates in decision-making processes. A collective agreement is signed with the trade union, providing for information, consultation, and negotiation mechanisms. The trade union has the right to initiate discussions on organisational changes, changes to the wage system, social guarantees, or other issues affecting workers' rights. Employees are able submit proposals to the trade union, which are forwarded to the Company. This ensures that employees' views are heard and taken into account in the decision-making process. The collective agreement stipulates that the employer must consult and coordinate decisions with the union on the following issues: the draft strategy and annual plan, personnel policy, aspects of the implementation of the collective agreement, and budget allocation. In addition, employees can express their views directly and be involved in decision-making through various channels. The annual engagement survey allows employees to assess their working environment, equality of opportunity, communication culture, and their level of empowerment. The results of the survey are used to make decisions on how to improve working conditions. Employees also participate in annual interviews with their managers to discuss their work objectives, career, and development opportunities and challenges. There is also an annual emotional well-being survey, where staff can rate how they feel and express their views on specific subjects. A quarterly general staff meeting is held where employees can ask questions or share their views. This promotes a culture of open MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 138 dialogue and communication within the Company. S1-3 – Processes to remediate negative impacts and channels for own workforce to raise concerns Litgrid has clear mechanisms in place to address potential negative impacts on its workforce and to provide opportunities for employees to raise concerns or needs. Employees have several ways to report possible discrimination, human rights violations, or other concerns. Helpline Employees can report possible discrimination, violence or human rights violations anonymously or by disclosing their identity through this hotline. When a report is received, a committee is set up to investigate, information is gathered and, if necessary, protective measures such as suspension or reassignment are taken. Where a breach is identified, corrective measures such as additional training, educational events and review of processes are implemented to prevent recurrence. To date, no human rights violations have been identified in the Company. All reports are analysed and their validity assessed by monitoring the number of reports, the results of the engagement survey, and other surveys. An anonymous employee corruption tolerance survey in 2024 showed that 93% of employees were aware of the Helpline. Other channels Litgrid has established various channels through which employees can directly contact and express their concerns. These include an email channel, an online reporting form, the possibility to send information by post, or to directly contact the responsible persons in the Company - there is also the possibility to contact the Head of People and Culture, and a line manager. Employees can also contact the trade union, which will pass on their suggestions and observations to the management where applicable. Litgrid has a procedure for recording, investigating, and notifying breaches of employee duties, which states that an employee who receives information about a possible breach of another employee's work duties must immediately inform the employee's direct supervisor in writing or by e-mail about the possible breach of the employee's work duties. The immediate supervisor shall inform the employer by means of an official notification that an investigation is necessary, providing all known facts and evidence. All these channels are available to any employee(s) and can be used both anonymously and by revealing their identity. Litgrid shall ensure that employees are informed about the available reporting channels and how they work (for example, Litgrid's description of procedures for the prevention of discriminatory violence and/or harassment and sexual harassment lists specific channels with links of where to go). All employees have access to key internal legislation through the Document Management System, and information on communication channels is regularly updated on the Intranet, on Lean Cards, and on the websites of the responsible units on the Intranet. The Company ensures that the Helpline and other reporting channels are effective and comply with international human rights standards. All communications are recorded and systematically monitored, feedback is gathered through employee surveys and annual engagement surveys, and the effectiveness of the handling of communications is analysed to identify opportunities for improvement. Litgrid is committed to ensuring that its complaint handling processes are transparent, clear and provide sufficient information for both complainants and the public interest. The company also has a policy to protect against retaliation. The description of the procedures for the implementation and operation of internal reporting channels clearly states that Litgrid ensures the confidentiality of the reporting person and additional guarantees. It is forbidden to have a negative impact on the whistleblower, as well as his/her family members or colleagues. If the employee meets the conditions set out in the Whistleblower Protection Act, his/her report shall be immediately forwarded to the Public Prosecutor's Office of the Republic of Lithuania. S1-4 – Taking action on material impacts on own workforce, and approaches to managing material risks and pursuing material opportunities related to own workforce, and effectiveness of those actions Litgrid's key actions are planned for consistent and continuous implementation, with a particular focus on annual performance reviews and strengthening employee engagement. MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 139 Diversity, inclusion, and equal opportunities During the year under review, the Company carried out various actions to strengthen inclusion and equal opportunities. Employee training programs, internal and external communications on relevant topics (such as the employment of senior professionals, gender diversity, and women in engineering), Equal Opportunities Awareness Days, Equal Opportunities Month, and internal articles on company culture and shared values have all been implemented. These initiatives were in place to remind employees of the desired behaviours and attitudes in the work environment. These actions will continue in the future. Employee engagement surveys are also planned to be carried out annually, the results of which will be used for further action planning. All of this activity contributes to raising the awareness and commitment of employees to the principles of equal opportunities in the workplace. The strategic actions implemented are geared towards enhancing employee well-being and inclusiveness: EPSO-G's Diversity and Inclusion Strategy was launched in 2024 and will be reviewed every three years (with the aim of promoting equality and inclusion in all areas of the Company's activities). The Company's Equal Opportunities Month and its dedicated events and activities are now in their fifth year, with a dedicated month in November and additional training and activities throughout the year. The Company conducts employee engagement surveys in January each year, the results of which are analysed and integrated into business planning in the first quarter of the year. Litgrid also promotes employee engagement through a voluntary initiative, the Equality Embassy, which promotes emotional well-being, discrimination prevention, and inclusion. The Equality Embassy prepares annual plans and actions on equal opportunities. This topic is overseen and coordinated by the People and Culture department. Litgrid conducts an annual survey on emotional well-being, and monitors the gender balance across different positions. The EPSO-G strategy also sets out specific actions to protect vulnerable groups, including adapting the working environment for people with disabilities, ensuring gender equality, in particular by promoting women in leadership positions, and strengthening the integration of senior workers and workers of different nationalities. In 2024, job advertisements began listing position titles in the female gender, with the male gender in parentheses – this approach aims to attract the underrepresented gender within the Company. The Company runs a number of initiatives and training sessions on equal opportunities, diversity, and discrimination every year. The role of women in engineering and energy, and the recruitment of senior workers are actively discussed in external social networks, with the aim of gradually changing attitudes towards the energy and engineering professions. The Company aims to reduce the gender imbalance across EPSO-G over the next few years, aiming to achieve a 30/70 gender ratio by 2027 and to increase the number of women in top management to at least 21%. To implement these measures, the Company is reformulating job advertisements, promoting the participation of women in the engineering and energy fields, and organising training and initiatives to promote inclusion. Litgrid pays special attention to the recruitment of employees with disabilities - the equal opportunities policy is clearly communicated in advertisements, and in 2024 Litgrid took part in a training course on the recruitment of people with disabilities organised by SOPA, the social employment agency. In November 2024, an event on disability was organized within the Group to provide a closer understanding of the topic. In 2025, participation in the ‘DUOday’ initiative (job shadowing initiative) is foreseen, where people with disabilities can get a closer look at the profession(s) they are interested in. In 2024, the Company trained its employees in e-learning on the prevention of psychological violence and discrimination, which is also mandatory for all new employees. In addition, a lecture on neurodiversity was organised and the exhibition of illustrations ‘Autism - part of me’ was on display at the central office. In 2024, training on effective communication and feedback was also provided, and the knowledge gained was deepened and put into practice in practical discussion group meetings at the Central Office. In 2024, a new e-learning course ‘Diversity and Inclusion: Equal Opportunities at Work’ has been developed, which deals with discrimination on various grounds (age, gender, disability, etc.) and its prevention. Approximately 50% of the Company's employees had completed this training by the end of 2024 and 80% of the Company's employees by the end of January 2025. New recruits are also required to undergo this training, thus ensuring that all employees have the same level of knowledge on this important topic. In October-November 2024, the Company participated in the Inclusive Communication training organised by the Diversity Charter, completing practical exercises and receiving evaluations and feedback. To date, the Company has not identified any actual cases of significant impact requiring remediation for the affected employees (no substantiated cases of discrimination recorded by Litgrid in the period 2021-2024). However, there are effective mechanisms MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 140 in place to deal with such cases should they arise (the existing mechanisms are described in detail in S1-3 – Processes to remediate negative impacts and channels for own workforce to raise concerns). The Discrimination, Violence and/or Harassment and Sexual Violence Prevention Procedures are also in place to ensure that all potential incidents are dealt with promptly and resolved with the necessary support. All reports are logged, analysed and used to review and improve relevant policies and processes. If necessary, the Company offers psychological support, adjustments to working conditions, and other assistance measures Training and skills development In 2024, the Company implemented the Future Competences mapping exercise with EPSO-G. In order to ensure that the Company's employees acquire the competences needed to achieve its strategic objectives for the future, the relevant agreed actions are planned to be implemented in 2025 and beyond. During the year under review, training was provided to all staff on a wide range of topics, including on variousIT tool, digitisation, innovation, legal knowledge and career planning. In addition, specialised training such as contract management or English language development was provided for targeted groups of employees. In 2025, it is planned to implement general and leadership competency enhancement programmes and a mentoring programme to promote the professional growth of employees. Working time/Work-life balance Managing working time and overtime is a priority - employee schedules are regularly monitored, the causes of overtime are assessed and, where necessary, the organisation of work is reviewed. Staffing levels are increased where necessary. Only limited overtime due to objective circumstances is tolerated. Long-term changes to the business model in this area are difficult, but short- term mitigation measures are in place. Health and safety Litgrid regularly carries out risk assessments and implements preventive measures in response to reported incidents. All hazardous incidents are logged, their causes are analysed, and appropriate recommendations are made to those responsible. Occupational safety violations are reported to department heads or contractors' representatives. Internal and external audits are carried out regularly to prevent accidents. In addition, the Company provides employees with supplementary health insurance. An integrated occupational safety and health information system covering all safety measures and their management has been in place since 2024. Workers are familiarised with factory instructions for the use of equipment and, from 2025, internal regulations will be amended to provide for periodic familiarisation with these instructions. Occupational risks in the workplace are regularly assessed and workers are provided with personal protective equipment. Every worker has the opportunity to report incidents in accordance with established procedures for recording and investigating incidents. Following the investigation of incidents, preventive measures are implemented as necessary to avoid accidents. Only persons aged 18 or over may work on operating electrical installations, and no younger workers are accepted. Workers' knowledge is checked before they are allowed to work on operating installations and their qualifications are periodically upgraded depending on the nature of the work to be carried out, between 20 and 24 hours per 5 years. All employees undergo periodic health checks and receive vaccinations for communicable diseases. Privacy In 2024, training on the General Data Protection Regulation (EU) 2016/679 was organized for the staff of the People and Culture Unit. Additionally, a regular information campaign was held addressing all employees, along with reminders about the rules on personal data protection. The audits carried out in 2023 did not reveal any significant irregularities related to personal data protection. The protection of personal data is ensured by documenting processing activities, conducting impact assessments, checking technical and organisational security measures, managing risks and dealing with data breach incidents. Strategic plans In 2025, EPSO-G plans to sign the Diversity Charter, further reinforcing its commitment to diversity and inclusion. A mentoring programme will be introduced to promote the internal potential and professional growth of employees. MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 141 Employee welfare programs will continue to expand, incorporating additional health and psychological support initiatives. Communication channels, such as the intranet and company websites, will also be enhanced to ensure all staff have access to clear information on the challenges and progress of ongoing activities. Litgrid is committed to continuously learning from its performance and improving processes to further enhance the positive impact on employees. Effectiveness of actions The effectiveness of the actions is measured through employee engagement surveys, questionnaires and report analysis. The results show that the initiatives are effective and opportunities for improvement are identified based on employee feedback and data, e.g., in 2022, 90.5% of employees agreed with the statement that the Company applies principles from Equal Opportunities Policy, while in 2023 this indicator was 90.29%. During 2021-2024 there were no substantiated cases of discrimination recorded by Litgrid, which indicates effective prevention and implementation of the policy. Resources to manage significant impacts Litgrid dedicates both financial and human resources to effectively manage the significant impact on its workforce. The People and Culture department plays a key role in ensuring equal opportunities and psychological safety, as well as employee training. To ensure the well-being of employees, an annual budget is approved, which includes allocations for health insurance, benefits, a training allowance, and salary increases. S1-5 – Targets related to managing material negative impacts, advancing positive impacts, and managing material risks and opportunities The Company's objectives are directly linked to the EPSO-G's strategic goals of promoting diversity and inclusion, creating a unified organisational culture, and developing employee competences and engagement. These objectives are aligned with the policies. EPSO-G has the following measurable objectives for the period 2025-2027: Diversity, inclusion, and equal opportunities The percentage of female employees in EPSO-G: 25% in 2025, 30% in 2027 (base year: 24% in 2024) Women in top management positions in the EPSO-G Group: ≥ 21% (base year: 12% in 2024) Share of employees in the under-30 and over-60 age groups: 15% in each group (base year values: 11% in the under- 30 age group, 10% in the over-60 age group in 2024) Proportion of employees with disabilities: ≥ 1% in 2025, ≥ 4% in 2027. Employee Engagement Survey index ≥70% (base year: 74% in 2024). Training and skills development 70% of critical positions are filled by internal candidates (base year: 65% in 2024). All critical positions have at least one shift candidate. Ensure 100% success rate in recruiting to the required positions (same base year value - the aim is to maintain the same level). The targets apply to all the Company's activities and to all employees. Progress against all of the targets is measured against the indicators set out in the EPSO-G indicator monitoring system, and the results are recorded in quarterly and annual reports. The data is intended to be compared with the baseline indicators for 2024 to ensure consistent achievement of the objectives. Involving staff in the target-setting process The company encourages active employee participation in setting objectives and deciding on important issues to ensure open dialogue and transparent decision-making: once a year, annual and semi-annual interviews are held where staff discuss their annual objectives with their managers and raise issues of concern; the trade union organises meetings with its members, inviting suggestions and discussions on issues of importance to employees, which are then passed on to Litgrid representatives; MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 142 the Equality Embassy, a voluntary employee initiative, also contributes to the formulation and implementation of the objectives by ensuring the empowerment of employees and the reduction of negative impacts. Monitoring performance Progress towards the Company's objectives is presented at quarterly staff meetings, where top management presents performance results. The implementation of the targets is monitored against set indicators. The Company ensures that processes for setting, monitoring, and improving targets are systematic, based on reliable indicators and closely linked to the involvement of employees and their representatives. S1-6 – Characteristics of the undertaking’s employees Litgrid's headcount has grown steadily between 2021 and 2024. The main reason for this growth was the increasing number of functions and responsibilities of the Company, arising both from the requirements of national and international legislation and from the specific nature of the Company's operations. This includes, for example, the preparation of synchronous operation with the Continental European grids, as well as the rapidly growing Renewable Energy Sources (RES) sector and other challenges related to this area. Employee breakdown by gender Gender Number of employees (head count) 2024 2023 2022 2021 Male 332 307 297 255 Female 126 111 94 80 Other 0 0 0 0 Not reported 0 0 0 0 Total Employees 458 418 391 335 Notes: The table shows the number of staff at the end of the reporting period - 31 December. The number of staff is shown without taking into account the head count. The number of employees reported in the Company's financial statements: 2024: In the Financial Statements section of the Management Report, under the chapter General Information. 2023: In the Financial Statements section of the Annual Report, on page 100. 2022 – 2021: In the Financial Statements sections of the Annual Report, under the chapters Remuneration Policy and Employees, in the subsections Employees, where the number of employees is provided; however, the gender breakdown is not detailed. (): Gender as specified by the employees themselves. MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 143 Employee breakdown by gender and by employment contract (2024, 2023) 2023 2024 Number of employees Number of employees FEMAL E FEMAL E MAL E OTHE R () NOT DISCLOSE D FEMAL E FEMAL E MAL E OTHE R () NOT DISCLOSE D Number of employees 126 332 0 0 458 111 307 0 0 418 Number of permanent employees 126 331 0 0 457 106 306 0 0 412 Number of temporary employees 0 1 0 0 1 5 1 0 0 6 Number of non- guarantee d hours employees Not applicable Notes: The number of staff at the end of the reporting period - 31 December. (): Gender as specified by the employees themselves. MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 144 Employee breakdown by gender and by employment contract (2022, 2021) 2022 2021 Number of employees Number of employees FEMAL E FEMAL E MAL E OTHE R () NOT DISCLOSE D FEMAL E FEMAL E MAL E OTHE R () NOT DISCLOSE D Number of employees 94 297 0 0 391 80 255 0 0 335 Number of permanent employees 92 296 0 0 388 80 253 0 0 333 Number of temporary employees 2 1 0 0 3 0 2 0 0 2 Number of non- guarantee d hours employees Not applicable Notes: The number of staff at the end of the reporting period - 31 December. (): Gender as specified by the employees themselves. Employee turnover Employees who left Rate of employee turnover 2024 41 0,09 2023 58 0,14 2022 34 0,09 2021 26 0,08 Notes: Employees who left voluntarily or were dismissed, retired or died in the line of duty. Calculation method: by number of employees. ** Number of resignations or redundancies divided by the total number of employees MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 145 In 2023, a higher employee turnover rate was recorded, as Litgrid grew strongly during this period, recruited a significant number of employees, and also experienced a number of voluntary redundancies compared to other years. S1-7 – Characteristics of non-employees in the undertaking’s own workforce Workers who are not employees Number of non-employees 2024 0 2023 0 2022 0 2021 0 Notes: * Definition of non-employees used: people with contracts with the undertaking to supply labour (‘self-employed people’) or people provided by undertakings primarily engaged in ‘employment activities’ (NACE Code N78). The Company does not have any such employees. S1-8 – Collective bargaining coverage and social dialogue The Company's collective bargaining agreement applies to all employees. The Company does not have any agreements with its salaried employees regarding their representation on the European Works Council, the Works Council of a European Company (‘SE’) or the Works Council of a European Cooperative Society (‘SCE’). Collective bargaining coverage and social dialogue Collective Bargaining Coverage Social Dialogue 2024 Coverage Rate Employees - EEA (for countries with >50 employees, representing >10% total employees) Employees - Non-EEA (estimate for regions with >50 employees, representing >10% total employees) Workplace representation (EEA only) (for countries with >50 employees, representing >10% total employees) 0-19% - Not applicable - 20-39% - - 40-59% - - 60-79% - - 80-100% Lithuania (100%) Lithuania (100%) Note: EEA stands for European Economic Area. The company has no employees outside the EEA. S1-9 – Diversity metrics MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 146 Gender Distribution at Top Management Level Gender distribution at top management level 2024 2023 2022 2021 Number Percentage Number Percentage Number Percentage Number Percentage Male 10 2.18 8 1.91 9 2.30 7 2.09 Female 0 0 0 0 0 0 0 0 Total 10 2.18 8 1.91 9 2.30 7 2.09 Note: The definition of top management is: the Head of the Company, heads of departments and centres. Distribution of Employees by Age Group Age Group 2024 2023 2022 2021 Number of employees Percentage of total employees Number of employees Percentage of total employees Number of employees Percentage of total employees Number of employees Percentage of total employees Under 30 years old 47 10.26 48 11.48 40 10.23 41 12.24 30-50 years 311 67.90 277 66.27 263 67.26 210 62.69 Over 50 years old 100 21.83 93 22.25 88 22.51 84 25.07 Total 458 100 418 100 391 100 335 100 S1-10 – Adequate wages All salaried employees of the Company are paid a fair wage in line with applicable benchmarks. Taking into account legislation and market indicators, the appropriate wage in the Republic of Lithuania in 2024 was EUR 924 per month gross (minimum monthly wage, MMA). S1-11 – Social protection All Litgrid, employees are covered by social protection against loss of income due to the following major life events: Diseases; Unemployment that starts when the worker works for the company; Accidents at work and acquired disabilities; Parental leave; Retirement. Under the collective agreement, retirement benefits are higher than those laid down in the Labour Code, depending on length of service. MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 147 S1-12 – Persons with disabilities Proportion of workers with disabilities 2024 2023 2022 2021 Percentage of Employees with Disabilities Total amongst all employees 0.2 0.2 0.5 0.6 Notes: data is based on information provided by employees, subject to restrictions on the collection of such information. S1-13 – Training and skills development metrics Percentage of employees that participated in regular performance and career development reviews 2024 2023 2022 2021 Percentage of employees that participated in regular performance and career development reviews Total, out of which: 90 99 95 97 Male 99 100 100 98 Female 63 95 77 98 Note: Due to exceptional, unusual cases, some staff members did not meet the annual targets or left before they had set them, so that in some cases the percentage of staff members does not reach 100%. Average number of training hours per employee and by gender 2024 2023 2022 2021 Average number of training hours per employee Total, out of which: 19 17 24 22 Male 20 16 23 18 Female 18 18 27 31 Note: Actual training hours for staff who have attended training are calculated excluding participants who have viewed training records. MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 148 S1-14 – Health and safety metrics Litgrid's Health and Safety Management System, based on legal requirements and recognised standards, applies to all employees. Health and safety indicators 2024 2023 2022 2021 Employees of the Company: The number of fatalities as a result of work- related injuries and work-related ill health 0 0 0 0 The number of recordable work-related accidents 0 0 0 0 Total annual hours worked by all employes 870364,00 961744,00 864887,00 770187,00 Recordable work-related accident rate 0 0 0 0 The number of cases of recordable work-related ill health 0 0 0 0 The number of days lost to work-related injuries and fatalities from work- related accidents, work- related ill health and fatalities from ill health 0 0 0 0 Non-employed personnel classified as part of the Company's workforce. Number of work-related fatalities and occupational health incidents involving non- employed personnel at the Company's operational sites. 0 0 0 0 MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 149 S1-15 – Work-life balance metrics Percentage of employees that took family-related leave broken down by gender Percentage of entitled employees that took family-related leave 2024 2023 2022 2021 Total, out of which 6.33 4.78 4.09 4.78 Male 3.93 2.63 3.32 3.29 Female 2.40 2.15 0.77 1.49 Note: In accordance with the social policies of the Republic of Lithuania, all employees of the Company are entitled to family leave. S1-16 – Remuneration metrics (pay gap and total remuneration) Gender pay gap Gender Pay Gap (%) 2024 2023 2022 2021 Total 12.77 14.84 13.86 11.71 Notes: * Formula for calculating the gender pay gap: (Average hourly earnings before tax of male employees - Average hourly earnings before tax of female employees) / Average hourly earnings before tax of male employees 𝑥 100) Total remuneration ratio The annual total remuneration ratio of the highest paid individual to the median annual total remuneration for all employees (excluding the highest-paid individual) * 2024 3.13 2023 3.10 2022 3.24 2021 2.77 Notes: * Formula used to calculate the total remuneration ratio: Annual total remuneration of the highest paid person in the company / Average annual total remuneration of salaried employees (excluding the highest paid person) S1-17 – Incidents, complaints, and severe human rights impacts No incidents of discrimination, including harassment, were reported in 2024. During the reporting period, 4 reports of possible illegal activities were received through the complaint channel of the Helpline. Verifications of the information provided revealed that the allegations made in these reports were unsubstantiated and, therefore, no internal investigations were launched. MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 150 The Company also discloses that no fines, penalties or damages were imposed in 2024 as a result of the above communications. All incidents and complaints are recorded in the relevant Litgrid registers. The Company discloses that there were no major human rights incidents in 2024, including forced labour, human trafficking, or child labour. Nor were there any cases found that were inconsistent with the UN Guiding Principles on Business and Human Rights, the ILO Declaration on Fundamental Principles and Rights at Work or the OECD Guidelines for Multinational Enterprises. As no such incidents have occurred, the Company has not incurred any fines, penalties or compensation for human rights violations. 22.5 S3 AFFECTED COMMUNITIES SBM-3 – Material impacts, risks, opportunities, and their interaction with strategy and business model The nature of the sector and the activities that the Company engages in naturally have a certain impact on local communities. As Litgrid's operational processes often involve the creation of physical infrastructure, this may cause temporary but significant inconvenience to the surrounding areas. Such impacts may include noise, dust generation, traffic restrictions or temporary disruption of transport links. The Company understands the importance of these impacts to communities and makes every effort to minimise them by planning the works responsibly, applying environmental measures, and informing communities of potential changes and planned works. The impact of the Company's activities was identified in relation to noise from transformer substations. Complaints have been received from residents, even in cases where noise levels remain within permissible limits. Significant impacts related to communities Sustainability theme Impacts Risks and opportunities Location in the value chain Communities’ economic, social and cultural rights The actual negative impact arises from the industry and the Company's direct activities, which inherently affect communities (e.g., noise, dust, or traffic restrictions). - - No significant risks/opportunities identified. The impact arises from the direct activity and therefore the location of the value chain is not specified. S3-1 – Policies related to affected communities Litgrid applies the following policies to ensure responsible operation, minimise negative impacts and manage positive impacts on all affected communities: EPSO-G Group's Aid and Humanitarian Aid Policy. The aim is to develop cooperation with the communities in which the activities, projects and programmes are carried out, as well as with other groups in society whose interests may be affected by these activities. Particular attention is paid to initiatives aimed at improving the well-being of the communities in the area where the companies operate. EPSO-G also encourages voluntary and unpaid involvement by employees. EPSO-G's communications department is responsible for implementing this policy commitment. Transparency and Communication Policy of the EPSO-G Group. One of the objectives of this policy is to increase the awareness and understanding of interest holders of EPSO-G, its values, its significance, the benefits it creates, the MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 151 strategic projects it undertakes, and their objectives, the motives behind its decisions, and to build the confidence of the communities in EPSO-G companies. The Manager and the Communications Department are responsible for the implementation of this policy commitment within the Company. EPSO-G Group's Environmental Policy. The aim is to ensure zero tolerance for environmental pollution and create a culture of zero environmental incidents, and to provide opportunities for local communities and other interested parties to participate in environmental impact assessment procedures. The implementation of this policy is the responsibility of the Group's corporate managers and Environmental Functional Mentors, who ensure that environmental aspects are identified in a timely manner, environmental objectives are set, plans are developed, targets are set for environmental improvement and sufficient resources are allocated to their implementation, results are monitored periodically, and the processes, technologies and working methods used are audited. EPSO-G Group's Sustainability Policy. It promotes transparent and fair cooperation with stakeholders to implement sustainable business solutions and actively involve society in sustainability initiatives. The Group's Corporate Managers and Sustainability Functional Area Mentors are responsible for the implementation of this Policy. Information on policy implementation and updates is provided to communities through the website, social media, and face-to-face meetings with stakeholders. This ensures transparency and accessibility of the policy to different audiences. To date, no cases of non-compliance with these principles or standards have been reported to Litgrid at the operational level or upstream and downstream of the value chain in relation to affected communities. S3-2 – Processes for engaging with affected communities about impacts Litgrid involves affected communities in decision-making processes through project management. Projects are presented to local governments and communities, meetings are organised with community leaders and mayors, and information is provided to local media. Before the works start, Litgrid representatives visit municipal offices to present the work plans, deadlines, and point of contacts for any inconvenience to the residents. During the works, the contractors inform the communities in advance about the ongoing projects and the timing of the works is coordinated with the residents. The Company assesses the effectiveness of the engagement with affected communities, taking into account whether the issues have been resolved, and takes action until the issue is resolved. In the Company, ensuring that engagement processes are in place and that their results are fed into decision-making is delegated to the managers in charge, who ensure that community representatives are involved in consultation and information processes. The aim is that the Company's engagement tools are designed for and accessible to all members of the affected community. S3-3 – Processes to remediate negative impacts and channels for affected communities to raise concerns Litgrid enables the identification, management and, where necessary, remediation of negative impacts on affected communities. The Company ensures that affected communities have the opportunity to report problems and monitor the progress of their resolution. Reporting of potential negative impacts can be done through the following channels: general contacts and email: pranesk@epso-g.lt or pranesk@litgrid.eu (Helpline) on Litgrid's website; an anonymous ‘Ask a Question’ messaging system on the Company's website; during the publicity of the projects when residents, mayors, and community leaders are given the contact details of the responsible project managers. The Company continuously monitors the issues raised and their progress to ensure the effectiveness and transparency of the channels. Analysis of the messages allows us to assess how quickly and efficiently issues are being addressed. The Company seeks to remedy significant negative impacts on affected communities through both technical measures and active dialogue with the community. For example, meetings have been held with the affected community where residents have been able to voice their concerns and discuss possible measures. Technical measures included the installation of sound insulation walls and the optimisation of equipment operation to reduce noise during peak hours. Following the installation of the sound insulation walls, noise measurements were carried out and additional meetings with the community were organised to make sure that the residents noticed the improvement and that the remedy was effective. MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 152 Litgrid also applies measures to ensure the confidentiality of reports and the protection of reporting parties. It also ensures that reports can be made anonymously and that personal data is protected. S3-4 – Taking action on material impacts on affected communities, and approaches to managing material risks, pursuing material opportunities related to affected communities, and effectiveness of those actions The Company applies and implements various measures to minimise the impact on affected communities: During construction, noise is managed by limiting working hours, controlling the movement of construction vehicles and using equipment that is in good working order; In response to community concerns about noise, the feasibility of physical barriers is being assessed in the planning of infrastructure upgrades; When the noise exposure is short-term, notifications are sent to surrounding communities about the higher noise levels at a specific time interval; Continuous and periodic noise measurements at substations. Advance planning and the application of restrictions help to minimise negative impacts on both the natural environment and nearby residential areas. The Company's noise and electromagnetic field (‘EMF’) management standards are more stringent than those set by external legislation: Noise management: from 2023 onwards, new and reconstructed sites with noise sources must not exceed a night-time noise level of 42 dB, which is 3 dB below the legal limit. EMF management: starting from 2023, 330 kV overhead transmission lines have been under reconstruction. The electromagnetic field magnitude in the protection zones is limited to 5 kV/m and it is ensured that the EMF after the reconstruction is not higher than before the reconstruction, although the legislation does not provide for such a limitation in the protection zones of the overhead lines. Construction and reconstruction of tracks has negative impacts in terms of noise and dust, but all projects are carried out in compliance with legal requirements and within the permitted. In the case of impacts on communities, the Company collects and analyses data and information, summarises it, and assesses whether these impacts pose a risk, which need to be included in a risk management plan with appropriate measures. The issue shall be presented to management and a decision on the action to be taken shall be taken by the Management Board or the head of the responsible department. Communities are involved in decision-making at all stages, from initial measurements to the implementation of mitigation measures and the evaluation of their effectiveness. Information on actions is provided to the authorities and local authorities. Under appropriate conditions, such as confirmed exceedances of noise limits, the Company initiates investment projects to manage and mitigate significant impacts. These projects can involve significant financial resources, which can amount to several million euros. For example, noise barriers have been erected in the Alytus district to reduce noise levels and ensure environmental standards. S3-5 – Targets related to managing material negative impacts, advancing positive impacts, and managing material risks and opportunities The Company has not set specific, measurable, time-bound, and results-oriented targets for reducing negative impacts on affected communities. However, in order to ensure effective impact management, Litgrid continuously monitors and analyses the state of the environment, investigates complaints and reports received, and based on the collected data, looks for improvement opportunities and implements preventive measures. The Company aims to ensure that noise levels remain within the applicable limits under a wide range of conditions (weather conditions, loads). The Company is constantly monitoring the situation and assessing the effectiveness of the measures: MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 153 Monitoring the nature and dynamics of complaints registered by communities; Periodic noise measurements at substations; Analysing the ways in which the issues raised by communities have been addressed and the effectiveness of mitigation measures. 22.6 S4 CONSUMERS AND END-USERS SBM-3, S4 SBM-3 – Material impacts, risks, opportunities, and their interaction with strategy and the business model To properly meet shareholder expectations and stakeholder needs, EPSO-G operates in a way that ensures a continuous supply of services. EPSO-G companies operate on a B2B basis and consumers and end-users of EPSO-G services are, to a large extent, reached indirectly (through the energy transmission and exchange operator). EPSO-G does not supply products to the market. Full details of the strategic objectives, performance indicators, and management principles for accessibility across the EPSO-G Group can be found in the section ‘Operational strategy and progress on implementation’ of the EPSO-G 2024 Management Report. Litgrid's business model also includes responsibility for the availability of information and its impact on direct consumers and end- users. In order to ensure transparency and sustainability, the Company consistently manages this aspect through its long-term strategy and implementation of legislation. By maintaining high standards of disclosure, the Company ensures that the public and stakeholders receive clear, timely, and reliable information. The Group's double materiality assessment evaluated all sustainability matters identified by ESRS across the EPSO-G value chain. The preliminary assessment of the matters, the double materiality assessment, and the stakeholder survey revealed that the matters 'privacy', 'freedom of expression', 'health and safety', 'personal security', 'child protection', 'non-discrimination', 'responsible marketing' are not related to EPSO-G's corporate activities or to the significant impacts, risks, and opportunities. The matter 'access to (quality) information' and 'access to products and services' have not been identified as having any significant risks and/or opportunities for EPSO-G. The following are the EPSO-G significant impacts on consumers and end-users. Sustainability matter Impacts Risks and opportunities Location in the value chain Access to (high-quality) information Potential negative impacts on consumers and end-users arise from late or overly bureaucratic provision of information on. Mismanagement in this area can have a negative impact on stakeholders. - - Access to products and services Potential negative impacts could arise through the value chain due to inadequate infrastructure in peripheral areas, disruptions to the transmission system, fluctuations in energy prices due to the impact of excessive costs of ifrastructure upgrades on transmission tariffs, etc. - Downstream No significant risks/opportunities identified. The impact arises from the direct activity and, therefore, the location of the value chain is not specified. MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 154 S4-1 – Policies related to consumers and end-users Litgrid's operational policies relating to customers and end-users are publicly available on the website https://www.litgrid.eu and on the EPSO-G website Operational Policies | EPSO-G. Impacts on consumers and end-users are managed through the EPSO- G Group's policies on Operational Transparency and Communication, EPSO-G Group Support and Humanitarian Aid, Management of Interests of Employees and Collegiate Body Members of the EPSO-G Group, Compliance Management of the EPSO-G Group, Equal Opportunities for the EPSO-G Group, Sustainability of the EPSO-G Group, Environmental Protection of the EPSO-G Group, Protection of Personal Data of the EPSO-G Group, Risk Management of the EPSO-G Group, and the protection of Sensitive Information of the EPSO-G Group. In addition, other relevant legislation, policies, and procedures apply. Litgrid's Risk Management Policy for the EPSO-G group of companies provides regular analysis of threats and mitigation measures. The main risks identified include power outages and lack of information availability. Litgrid's direct customers are electricity transmission grid users and suppliers of imbalance and balancing electricity. Customers - users of the transmission grid: Distribution grid operators and electricity consumers directly connected to the transmission system; Electricity producers directly connected to the transmission system; Storage Capacity builders; Land owners and managers. Customers - system management: Electricity generators and distributors responsible for balancing/unbalancing the grid; Lithuania's major electricity and district heating companies, as well as industrial; companies and medium-sized Lithuanian businesses; Baltic and third-country energy and gas supply, and natural gas transmission service companies. Imbalance and balancing electricity suppliers are electricity generators and suppliers. The Company is committed to ensuring the smooth functioning of the electricity transmission system, rapid response to disruptions, and the implementation of projects of national importance, thus creating value for society and all stakeholders. It is important to the Company that electricity is always supplied to electricity consumers and that any faults are rectified as soon as possible. Litgrid aims to become a customer-oriented organisation, developing innovative and flexible services. S4-2 – Processes for engaging with consumers and end- users about impacts Litgrid takes into account the actual and potential impact on consumers and end-users when implementing legislation. In most cases, these stakeholders are represented by public authorities, but in some cases the Company directly coordinates decisions with stakeholders to ensure compliance with the legislation. Engagement takes place at different stages of the project and its frequency depends on the legal framework and the needs of stakeholders. The company's CEO is responsible for ensuring the involvement of consumers and end-users. Litgrid conducts regular customer satisfaction surveys to assess the effectiveness of engagement. These surveys allow us to assess how consumers and end-users perceive the Company's performance and to identify areas where further improvement actions are required. S4-3 – Processes to remediate negative impacts and channels for consumers and end-users to raise concerns All interested parties, including all consumers and end-users of EPSO-G services, can contact EPSO-G through the same anonymous and non-anonymous channels (see section ‘Whistleblowing and whistleblower protection’). Communication and provision of information to interested parties is carried out in accordance with national legislation and internal procedures. This line is managed by the company and is available in both English and Lithuanian. MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 155 Litgrid's Complaints Handling Procedure Description regulates the registration, handling and resolution of consumer complaints. It covers complaints related to electricity transmission services, reliability of the operation of transmission grid facilities, the installation and organisation of electricity metering, operation and maintenance of facilities, connection of grid users' facilities, grid reconstruction, and the provision of services of public interest. The detailed complaints procedure is published on Litgrid's website: complaints procedure. S4-4 – Taking action on material impacts on consumers and end- users, and approaches to managing material risks and pursuing material opportunities related to consumers and end-users, and effectiveness of those actions These actions ensure that both consumers and end-users receive quality and reliable electricity transmission services and clear information on the operation of the system: Taking into account the complexity of the services provided and the needs of consumers and end-users, Litgrid actively seeks to ensure the smooth provision of information, reliable transmission of electricity, and efficient maintenance of grid; Timely information events are organised for consumers on relevant topics related to the electricity transmission system, its development, and efficiency. Services and solutions are also continuously developed and implemented to meet customer needs; To ensure the interests of end-users, Litgrid implements grid modernisation and maintenance solutions to improve the reliability of electricity supply. The company maintains relations with foreign partners, such as power transmission and biofuel exchange operators, and participates in meetings and conferences to present its strategic objectives; Litgrid actively cooperates with state institutions to ensure that electricity transmission services are in the public interest. Meetings are initiated to discuss topical issues, information is provided to the Parliament's Committees, the Government, and inter-institutional working groups are involved. The Company is also implementing digital transformation, leveraging artificial intelligence solutions and opening up data for faster decision-making. The Company aims to avoid significant adverse impacts by operating in compliance with legislation and the requirements of the State Energy Regulatory Board. Litgrid responds to potential negative impacts on consumers and end-users in accordance with the Lithuanian legal framework and the instructions of the State Energy Regulatory Council. As the Company's activities are fully regulated by the State, it is not directly involved in marketing, sales, or data use processes that could impact end-users. Litgrid responds to complaints, notifications, and legal proceedings by improving operational processes accordingly. The company engages various stakeholders – customers, group companies, foreign partners, government representatives, employees, and shareholders – through information events, consultations, meetings and professional conferences. These actions contribute to the achievement of long-term strategic objectives. There were no cases of significant adverse impacts requiring corrective action during the reporting period. Nor were there any actions or action plans identified in previous periods for which progress should be assessed. There were no substantiated human rights violations or incidents in 2024. Litgrid has not identified any significant action plans that would require significant operational or capital expenditure, and therefore there is no need for individual financial resources to be identified. S4-5 – Targets related to managing material negative impacts, advancing positive impacts, and managing material risks and opportunities One of Litgrid's key objectives is to increase customer orientation in order to create a customer-oriented organisation. The company has RES empowerment objectives which are directly related to customer orientation: updating processes related to RES connection, improving customer satisfaction, and increasing RES power plant connections. The Company monitors the effectiveness of its policies and actions by responding to and addressing reports, complaints, and issues raised in them. Although no specific targets have been set in this area, Litgrid applies a risk management system that assesses relevant indicators and leads to the establishment of action plans. 156 MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 157 22.7 G1 BUSINESS CONDUCT Litgrid belongs to the EPSO-G group. The double materiality assessment of the EPSO-G group assessed all sustainability matters identified by ESRS across the EPSO-G group companies' value chain. The preliminary assessment of the topics, the impact, financial materiality assessments, and the stakeholders survey revealed that the topics "Corporate culture", "Protection of whistle- blowers", "Management of relationships with suppliers including payment practices", "Corruption and bribery" are all material. Below are the material impacts, risks, and opportunities related to EPSO-G's business conduct. Sustainability matter Impacts Risks and opportunities Location in the value chain Corporate culture Potential negative impacts may arise from possible non- compliance with the Company's culture and policies and principles, including transparency, accountability, diversity, inclusiveness, and ethical behaviour. - - Protection of whistle- blowers Potential negative impact on the rights of stakeholders may arise if the whistle- blowers protection system does not function effectively. This includes breaches of whistleblowers' confidentiality, possible overt or indirect discrimination, reprisals, or other negative behaviour towards them. The opportunity for stakeholders (from the worker to other stakeholders) to voice their concerns and resolve those concerns creates the conditions for financial opportunity. Upstream and downstream value chain Management of relationships with suppliers including payment practices Potential negative impact on stakeholders' rights in public procurement. - - Corruption and bribery Potential negative impacts on stakeholders' rights may arise from corrupt or unethical practices along the value chain. - Upstream and downstream value chain No significant risks/opportunities identified. The impact arises from the direct activity and therefore the location of the value chain is not specified. MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 158 G1-1 Business conduct policies and corporate culture The Company has enforced the EPSO-G Group’s Anti-Corruption Policy, the EPSO-G Group’s Code of Conduct, the EPSO-G Group’s Supplier Code of Conduct, and the EPSO-G Groups’ Employee Anti-Corruption Procedure. The Company has Internal Rules of Procedure, an Equal Opportunities Policy and Procedure, and a Procedure for the Prevention of Discrimination, Violence and/or Harassment, and Sexual Harassment. Every employee of the Company is required to familiarize with these documents and to act in accordance with their provisions. All Litgrid employees, in accordance with the above-mentioned documents and the values adopted by the Group, create and maintain a respectful and tolerant working environment and culture. Promoting Litgrid's culture starts with its managers, who show leadership by following the EPSO-G Group Code of Conduct and setting an example for employees on how to behave ethically and foster culture. Regular training on business conduct and anti-corruption is provided to the Company's employees. The training introduces Litgrid's values, behavioural principles, and corporate culture, as well as introducing employees to the principles set for the operation of the Helpline. The positions most likely to be at risk of corruption and bribery are those included in the list of positions subject to legal scrutiny. In order to manage the risks and to prevent potential risks, this list is made public on the Company‘s website. The Company's culture is developed and promoted in the following ways: Organising targeted events to promote culture, e.g. Equal Opportunities Month; The importance of ensuring compliance in training and communication related to anti-corruption behaviour; Organising joint group events related to activities that benefit the community, e.g. volunteering days, replanting forests, blood donations, etc. Developing a high level of customer orientation; Providing training for managers to build their maturity and positively influence corporate culture. The Company's values and behaviours are closely integrated into its day-to-day and strategic activities, and the values are approved by the Company's Board of Directors in conjunction with the Strategy Document. Adherence to the values is one of the most important criteria for employee evaluation and possible financial incentives, and this is done during the Annual Performance Review. Litgrid uses a variety of communication tools to promote employee engagement and ensure adherence to the values of the organisation. Shared cultural understanding and behaviour is reinforced through visual and interactive tools such as computer screen savers, posters in office corridors, sharing of best practices at meetings, events, and articles on the intranet. Whistle-blowing channel and protection of whistle-blowers The Company is subject to the legal requirements for the protection of whistle-blowers set out in the EU and national legislation transposing Directive (EU) 2019/1937 into national law. The Company has mechanisms in place to identify, report, and investigate concerns about misconduct or breaches of the Code of Conduct. The description of how and where to report corrupt activities, occupational health and safety, environmental violations, unethical behaviour, as well as actions by contractors or partners that are contrary to the Supplier Code of Conduct, is set out in the description of the procedures for the establishment and maintenance of internal whistle-blowing channels. The Company has a Helpline, where both employees and external stakeholders can anonymously report possible irregularities. Information on this channel, its principles, responsible persons, and reporting methods is published on the Company's website, intranet, and through targeted communication campaigns. In addition, the whistle-blowing process is regulated by internal legislation. A system of internal investigations ensures that business ethics incidents, including corruption and bribery, are dealt with promptly, independently and objectively. In accordance with national legislation, the Company protects whistle-blowers by ensuring that the release of information does not have the potential to cause adverse consequences for the whistle-blower or his/her family members. This protection includes MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 159 the prohibition of dismissal, suspension, demotion, non-renewal of a fixed-term contract or any other form of discrimination. G1-2 Management of relationships with suppliers The procurement function is seen as one of the enablers of the strategy in EPSO-G Companys, so procurement is planned for the long term, digitised, and focused on transparency and sustainability. Selection of suppliers is based on social and environmental criteria. The majority of the Company's purchases are carried out in accordance with the Law of the Republic of Lithuania on Procurement by Contracting Entities in the Field of Water Management, Energy, Transport, or Postal Services. Potential suppliers must have no grounds for exclusion on grounds of environmental or social non-compliance and must meet the qualification requirements. In addition, 100% of public procurement is considered as green, and all procurement is carried out in accordance with the Minister of the Environment's order on the application of environmental requirements. Since 2024, the Company has included social criteria in the terms and conditions of its purchases, and in 2025 the share of such purchases will have to be at least 7% of all purchases. The most significant procurements are carried out by certified workers with Procurement Officers' Certificates issued by the Public Procurement Service, so that compliance risks are properly managed. Before concluding contracts, suppliers must read and confirm that they will comply with the Supplier Code of Conduct and complete a partner screening questionnaire to assess the suppliers' compliance and potential risks. This data is analysed both individually and in aggregate, with a view to providing suppliers with recommendations on the application of environmental policies and other sustainability measures. More than 80% of the Group's suppliers are local (in terms of number of contracts). A contract monitoring process is applied in the supply chain to monitor changes in suppliers' performance and ability to fulfil contracts, including where suppliers are deemed to be in breach. The Company also seeks to manage the risks from late payments, in particular for small and medium-sized enterprises (SMEs). The contract monitoring process helps to ensure timely payments to suppliers and the Company's financial management practices are focused on transparency and efficiency in payments. G1-3 Prevention and detection of corruption and bribery The Company has measures in place to prevent corruption and bribery, including both risk management and incident investigation. EPSO-G' Group’s anti-corruption policy includes the following key measures: restrictions on accepting and giving gifts, and procedures for making donations. measures to manage the interests of workers and members of collegial bodies are designed to ensure the primacy of interests. verification of operating partners ensuring workers' reliability. an operational Helpline system. internal investigation procedures to investigate irregularities, including those with the appearance of corruption. transparency measures for transactions. raising workers' anti-corruption awareness through training and communication. ensuring transparency in procurement. The Company regularly identifies and assesses corruption risks, implements measures to manage them, and analyses their effectiveness in accordance with EPSO-G's Group Risk Management Policy and Methodology. The internal investigation process ensures that corruption incidents are dealt with by a separate business unit rather than by management. The Internal Investigation Report, in accordance with Litgrid's Internal Investigations Procedures, is provided to the Head of the Company and, where appropriate, to the heads of the business units as necessary for the performance of key functions. The Company‘s anti-corruption policy documents are made public and available to all interested persons and organisations on the Company's website. The information published includes: MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 160 regulatory legislation preventive measures links to relevant documents contact details This information is available in both Lithuanian and English, and suppliers are informed of the EPSO-G Group's Supplier Code of Conduct, which they are obliged to comply with when taking part in the Group's procurement tenders. Internal communication channels (intranet) keep employees informed about relevant corruption prevention issues and familiarise them with the relevant legislation through the document management system. The Company organises targeted anti-corruption training for both new hires and existing employees. The training takes various forms, including seminars, guest lectures, and workshops. Anti-corruption training is provided to all workers, regardless of their position, to ensure general awareness and understanding of the principles of corruption prevention. In addition, members of administrative, management, and supervisory bodies are also included in this training to increase their knowledge and involvement in this area. G1-4 Confirmed incidents of corruption or bribery There were no incidents related to corruption and bribery during the reporting period, including: convictions or fines for violations of anti-corruption and anti-bribery laws; breaches of procedures or standards that would have required corrective action. confirmed incidents of corruption or bribery; in cases where workers are dismissed or punished for acts related to corruption or bribery; contracts with business partners terminated or not renewed for corruption or bribery offences; public legal proceedings against the Company or its employees for corruption or bribery; Incidents directly involving the Company or its employees in the context of the value chain. G1-6 Payment Practices The Company implements a responsible payment policy to ensure transparent and timely payments to suppliers. The calculated average time limit for payment of all invoices is 24 calendar days ("EPSO-G": 22 calendar days) and the weighted average time limit is 27 calendar days ("EPSO-G": 26 days). Basic contractual payment terms (no difference in payment practices between large and small and medium-sized enterprises (SMEs)): within 14 calendar days of invoicing: 23.38% of payments, 24.75% for EPSO-G. within 30 calendar days of invoicing: 76.62% of payments, 75.25% for EPSO-G. For the purposes of calculating payment terms, a time limit of 14 calendar days was applied for verbal contracts and 30 calendar days for all non-public and public procurement contracts. Some contracts have payment terms of 30 days or more, but are difficult to identify in the short term. At the end of the reporting period, one court case concerning late payments was pending. 23. EU TAXONOMY REGULATION INDICATORS The European Union (EU) Taxonomy Regulation (EU) 2020/852 and its delegated acts (hereinafter referred to as the Taxonomy) establish a classification system for environmentally sustainable economic activities. This system is designed to promote private investments in activities that contribute to achieving the objectives of the European Green Deal. The Taxonomy sets out science- based criteria for assessing the sustainability of economic activities and establishes corporate accountability and reporting MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 161 obligations. The identification of Litgrid’s taxonomy-aligned economic activities, the assessment of compliance with technical screening criteria, the evaluation of climate-related risks and vulnerabilities, the assessment of compliance with minimum safeguards, and the calculation of indicators for taxonomy non-eligible activities are presented in the EPSO-G’S Consolidated Management Report 2024, within the EU Taxonomy reporting section. Company’s Application of the EU Taxonomy Regulation The Company adheres to the provisions of Regulation (EU) 2020/852 of the European Parliament and the Council of June 18, 2020, on the establishment of a framework to facilitate sustainable investment (hereinafter – the Taxonomy Regulation). The Taxonomy Regulation defines what constitutes environmentally sustainable economic activities and the criteria under which economic activities are classified as environmentally friendly. The objective of the Taxonomy Regulation is to establish a classification of economic activities across the EU based on defined requirements, considering their contribution to environmental objectives (Article 9 of the Taxonomy Regulation) and thereby supporting the EU’s transition to a climate-neutral economy. Assessment of Taxonomy-Aligned Activities The delegated acts of the EU Taxonomy Regulation outline specific taxonomy-aligned activities. The Company has analyzed these activities and determined that its operations align with the taxonomy category "4.9 Electricity Transmission and Distribution" (D35.12 Electricity Transmission, NACE Code under Regulation (EC) No. 1893/2006). The activity description, as per Annex I of the Commission Delegated Regulation (EU) 2021/2139 concerning climate change mitigation, includes the construction and operation of transmission systems where electricity is transmitted through interconnected high-voltage and ultra-high-voltage networks. This constitutes the Company's core regulated activity. In addition to its primary activity, the Company has identified supplementary, low-significance taxonomy-aligned activities, such as: "4.1 Electricity Generation using Photovoltaic Solar Energy Technology." "6.5 Transport by Motorcycles, Passenger Cars, and Light Commercial Vehicles." Description: The purchase, financing, leasing, rent-to-own, and operation of M1 and N1 category vehicles covered by Regulation (EC) No. 715/2007, as well as L-category vehicles (two- and three-wheelers and quadricycles). "7.4 Installation, Maintenance, and Repair of Charging Stations for Electric Vehicles in Buildings (and Parking Spaces Adjacent to Buildings)." A review of disclosure practices among transmission system operators in other countries reveals a predominant approach of classifying all activities under the primary category, "4.9 Electricity Transmission and Distribution." This is because it is the main regulated activity overseen by the National Energy Regulatory Council, while all other activities are statistically insignificant and serve solely to support the core function. Key Environmental Objectives The principal environmental objectives outlined in the Taxonomy Regulation include climate change mitigation, adaptation to climate change, sustainable use and protection of water and marine resources, transition to a circular economy, pollution prevention and control, and protection and restoration of biodiversity and ecosystems. According to Article 3 of the Taxonomy Regulation, an economic activity is considered environmentally sustainable if it: Makes a substantial contribution to at least one of the environmental objectives defined in Article 9 (per Articles 10–16 of the Regulation); Does not cause significant harm to any of the environmental objectives in Article 9 (per Article 17); Complies with minimum safeguards (per Article 18); Meets the technical screening criteria set out in the Commission Delegated Regulation (EU) 2021/2139 of June 4, 2021. Accounting Policy Under the EU Taxonomy Regulation, companies must disclose key performance indicators (KPIs). These are calculated based on Commission Delegated Regulation (EU) 2021/2178 of July 6, 2021, supplementing Regulation (EU) 2020/852 by establishing disclosure requirements for environmentally sustainable activities by companies subject to Articles 19a or 29a of Directive 2013/34/EU. In calculating KPIs, the Company has made certain assumptions due to the limited and evolving nature of the MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 162 European Commission's guidelines. As new or expanded guidelines become available, the Company will update its assumptions, and any changes will be disclosed retrospectively. Analysis of other transmission system operators' practices shows that both the numerator and denominator of KPIs related to taxonomy-aligned activities are generally close to 100%. The Company applies a more conservative calculation approach, particularly in determining operational expenditure (OPEX) ratios. Avoidance of Double Counting All disclosed KPIs related to taxonomy-aligned or criteria-compliant activities avoid double counting, as each KPI is assigned to independent activities. To prevent double counting, when an economic activity contributes to multiple environmental objectives, KPIs are calculated only once. Calculation of Taxonomy-Aligned Revenue The proportion of revenue from taxonomy-aligned and/or criteria-compliant activities is calculated in accordance with Commission Delegated Regulation (EU) 2021/2178, by dividing the revenue from taxonomy-aligned activities by total revenue. The Company's “Other Activities” revenue is classified as non-taxonomy-aligned. In the Company’s assessment, this includes revenue from the administration of guarantees of origin. While guarantees of origin contribute to climate sustainability, they are not directly linked to transmission activities. Purchasing guarantees of origin for electricity will demonstrate that technological losses are covered by electricity generated from renewable energy sources in Lithuania, thereby reducing greenhouse gas (GHG) emissions (Scope 2 GHG emissions, calculated using the market-based method). Calculation of Taxonomy-Aligned Capital Expenditure (CAPEX) The share of capital expenditure (CAPEX) related to taxonomy-aligned and/or criteria-compliant activities is calculated per Commission Delegated Regulation (EU) 2021/2178, by dividing taxonomy-aligned CAPEX by total CAPEX. Taxonomy-aligned CAPEX is recognized based on International Accounting Standard (IAS) 16 “Property, Plant, and Equipment” and IAS 38 “Intangible Assets.” Capitalized salaries, travel expenses, and interest are excluded from CAPEX calculations. Additionally, capital expenditures financed by third parties and transferred to the Company free of charge are not included. CAPEX includes all capital expenditures incurred during the reporting year, regardless of whether assets have been commissioned or are still in the project development phase. It should be noted that the Company’s disclosed capital investments in financial reporting differ from taxonomy-aligned CAPEX, as the latter includes acquisitions of right-of-use assets, which are not considered as investments in financial statements. Calculation of Taxonomy-Aligned Operational Expenditure (OPEX) The proportion of the Company’s operational expenditures (OPEX) associated with taxonomy-aligned and/or taxonomy-eligible activities, as defined by the European Commission Delegated Regulation (EU) 2021/2178, is calculated by dividing these expenditures by total operational expenses (OPEX). MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 163 Under the taxonomy framework, OPEX includes direct non-capitalized costs related to research and development, building renovation measures, short-term leases, maintenance and repairs, as well as all other direct expenditures necessary for the daily servicing of real estate, equipment, and installations—whether performed by the Company itself or outsourced to a third party. These expenditures are essential to ensuring the continuous and efficient use of such assets. Currently, the applicable regulations leave room for interpretation, and there is a lack of clear guidance specifying eligible OPEX inclusions within the taxonomy framework. The Company anticipates further clarification on OPEX classification in the future and aims to enhance its processes for more precise disclosures. As previously stated, the Company adopts a conservative calculation approach. In alignment with the available guidance and its interpretation, the calculation of the numerator and denominator for taxonomy-based OPEX follows these criteria and exceptions: All research and development expenses are included. All electricity network maintenance and repair costs are included. Costs related to IT systems, employee salaries, and facility maintenance are included in the numerator only when allocated to the transmission network, system management, system infrastructure departments, and the synchronization center. These costs are considered directly attributable to ensuring the uninterrupted and efficient use of the Company’s assets. In the denominator, these expenses are included in full, except for salary costs, which are incorporated at the same level as in the numerator. Transport expenses are allocated between activities 4.9 and 6.5. Expenses assigned to activity 4.9 are those related to the transmission network, system management, system infrastructure departments, and the synchronization center, as they directly support the Company’s electricity transmission operations. The remaining transport costs are classified under activity 6.5. Below are the tables of Litgrid’s Taxonomy indicators (revenue, capital expenditures, and operating expenditures), prepared in accordance with the requirements and templates of the European Commission’s Delegated Regulation (EU) 2021/2178. Taxonomy - aligned, not Taxonomy - aligned and Taxonomy - non - eligible activities KPIs Turnover according to EU Taxonomy regulation. Proportion of turnover from products or services associated with Taxonomy-aligned economic activities – disclosure covering year 2024. MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 164 Substantial contribution criteria DNSH criteria ('Does Not Significantly Harm') Minimum safeguards Proportion of Taxonomy -aligned (A.1.) or -eligible (A.2.) turnover year 2023 Category (enabling activity) Category (transitional activity) Economic activities Code(s) Absolute turnover Proportion of turnover year 2024 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 A. TAXONOMY ELIGIBLE ACTIVITIES mln. Eur % Y; N; N/EL Y; N; N/EL Y; N; N/EL Y; N; N/EL Y; N; N/EL Y; N; N/EL Y / N Y / N Y / N Y / N Y / N Y / N Y / N % E T A.1 Environmental sustainable activities (Taxonomy-aligned) Electricity generation using solar photovoltaic technology CCM 4.1. - - Y N N/EL N/EL N/EL N/EL Y Y Y Y Y Y Y - - - Transmission and distribution of electricity CCM 4.9. 375.7 99.5% Y N N/EL N/EL N/EL N/EL Y Y Y Y Y Y Y 99.2% E - Installation, maintenance and repair of charging stations for electric vehicles in buildings (and parking spaces attached to buildings) CCM 7.4. - - Y N N/EL N/EL N/EL N/EL Y Y Y Y Y Y Y - E - Turnover of environmentally sustainable activities (Taxonomy- aligned) (A.1) - 375.7 99.3% 99.3% N N/EL N/EL N/EL N/EL Y Y Y Y Y Y Y 99.2% - - Of which enabling - 375.7 99.3% 99.3% N N/EL N/EL N/EL N/EL Y Y Y Y Y Y Y 99.2% E - Of which transitional - - - - - - - - - - - - - - - - - - - A.2 Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned activities) Transport by motorbikes, passenger cars and light commercial vehicles CCM 6.5. - - EL N/EL N/EL N/EL N/EL N/EL - - - - - - - - - - Turnover of Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned activities) (A.2) - - - - - - - - - - - - - - - - - - - Turnover of Taxonomy-eligible activities (A.1+A.2) - 375.7 99.3% 99.3% - - - - - - - - - - - - 99.2% - - B. TAXONOMY-NON-ELIGIBLE ACTIVITIES Turnover of Taxonomy-non-eligible activities 2,6 0,7% TOTAL (A+B) 378,3 100% EL – Taxonomy-eligible activity for the relevant objective; N/EL – Not eligible, Taxonomy-non-eligible activity for the relevant environmental objective; Y – Yes, Taxonomy-eligible and Taxonomy-aligned activity with the relevant environmental objective; N – No, Taxonomy-eligible but not Taxonomy-aligned activity with the relevant environmental objective. MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 165 CapEX according to EU Taxonomy regulation. Proportion of CapEX from products or services associated with Taxonomy-aligned economic activities – disclosure covering year 2024. Substantial contribution criteria DNSH criteria ('Does Not Significantly Harm') Minimum safeguards Proportion of Taxonomy - aligned (A.1.) or -eligible (A.2.) turnover year 2023 Category (enabling activity) Category (transitional activity) Economic activities Code(s) Absolute turnover Proportion of turnover year 2024 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 A. TAXONOMY ELIGIBLE ACTIVITIES Mil. Eur % Y; N; N/EL Y; N; N/EL Y; N; N/EL Y; N; N/EL Y; N; N/EL Y; N; N/EL Y / N Y / N Y / N Y / N Y / N Y / N Y / N % E T A.1 Environmental sustainable activities (Taxonomy-aligned) Electricity generation using solar photovoltaic technology CCM 4.1. 0.0 0.0% Y N N/EL N/EL N/EL N/EL Y Y Y Y Y Y Y - - - Transmission and distribution of electricity CCM 4.9. 209.7 98.1% Y N N/EL N/EL N/EL N/EL Y Y Y Y Y Y Y 98.0% E - Installation, maintenance and repair of charging stations for electric vehicles in buildings (and parking spaces attached to buildings) CCM 7.4. - - Y N N/EL N/EL N/EL N/EL Y Y Y Y Y Y Y 0.3% E - CapEX of environmentally sustainable activities (Taxonomy- aligned) (A.1) - 209.7 98.1% 98.1% N N/EL N/EL N/EL N/EL Y Y Y Y Y Y Y 98.3% - - Of which enabling - 209.7 98.1% 98.1% N N/EL N/EL N/EL N/EL Y Y Y Y Y Y Y 98.3% E - Of which transitional - - - - - - - - - - - - - - A.2 Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned activities) Transport by motorbikes, passenger cars and light commercial vehicles CCM 6.5. - - EL N/EL N/EL N/EL N/EL N/EL 0.10% CapEX of Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned activities) (A.2) - - - - - - - - - - - - - - - - - - CapEX of Taxonomy-eligible activities (A.1+A.2) - 209.7 98.1% 98.1% - - - - - - - - - - - - 98.4% - - B. TAXONOMY-NON-ELIGIBLE ACTIVITIES CapEX of Taxonomy-non-eligible activities 4 1.90% TOTAL (A+B) 213.7 100% EL – Taxonomy-eligible activity for the relevant objective; N/EL – Not eligible, Taxonomy-non-eligible activity for the relevant environmental objective; Y – Yes, Taxonomy-eligible and Taxonomy-aligned activity with the relevant environmental objective; MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 166 N – No, Taxonomy-eligible but not Taxonomy-aligned activity with the relevant environmental objective. OpEX according to EU Taxonomy regulation Proportion of OpEx from products or services associated with Taxonomy-aligned economic activities – disclosure covering year 2024 Substantial contribution criteria DNSH criteria ('Does Not Significantly Harm') Minimum safeguards Proportion of Taxonomy - aligned (A.1.) or -eligible (A.2.) turnover year 2023 Category (enabling activity) Category (transitional activity) Economic activities Code(s) Absolute turnover Proportion of turnover year 2024 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 A. TAXONOMY ELIGIBLE ACTIVITIES mln. Eur % Y; N; N/EL Y; N; N/EL Y; N; N/EL Y; N; N/EL Y; N; N/EL Y; N; N/EL Y / N Y / N Y / N Y / N Y / N Y / N Y / N % E T A.1 Environmental sustainable activities (Taxonomy-aligned) Electricity generation using solar photovoltaic technology CCM 4.1. - - Y N N/EL N/EL N/EL N/EL Y Y Y Y Y Y Y - - - Transmission and distribution of electricity CCM 4.9. 21.5 88.2% Y N N/EL N/EL N/EL N/EL Y Y Y Y Y Y Y 88.7% E - Installation, maintenance and repair of charging stations for electric vehicles in buildings (and parking spaces attached to buildings) CCM 7.4. - - Y N N/EL N/EL N/EL N/EL Y Y Y Y Y Y Y - E - OpEX of environmentally sustainable activities (Taxonomy- aligned) (A.1) - 21.5 88.2% 88.2% N N/EL N/EL N/EL N/EL Y Y Y Y Y Y Y 88.7% - - Of which enabling - 21.5 88.2% 88.2% N N/EL N/EL N/EL N/EL Y Y Y Y Y Y Y 88.7% E - Of which transitional - - - - - - - - - - - - - - - - - - - A.2 Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned activities) Transport by motorbikes, passenger cars and light commercial vehicles CCM 6.5. 0.1 0.3% EL N/EL N/EL N/EL N/EL N/EL - - - - - - - 0.3% - - OpEX of Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned activities) (A.2) - 0.1 0.3% 0.3% - - - - - - - - - - - - 0.3% - OpEX of Taxonomy-eligible activities (A.1+A.2) - 21.5 88.5% 88.5% - - - - - - - - - - - - 89.0% - B. TAXONOMY-NON-ELIGIBLE ACTIVITIES OpEX of Taxonomy-non-eligible activities - 2.8 11.5% TOTAL (A+B) - 24.4 100% EL – Taxonomy-eligible activity for the relevant objective; N/EL – Not eligible, Taxonomy-non-eligible activity for the relevant environmental objective; MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 167 Y – Yes, Taxonomy-eligible and Taxonomy-aligned activity with the relevant environmental objective; N – No, Taxonomy-eligible but not Taxonomy-aligned activity with the relevant environmental objective. 168 MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 169 23.1 ESRS Index Applicable ESRS Sector Not available ESRS 2 General Disclosures Disclosure Requirement Section title where the information is disclosed: 1. Basis for preparation BP-1 General basis for preparation of sustainability statements About the report BP-2 Entities included in the organisation's sustainability reporting About the report 2. Governance GOV-1 The role of the administrative, management and supervisory bodies Sustainability governance GOV-2 Information provided to and sustainability matters addressed by the undertaking’s administrative, management and supervisory bodies Sustainability governance GOV-3 Integration of sustainability-related performance in incentive schemes Sustainability governance GOV-4 Statement on due diligence Sustainability governance GOV-5 Risk management and internal controls over sustainability reporting Sustainability governance 3. Strategy SBM-1 Strategy, business model and value chain Strategy, business model and value chain SBM-2 Interests and views of stakeholders Strategy, business model and value chain SBM-3 Material impacts, risks and opportunities and their interaction with strategy and business model Strategy, business model and value chain 4. Impact, risk and opportunity management 4.1 Disclosures on the materiality assessment process IRO-1 Description of the process to identify and assess material impacts, risks and pportunities Double materality assessment IRO-2 Disclosure Requirements in ESRS covered by the undertaking’s sustainability statement Double materality assessment 4.2 Minimum disclosure requirement on policies and actions MDR-P Policies adopted to manage material sustainability matters Sustainability governance MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 170 MDR-A Actions and resources in relation to material sustainability matters Sustainability governance 5. Metrics and targets MDR-M Metrics in relation to material sustainability matters Sustainability governance MDR-T Tracking effectiveness of policies and actions through targets Sustainability governance Environmental topics ESRS E1 Climate Change Governance E1 GOV-3 Integration of sustainability-related performance in incentive schemes Sustainability governance Strategy E1-1 Transition plan for climate change mitigation E1 Climate change E1 SBM-3 Material impacts, risks and opportunities and their interaction with strategy and business model E1 Climate change Impact, risk and opportunity management E1 IRO-1 Description of the processes to identify and assess material climate-related impacts, risks and opportunities E1 Climate change E1-2 Policies related to climate change mitigation and adaptation E1 Climate change E1-3 Actions and resources in relation to climate change policies E1 Climate change Metrics and targets E1-4 Targets related to climate change mitigation and adaptation E1 Climate change E1-5 Energy consumption and mix E1 Climate change E1-6 Gross Scopes 1, 2, 3 and Total GHG emissions E1 Climate change MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 171 E1-7 GHG removals and GHG mitigation projects financed through carbon credits E1 Climate change E1-8 Internal carbon pricing E1 Climate change ESRS E2 Pollution Impact, risk and opportunity management E2 IRO-1 Description of the processes to identify and assess material pollution-related impacts, risks and opportunities Immaterial E2-1 Policies related to pollution Immaterial E2-2 Actions and resources related to pollution Immaterial Metrics and targets E2-4 Pollution of air, water and soil Immaterial ESRS E3 Water and marine resources Impact, risk and opportunity management E3 SBM-3 Material impacts, risks and opportunities and their interaction with strategy and business model Immaterial E3 IRO-1 Description of the processes to identify and assess material pollution-related impacts, risks and opportunities Immaterial ESRS E4 Biodiversity and ecosystems Strategy E4-1 Transition plan and consideration of biodiversity and ecosystems in strategy and business model E4 Biodiversity and Ecosystems E4 SBM-3 Material impacts, risks and opportunities and their interaction with strategy and business model E4 Biodiversity and Ecosystems Impact, risk and opportunity management MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 172 E4 IRO-1 Description of processes to identify and assess material biodiversity and ecosystem- related impacts, risks and opportunities E4 Biodiversity and Ecosystems E4-2 Policies related to biodiversity and ecosystems E4 Biodiversity and Ecosystems E4-3 Actions and resources related to biodiversity and ecosystems E4 Biodiversity and Ecosystems Metrics and targets E4-4 Targets related to biodiversity and ecosystems E4 Biodiversity and Ecosystems E4-5 Impact metrics related to biodiversity and ecosystems change E4 Biodiversity and Ecosystems ESRS E5 Resource use and circular economy Impact, risk and opportunity management E5 IRO-1 Description of the processes to identify and assess material resource use and circular economy-related impacts, risks and opportunities E5 Circular Economy E5-1 Policies related to resource use and circular economy E5 Circular Economy E5-2 Actions and resources related to resource use and circular economy E5 Circular Economy Metrics and targets E5-3 Targets related to resource use and circular economy E5 Circular Economy E5-4 Resource inflows E5 Circular Economy E5-5 Resource outflows E5 Circular Economy Social topics ESRS S1 Own workforce Strategy MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 173 S1 SBM-2 Interests and views of stakeholders S1 Own Workforce S1 SBM-3 Material impacts, risks and opportunities and their interaction with strategy and business model S1 Own Workforce Impact, risk and opportunity management S1-1 Policies related to own workforce S1 Own Workforce S1-2 Processes for engaging with own workers and workers’ representatives about impacts S1 Own Workforce S1-3 Processes to remediate negative impacts and channels for own workers to raise concerns S1 Own Workforce S1-4 Taking action on material impacts on own workforce, and approaches to mitigating material risks and pursuing material opportunities related to own workforce, and effectiveness of those actions S1 Own Workforce Metrics and targets S1-5 Targets related to managing material negative impacts, advancing positive impacts, and managing material risks and opportunities S1 Own Workforce S1-6 Characteristics of the undertaking’s employees S1 Own Workforce S1-7 Characteristics of non-employee workers in the undertaking’s own workforce S1 Own Workforce S1-8 Collective bargaining coverage and social dialogue S1 Own Workforce S1-9 Diversity metrics S1 Own Workforce S1-10 Adequate wages S1 Own Workforce S1-11 Social protection S1 Own Workforce S1-12 Persons with disabilities S1 Own Workforce MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 174 S1-13 Training and skills development metrics S1 Own Workforce S1-14 Health and safety metrics S1 Own Workforce S1-15 Work-life balance metrics S1 Own Workforce S1-16 Compensation metrics (pay gap and total compensation) S1 Own Workforce S1-17 Incidents, complaints and severe human rights impacts S1 Own Workforce ESRS S3 Affected communities Strategy S3 SBM-2 Interests and views of stakeholders S3 Affected Communities S3 SBM-3 Material impacts, risks and opportunities and their interaction with strategy and business model S3 Affected Communities Impact, risk and opportunity management S3-1 Policies related to affected communities S3 Affected Communities S3-2 Processes for engaging with affected communities about impacts S3 Affected Communities S3-3 Processes to remediate negative impacts and channels for affected communities to raise concerns S3 Affected Communities S3-4 Taking action on material impacts on affected communities, and approaches to managing material risks and pursuing material opportunities related to affected communities, and effectiveness of those actions S3 Affected Communities Metrics and targets S3-5 Targets related to managing material negative impacts, advancing positive impacts, and managing material risks and opportunities S3 Affected Communities MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 175 ESRS S4 Consumers and end-users Strategy S4 SBM-2 Interests and views of stakeholders S4 Consumers and End Users S4 SBM-3 Material impacts, risks and opportunities and their interaction with strategy and business mode S4 Consumers and End Users Impact, risk and opportunity management S4-3 Processes to remediate negative impacts and channels for consumers and end-users to raise concerns S4 Consumers and End Users Governance topics ESRS G1 Business Conduct Governance G1 GOV-1 The role of the administrative, supervisory and management bodies G1 Business Ethics Impact, risk and opportunity management G1 IRO-1 Description of the processes to identify and assess material impacts, risks and opportunities G1 Business Ethics G1-1 Corporate culture and bBusiness conduct policies and corporate culture G1 Business Ethics G1-2 Management of relationships with suppliers G1 Business Ethics G1-3 Prevention and detection of corruption and bribery G1 Business Ethics Metrics and targets G1-4 Confirmed incidents of corruption or bribery G1 Business Ethics G1-6 Payment practices G1 Business Ethics MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 176 23.2 List of datapoints in cross-cutting and topical standards that derive from other EU legislation List of data units of horizontal standards and thematic standards required under other EU legal acts This appendix is an integral part of the ESRS 2. The table below illustrates the datapoints in ESRS 2 and topical ESRS that derive from other EU legislation. Disclosure Requirement and related datapoint SFDR 1 reference Pillar 3 2 reference Benchmark Regulation 3 reference EU Climate Law 4 reference Section title where the information is disclosed ESRS 2 GOV-1 Board's gender diversity paragraph 21 (d) Indicator number 13 of Table #1 of Annex 1 Commission Delegated Regulation (EU) 2020/1816 5 , Annex II Sustainability governance ESRS 2 GOV-1 Percentage of board members who are independent paragraph 21 (e) Delegated Regulation (EU) 2020/1816, Annex II Sustainability governance ESRS 2 GOV-4 Statement on due diligence paragraph 30 Indicator number 10 Table #3 of Annex 1 Sustainability governance ESRS 2 SBM-1 Involvement in activities related to fossil fuel activities paragraph 40 (d) i Indicators number 4 Table #1 of Annex 1 Article 449a Regulation (EU) No 575/2013; Commission Implementing Regulation (EU) 2022/2453 6 Table 1: Qualitative information on Environmental risk and Table 2: Qualitative information on Social risk Delegated Regulation (EU) 2020/1816, Annex II Strategy, business model and value chain ESRS 2 SBM-1 Involvement in activities related to chemical production paragraph 40 (d) ii Indicator number 9 Table #2 of Annex 1 Delegated Regulation (EU) 2020/1816, Annex II Strategy, business model and value chain MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 177 ESRS 2 SBM-1 Involvement in activities related to controversial weapons paragraph 40 (d) iii Indicator number 14 Table #1 of Annex 1 Delegated Regulation (EU) 2020/1818 7 , Article 12(1) Delegated Regulation (EU) 2020/1816, Annex II Strategy, business model and value chain ESRS 2 SBM-1 Involvement in activities related to cultivation and production of tobacco paragraph 40 (d) iv Delegated Regulation (EU) 2020/1818, Article 12(1) Delegated Regulation (EU) 2020/1816, Annex II Strategy, business model and value chain ESRS E1-1 Transition plan to reach climate neutrality by 2050 paragraph 14 Regulation (EU) 2021/1119, Article 2(1) E1 Climate change ESRS E1-1 Undertakings excluded from Paris-aligned Benchmarks paragraph 16 (g) Article 449a Regulation (EU) No 575/2013; Commission Implementing Regulation (EU) 2022/2453 Template 1: Banking book- Climate Change transition risk: Credit quality of exposures by sector, emissions and residual maturity Delegated Regulation (EU) 2020/1818, Article12.1 (d) to (g), and Article 12.2 E1 Climate change ESRS E1-4 GHG emission reduction targets paragraph 34 Indicator number 4 Table #2 of Annex 1 Article 449a Regulation (EU) No 575/2013; Commission Implementing Regulation (EU) 2022/2453 Template 3: Banking book – Climate change transition risk: alignment metrics Delegated Regulation (EU) 2020/1818, Article 6 E1 Climate change ESRS E1-5 Indicator number 5 Table #1 and Indicator n. 5 E1 Climate change MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 178 Energy consumption from fossil sources disaggregated by sources (only high climate impact sectors) paragraph 38 Table #2 of Annex 1 ESRS E1-5 Energy consumption and mix paragraph 37 Indicator number 5 Table #1 of Annex 1 E1 Climate change ESRS E1-5 Energy intensity associated with activities in high climate impact sectors paragraphs 40 to 43 Indicator number 6 Table #1 of Annex 1 E1 Climate change ESRS E1-6 Gross Scope 1, 2, 3 and Total GHG emissions paragraph 44 Indicators number 1 and 2 Table #1 of Annex 1 Article 449a; Regulation (EU) No 575/2013; Commission Implementing Regulation (EU) 2022/2453 Template 1: Banking book – Climate change transition risk: Credit quality of exposures by sector, emissions and residual maturity Delegated Regulation (EU) 2020/1818, Article 5(1), 6 and 8(1) E1 Climate change ESRS E1-6 Gross GHG emissions intensity paragraphs 53 to 55 Indicators number 3 Table #1 of Annex 1 Article 449a Regulation (EU) No 575/2013; Commission Implementing Regulation (EU) 2022/2453 Template 3: Banking book – Climate change transition risk: alignment metrics Delegated Regulation (EU) 2020/1818, Article 8(1) E1 Climate change ESRS E1-7 GHG removals and carbon credits paragraph 56 Regulation (EU) 2021/1119, Article 2(1) E1 Climate change ESRS E1-9 Exposure of the benchmark portfolio to Delegated Regulation (EU) 2020/1818, Annex II Delegated Immaterial MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 179 climate-related physical risks paragraph 66 Regulation (EU) 2020/1816, Annex II ESRS E1-9 Disaggregation of monetary amounts by acute and chronic physical risk paragraph 66 (a) ESRS E1-9 Location of significant assets at material physical risk paragraph 66 (c). Article 449a Regulation (EU) No 575/2013; Commission Implementing Regulation (EU) 2022/2453 paragraphs 46 and 47; Template 5: Banking book - Climate change physical risk: Exposures subject to physical risk. Immaterial ESRS E1-9 Breakdown of the carrying value of its real estate assets by energy-efficiency classes paragraph 67 (c). Article 449a Regulation (EU) No 575/2013; Commission Implementing Regulation (EU) 2022/2453 paragraph 34;Template 2:Banking book - Climate change transition risk: Loans collateralised by immovable property - Energy efficiency of the collateral Immaterial ESRS E1-9 Degree of exposure of the portfolio to climate- related opportunities paragraph 69 Delegated Regulation (EU) 2020/1818, Annex II Immaterial ESRS E2-4 Amount of each pollutant listed in Annex II of the E- PRTR Regulation (European Pollutant Release and Transfer Register) emitted to air, water and soil, paragraph 28 Indicator number 8 Table #1 of Annex 1 Indicator number 2 Table #2 of Annex 1 Indicator number 1 Table #2 of Annex 1 Indicator number 3 Table #2 of Annex 1 Immaterial MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 180 ESRS E3-1 Water and marine resources paragraph 9 Indicator number 7 Table #2 of Annex 1 Immaterial ESRS E3-1 Dedicated policy paragraph 13 Indicator number 8 Table 2 of Annex 1 Immaterial ESRS E3-1 Sustainable oceans and seas paragraph 14 Indicator number 12 Table #2 of Annex 1 Immaterial ESRS E3-4 Total water recycled and reused paragraph 28 (c) Indicator number 6.2 Table #2 of Annex 1 Immaterial ESRS E3-4 Total water consumption in m 3 per net revenue on own operations paragraph 29 Indicator number 6.1 Table #2 of Annex 1 Immaterial ESRS 2- IRO 1 - E4 paragraph 16 (a) i Indicator number 7 Table #1 of Annex 1 Double materality assessment ESRS 2- IRO 1 - E4 paragraph 16 (b) Indicator number 10 Table #2 of Annex 1 Double materality assessment MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 181 ESRS 2- IRO 1 - E4 paragraph 16 (c) Indicator number 14 Table #2 of Annex 1 Double materality assessment ESRS E4-2 Sustainable land / agriculture practices or policies paragraph 24 (b) Indicator number 11 Table #2 of Annex 1 E4 Biodiversity and Ecosystems ESRS E4-2 Sustainable oceans / seas practices or policies paragraph 24 (c) Indicator number 12 Table #2 of Annex 1 E4 Biodiversity and Ecosystems ESRS E4-2 Policies to address deforestation paragraph 24 (d) Indicator number 15 Table #2 of Annex 1 E4 Biodiversity and Ecosystems ESRS E5-5 Non-recycled waste paragraph 37 (d) Indicator number 13 Table #2 of Annex 1 E5 Circular Economy ESRS E5-5 Hazardous waste and radioactive waste paragraph 39 Indicator number 9 Table #1 of Annex 1 E5 Circular Economy ESRS 2- SBM3 - S1 Risk of incidents of forced labour paragraph 14 (f) Indicator number 13 Table #3 of Annex I S1 Own Workforce MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 182 ESRS 2- SBM3 - S1 Risk of incidents of child labour paragraph 14 (g) Indicator number 12 Table #3 of Annex I S1 Own Workforce ESRS S1-1 Human rights policy commitments paragraph 20 Indicator number 9 Table #3 and Indicator number 11 Table #1 of Annex I S1 Own Workforce ESRS S1-1 Due diligence policies on issues addressed by the fundamental International Labor Organisation Conventions 1 to 8, paragraph 21 Delegated Regulation (EU) 2020/1816, Annex II S1 Own Workforce ESRS S1-1 processes and measures for preventing trafficking in human beings paragraph 22 Indicator number 11 Table #3 of Annex I S1 Own Workforce ESRS S1-1 workplace accident prevention policy or management system paragraph 23 Indicator number 1 Table #3 of Annex I S1 Own Workforce ESRS S1-3 grievance/complaints handling mechanisms paragraph 32 (c) Indicator number 5 Table #3 of Annex I S1 Own Workforce ESRS S1-14 Number of fatalities and number and rate of work- related accidents paragraph 88 (b) and (c) Indicator number 2 Table #3 of Annex I Delegated Regulation (EU) 2020/1816, Annex II S1 Own Workforce MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 183 ESRS S1-14 Number of days lost to injuries, accidents, fatalities or illness paragraph 88 (e) Indicator number 3 Table #3 of Annex I S1 Own Workforce ESRS S1-16 Unadjusted gender pay gap paragraph 97 (a) Indicator number 12 Table #1 of Annex I Delegated Regulation (EU) 2020/1816, Annex II S1 Own Workforce ESRS S1-16 Excessive CEO pay ratio paragraph 97 (b) Indicator number 8 Table #3 of Annex I S1 Own Workforce ESRS S1-17 Incidents of discrimination paragraph 103 (a) Indicator number 7 Table #3 of Annex I S1 Own Workforce ESRS S1-17 Non-respect of UNGPs on Business and Human Rights and OECD paragraph 104 (a) Indicator number 10 Table #1 and Indicator n. 14 Table #3 of Annex I Delegated Regulation (EU) 2020/1816, Annex II Delegated Regulation (EU) 2020/1818 Art 12 (1) S1 Own Workforce ESRS 2- SBM3 – S2 Significant risk of child labour or forced labour in the value chain paragraph 11 (b) Indicators number 12 and n. 13 Table #3 of Annex I Immaterial ESRS S2-1 Human rights policy commitments paragraph 17 Indicator number 9 Table #3 and Indicator n. 11 Table #1 of Annex 1 Immaterial MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 184 ESRS S2-1 Policies related to value chain workers paragraph 18 Indicator number 11 and n. 4 Table #3 of Annex 1 Immaterial ESRS S2-1Non-respect of UNGPs on Business and Human Rights principles and OECD guidelines paragraph 19 Indicator number 10 Table #1 of Annex 1 Delegated Regulation (EU) 2020/1816, Annex II Delegated Regulation (EU) 2020/1818, Art 12 (1) Immaterial ESRS S2-1 Due diligence policies on issues addressed by the fundamental International Labor Organisation Conventions 1 to 8, paragraph 19 Delegated Regulation (EU) 2020/1816, Annex II Immaterial ESRS S2-4 Human rights issues and incidents connected to its upstream and downstream value chain paragraph 36 Indicator number 14 Table #3 of Annex 1 Immaterial ESRS S3-1 Human rights policy commitments paragraph 16 Indicator number 9 Table #3 of Annex 1 and Indicator number 11 Table #1 of Annex 1 S3 Affected Communities ESRS S3-1 non-respect of UNGPs on Business and Human Rights, ILO principles or and OECD guidelines paragraph 17 Indicator number 10 Table #1 Annex 1 Delegated Regulation (EU) 2020/1816, Annex II Delegated Regulation (EU) 2020/1818, Art 12 (1) S3 Affected Communities ESRS S3-4 Human rights issues and incidents paragraph 36 Indicator number 14 Table #3 of Annex 1 S3 Affected Communities MANAGEMENT REPORT (All amounts are in EUR thousands unless otherwise stated) 185 ESRS S4-1 Policies related to consumers and end-users paragraph 16 Indicator number 9 Table #3 and Indicator number 11 Table #1 of Annex 1 S4 Consumers and End Users ESRS S4-1 Non-respect of UNGPs on Business and Human Rights and OECD guidelines paragraph 17 Indicator number 10 Table #1 of Annex 1 Delegated Regulation (EU) 2020/1816, Annex II Delegated Regulation (EU) 2020/1818, Art 12 (1) S4 Consumers and End Users ESRS S4-4 Human rights issues and incidents paragraph 35 Indicator number 14 Table #3 of Annex 1 S4 Consumers and End Users ESRS G1-1 United Nations Convention against Corruption paragraph 10 (b) Indicator number 15 Table #3 of Annex 1 G1 Business Ethics ESRS G1-1 Protection of whistle- blowers paragraph 10 (d) Indicator number 6 Table #3 of Annex 1 G1 Business Ethics ESRS G1-4 Fines for violation of anti- corruption and anti-bribery laws paragraph 24 (a) Indicator number 17 Table #3 of Annex 1 Delegated Regulation (EU) 2020/1816, Annex II) G1 Business Ethics ESRS G1-4 Standards of anti- corruption and anti- bribery paragraph 24 (b) Indicator number 16 Table #3 of Annex 1 G1 Business Ethics 186 THE COMPANY’S STATEMENT OF FINANCIAL POSITION (All amounts are in EUR thousands unless otherwise stated) Balansas Notes At 31 December 2024 At 31 December 2023 ASSETS Non-current assets Intangible assets 5 4,010 4,941 Property, plant and equipment 6 445,479 395,157 Right-of-use assets 7 4,895 5,355 Investments in a joint venture 8 99 45 Deferred income tax assets 23 12,778 7,122 Total non-current assets 467,261 412,620 Current assets Inventories 9 61 41 Prepayments 1,987 1,883 Trade receivables 10 49,985 26,912 Other amounts receivable 11 30,657 34,867 Prepaid income tax 23 - 28,934 Loans granted 12 266,060 167,082 Other financial assets 13 4,196 4,444 Cash and cash equivalents 14 113 634 Total current assets 353,059 264,797 TOTAL ASSETS 820,320 677,417 EQUITY AND LIABILITIES Equity Share capital 15 146,256 146,256 Share premium 15 8,579 8,579 Revaluation reserve 16 20,830 23,320 Legal reserve 16 14,626 12,105 Other reserves 16 500 40 Retained earnings 67,404 48,386 Total equity 258,195 238,686 Liabilities Non-current liabilities Non-current borrowings 19 22,000 28,143 Lease liabilities 20 4,605 5,038 Congestion management funds 21 308,802 264,173 Provisions 22 704 823 Other non-current amounts payable and liabilities 26 14,615 1,880 Total non-current liabilities 350,726 300,057 Current liabilities Current portion of non-current borrowings 19 6,143 6,143 Current borrowings 19 35 43 Current portion of lease liabilities 20 454 455 Trade payables 24 112,918 56,153 Current portion of congestion management funds 21 81,316 36,901 Advance amounts received 25 1,559 29,602 Provisions 22 83 1,607 Other current amounts payable and liabilities 26 8,891 7,770 Total current liabilities 211,399 138,674 Total liabilities 562,125 438,731 TOTAL EQUITY AND LIABILITIES 820,320 677,417 187 THE COMPANY’S STATEMENT OF COMPREHENSIVE INCOME (All amounts are in EUR thousands unless otherwise stated) Notes 2024 2023 Revenue Revenue from electricity transmission and related services 27 375,865 366,822 Other income 28 2,461 3,016 Operating expenses Expenses for purchase of electricity and related services 29 (271,579) (251,258) Wages and salaries and related expenses 30 (20,579) (17,630) Purchases of repair and maintenance services (10,281) (9,425) Reversal of impairment of inventories and amounts receivable 10 10 Other expenses 31 (15,313) (13,237) EBITDA 60,584 78,298 Depreciation and amortisation 5,6,7 (22,562) (19,737) Revaluation of property, plant and equipment 6 - (21,624) Impairment and loss on write-off of property, plant and equipment (653) (293) Operating profit (EBIT) 37,369 36,644 Financial income 6,247 4,853 Financial costs (489) (419) Financial income (costs) net 5,758 4,434 Profit before income tax 43,127 41,078 Income tax Current year income tax income/(expenses) 23 - 7,156 Deferred income tax income/(expenses) 23 5,901 152 Total income tax 5,901 7,308 Profit for the period 49,028 48,386 Other comprehensive income (expenses) that will not be reclassified to profit or loss Gain on revaluation of non-current assets 16 (22) 27,435 Deferred tax (expenses) 16,23 (245) (4,115) Total comprehensive income/(expenses) for the period 48,761 71,706 Basic and diluted earnings per share (in EUR) 0.097 0.096 188 THE COMPANY’S STATEMENT OF CHANGES IN EQUITY (All amounts are in EUR thousands unless otherwise stated) Note Share capital Share premium Legal reserve Revaluation reserve Other reserves Retained earnings/ (deficit) Total Balance at 1 January 2023 146,256 8,579 14,626 - 47,003 (49,484) 166,980 Comprehensive income/(expenses) for the period 16 - - - 23,320 - 48,386 71,706 Depreciation of revaluation reserve and amounts written off 16 - - - - - - - Transfer to reserves 16 - - (2,521) - (46,963) 49,484 - Dividends 16.17 - - - - - - - Balance at 31 December 2023 146,256 8,579 12,105 23,320 40 48,386 238,686 Balance at 1 January 2024 146,256 8,579 12,105 23,320 40 48,386 238,686 Comprehensive income/(expenses) for the period 16 - - - (267) - 49,028 48,761 Depreciation of revaluation reserve and amounts written off 16 - - - (2,223) - 2,223 - Transfer to reserves 16 - - 2,521 - 460 (2,981) - Dividends 16.17 - - - - - (29,252) (29,252) Balance at 31 December 2024 146,256 8,579 14,626 20,830 500 67,404 258,195 189 THE COMPANY’S STATEMENT OF CASH FLOWS (All amounts are in EUR thousands unless otherwise stated) Notes 2024 2023 Cash flows from operating activities Profit/(loss) for the period 49,028 48,386 Adjustments for non-cash items Depreciation and amortisation expenses 5,6,7 22,562 19,737 Revaluation of property, plant and equipment 6 - 21,624 Impairment/(reversal of impairment) of inventories and receivables 9.11 (33) (10) Impairment of property, plant and equipment 6 480 108 Bad debts 11 23 - Income tax expenses/(income) 23 (5,901) (7,308) Loss on write-off of property, plant and equipment 173 174 Increase (decrease) in provisions 196 (177) (Gain)/loss on disposal/write-off of property, plant and equipment (381) - Elimination of results of financing and investing activities Interest income (6,182) (4,849) Interest expenses 392 489 Other finance costs/(income) 32 (74) Changes in working capital (Increase)/decrease in trade receivables and other amounts receivable (23,295) 36,593 (Increase)/decrease in inventories, prepayments and other current assets 584 (269) Increase/(decrease) in amounts payable, grants, deferred revenue and advance amounts received 67,496 (167,036) Congestion management inflows received - 108,088 Changes in other financial assets 248 2,917 Income tax (paid) - 380 Net cash inflow/(outflow) from operating activities 105,422 58,773 Cash flows from investing activities (Acquisition) of property, plant and equipment and intangible assets (181,406) (137,154) Grants received 18 68,732 15,727 Loans granted to related parties 12 (98,978) 65,408 Congestion management inflows received 135,670 - Interest received 6,081 4,389 Net cash inflow/(outflow) from in investing activities (69,901) (51,630) Cash flows from financing activities Repayments of borrowings 19 (6,143) (6,142) Settlement of lease liabilities 20 (434) (417) Interest paid 19 (400) (495) Dividends paid (29,156) (26) Other cash flows from financing activities 91 72 Net cash (outflow) from financing activities (36,042) (7,008) Increase/(decrease) in cash and cash equivalents (521) 135 Cash and cash equivalents at the beginning of the period 14 634 499 Cash and cash equivalents at the end of the period 14 113 634 The accompanying notes are an integral part of the financial statements. 190 NOTES TO THE COMPANY’S FINANCIAL STATEMENTS (All amounts are in EUR thousands unless otherwise stated) 1.General information LITGRID AB (the “Company”) is a public limited liability company registered in the Republic of Lithuania. The address of its registered office is Karlo Gustavo Emilio Manerheimo g. 8, LT-05131, Vilnius, Lithuania. The Company was established as a result of the unbundling of Lietuvos Energija AB operations. The Company was registered with the Register of Legal Entities on 16 November 2010. The Company’s code is 302564383. LITGRID AB is an operator of electricity transmission system, operating electricity transmissions in the territory of Lithuania and ensuring stability of operation of the whole electric power system. The Company is also responsible for the integration of the Lithuanian electric power system into the European electricity infrastructure and the single electricity market. On 27 August 2013, the National Energy Regulatory Council (the “NERC”) granted a licence to the Company to engage in electricity transmission activities for an indefinite term. The principal objectives of the Company’s activities include ensuring stability and reliability of the electricity system in the territory of the Republic of Lithuania within the areas of its competence, creation of objective and non-discriminatory conditions for the use of the transmission networks, management, use and disposal of electricity transmission system assets and its appurtenances. As at 31 December 2024, the Company’s authorised share capital amounted to EUR 146,256,100.20 and it was divided into 504,331,380 ordinary registered shares with the nominal value of EUR 0.29 each. All shares are fully paid. Company’s shareholders: Number of shares held Number of shares held (%) At 31 December 2024 At 31 December 2023 At 31 December 2024 At 31 December 2023 EPSO-G UAB 491,736,153 491,736,153 97.5 97.5 Other shareholders 12,595,227 12,595,227 2.5 2.5 Total 504,331,380 504,331,380 100 100 The ultimate controlling shareholder of EPSO-G UAB (company code 302826889, address: Laisvės pr. 10, Vilnius) is the Ministry of Energy of the Republic of Lithuania. As from 22 December 2010, the shares of the Company are listed on the additional trading list of NASDAQ OMX Vilnius Stock Exchange, issue ISIN code LT0000128415. The number of shares held by the Company in the joint venture were as follows: Company name Address of the company’s registered office at 31 December 2024 at 31 December 2023 Profile of activities Baltic RCC OÜ Kadaka tee 42, EE- 12915 Tallinn Eesti 33.33% 33.33% Provision of services ensuring safety and reliability of the electricity system and coordination between the transmission network operators of the Baltic region As at 31 December 2024, the Company had 458 (31 December 2023: 418) employees. 191 NOTES TO THE COMPANY’S FINANCIAL STATEMENTS (All amounts are in EUR thousands unless otherwise stated) 2.Material accounting policy The material accounting policies adopted in the preparation of the Company’s financial statements for the year ended 31 December 2024 are summarised below. 2.1Basis of preparation The Company’s financial statements for the year ended 31 December 2024 have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union and meet them. The financial statements have been prepared on a historical cost basis, except for property, plant and equipment which is recorded at revalued amount, less accumulated depreciation and estimated impairment losses, and financial assets measured at fair value through other comprehensive income. Amounts in these financial statements are presented in thousands of euro (EUR), unless otherwise stated. The statement of cash flows is prepared indirectly. The Company's financial year coincides with the calendar year. The Company’s management approved these financial statements on 7 April, 2025. The shareholders of the Company have a statutory right to approve or not to approve these financial statements and require that management prepare a new set of financial statements. Accounting policies adopted in the preparation of the financial statements are consistent with those of the previous financial year except as follows: a)Adoption of new and/or amended IFRS and interpretations of the International Financial Reporting Interpretations Committee (IFRIC) In the year ended 31 December2024, The following IFRSs, amendments and IFRIC interpretations were adopted by the Company: Amendments to IFRS 16 Leases – Lease Liability in a Sale and Leaseback (issued on 22 September 2022 and effective for annual periods beginning on or after 1 January 2024). The amendments relate to sale and leaseback transactions which satisfy the requirements of IFRS 15 to be accounted for as a sale. Classification of liabilities as current or non-current – Amendments to IAS 1 (originally issued on 23 January 2020 and subsequently amended on 15 July 2020 and 31 October 2022, ultimately effective for annual periods beginning on or after 1 January 2024). These amendments clarify that liabilities are classified as either current or non-current, depending on the rights that exist at the end of the reporting period. Liabilities are non-current if the entity has a substantive right, at the end of the reporting period, to defer settlement for at least 12 months. The guidance no longer requires such a right to be unconditional. The October 2022 amendment established that loan covenants to be complied with after the reporting date do not affect the classification of debt as current or non-current at the reporting date. Management’s expectations whether they will subsequently exercise the right to defer settlement do not affect classification of liabilities. A liability is classified as current if a condition is breached at or before the reporting date even if a waiver of that condition is obtained from the lender after the end of the reporting period. Conversely, a loan is classified as non-current if a loan covenant is breached only after the reporting date. In addition, the amendments include clarifying the classification requirements for debt a company might settle by converting it into equity ‘Settlement’ is defined as the extinguishment of a liability with cash, other resources embodying economic benefits or an entity’s own equity instruments. There is an exception for convertible instruments that might be converted into equity, but only for those instruments where the conversion option is classified as an equity instrument as a separate component of a compound financial instrument. IAS 7 Statement of Cash Flows and IFRS 7 Financial Instruments – Supplier Finance Arrangements (Amendments) (issued on 25 May 2023 and effective for annual periods beginning on or after 1 January 2024), introducing disclosure requirements about an entity’s supplier finance arrangements. These amendments require the disclosures of the entity’s supplier finance arrangements that would enable the users of financial statements to assess the effects of those arrangements on the entity’s liabilities and cash flows and on the entity’s exposure to liquidity risk. The purpose of the additional disclosure requirements is to enhance the transparency of the supplier finance arrangements. The amendments do not affect recognition or measurement principles but only disclosure requirements. Based on the Company’s assessment, the amendments of IAS 7 and IFRS 7 did not have a significant impact on the Company’s financial statements. 192 NOTES TO THE COMPANY’S FINANCIAL STATEMENTS (All amounts are in EUR thousands unless otherwise stated) b)Standards, amendments and interpretations that have been endorsed by the European Union, but are not yet effective and have not been early adopted by the Company Foreign currency accounting – Amendments to IAS 21: Lack of Exchangeability (issued on 15 August 2023 and effective for annual periods beginning on or after 1 January 2025). In August 2023, the IASB issued amendments to IAS 21 to help entities assess exchangeability between two currencies and determine the spot exchange rate, when exchangeability is lacking. An entity is impacted by the amendments when it has a transaction or an operation in a foreign currency that is not exchangeable into another currency at a measurement date for a specified purpose. The amendments to IAS 21 do not provide detailed requirements on how to estimate the spot exchange rate. Instead, they set out a framework under which an entity can determine the spot exchange rate at the measurement date. When applying the new requirements, it is not permitted to restate comparative information. It is required to translate the affected amounts at estimated spot exchange rates at the date of initial application, with an adjustment to retained earnings or to the reserve for cumulative translation differences. Based on the Company’s assessment, the requirements of IAS 21 will not have a significant impact on the Company’s financial statements. 2.2Property, plant and equipment and intangible assets Items of assets with a useful life over one year and the acquisition cost higher than the set minimal capitalisation value for different groups of assets. All property, plant and equipment is shown at revalued amounts, based on periodic (at least every 5 years) property valuations, less the amounts of accumulated depreciation, recognised grants and impairment losses. During the revaluation, each object of the asset and the item within that object are evaluated by indicating the remaining useful life established for that item of the asset. Decreases in the carrying amount arising on the revaluation of property, plant and equipment that offset previous increases of the same asset are charged against the revaluation reserve directly in equity, and all other decreases are recognised in profit or loss. Increases in the carrying amount offset previous decreases of the same asset are recognised in profit or loss. All other increases in the carrying amount are credited to revaluation reserve. Each year, the difference between depreciation based on the revalued carrying amount of the asset charged to the statement of comprehensive income and depreciation based on the asset’s original cost is transferred from revaluation reserve to retained earnings, after considering the effect of deferred income tax. After the sale or write-off of a property unit, any balance of the revaluation reserve related to this property is transferred to retained earnings. Interest on targeted and general loans and other borrowing costs (such as the bank’s administration fee, etc.) are included in the acquisition cost of property, plant and equipment, if they are directly attributable to the acquisition of a qualifying asset. A qualifying asset is regarded to be an asset which is developed on the basis of a project the value of which is not less than EUR 1 million and the preparation of which for its intended use or sale takes no less than 12 months. Borrowing costs that are attributable to the acquisition of a qualifying asset are capitalised as part of the cost of that asset. The capitalisation of borrowing costs is started when costs related to the production or acquisition of the qualifying asset are incurred (a prepayment is made or a payment for works is made according to the signed statement on the works carried out and their respective value) and ended when all the activities necessary for the preparation of the qualifying asset for its intended use or sale in the manner intended by management are substantially complete. While determining the amount of borrowing costs eligible for the capitalisation of costs incurred in the acquisition of qualifying assets, the capitalisation rate is applied. Construction work in progress represents non-current fixed assets under construction. The cost of such assets includes design, construction works, plant and equipment being installed, and other directly attributable costs. Prepayments for non-current assets are classified as non-current assets because they are used in long-term activities and are presented in the balance sheet line item “property, plant and equipment”. Property, plant, and equipment is recorded at acquisition (production) cost, less grants received/receivable for the acquisition of property, property, plant, and equipment. Grants comprise financing from the EU support funds, a portion of congestion management funds designated for the financing of investments, payments for the expenses incurred during the connection of producers to the transmission network and performance of works for the relocation/reconstruction of the transmission network’s installations initiated by customers. Intangible assets 193 NOTES TO THE COMPANY’S FINANCIAL STATEMENTS (All amounts are in EUR thousands unless otherwise stated) Intangible assets are initially recognised at cost. Intangible assets are recognised only when it is probable that future economic benefits associated with these assets will flow to the Company and the value of assets can be measured reliably. After initial recognition, intangible assets are carried at cost, less accumulated amortisation and accumulated impairment losses, if any. Depreciation and amortisation Depreciation of property, plant and equipment and amortisation of intangible assets, except for land, construction work in progress, statutory servitudes and protection zones of the transmission network, is calculated using the straight-line method over estimated useful lives of the asset. The estimated useful lives, residual values and depreciation/amortisation method are reviewed by the Company at each year-end to ensure that they are consistent with the expected pattern of economic benefits from these assets. The effect of changes in estimates, if any, is accounted for on a prospective basis. Estimated useful lives of property, plant and equipment and intangible assets are as follows: Categories of property, plant and equipment and intangible assets Useful lives (in years) Buildings 20 – 75 Structures and machinery, whereof - Constructions of transformer substations 30 - Structures, machinery and equipment, whereof: - 400, 330, 110, 35 kV electricity transmission lines 40 – 55 - 400, 330, 110, 35, 6-10 kV switchyard’s electrical installations 30 – 35 - 400, 330, 110, 35, 6-10 kV capacity transformers 35 - electricity and communication devices 20 – 25 - electrical installations, whereof: 15 – 35 - relay security and automation equipment 15 – 35 - technological and dispatch control equipment 8 - other equipment 5 – 20 Other property, plant and equipment, whereof: - computer hardware and communication equipment 3 – 10 - inventory, tools 4 – 10 Intangible assets, whereof: 3 – 4 - statutory servitudes and protection zones of the transmission network Not subject to amortisation Statutory servitudes and protection zones of the transmission network have an indefinite useful life because the right to use the established zones is unlimited in time. Gain or loss on disposal of non-current assets is calculated as the difference between the proceeds from sale and the book value of the disposed asset and is recognised in the statement of comprehensive income of the reporting year. Subsequent repair costs incurred when performing major improvements are included in the carrying amount of property, plant and equipment, only when it is probable that future economic benefits associated with these costs will flow to the Company and these costs can be measured reliably. Repair costs for the asset category of overhead lines and cables are accounted for as component of item of assets by estimating the useful life of the new asset. The carrying amount of the replaced part is derecognised. All other repair and maintenance costs are recognised as expenses in the statement of comprehensive income during the financial period in which they are incurred. 2.3Impairment of property, plant and equipment and intangible assets At each reporting date, the Company reviews the carrying amounts of property, plant and equipment (including right-of-use assets) and intangible assets to determine whether there are any indications that those assets have suffered an impairment loss. If any such indication exists, the recoverable value of the asset is estimated in order to determine the extent of the impairment loss (if any). The recoverable amount is the higher of the asset’s fair value less costs to sell and value in use. In assessing value in use, the expected future cash flows are discounted to their present value using the discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted. If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying value, the carrying value 194 NOTES TO THE COMPANY’S FINANCIAL STATEMENTS (All amounts are in EUR thousands unless otherwise stated) of the asset (cash-generating unit) is reduced to its recoverable value. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a decrease of revaluation reserve. Where an impairment loss subsequently reverses, the carrying value of the asset (cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying value does not exceed the carrying value that would have been determined had no impairment loss been recognised for the asset (cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase (without exceeding the amount of previous impairment). 2.4Inventories Inventories are initially recorded at acquisition cost. Subsequent to initial recognition, inventories are stated at the lower of cost and net realisable value. Acquisition cost of inventories includes acquisition price and related taxes that are not subsequently recovered from tax administration authorities and costs associated with bringing inventory into their current condition and location. Cost is determined on the first-in, first-out (FIFO) basis. Net realisable value is the estimated selling price, less the estimated costs of completion and selling expenses. Inventories required to be stored as a reserve and the management does not expected these inventories to be used over the normal business cycle of the Company or 12 months are classified as non-current assets. Depreciation is calculated for reserve inventories that are classified as non-current assets. The depreciation rate applied reflects an expected useful life of such inventories. 2.5Trade payables and other financial liabilities, borrowings Financial liabilities, borrowings Financial liabilities, including borrowings, are recognised initially at fair value, less transaction costs. In subsequent periods, financial liabilities, excluding borrowings, are measured at amortised cost using the effective interest rate method. Interest expense is recognised using the effective interest rate method as disclosed in paragraph 2.6 of the notes to the financial statements. If a financing agreement concluded before the date of the statement of financial position proves that the liability was non-current as of the date of the statement of financial position, that financial liability is classified as non-current. Derecognition of financial liabilities A financial liability is derecognised when the obligation under the liability is settled, cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts of financial liabilities is recognised in the statement of comprehensive income. Trade payables Trade payables represent commitments to pay for goods and services acquired from suppliers in the ordinary course of business. Trade payables are classified as current liabilities if the term of their settlement is not longer than one year; otherwise they are included in non-current liabilities. 2.6Grants Asset-related grants The government and the EU grants received in the form of non-current assets or designated for the purchase of non-current are treated as asset-related grants. The Company’s congestion management revenue, intended for implementation of the strategic projects, are accounted for as asset-related grants. These grants are accounted for by reducing by the carrying amount of respective non-current assets. In the statement of comprehensive income, grants are recognised over the useful life of the asset by reducing depreciation expenses. When received in advance, grants related to the acquisition of non-current assets are stated as non-current liabilities until the 195 NOTES TO THE COMPANY’S FINANCIAL STATEMENTS (All amounts are in EUR thousands unless otherwise stated) costs are incurred which are reimbursed in line with terms and condition of financing agreements. Grants receivable are recorded in other amounts receivable when, in accordance with the agreements under which the grant providers assume the obligation to finance the investment projects, reimbursable costs have been incurred according to the established terms of the financing agreements. Income-related grants Grants received as a compensation for expenses or unearned income of the current or previous reporting period, also, all grants, which are not grants related to assets, are defined as grants related to income. Income-related grants are recognised as used in parts to the extent of expenses incurred during the reporting period or unearned income to be compensated by that grant. Income-related grants are recognised in profit or loss by increasing other income over the period in which the grant is received or when there is reasonable assurance that the grant will be received and that the Company complies with the conditions for the allocation of the grant established in the grant agreement. 2.7Connection of new consumers and producers The connection of producers is accounted for similarly to the principle applicable to grants by offsetting the acquisition cost of assets created for the connection of the producer against the compensation receivable from the connected producer. In case of relocation works of the electricity transmission network when major improvements are performed and when the assets are created by the Company, the grant principle is applied and the cost of the created assets is offset against the amount of compensations receivable from the customer, and when the assets are created by the customer and transferred to the Company free of charge, the assets received from the third parties are offset against the value of the assets. If the major improvement was not performed during the relocation and the asset was created by the Company, such asset is not recognised, i.e. compensation income from the customer and expenses for the creation of such asset are accounted for. When no major improvement is performed and the asset is created by the customer, the asset received from the customer free of charge is not recognised and accounted for in off-balance sheet accounts. Revenue received from connection of new consumers is accounted for by the Company over the useful life of the created asset because the connection of a new consumer is related to further consumption and related revenue. 2.8Lease liabilities Initial measurement of lease liability The amount of the initial measurement of lease liability is calculated as the present value of lease payments not paid at the commencement date. Lease payments are discounted using the incremental borrowing rate, which is applied when the contractual interest rate is not known. The incremental borrowing rate is determined by the rate at which the Company would be able to borrow funds for the purpose of acquiring certain assets for a respective period. At the commencement date, lease payments included in the measurement of a lease liability include: ‐fixed lease payments less any lease incentives receivable. ‐variable lease payments that depend on an index or a rate. ‐amounts expected to be payable by the Company under residual value guarantees. ‐the exercise price of the purchase option, if exercise of that option by the Company is reasonably certain. ‐fines for the termination of the lease, if it is assumed that the Company will exercise the option to terminate the lease during the lease term. Subsequent measurement of lease liability Subsequent to initial recognition, changes in the value of the Company’s lease liability are reflected by: ‐increasing the value of the liability by the amount of interest charged. ‐reducing the carrying amount by the lease payments made. ‐remeasuring the liability for lease modifications or revised payments. Remeasurement of lease liability Subsequent to initial recognition, the lease liability is remeasured to reflect changes in lease payments. The Company treats remeasurements as adjustments to the right-of-use assets. If the carrying amount the right-of-use assets is reduced to zero and the lease liability is reduced as well, the Company recognises any remaining amount of the remeasurement in profit or loss. 196 NOTES TO THE COMPANY’S FINANCIAL STATEMENTS (All amounts are in EUR thousands unless otherwise stated) 2.9Right-of-use assets Right-of-use assets are assets that the Company has the right to manage during the lease term. As of 1 January 2019, the Company recognises right-of-use assets for all types of leases, including the lease of a right-of-use asset in case of sublease, but excluding leases of intangible assets, short-term leases and leases of low value assets. Initial measurement of right-of-use assets At the date of a lease agreement, the Company measures right-of-use assets at cost, which consists of: the amount of the initial measurement of the lease liability. initial costs incurred directly attributable to the underlying asset. lease payments known at the commencement date, less any lease incentives received and receivable. costs to be incurred by the Company in dismantling or removing the underlying asset, restoring the site on which it is located or restoring the underlying asset to the condition required by the terms and conditions of the lease. The amount of the initial measurement of the lease liability is calculated as the present value of lease payments not paid at the commencement date using the discount rate implicit in the lease. Subsequent measurement of right-of-use assets After the initial recognition, the Company applies a cost method for right-of-use assets: the carrying amount of the asset at the respective date is calculated as the difference between the acquisition cost and the accumulated depreciation, plus any subsequent adjustments for the remeasurement of lease liability. The calculation of depreciation of right-of-use assets is started from the date on which the assets are transferred for the use (the commencement date) until the earlier of these dates: the end of the lease term and the end of the useful life. The Company calculates depreciation of right-of-use assets using the following rates: Land99 years Motor vehiclesfrom 2 to 4 years Buildingsfrom 2 to 3 years Other property, plant and equipmentfrom 2 to 3 years The Company applies the portfolio method for the land lease agreements concluded with the municipalities not by auction, i.e. a set of the agreements of the Company is accounted for as a single agreement due to similar criteria. Regardless of the remaining term of the land lease agreement, in accordance with the requirements of the legal acts, the agreements must be extended for as long as the facilities of the Company’s entities exist on the land plots. When assessing the flow generated by the infrastructure assets of the Company’s entities (for the calculation of the recoverable amount of assets), an infinite flow is projected as the ongoing reconstruction and repair works allow using the assets for a longer period than the established original depreciation rates. For this reason, the lease of land is subject to a substantially infinite rate corresponding to the original term of the agreement – 99 years. 2.10Provisions Provisions are recognised only when the Company has a legal obligation or irrevocable commitment as a result of past event, and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. If the effect of the time value of money is material, the amount of provision is discounted using the effective pre-tax discount rate set based on the interest rates for the period and taking into account specific risks associated with the provision as appropriate. Where discounting is used, the increase in the provision due to the passage of time is recognised as borrowing costs. 2.11Employee benefits a)Bonus plans The Company recognises a liability and an expense for bonuses where contractually obliged or where there is a past practice that has created a constructive obligation. b)Pension benefits to employees of retirement age According to the laws of the Republic of Lithuania and the Collective Agreement effective at LITGRID AB, each employee leaving 197 NOTES TO THE COMPANY’S FINANCIAL STATEMENTS (All amounts are in EUR thousands unless otherwise stated) the Company at the retirement age is entitled to a one-off benefit. A liability for such payments is recognised in the balance sheet and it reflects the present value of these payments at the date of the financial statements. At each reporting date, the long-term employee benefit obligation is estimated with reference to actuary valuations using the projected relative unit method. The present value of the defined long-term employee benefit obligation is determined by discounting the estimated future cash flows using the effective interest rates as set for government debentures denominated in a currency in which payments to employees are expected to be made and with maturity similar to that of the related liability. 2.12Congestion management funds The Company acquires the right to congestion management funds when different electricity market prices occur in Lithuania, Sweden, Poland and Latvia as a result of insufficient capacity of electricity lines. Revenue that was received as a result of price differences at different bidding areas is distributed equally by the power exchange operator (Nord Pool AS) to the transmission system operators of the countries which operate the interconnections. Regulation (EU) No 2019/943 of the European Parliament and of the Council of 5 June 2019 on conditions for access to the network for cross-border exchanges in electricity stipulates that congestion management funds may be used in the following order of priority: a)When revenue is used for guaranteeing availability of the allocated capacity of the interconnections, it is recognised as income in the period during which the related expenses are incurred. In case of unplanned disconnection of the electricity interconnection and when the trade in the interconnection’s capacities has already been completed at the electricity exchange (i.e. when they have already been allocated), the operators of the line ensure that the capacities traded are available to the market participants. In such a case, the operators incur costs that arise as a result of the price difference between the price of electricity traded by the operators and the price of balancing and (or) imbalance electricity purchased/sold by the Company. b)When revenue is used for maintaining or increasing the interconnections’ capacities, congestion management funds is accounted for using the accounting policies applicable to grants, i.e. initially congestion management funds is recognised as liability and recorded by reducing the value of the asset concerned, and subsequently it is recognised by reducing depreciation expenses of the related asset over the useful life of that asset. c)When revenue is used for reducing the tariff, revenue is recognised as income in the period during which the Company generates lower revenue due to lower tariffs and only in case when revenue cannot be efficiently used for the purposes set out in points a) and/or b). Subject to approval by the regulatory authorities of the Member States concerned, they may be used, up to a maximum amount to be decided by those regulatory authorities, as income to be taken into account by the regulatory authorities when approving the methodology for calculating network tariffs and/or fixing network tariffs. In the statement of financial position, unused congestion management funds are presented as non-current and current liabilities, given the planned use of congestion management funds to finance investments or to compensate tariff in the following year. 2.13Revenue recognition The Company’s revenue comprises as follows: ‐Revenue from electricity transmission and related services; ‐Other income. Revenue is recognised when it is probable that economic benefits associated with a transaction will flow to the Company, and when a reliable estimate of the amount of revenue can be made. Revenue is measured at the fair value of the consideration received or receivable, net of value added tax and discounts. Revenue from electricity transmission and related This group of the Company’s revenue comprises revenue from electricity transmission, provision of ancillary services, trade in imbalance and balancing electricity, congestion management revenue, revenue from connection of new consumers, congestion management funds used to reduce the tariff and other revenue related to electricity transmission and ancillary services. Revenue from contracts with customers comprises revenue from electricity transmission, ancillary services, trade in imbalance and balancing electricity and revenue from connection of new consumers and other related revenue. The Company recognises revenue from contracts with customers over the reporting period in which the performance obligation is satisfied, i.e. the control of the good is transferred or the service is provided, except for revenue from connection of new consumers which is recognised by the Company over the useful life of the created asset (Note 2.2). When recognising other income related to electricity transmission and ancillary services the Company takes into consideration the terms of contracts signed with customers and all significant facts and circumstances, including the nature, amount, timing and uncertainty relating to cash flows arising from the contract with the customer. The main sale contracts are signed for the term of one year and coincide with the reporting period. All subsequent value adjustments for previous periods are not made, and contract 198 NOTES TO THE COMPANY’S FINANCIAL STATEMENTS (All amounts are in EUR thousands unless otherwise stated) modifications are rare. Prices of the electricity transmission services are regulated by the Council which establishes the upper limits of the prices for the transmission service. Specific prices and tariffs for the transmission services are established by the Company’s Board within the limits approved by the Council. When establishing prices for the next year, deviations of the current year (the year not yet ended) and deviations of the previous year (the year that already ended) and various forecasts for the upcoming year are assessed, i.e. they increase or decrease the prices for the next year, i.e. the prices are not adjusted retrospectively. All possible price adjustments in the future periods for excess profit/higher loss incurred in the previous/current years are not treated as a variable part of the price under IFRS 15. Such decrease (due to excess profit earned) or increase (due to higher expenses incurred) in future revenue does meet the general accounting criteria for the recognition of liabilities or assets because it depends on the Company’s operations in the future and is treated as the regulated assets or liabilities and therefore, in the opinion of the Company’s management, it does not fall within the scope of IFRS 15. The Company purchases ancillary services from the producers and later provides this service to the distribution network operators and electricity consumers using the tariff established by the Council. The Company recognises the gross amounts of revenue as it acts as a principal in the provision of ancillary services. Other income Interest income is recognised on accrual basis considering the outstanding balance of debt and the applicable interest rate. Interest received is recorded in the statement of cash flows as cash flows from investing activities. Gain from disposal of property, plant and equipment, lease income, income from default charges and fines collected from the contractors as a result of late fulfilment of works, including property, plant and equipment under construction, are recognised by the Company as other income. Default charges and fines collected from the contractors as a result of late fulfilment of works are calculated upon the completion of a project or a stage thereof and upon notifying a supplier, and they are offset against the supplier’s debt. In case of a legal dispute over the amount of default charges or fines and when it is more likely than unlikely that the amounts of default charges or fines will be reduced or annulled, provisions are recognised. Dividend income is recognised when the right to receive payment is established. 2.14Income tax Income tax expense comprises the current income tax and deferred tax expense (income). Income tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity, in which case income tax is also recognised in other comprehensive income or directly in equity. Income tax The income tax expense for the current year is calculated on the current year’s profit before tax, as adjusted for certain non-deductible expenses/non-taxable income. Tax losses can be carried forward for indefinite period, except for the losses incurred as a result of disposal of securities and/or derivative financial instruments. Such carrying forward is disrupted if the Company changes its activities due to which these losses were incurred except when the Company does not continue its activities due to reasons which do not depend on the Company itself. The losses from disposal of securities and/or derivative financial instruments can be carried forward for 5 consecutive years and only be used to reduce the taxable income earned from the transactions of the same nature. Tax losses carried forward can be used to reduce the taxable income earned during the reporting year by maximum of 70%. In addition, the Company may also take over tax losses of the companies of the group or transfer tax losses to other companies of the group provided that the requirements of the Law on Corporate Income Tax are complied with. Deferred income tax Deferred taxes are calculated using the balance sheet liability method. Deferred tax assets and deferred tax liability are recognised for future tax purposes to reflect differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred tax liabilities are recognised on all temporary differences that will increase the taxable profit in future, whereas deferred tax assets are recognised to the extent it is probable that they will reduce the taxable profit in future. Deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting, nor taxable profit or loss. 199 NOTES TO THE COMPANY’S FINANCIAL STATEMENTS (All amounts are in EUR thousands unless otherwise stated) The Company reviews the carrying amount of a deferred income tax assets at each reporting date and reduces it to the extent that it is no longer probable that sufficient taxable profit will be available to allow the benefit of a part or all of that deferred tax assets to be utilised. Deferred tax assets and liabilities are estimated using the tax rate that has been applied when calculating income tax for the year when the related temporary differences are to be realised or settled. Deferred income tax assets and liabilities are offset only where they relate to income taxes assessed by the same fiscal authority or where there is a legally enforceable right to offset current tax assets and current tax liabilities. Current income tax and deferred income tax Current income tax and deferred income tax are recognised as income or expenses and included in profit or loss for the reporting period, except for the cases when tax arises from a transaction or event that is recognised directly in equity or in other comprehensive income, in which case taxes are also recorded in equity and in other comprehensive income respectively. 3.Accounting estimates and assumptions Significant accounting estimates and assumptions The preparation of financial statements according to International Financial Reporting Standards requires management to make estimates and assumptions that applied, the reported amounts of assets, liabilities, income and expenses, and the disclosures of contingencies. Actual results may differ from those estimates. The significant management estimates and assumptions and the main sources for uncertainties used in the preparation of these financial statements that might cause substantial changes in the carrying amounts of the related assets and liabilities in the next financial year are described below: Valuation of property, plant and equipment As described in Note 6, the Company revalued its property, plant and equipment as at 31 December 2023. The determination of the assets’ fair value is mainly affected by assumptions used in assessing the transmission service income for the future periods. The assumptions used in determining the fair value of property, plant and equipment are described in more detail in the above-mentioned note. Depreciation rates of property, plant and equipment The useful life of property, plant and equipment is determined separately for each item (component) of the asset by estimating future economic benefit in view of the expected period of use in the Company’s activities, the intensity of use, the environment of use, changes in the asset’s original standard performance over its entire useful life, technological and economic progress morally outdating the asset, legal and similar factors restricting the useful life of property, plant and equipment. Useful lives are reviewed annually to ensure that the depreciation period would correspond to the expected useful life of property, plant and equipment. The effect of changes in estimates, if any, is accounted for on a prospective basis. Congestion management funds and deferred income tax assets Based on the accounting policies described in Note 2.12, accounting for congestion management funds depends on the purpose for which revenue is used. These purposes are described in Regulation (EU) No 2019/943 of the European Parliament and of the Council of 5 June 2019 on the internal market for electricity. Deferred tax assets arising from congestion funds received in 2014-2017 and due to taxation with profit tax at the year as they received will be realised over the useful life of the asset acquired using congestion management funds. In the long term, regulation ensures the Company’s profitability, therefore, in the management’s opinion, deferred income tax assets will be realised in the future by reducing income tax payable. The congestion management funds received from 2018 are subject to profit tax at the time of use of congestion management funds, so there is no difference between financial and tax accounting. 4.Segment information The Company is engaged in the provision of electricity transmission and related services and its business activities are organised as a single segment. The Board is the main decision-making body of the Company. The Board monitors the key performance indicators: profit before interest, taxes, depreciation (amortisation), loss on impairment and write-off of property, plant and equipment 200 NOTES TO THE COMPANY’S FINANCIAL STATEMENTS (All amounts are in EUR thousands unless otherwise stated) (EBITDA). profit before interest and taxed (EBIT). net profit. operating expenses, excluding electricity and related expenses. These indicators are calculated on the basis of data reported in the financial statements. The Board also monitors adjusted performance indicator – adjusted EBITDA, which is non-IFRS alternative performance measure. Adjustments include temporary regulatory differences resulting from the Council’s decisions already made and predicted. All adjustments may have both positive and negative impact on the reporting period results. In Board’s view, adjusted EBITDA more accurately presents results of the operations and enable a better comparison of the results between the periods as they indicate the amount that was actually earned by the Group in the reporting year. Notes 2024 2023 Revenue 378,326 369,838 Operating expenses, excluding electricity, gas and related expenses, depreciation and impairment (46,173) (40,292) EBITDA * 60,574 78,288 Adjusted EBITDA 47,543 37,112 Temporary regulatory differences for previous periods 13,100 23,011 Temporary regulatory differences for reporting period (26,131) (64,187) Overall effect of management’s adjustments on EBITDA (13,031) (41,176) Result of lost control in subsidiary and revaluation (11,546) (29,902) Depreciation and amortisation (22,562) (19,737) Loss on impairment and write-off of assets * (643) (21,907) Total finance costs, net 5,758 4,434 Income tax 5,901 7,308 Net profit (loss) 49,028 48,386 Total assets at the end of period 820,320 677,417 Net financial deb at the end of period (33,124) (39,188) Investments (additions of property, plant and equipment and intangible assets) at the end of period (232,611) (165,371) The adjusted EBITDA for 2024 was calculated using the data of the unaudited regulated activity report, whereas this indicator for 2023 was revised using the data of the audited regulated activity report. ** In 2023, write-off of assets was EUR 283 thousand. All non-current assets of the Company are allocated in Lithuania where the Company conducts its business activities., except for an insignificant 1/3 of the NordBalt cable, which is located in the neutral waters of the Baltic Sea. In 2024, revenue from the Lithuanian clients accounted for 86% of the Company’s total revenue ( 84% in 2023). In 2024 and 2023, the Company’s revenue by geographical location of customers: 2024 2023 Lithuania 324,275 306,313 Estonia 28,266 29,534 Sweden 5,854 8,691 Poland 2,702 3,354 Luxembourg 7,792 1,716 Latvia 1,636 2,221 Denmark 5,300 1 Norway 3,030 4,816 Other countries (529) 13,192 Total 378,326 369,838 201 NOTES TO THE COMPANY’S FINANCIAL STATEMENTS (All amounts are in EUR thousands unless otherwise stated) The Company’s revenue from the major clients: 2024 2023 Client A 243,759 90,767 Client B 27,664 29,812 Client C 16,695 29,286 5.Intangible assets Patents and licences Computer software Other intangible assets Statutory servitudes and protection zones Total At 31 December 2022 Acquisition cost 950 10,028 342 1,691 13,011 Accumulated amortisation (634) (6,713) (180) - (7,527) Net book amount 316 3,315 162 1,691 5,484 Net book amount at 1 January 2023 316 3,315 162 1,691 5,484 Acquisitions 7 2,251 - 176 2,434 Reclassification to/from PP&E 886 (816) - - 70 Value adjustment due to change in assumptions - - - 201 201 Off-set of grants against intangible assets - (2,415) - - (2,415) Amortisation charge (332) (425) (76) - (833) Net book amount at 31 December 2023 877 1,910 86 2,068 4,941 At 31 December 2023 Acquisition cost 1,785 6,633 342 2,068 10,828 Accumulated amortisation (908) (4,723) (256) - (5,887) Net book amount 877 1,910 86 2,068 4,941 Net book amount at 1 January 2024 877 1,910 86 2,068 4,941 Acquisitions 49 1,917 - - 1,966 Reclassification to/from PP&E 344 (207) - - 137 Value adjustment due to change in assumptions - - - (390) (390) Off-set of grants against intangible assets (344) (1,578) - - (1,922) Amortisation charge (419) (245) (58) - (722) Net book amount at 31 December 2024 507 1,797 28 1,678 4,010 At 31 December 2024 Acquisition cost 1,834 6,764 342 1,678 10,618 Accumulated amortisation (1,327) (4,967) (314) - (6,608) Net book amount 507 1,797 28 1,678 4,010 * As at 31 December 2024, the assets related to statutory servitudes amounted to EUR 1,015 thousand (31 December 2023: EUR 1,302 thousand). The following assumptions for the recalculation of the provision for statutory servitudes applied as at 31 December 2024: the estimated number of applications to be received – 236, average compensation amount per application – EUR 212, discount rate – 2.09%; as at 31 December 2023: the estimated number of applications to be received – 1,302, average compensation amount per application – EUR 213, discount rate – 1.74%. As at 31 December 2024, the assets related to protection zones amounted to EUR 663 thousand (31 December 2023: EUR 766 thousand). The following assumptions for the recalculation of the provision for protection zones applied as at 31 December2024: 202 NOTES TO THE COMPANY’S FINANCIAL STATEMENTS (All amounts are in EUR thousands unless otherwise stated) adjusted planned value of services, considering amendments to the Law on Special Land Use Conditions of the Republic of Lithuania and services provided, discount rate – 2.09%; as at 31 December 2023: planned value of services estimated in accordance with the provisions of the Law on Special Land Use Conditions of the Republic of Lithuania and procurements completed, discount rate – 1.74%. 203 NOTES TO THE COMPANY’S FINANCIAL STATEMENTS (All amounts are in EUR thousands unless otherwise stated) 6.Property, plant, and equipment Land Buildings Structures and machinery Motor vehicles Other property, plant and equipment Construction work in progress Total At 31 December 2022 Revaluated acquisition cost 520 21,387 338,384 - 16,517 60,347 437,155 Accumulated depreciation - (2,212) (65,705) - (7,520) - (75,437) Accumulated impairment - - - - - - - Net book amount 520 19,175 272,679 - 8,997 60,347 361,718 Net book amount at 1 January 2023 520 19,175 272,679 - 8,997 60,347 361,718 Acquisitions - 492 13,909 - 4,136 150,991 169,528 Change in prepayments for PP&E - - - - - (6,591) (6,591) Revaluation (reversal) - 543 5,245 - 23 - 5,811 Write-offs - - (95) - 101 - 6 Sales - - - - - - - Impairment (reversal) - - - - (108) - (108) Reclassification to inventories - - - - (200) - (200) Reclassification to intangible assets - - - - - (70) (70) - - - - - 2,415 2,415 Reclassifications between grant categories - - (47,175) - (984) 48,159 - Reclassification between categories - 700 69,004 - 1,291 (70,995) - Off-set of connection revenue against non-current assets - (492) (13,886) - (1,078) (1,417) (16,873) Off-set of grants against non-current assets - - - - - (102,021) (102,021) Depreciation charge - (612) (15,937) - (1,909) - (18,458) Net book amount at 31 December 2023 520 19,806 283,744 - 10,269 80,818 395,157 At 31 December 2023 Revaluated acquisition cost 520 22,630 365,386 - 19,698 80,818 489,052 Accumulated depreciation - (2,824) (81,642) - (9,429) - (93,895) Accumulated impairment - - - - - - - Net book amount 520 19,806 283,744 - 10,269 80,818 395,157 Net book amount at 1 January 2024 520 19,806 283,744 - 10,269 80,818 395,157 Acquisitions - 556 24,834 169 5,805 208,750 240,114 Change in prepayments for PP&E - - - - - (9,469) (9,469) Revaluation (reversal) - - (22) - - - (22) Write-offs - (2) (1,170) - - (63) (1,235) Sales - - - - (1) - (1) Impairment (reversal) - - (480) - - - (480) Reclassification to inventories - - - - (100) 845 745 Reclassification to intangible assets - - - - 142 (279) (137) Reclassification off-set of grants against intangible assets - - - - - 1,922 1,922 Reclassifications between grant categories - (5,358) (42,811) - (579) 48,748 - Reclassification between categories - 11,142 91,594 - 3,709 (106,445) - Off-set of connection revenue against non-current assets - (556) (24,396) - (1,192) (816) (26,960) Off-set of grants against non-current assets - - - - - (132,775) (132,775) Depreciation charge - (692) (18,723) (11) (1,954) - (21,380) Net book amount at 31 December 2024 520 24,896 312,570 158 16,099 91,236 445,479 At 31 December 2024 Revaluated acquisition cost 520 25,575 331,384 169 18,054 91,236 466,938 Accumulated depreciation - (679) (18,334) (11) (1,955) - (20,979) Accumulated impairment - - (480) - - - (480) Net book amount 520 24,896 312,570 158 16,099 91,236 445,479 204 NOTES TO THE COMPANY’S FINANCIAL STATEMENTS (All amounts are in EUR thousands unless otherwise stated) There was no interest capitalised during the year ended December 2023. Prepayments for property, plant, equipment (PPE): 2024 2023 Carrying amount at 1 January 16,181 22,772 Prepayments paid for PPE over the period 2,316 13,803 Transfer to construction work in progress (11,785) (20,358) Unused advances repaid - (36) Carrying amount at 31 December 2024 6,712 16,181 As at 31 December 2024, the Company’s commitments for the acquisition of property, plant and equipment to be fulfilled in the upcoming periods amounted to EUR 170,733 thousand (31 December 2023: EUR 335,761 thousand). The table below presents the net book amounts of the Company’s property, plant and equipment, which would have been recognised had the historical cost method been used, less grants received and negative revaluations that would be treated as an impairment equivalent, as at 31 December 2024 and 31 December 2023: Land Buildings Structures and machinery Motor vehicles Other property, plant and equipment Construction work in progress Total At 31 December 2023 520 18,746 257,432 - 10,207 64,637 351,542 At 31 December 2024 520 23,865 288,854 158 16,049 84,524 413,970 Property, plant, and equipment is stated at acquisition cost, less grants received/receivable for the acquisition of property, property, plant, and equipment. Grants comprise financing from the EU support funds, a portion of congestion management funds designated for the financing of investments, payments for the expenses incurred during the connection of producers to the transmission network and performance of works for the relocation/reconstruction of the transmission network’s installations initiated by customers. Had the value of the property, plant and equipment not been reduced by the amount of grants, its carrying amount would have been increased by the amounts of the following grants: 2024 2023 Carrying amount at 1 January 458,506 354,323 Acquisitions 157,813 116,479 Depreciation charge (17,688) (11,963) Write-offs (17) (333) Carrying amount at 31 December 598,614 458,506 Revaluation of property, plant and equipment No regulatory decisions that could materially affect the value of the assets were adopted in 2024. The carrying amount of the asset was, within materiality threshold, an approximation of its fair value, therefore no adjustments were made to the assets value as at 31 December 2024. The valuation corresponded to Level 3 of the fair value hierarchy, it was performed using the Company’s internal resources and not engaging an independent external valuer. The Company assessed the assets as a business, but its assessment excluded all activities related to the transmission network development (and not related to the present assets being assessed), i.e. investments in the development projects, connection of new consumers/producers, grants for the development projects. In 2023, the Company performed the revaluation of its property, plant and equipment using internal resources, without engaging an independent external evaluator. The valuation corresponded to Level 3 of the fair value hierarchy. The Company estimated the 205 NOTES TO THE COMPANY’S FINANCIAL STATEMENTS (All amounts are in EUR thousands unless otherwise stated) fair value of the assets under the income approach, using the discounted cash flows calculation method. The value of assets was determined as the present value of net future cash flows. The Company performed the last revaluation of its property, plant and equipment as at 31 December 2018 and determined that the fair value of the property, plant and equipment is higher than carrying amount by EUR 5.8 million. Recognised in other comprehensive income (revaluation reserve) Recognised through profit or loss Total revaluation impact Increase in net book value as at 31 December 2023 27,435 8,172 35,607 (Decrease) in net book value as at 31 December 2023 - (29,796) (29,796) Total revaluation impact as at 31 December 2023 27,435 (21,624) 5,811 The decrease in value was largely determined by the review of the useful life of Alytus back-to-back converter due synchronisation projects and a EUR 21,487 thousand impairment loss recognised for the asset. The valuation involved the following steps: (1) The total fair values of the property, plant and equipment was determined using the income method. (2) Determining the fair value of items of property, plant and equipment: The regulatory asset base value was estimated using historical costs. The replacement cost new (RCN) was determined for asset items. The remaining useful life of the asset components was estimated. The total fair value was allocated to individual asset components and items. The Company’s activity is regulated, the property operates as an integral electrical grid. The fair value of the electrical grid is appraised using the income approach, but its assessment excludes all activities related to the transmission network development (i.e. not related to the present assets being assessed), i.e. investments in development projects, connection of new consumers/producers, grants to development projects. Application of discounted cash flow method The value of the assets was calculated using the following main assumptions: The forecast period until 2031. Additional component has been established for the financing of investments increasing the level of revenue from the regulated activities. Additional component was estimated by the Company in the long-term financial forecasts for 2025-2031 based on a sustainable level of debt (assuming that the average debt to EBITDA ratio over the regulatory period is below but close to 4.5). However, given that the regulatory framework did not define the sustainable level of debt, 86% of the requested additional component has been awarded for 2024, the need for additional component would be lower if actual investments were lower than planned, the amount of undiscounted additional component for 2025-2031 has been decreased in the measurement by 25%. The updated LRAIC model for the establishment of the regulated asset base and the cost of capital is applied in the regulatory pricing from 2022. The cost of capital comprises depreciation expenses of the regulated assets and return on investments, which is calculated by multiplying the regulated asset base by the rate of return on investments. Over the regulatory period of five years (current regulatory period covers 2022-2026), the cost of assets under optimisation (planned to be restored) is determined using the present (replacement) value and investments in the optimised assets over the regulatory period of five years are consistent with the value of assets being replaced, which is calculated under the LRAIC model. The cost of capital of the assets that are not optimised is determined using the historical value. The amounts of investments until 2031 are used from the actual ten-year investment plan, which excludes all development investments. 206 NOTES TO THE COMPANY’S FINANCIAL STATEMENTS (All amounts are in EUR thousands unless otherwise stated) All operating expenses attributable to the regulated activities are compensated through transmission revenue, except for the compensation of remuneration expenses, the compensation assumption of which is 96%. The terminal value was calculated based on the assumption that all the costs incurred by the Company will be compensated with revenue. The calculation of cash flows for the years 2024-2025 included a difference between the permitted and actual return on transmission activity investments in 2022-2023 (considering the efficient saving of operating expenses that increases the permitted investment return), which is reimbursed to customers through a lower sale price. Additionally, a difference between additional service revenue and income, included in the calculation of cash flows for 2025, is refunded through a higher component of additional services and revenue of the Company. The rate of return on investments (ROI pre-tax) is equal to 5% for 2024 (equivalent to a 4.25% post-tax) and from 2025 it is the same as the discount rate, i.e. 5.87% (are equal to post-tax WACC 4.99%). Net cash flows generated from the assets were discounted using the discount rate (WACC post-tax) of 4.99% calculated by the Company. Sensitivity analysis If the additional component for the financing of investments was not awarded, the value of the assets would be additionally lower by EUR 92.1 million, if the total amount estimated in the Company’s long-term financial forecasts was allocated, the value of the assets would be higher by an additional EUR 30.7 million. The sensitivity of asset valuation to the additional component for the financing of investments, the change in the rate of return on investments and the change in discount rate from 2025 is presented in the tables below: 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 1.00% -1.1 Application of replacement cost method The items of property, plant and equipment were allocated to main components of the technological assets: transformer substations, power transmission lines, back-to-back converters, and autotransformers. Carrying amount of other (unallocated) asset items accounts for only 0.6% of the carrying amount after valuation, therefore the assumption was made that their fair value equals to carrying amount, therefore they were excluded from subsequent stages of measurement. The fair value of construction in progress was also considered equal to carrying amount, because it consisted of recently acquired assets, the value of which approximated current market (fair) value. As at 31 December 2023, EUR 70,391 thousand of property, plant and equipment carrying amount of which is considered equal to its fair value was account for under the line item of acquisition/revaluation amount. The regulatory asset base value was estimated for each asset component by summing discounted historical cost of capital (depreciation expenses and return on investment for forecast period) and discounted residual value of the asset component at 207 NOTES TO THE COMPANY’S FINANCIAL STATEMENTS (All amounts are in EUR thousands unless otherwise stated) the end of 2031. A new replacement cost was calculated for each asset component based on the physical parameters of the asset items (autotransformer capacity, number of transformer substation connectors, number of transmission line circuits and type of poles) and the current purchase and LRAIC model rates and statistical indices. The remaining useful life of the asset components was estimated as follows: If the asset component is included in a 10-year investment plan, i.e. it is scheduled for reconstruction, the remaining useful life is the period before reconstruction; If information on the end of useful life/write-down date of the asset component is available, the remaining useful life is the period before the write-down; If not included in the plan, the remaining useful life is the difference between the asset component’s standard useful life (55 years for lines, 35 years for autotransformers, substations and converters, 60 years for a building) and the functional obsolescence (the period of time from the date of the asset’s entry into operation, after taking into account the reconstruction/replacement of components). The replacement cost of each asset component was calculated as a new replacement cost of the asset component multiplied by the component’s remaining useful life and divided by the component’s standard useful life. The increase in value of property, plant and equipment estimated using income approach was allocated to the asset items in proportion to replacement costs, ensuring that the value estimated is not lower than the regulated cash flow of the asset component. Taking into account the ongoing investment programme for synchronisation projects, the Company reviewed the alternative uses of the asset items affected by the synchronisation projects, and the remaining useful life. As a result, a shorter useful life was set for the components of Alytus back-to-back converter, i.e. until 30 June 2025 Based on the estimated remaining useful life, the remaining useful lives of the asset items have been reviewed and updated. The updated useful lives were applied from 1 January 2024. 7.Right-of-use assets As indicated below, the Company leases land, office premises, motor vehicles and other property, plant and equipment. The lease terms of the lease contracts (except for the lease of land) is 2-4 years. The lease terms of the land lease contracts is 99 years. When recognising right-of-use assets and lease liabilities and determining the lease terms the Company assessed extension and early termination options of the lease contracts. As the useful life of the right-of-use assets is longer than the lease term, depreciation is calculated from the commencement date of the lease till the end of the lease term. The Company’s right-of-use assets comprise as follows: 208 NOTES TO THE COMPANY’S FINANCIAL STATEMENTS (All amounts are in EUR thousands unless otherwise stated) Land Buildings Motor vehicles Total At 31 December 2022 Acquisition cost 4,465 47 1,461 5,973 Accumulated depreciation (180) (32) (169) (381) Net book amount 4,285 15 1,292 5,592 Net book amount at 1 January 2023 4,285 15 1,292 5,592 Acquisitions - 70 140 210 Write-offs - (47) (59) (106) Depreciation charge (45) (16) (385) (446) Depreciation (write-offs) - 48 57 105 Net book amount at 31 December 2023 4,240 70 1,045 5,355 At 31 December 2023 Acquisition cost 4,465 70 1,542 6,077 Accumulated depreciation (225) - (497) (722) Net book amount 4,240 70 1,045 5,355 Net book amount at 1 January 2024 4,240 70 1,045 5,355 Acquisitions - - - - Write-offs - - - - Depreciation charge (45) (24) (391) (460) Depreciation (write-offs) - - - - Net book amount at 31 December 2024 4,195 46 654 4,895 At 31 December 2024 Acquisition cost 4,465 70 1,542 6,077 Accumulated depreciation (270) (24) (888) (1,182) Net book amount 4,195 46 654 4,895 8.Investments in a joint venture 2024 2023 Carrying amount at 1 January 45 45 Change in value of investments in joint ventures 54 - Carrying amount at the end of the period 99 45 The Company applies the equity method, to more accurately reflect the value of the investment in a joint venture on its balance sheet. The increase in equity of the joint venture is recognised in income, whereas the decrease in expenses. The EUR 54 thousand increase in value of investments was recorded in 2024. 9.Inventories At 31 December 2024 At 31 December 2023 Materials, spare parts and other inventories 204 194 Less: impairment (143) (153) Carrying amount at the end of the period 61 41 209 NOTES TO THE COMPANY’S FINANCIAL STATEMENTS (All amounts are in EUR thousands unless otherwise stated) Movements in write-down allowance for inventories in 2024 and 2023 are indicated below: At 31 December 2024 At 31 December 2023 Carrying amount at 1 January 153 163 Change in impairment (10) (10) Carrying amount at the end of the period 143 153 In 2024 and 2023, the Company reversed additional provisions for inventory write-down to net realisable value in relation to inventories stored at the warehouse and not moving or slow-moving inventories and accounted for in operating expenses in the statement of comprehensive income. The Company’s inventories recognised as expenses in 2024 amounted to EUR 327 thousand (2023: EUR 385 thousand). 10.Trade receivables At 31 December 2024 At 31 December 2023 Trade receivables under contracts with customers Amounts receivable for electricity transmission and related services 39,912 18,082 Accumulated amounts receivable for electricity services 8,878 547 Trade receivables under contracts with customers carrying amount 48,790 18,629 Trade receivables under the other contracts with customers Amounts receivable for electricity transmission and related services 14 49 Congestion management funds receivable 1,053 770 Accumulated amounts receivable for electricity transmission and related services 67 7,408 Other trade receivables 61 56 Trade receivables under the other contracts with customers carrying amount 1,195 8,283 Short terms trade receivables total 49,985 26,912 The fair value of trade receivables approximates their carrying amount. As at 31 December 2024, trade receivables from contracts with customers were EUR 30.2 million higher (2.6 times) than as at 31 December 2023. Receivable for electricity transmission and related services as at 31 December 2024, compared to 31 December 2023, increased, as the price of ancillary services was 4.5times higher, and the price of transmission services as 2 times higher. Accrued receivable for electricity transmission and related services increased, as part of the sales of balancing and disbalancing energy in December were invoiced in 2025. In 2024, the Company did not recognise any expected credit losses related to trade. There were no amounts past due as at 31 December 2024 and as at 31 December 2023. 11.Other trade amounts receivable At 31 December 2024 At 31 December 2023 Non-financial asset Grants receivable 30,287 34,006 VAT receiveble from the budget 317 441 Total non-financial asset 30,604 34,447 Financial asset Other amounts receivable 53 443 Less: impairment of other receivables - (23) Total financial asset 53 420 Carrying amount 30,657 34,867 210 NOTES TO THE COMPANY’S FINANCIAL STATEMENTS (All amounts are in EUR thousands unless otherwise stated) The fair value of other amounts receivable approximates their carrying amount. By 31 December 2024 other receivables overdue, for which a 100% impairment allowance was recognised, were reclassified to bad debts and written off (at 31 December 2023: EUR 23 thousand). 12.Loans granted At 31 December 2024 At 31 December 2023 Loan to EPSO-G UAB (under the cashpool agreement) 265,472 166,600 Interest on loans 588 482 Carrying amount 266,060 167,082 NERC’s approval enabled the Company to enter into the cashpool agreement with EPSO-G UAB on 26 February 2021. The agreement establishes the possibility to temporarily use free congestion management revenue for inter-company lending and borrowing purposes. On 25 July 2024, Company signed a new cashpool agreement with EPSO-G UAB. The agreement was valid until 29 July 2025 and contained two possible extensions of 12 months each, by applying variable interest rate linked to ESTR (euro short-term rate). Under the group account (cashpool) agreement the Company’s positive funds balance transferred to the disposal of EPSO-G UAB is accounted for as amounts receivable (loans granted) in the statement of financial position and is not included in the line item of cash and cash equivalents. As at 31 December 2024, the Company assessed and did not identify any indications that credit risk of the EPSO-G UAB group companies, i.e. recipients of non-current and current loans, could be increased. Consequently, lifetime ECL were not recognised for current borrowing. 13.Other financial assets At 31 December 2024 At 31 December 2023 Funds deposited for guarantees 1,200 1,500 Deposits received 2,960 2,889 Other financial assets 36 55 Carrying amount at the end of the period 4,196 4,444 The fair value of other financial assets as at 31 December 2024 and 2023 approximated their carrying amount. 14.Cash and cash equivalents At 31 December 2024 At 31 December 2023 Cash at bank 113 634 Carrying amount at the end of the period 113 634 211 NOTES TO THE COMPANY’S FINANCIAL STATEMENTS (All amounts are in EUR thousands unless otherwise stated) The fair value of cash and cash equivalents is equal to their nominal and carrying amounts. 15.Share capital and share premium As at 31 December 2024 and 31 December 2023, the Company’s issued capital amounted to EUR 146,256 thousand and it was divided into 504,331,380 units of ordinary registered shares with the nominal value of EUR 0.29 each. All the shares were fully paid. Share premium represents a difference between the nominal value of shares and consideration received for shares, they were formed in 2010 and amount to EUR 8,579 thousand. Capital management Capital consists of the equity capital disclosed in the statement of financial position. According to the Law on Companies of the Republic of Lithuania, the equity of the Company must account for at least ½ of the amount of the authorised share capital. As at 31 December 2024 and 2023, the Company was in compliance with this requirement. No other external capital requirements have been imposed on the Company. Dividends are allocated pursuant to the approved dividend policy, under which dividends payable are directly linked with the effective use of the company’s equity, i.e. the higher benefits created by the Company for the shareholders are, the larger portion of profit can be allocated by the Company for a further development or implementation of other significant projects. The Company’s main objectives when managing capital are to safeguard the Company’s ability to continue as a going concern. In order to maintain or change the capital structure, the amount of dividends to be paid to the shareholders may be adjusted, capital may be returned to the shareholders, or new shares may be issued. 16.Legal reserve, revaluation reserve and other reserves Legal reserve A legal reserve is a compulsory reserve under the Lithuanian legislation. The legal reserve should not be less than 10 per cent of the authorised share capital and can only be used to cover the Company’s losses only. In 2024, the legal reserve accumulated by the Company complied with the requirements of the legal acts of the Republic of Lithuania and represented 10% of the issued share capital. In 2023, the legal reserve did not comply with the requirements of the legal acts of the Republic of Lithuania, as EUR 2 521 thousand was used to cover losses incurred in 2022. Revaluation reserve Pursuant to Article 39(7) of the Law on Companies of the Republic of Lithuania, “the revaluation reserve shall be the amount of increase (decrease) in the value of tangible fixed assets and financial assets resulting after the revaluation of assets in accordance with applicable financial reporting standards. The revaluation reserve or a portion thereof may be used to increase the capital. No part of the revaluation reserve may be distributed, either directly or indirectly.” In 2024, the Company reduced the revaluation reserve by the amount of EUR 22 thousand as it established the impairment provision in respect of the assets for which the value increase was formed in 2023 (the Company revalued property, plant and equipment in 2023 and established the revaluation reserve of EUR 27,435 thousand). Notes 2024 2023 Carrying amount at 1 January 23,320 - Revaluation of property, plant and equipment (reversal) (22) 27,435 Depreciation of revaluation reserve (2,590) - Write-off of property, plant and equipment (25) - Deferred income tax 147 (4,115) Carrying amount at the end of the period 20,830 23,320 212 NOTES TO THE COMPANY’S FINANCIAL STATEMENTS (All amounts are in EUR thousands unless otherwise stated) Other reserves Other reserves are formed based on the decision of shareholders and can be redistributed on the distribution of the next year’s profit. On 30 April 2024, the Ordinary General Meeting of Shareholders of LITGRID AB adopted the decision to approve the draft profit distribution, by rebuilding the legal reserve with the transfer of EUR 2,521 thousand from the retained earnings; allocating EUR 29,252 thousand of earnings to dividends, and establishing a EUR 500 thousand reserve for support. On 11 April 2023, the Ordinary General Meeting of Shareholders the decision was made to approve the draft profit (loss) distribution and to cover losses by transferring EUR 2,521 thousand from the legal reserve and EUR 46,828 thousand from other reserves, and through reversal of the reserve for support of EUR 135 thousand. 17.Dividends On 30 April 2024, the Ordinary General Meeting of Shareholders of LITGRID AB approved the distribution of the Company’s profit (loss) for 2023. EUR 29 252 thousand was allocated to dividends for the year ended 31 December 2023. On 11 April 2023, the Ordinary General Meeting of Shareholders of LITGRID AB the decision was made to approve the Company’s profit (loss) for 2022. Dividends for 2022 were not declared, as the Company reported a loss at the end of the year. 2024 2023 Dividends per share, Eur 0.058 0.000 18.Grants The grants at the Company are mainly designated for the acquisition of non-current assets. Movements in grants in 2024 and 2023 were as follows: Note 2024 2023 Opening balance at 1 January Grants receivable 34,006 302 Grants received in advance (non-current liabilities) - (32,802) Grants received in advance (current liabilities) (28,563) (34,896) 5,443 (67,396) Recognised grants Transfer to property, plant and equipment 5, 6 159,735 118,894 Grants used for compensation of expenses 195 - 159,930 118,894 Grants received Grants received in the form of monetary funds (cash flow statement) 68,732 15,727 Congestion revenue transferred to grants 21 43,498 13,457 Grants received during the previous years - (2) 112,230 29,182 Grants received in the form of assets 6 26,960 16,873 Closing balance at 31 December 2024 Grants receivable 30,287 34,006 Grants received in advance (non-current liabilities) (3,469) - Grants received in advance (current liabilities) (635) (28,563) 26,183 5,443 213 NOTES TO THE COMPANY’S FINANCIAL STATEMENTS (All amounts are in EUR thousands unless otherwise stated) 19.Borrowings The Company’s borrowings comprise as follows: At 31 December 2024 At 31 December 2023 Non-current borrowings Bank borrowings 22,000 28,143 Current borrowings Current portion of non-current bank borrowings 6,143 6,143 Bank borrowings interest 35 43 Total borrowings at the end of the period 28,178 34,329 Non-current borrowings grouped by maturity profile: At 31 December 2024 At 31 December 2023 From 1 to 2 years 4,000 6,143 From 2 to 5 years 12,000 12,000 After 5 years 6,000 10,000 Total 22,000 28,143 As at 31 December 2024 and 2023, no assets were pledged as collateral by the Company. As at 31 December 2024, the weighted average interest rate on the Company’s borrowings was 0.94 % (31 December 2023: 0.94 %). As at 31 December 2024, the outstanding balance of the Company’s borrowings with the fixed interest rate amounted to EUR 28,143 thousand (31 December 2023: EUR 34,286 thousand). As at 31 December 2024 and 2023, the Company had no unwithdrawn borrowings or overdrafts. Under the loan agreement signed by the Company with the European Investment Bank, the Company is committed to comply with the net debt to EBITDA ratio, which should not exceed 6.5 and with the interest coverage ratio, which should be above 3, these ratios are calculated two times per year at 31 December and at 30 June. The outstanding balance of a borrowing, which is subject to this requirement, amounted to EUR 28,143 thousand as at 31 December 2024 As at 31 December 2023: the outstanding balance of a borrowing, which is subject to this requirement, EUR 34,286 thousand (European Investment Bank). As at 31 December 2024 and 2023, the Company complied with the requirements laid down in the loan agreements. Reconciliation of net debt balances and cash flows from financing activities in 2024 and 2023: At 31 December 2024 At 31 December 2023 Cash and cash equivalents 113 634 Non-current borrowings (22,000) (28,143) Lease liabilities (4,605) (5,038) Current portion of non-current borrowings (6,143) (6,143) Interest charged on borrowings (35) (43) Current portion of lease liabilities (454) (455) Net debt (33,124) (39,188) Cash and cash equivalents 113 634 Borrowings with a fixed interest rate (33,237) (39,822) Net debt (33,124) (39,188) 214 NOTES TO THE COMPANY’S FINANCIAL STATEMENTS (All amounts are in EUR thousands unless otherwise stated) Cash Borrowings Other financing Leases Total Net debt at 1 January 2023 499 (40,477) - (5,702) (45,680) Increase (decrease) in cash and cash equivalents 135 - - - 135 New leases - - - (210) (210) Write – offs and termination of leases - - - 2 2 Lease payments - - - 417 417 Repayment of a borrowing - 6,142 - - 6,142 Interest charged - (360) (52) (77) (489) Interest paid - 366 52 77 495 Net debt at 31 December 2023 634 (34,329) - (5,493) (39,188) Net debt at 1 January 2024 634 (34,329) - (5,493) (39,188) Increase (decrease) in cash and cash equivalents (521) - - - (521) New leases - - - - - Write – offs and termination of leases - - - - - Lease payments - - - - - Repayment of a borrowing - 6,143 - - 6,143 Interest charged - (301) (15) (76) (392) Interest paid - 309 15 76 400 Net debt at 31 December 2024 113 (28,178) - (5,493) (33,558) 20.Lease liabilities The Company’s lease liabilities and their movements: 2024 2023 Carrying amount at the 1 January 5,493 5,702 Leases - 210 Terminated contracts - (2) Expenses of interest charged 76 77 Lease payments (principal) (434) (417) Lease payments (interest) (76) (77) Carrying amount at 31 December 5,059 5,493 Non-current lease liabilities 4,605 5,038 Current lease liabilities 454 455 Carrying amount at 31 December 5,059 5,493 The Company’s lease liabilities comprise as follows: At 31 December 2024 At 31 December 2023 Current portion 454 455 Repayment terms of non-current liabilities: From 1 to 2 years 297 433 From 2 to 3 years 29 298 From 3 to 5 years 23 29 After 5 years 4,256 4,278 Total 5,059 5,493 215 NOTES TO THE COMPANY’S FINANCIAL STATEMENTS (All amounts are in EUR thousands unless otherwise stated) Lease expenses for the Company’s leases, which do not comply with the requirements of IFRS 16, amounted to EUR 217.9 thousand in 2024 (2023: EUR 175.5 thousand). The Company had no leases with variable payments. 21.Congestion management funds At 31 December 2024 At 31 December 2023 Non-current portion of congestion management funds included in liabilities 308,802 264,173 Current portion of congestion management funds included in liabilities 81,316 36,901 Total congestion management funds 390,118 301,074 2024 2023 Congestion management funds at 1 January 301,074 351,495 Congestion management funds received during the period 134,856 108,527 Congestion management funds use to finance property, plant and equipment (43,498) (13,457) Congestion management funds recognised as income during the period (2,314) (145,491) Carrying amount at 31 December 390,118 301,074 The principles of collection and use of congestion management funds are set out in Note 2.12. Under the NERC’s Resolution No O3E-1330 of 30 September 2022 Regarding Adjustment of the Service Price Cap of Litgrid AB in 2023. In 2023, the transmission tariff was reduced, but EUR 142,300 thousand was used in 2023 to compensate for the loss of revenue. For the purpose of the statement of cash flows, congestion management funds collected in 2024 were presented under investing activities (2023: under operating activities), as congestion management funds collected in 2024 were intended to finance investments (2023: to compensate for the loss of operating income due to the reduction of the transmission tariff). The current portion of liabilities is expected to be settled (used) within 12 months. 22.Provisions At 31 December 2024 At 31 December 2023 Provisions for pension benefits to employees 673 477 Provisions for servitude liabilities 45 419 Provisions for registration of protection zones 69 176 Provisions for settlement of current liabilities - 1,358 Carrying amount 787 2,430 Non-current provisions 704 823 Current provisions 83 1,607 Carrying amount at 31 December 787 2,430 216 NOTES TO THE COMPANY’S FINANCIAL STATEMENTS (All amounts are in EUR thousands unless otherwise stated) Movements in provisions were as follows: Provisions for pension benefit obligations to employees Provisions for servitude liabilities Provisions for registration of protection zones Provisions for litigations and claims Total Carrying amount at 1 January 2023 654 468 367 100 1,589 Calculated - - 176 1,358 1,534 Revised estimate (177) 201 - - 24 Payments made - (250) (367) (100) (717) Carrying amount at 31 December 2023 477 419 176 1,358 2,430 Calculated - - - - - Revised estimate 196 (287) (103) - (194) Payments made - (87) (4) (1,358) (1,449) Carrying amount at 31 December 2024 673 45 69 - 787 The assumptions applied when calculating provisions for pension benefit obligations to employees were as follows: long-term salary growth rate in 2024 – 2.8% (2023: 3%), discount rate in 2024 – 0.96 % (2023: 1.23 %), employee turnover rate in 2024 – 12.15 % (2023: 14.5%), benefit rate in 2024 – the amount of 2-4 monthly average salaries (2023: the amount of 2-4 monthly average salaries). In 2024, the Company revised the provision for servitude liabilities and decreased it by EUR 287 thousand, taking into account statistics on payment requests (2023: increased by EUR 201 thousand). Please see Note 5. In 2024, the Company revised the provision of protection zones for the protection of electronic communications infrastructure and decreased it by EUR 103 thousand, while recognising provisioning expenses of EUR 4 thousand. Please see Note 5. (In 2023 recognised a new EUR 176 thousand provision of protection zones for the protection of electronic communications infrastructure and provisioning expenses of EUR 367 thousand to pay for works designated for the protection of the electricity transmission network installed on the land plot not owned). In the light of ongoing litigations, as at 31 December 2024, there were no any provisions recognised for litigations (as at 31 December 2023, EUR 1,358 thousand was recognised). In April 2024, the Court of Appeal rendered its final decision, rejecting the accrued default interest of EUR 1,358 thousand. 23.Current and deferred income tax Income tax expenses comprise as follows: 2024 2023 Income tax expenses of the previous year - (7,156) Deferred income tax income/(benefit) (5,770) (207) Deferred income tax income/(benefit) of the previous year (131) 55 Income tax expenses/(benefit) of the current year (5,901) (7,308) In accordance with tax legislation of the Republic of Lithuania, the Company’s profit (loss) for the twelve-month period ended 2024 was subject to a 15% income tax (2023: 15%). 217 NOTES TO THE COMPANY’S FINANCIAL STATEMENTS (All amounts are in EUR thousands unless otherwise stated) For the purpose of calculating income tax for 2024 and 2023, the taxable profit was reduced by 70% of the tax losses carried forward from 2022, by reducing the deferred tax asset. Accumulated tax loss and accumulated deferred tax asset on tax loss 2024 2023 Accumulated tax loss as at 1 January 11,220 55,374 Accumulated tax loss (reversed) 629 (370) Realised tax loss (11,849) (43,784) Accumulated tax loss as at 31 December - 11,220 2024 2023 Deferred tax asset on tax loss as at 1 January 1,683 8,306 Deferred tax asset on tax loss recognised 94 (55) Deferred tax asset on tax loss realised (1,777) (6,568) Deferred tax asset on tax loss as at 31 December - 1,683 Accumulated deferred tax asset on unused investment incentive 2024 2023 Unused deferred tax asset on investment incentive as at 1 January 3,165 - Accumulated deferred tax asset on investment incentive for current year * 8,391 3,000 Accumulated deferred tax asset on investment incentive for prior year * 1,473 165 Utilised deferred tax asset on investment incentive (3,165) - Unutilised deferred tax asset on investment incentive as at 31 December 9,864 3,165 In 2024, the deferred tax asset was recalculated at a 16% income tax rate, as from 1 January 2025 the Company’s profit (loss) will be subject to the 16% income tax rate in accordance with the tax legislation of the Republic of Lithuania. The movement in deferred income tax assets and liabilities prior to offsetting the balances related to the same fiscal authority was as follows: Deferred income tax assets Impairment of revalued property, plant and equipment and financial assets Impairment of assets Congestion revenue Differences in depreciation rates * Tax loss and unutilised investment incentive Other Total At 1 January 2023 1,246 93 2,378 212 8,305 626 12,860 Recognised in profit and loss 2,761 13 (58) 647 (3,457) 218 124 At 31 December 2023 4,007 106 2,320 859 4,848 844 12,984 Recognised in profit and loss (1,614) 17 108 1,779 5,016 218 5,524 Recognised in profit and loss - - - - - - - At 31 December 2024 2,393 123 2,428 2,638 9,864 1,062 18,508 Deferred income tax liabilities Increase in value of revalued property, plant and equipment and financial assets Effect of capitalisation of interest Tax relief on acquisition of PP&E Statutory servitudes and protection zones ** Total At 1 January 2023 - (271) (1,375) (129) - - (1,775) Recognised in profit and loss - 9 112 (93) - - 28 Recognised in profit and loss (4,115) - - - - - (4,115) At 31 December 2023 (4,115) (262) (1,263) (222) - - (5,862) Recognised in profit and loss 384 (8) 29 (28) - - 377 Recognised in profit and loss (245) - - - - - (245) At 31 December 2024 (3,976) (270) (1,234) (250) - - (5,730) Deferred income tax assets, net, at 31 December 2023 12,984 Deferred income tax assets, net, at 31 December 2024 18,508 Deferred income tax liability, net, at 31 December 2023 (5,862) Deferred income tax liability, net, at 31 December 2024 (5,730) Deferred income tax, net, at 31 December 2023 7,122 Deferred income tax, net, at 31 December 2024 12,778 218 NOTES TO THE COMPANY’S FINANCIAL STATEMENTS (All amounts are in EUR thousands unless otherwise stated) * From 31 December 2022, the differences in depreciation rates result in deferred tax asset, therefore were transferred to the line item ‘Deferred tax asset’. ** Statutory servitudes and protection zones result in both deferred tax asset and deferred tax liability, therefore were netted off and reported under 'Deferred tax liability’. On the basis of this amendment, the amounts of deferred tax asset and deferred tax liability realisable in long-term and short-term period were restructured on 31 December 2023. The analysis of movements in deferred income tax assets and liabilities over time is as follows: At 31 December 2024 At 31 December 2023 Deferred income tax assets: Deferred income tax assets to be realised after more than 12 months 6,470 7,534 Deferred income tax assets to be realised within 12 months 12,038 5,450 Total 18,508 12,984 Deferred income tax liabilities: Deferred income tax liabilities to be settled after more than 12 months (5,196) (5,384) Deferred income tax liabilities to be settled within 12 months (534) (478) Total (5,730) (5,862) The table below presents reconciliation of income tax expenses reported in the statement of comprehensive income to income tax expenses calculated at a statutory income tax rate on profit before income tax: 2024 2023 Profit/(loss) before income tax 43,127 41,078 Income tax calculated at a rate of 15% 6,469 6,162 Effect of investment incentive (7,866) (3,000) Effect of investment incentive of prior years (3,674) (10,117) Income tax expenses/(benefit) for the previous year (131) 36 Effect of non-allowable deductions and non-taxable income 348 (389) Tariff revaluation effect (1,047) - Income tax expenses/(benefit) recognised in profit or loss (5,901) (7,308) 219 NOTES TO THE COMPANY’S FINANCIAL STATEMENTS (All amounts are in EUR thousands unless otherwise stated) The change in prepaid income tax and repayable income tax was as follows: 2024 2023 Amount of prepaid income tax (income tax) as at 1 January 28,934 28,597 (Repayable) income tax paid - (380) Additional overpayment of income tax due to utilised investment incentives of prior periods - 7,137 Realised income tax prepaid * (28,934) (6,420) Prepaid income tax as at 31 December - 28,934 * Prepaid income tax was offset against the fees payables to the contractor carrying out the investment project. 24.Trade payables At 31 December 2024 At 31 December 2023 Amounts payable for electricity 46,188 26,684 Amounts payable for repair works, services 14,482 3,190 Payables for property, plant and equipment and inventory 52,248 26,279 Carrying amount at the end of the period 112,918 56,153 As at 31 December 2024, compared to 31 December 2023, trade payables increased 2 times as result of the following: 73 % increase in debt for electricity due to a 1.8 times increase in ancillary services and balancing costs in December; 2 times increase in debt for property, plant and equipment due to the larger-scale investments made under the project for synchronisation with the Continental European Network. The fair value of trade payables approximates their carrying amounts. 25.Advance amounts received At 31 December 2024 At 31 December 2023 Deferred revenue - 2 Advance amounts received from new consumers and producers 874 217 Grants received in advance 635 28,563 Other advance amounts received 50 820 Carrying amount 1,559 29,602 Advance amounts received from new consumers and producers include advance amounts received from new consumers and 220 NOTES TO THE COMPANY’S FINANCIAL STATEMENTS (All amounts are in EUR thousands unless otherwise stated) producers for connection to electricity networks and for electricity infrastructure relocation services. 26.Other amounts payable At 31 December 2024 At 31 December 2023 Other non-current amounts payable and liabilities Non-financial liabilities Advance amounts received from connection of new consumers * 11,005 1,595 Non-current trade payables 3,469 - Deferred revenue - 131 Grants received in advance 141 154 Carrying amount at the end of period 14,615 1,880 Other current amounts payable and liabilities Non-financial liabilities Employment-related liabilities ** 2,235 1,860 Accrued expenses relating to vacation reserve 1,876 1,758 Real estate and other taxes payable 688 - Total non-financial liabilities 4,799 3,618 Financial liabilities Dividends payable 592 496 Deposits received *** 2,960 2,889 Fee payable to the regulator 540 618 Other amounts payable and current liabilities - 149 Total financial liabilities 4,092 4,152 Total carrying amount of financial and non-financial liabilities 8,891 7,770 Total amount payable and liabilities 23,506 9,650 * In 2024, prepayments received for the connection of new consumers/producers/facilities significantly increased due to one of the largest railway infrastructure modernisation projects in Lithuania implemented by LTG Infra AB. ** As at 31 December 2023, the amount was adjusted because the amount of EUR 1,481 thousand was reclassified from the line item “Accrued other expenses” within financial liabilities to the line item “Employment-related liabilities” within non-financial liabilities *** Deposits received consist of deposits received from customers under imbalance purchase - sale contracts. The fair value of other amounts payable approximates their carrying amount. 27.Revenue from electricity transmission and related services 2024 2023 Revenue from contracts with customers Revenue from electricity transmission and related services Electricity transmission services 129,079 64,180 Trade in balancing/imbalance electricity 102,814 108,264 Electricity ancillary services 139,173 27,992 Revenue from other sales of electricity and related services 2,606 5,867 Total revenue from electricity transmission and related services 373,672 206,303 Other income from contracts with customers Income from administration of guarantees of origin 158 78 Total other income 158 78 Total revenue from contracts with customers 373,830 206,381 Revenue not attributable to contracts with customers Electricity transmission services (tariff compensation using congestion management funds) - 142,300 Electricity transmission services (recognised as income) 2,314 3,191 Other electricity-related services (322) 14,937 Revenue from connection of producers and relocation of electrical installations 43 13 Total revenue not attributable to contracts with customers 2,035 160,441 Total revenue 375,865 366,822 221 NOTES TO THE COMPANY’S FINANCIAL STATEMENTS (All amounts are in EUR thousands unless otherwise stated) All revenues are recognised over – time. Revenue from electricity transmission and related services during the period of twelve months in 2024, compared to the period of twelve months in 2024 increased 1.8 times, where: The revenue from balancing and imbalance energy sale decreased by 5 % due to decrease in the electricity sale price by 44 %, although increase the volume of electricity sold increased by 69 %; Revenue from ancillary services increased 5 times due to a higher ancillary services acquisition component to the transmission service price; Transmission revenue increased 2 times due to 2 times higher transmission services tariff. However, transmission revenues, including congestion management revenue used to reduce transmission tariff, decreased by 37.5 %. In the period of twelve months of 2023 EUR 142,300 thousand of congestion management revenue was used to reduce the tariff. Imbalance pricing has changed since October 2024, when Litgrid connected to a single European platform for the exchange of balancing energy from frequency restoration reserves with manual activation (MARI). The neutrality component, which is added to (deducted from) the balancing energy reference price, before the connection to MARI, was calculated based on the actual balancing trade data for the reporting month, to socialise the expenses and/or income, which Litgrid incurred. After the connection to MARI, the neutrality component is calculated in advance and adjusted for subsequent months using actual data from previous months, which may result in a significant difference between the balancing and imbalance income and expenses during the reporting period. The difference between expenses and revenue from balancing and imbalance energy was EUR 4,731 thousand. 28.Other income 2024 2023 Income from lease of assets 576 551 Interest on late payment and default charges 924 1,609 Gain on disposal of assets 380 476 Other income 581 380 Total 2,461 3,016 29.Expenses of purchases of electricity and related services 2024 2023 Expenses for purchase of imbalance and balancing electricity 107,545 108,515 Expenses for electricity ancillary services 121,649 98,121 Expenses for electricity technological needs 36,926 38,273 Expenses for electricity and related services 5,459 6,349 Carrying amount at the end of period 271,579 251,258 222 NOTES TO THE COMPANY’S FINANCIAL STATEMENTS (All amounts are in EUR thousands unless otherwise stated) Purchases of electricity transmission and related services during the period of twelve months in 2024, compared to the period of twelve months in 2023 increased as: Expenses for additional services increased by 24 % to EUR 121.6 million; Balancing and imbalance electricity expenses decreased 5 %, as the cost impact of a 62 % increase in volume was almost eliminated by a 41 % decrease in the average purchase price; Expenses of compensating for electricity purchase technological losses in the transmission network decreased by 4 % to EUR 36.9 million due to a 5.8 % lower average electricity purchase price, while the amount technological losses was 2.5 % higher. 30.Wages and salaries and related expenses 2024 2023 Wages and salaries 20,216 17,322 Expenses of social security contributions 363 308 Carrying amount at the end of period 20,579 17,630 31.Other expenses 2024 2023 Telecommunications and IT system expenses (2,850) (2,465) Tax expenses (2,876) (2,670) Fee payable to the regulator (2,161) (2,473) Business protection expenses (980) (870) Market coupling costs (805) (641) Membership fee (568) (518) Management service cost (923) (505) Business trips (367) (399) Insurance expenses (573) (445) Transport expenses (311) (303) Premise rental expenses (360) (287) Collective agreement benefits (234) (189) Consultation service expenses (654) (300) Personnel development costs (298) (247) Research and development works (172) (307) Expenses of governing bodies (115) (66) Public relations (101) (112) Damage compensation (1) 613 Support (214) (39) Other expenses (750) (1,014) Carrying amount at the end of period (15,313) (13,237) 223 NOTES TO THE COMPANY’S FINANCIAL STATEMENTS (All amounts are in EUR thousands unless otherwise stated) 32.Related-party transactions EPSO-G UAB was the parent company as at 31 December 2024 and 2023. The parent entity of this company was the Republic of Lithuania represented by the Ministry of Energy of the Republic of Lithuania. For the purposes of the related-party disclosure the Republic of Lithuania excludes central and local government authorities. The disclosures comprise transactions with the companies of the EPSO-G UAB group, associates and all entities controlled by or under a significant influence of the state (transactions with these entities are disclosed only if the amount of the transactions exceeds EUR 100 thousand during a calendar year) and with the management, and balances arising from these transactions. The list of entities controlled by or under a significant influence of the state, with which the transactions are disclosed, is presented at address: https://vkc.sipa.lt/apie-imones/vvi-sarasas/. The Company’s related parties in 2024 and 2023 were as follows: ‐The Company’s parent EPSO-G, which is wholly owned by the Ministry of Energy of the Republic of Lithuania: ‐The companies of the EPSO-G UAB group: ‐Amber Grid AB (jointly controlling shareholders); ‐TETAS UAB (jointly controlling shareholders); ‐Energy Cells UAB (jointly controlling shareholders); ‐BALTPOOL UAB (jointly controlling shareholders). ‐The companies of Ignitis Grupė UAB ‐Other state-owned entities: ‐State Enterprise Ignalina Nuclear Power Plant ‐State Enterprise Centre of Registers ‐Other state-owned companies or those under significant influence. ‐Management. Transactions with related parties are carried out in accordance with the public procurement requirements or the tariffs approved by the legal acts. The Company’s transactions with the state-owned enterprises mainly comprise sales of electricity transmission, balancing, imbalance and electricity ancillary services, purchase of electricity. EPSO-G UAB provides management services, TETAS UAB provides services under construction contracts. The Company’s transactions conducted with related parties in 2024 and balances arising from these transactions as at 31 December 2024 were as follows: Related parties Amounts receivable and accrued revenue Amounts payable and accrued expenses Loans granted Purchases Sales Other sales EPSO-G UAB group companies EPSO-G UAB 589 210 265,472 852 - 6,182 TETAS UAB 154 4,030 - 23,759 - 359 Energy cells UAB 30 762 - 7,477 374 - State-owned companies Energijos Skirstymo Operatorius AB 29,107 1,144 - 3,275 243,759 - Ignitis Gamyba AB 688 27,026 - 150,424 1,515 - Ignitis Grupės Paslaugų Centras UAB 33 - - - 299 - Ignitis UAB 568 1,615 - 7,401 16,695 - Vilniaus Kogeneracinė Jėgainė UAB 26 118 - 1,794 418 - Kauno Kogeneracinė Jėgainė UAB 3 - - 308 66 - Vėjas LT UAB 1 - - - 97 - Via Lietuva AB - - - - - - Vidaus vandens kelių direkcija AB - 346 - 286 - - STATE ENTERPRISE IGNALINA NUCLEAR POWER PLANT 121 18 - 2 1,196 - LTG Infra AB 85 4,891 - - 806 - State Enterprise Centre of Registers - 1 - 21 - - 31,405 40,161 265,472 195,599 265,225 6,541 224 NOTES TO THE COMPANY’S FINANCIAL STATEMENTS (All amounts are in EUR thousands unless otherwise stated) Income from other sales comprised as follows: interest charged to EPSO-G UAB on the loan granted (EUR 6,182 thousand), and interest on late payment and default charges from TETAS UAB (EUR 359 thousand). The Company’s transactions conducted with related parties in 2023 and balances arising from these transactions as at 31 December 2023 were as follows: Related parties Amounts receivable and accrued revenue Amounts payable and accrued expenses Loans granted Purchases Sales Other sales EPSO-G UAB group companies EPSO-G UAB - 150 167,082 505 - 4,849 TETAS UAB 279 1,526 - 9,811 - 625 Energy cells UAB 15 861 - 2,455 535 - State-owned companies Energijos Skirstymo Operatorius AB 13,765 1,145 - 1,656 90,743 - Ignitis Gamyba AB 477 12,592 - 130,303 4,082 - Ignitis Grupės Paslaugų Centras UAB 29 - - - 285 - Ignitis UAB 983 809 - 9,594 29,812 - Vilniaus Kogeneracinė Jėgainė UAB 111 100 - 616 549 - Kauno Kogeneracinė Jėgainė UAB - 36 - 276 79 - Vėjas LT UAB - 227 - - - - Via Lietuva AB - - - - 1,086 - Vidaus vandens kelių direkcija AB - - - - - - State Enterprise Ignalina Nuclear Power Plant 55 - - - 535 - LTG Infra AB 37 75 - - 295 - VĮ Registrų centras - 1 - 402 - - 15,751 17,522 167,082 155,618 128,001 5,474 Income from other sales comprised as follows: interest charged to EPSO-G UAB on the loan granted (EUR 4,849 thousand), and interest on late payment and default charges from TETAS UAB (EUR 625 thousand). After the connection of the battery park of ENERGY CELLS UAB, the assets created during the connection in the amount of EUR 3 425 thousand were transferred to the Company free of charge. Dividends paid to related parties 2024 2023 EPSO-G UAB 28,521 - Total 28,521 - Payments to key management personnel At 31 December 2024 At 31 December 2023 Employment-related payments 1,276 1,110 Whereof: Payed benefits* 168 3 Number of key management personnel (average annual) 9 9 * - including social security contributions paid by the employer. No loans, guarantees or any other benefits were paid or calculated, nor any assets were transferred to the Company’s management in 2024 and 2023. Key management personnel consists of the Company’s head of administration, chiefs of the departments and centers, and members of the collegial management bodies. In 2024, payments to the members of the collegial management bodies amounted to EUR 104 thousand (2023: EUR 66 thousand). 225 NOTES TO THE COMPANY’S FINANCIAL STATEMENTS (All amounts are in EUR thousands unless otherwise stated) 33.Basic and diluted earnings per share In 2024 and 2023, the Company’s basic and diluted earnings/(deficit) per share were as follows: At 31 December 2024 At 31 December 2023 Profit/(loss) for the period attributable to the Company’s shareholders (EUR thousands) 49,028 48,386 Weighted average number of shares (units) 504,331,380 504,331,380 Basic and diluted earnings/(deficit) per share (in EUR) 0.097 0.096 34.Additional information on cash flows Changes in the Company’s payables for non-current assets amounting to EUR 26,199 thousand in 2024 (2023: EUR 12,758 thousand). 35.Financial risk factors The Company is exposed to financial risks in its operations. In managing these risks, the Company seeks to mitigate the effect of factors which could make a negative effect on the financial performance of the Company. Financial risk management is conducted by the Company’s Finance Planning and Analysis Division in accordance with the Treasury and Financial Risk Management Policy of the EPSO-G UAB Group approved by the Board of LITGRID AB which is published on the website of EPSO-G UAB www.epsog.lt. Financial instruments by category (as per the statement of financial position): Financial assets At 31 December 2024 At 31 December 2023 Trade receivables under contracts with customers 48,790 18,629 Trade receivables 1,195 8,283 Other amounts receivable 53 420 Loans granted 266,060 167,082 Other financial assets 4,196 4,444 Cash and cash equivalents 113 634 Financial assets measured at amortised cost 320,407 199,492 Other financial assets Financial assets measured at fair value through other comprehensive income - - Total financial assets 320,407 199,492 At 31 December 2024 At 31 December 2023 Financial liabilities * Borrowings 28,178 34,329 Lease liabilities 5,059 5,493 Trade payables 112,918 58,033 Dividends payable 592 496 Guarantee on the fulfilment of obligations 3,500 3,507 Total 150,247 101,858 As at 31 December 2023, the amount of EUR 1,481 thousand was eliminated from the line item ‘Accrued other expenses and deferred revenue’, as described in Note 26. Credit risk 226 NOTES TO THE COMPANY’S FINANCIAL STATEMENTS (All amounts are in EUR thousands unless otherwise stated) As at 31 December 2024 and 31 December 2023, credit risk was related to the following line items: At 31 December 2024 At 31 December 2023 Financial assets, excluding assets measured at fair value through other comprehensive income 320,407 199,492 The Company has a significant credit risk concentration, because exposure to credit risk is shared among 10 main customers, amounts receivables from which accounted for about 95% of the Company’s total trade and other receivables as at 31 December 2024 (31 December 2023: 92%). As at 31 December 2024, amounts receivable from the major customer, i.e. distribution network operator Energijos Skirstymo Operatorius AB, accounted for 70% of the Company’s total amounts receivable (31 December 2023: 58%). When entering into imbalance contracts with participants of the electricity market, the Company requires to pay a cash deposit of the established amount (note 13 and note 26) or to provide a bank guarantee in accordance with terms and conditions set out in the imbalance contract. The Company holds unused cash and cash equivalents at the banks assigned with a credit rating not lower than AA-. The table below shows the long-term credit ratings of the parent banks of the banks at which the Company holds cash and cash equivalents (Note 14): At 31 December 2024 At 31 December 2023 Financial assets amout S&P Moody's amout S&P Moody's SEB - (currency Euro) 10 A+ Aa3 392 A+ Aa3 SwB - (currency Euro) 103 A+ Aa3 242 A+ Aa3 OP Corporate - (currency Euro) - AA- Aa3 - AA- Aa3 Carrying amount at the end of the period: 113 634 Trade and other receivables are mainly from the state-owned entities and large manufacturers with no history of significant defaults. The Company has granted the loan to EPSO-G UAB, which is wholly owned by the state and has a Baa1 investment rating assigned by rating agency Moody’s Investors Service. Liquidity risk The main objective of the Company’s liquidity policy is to ensure funding of its operations, i.e. to ensure that the Company will have sufficient cash and/or committed credit facilities and overdrafts to meet its contractual obligations at any time. The liquidity risk is managed by making forecasts of cash flows of the Company. The Company’s cash flows from operations were positive in 2024, therefore its exposure to liquidity risk were not significant. The Company’s current ratio (total current assets / total current liabilities) and quick ratio ((total current assets – inventories) / total current liabilities) as at 31 December 2024 were 1.67 (31 December 2023: 1.9). As described in Note 2.12, the Company may temporarily use congestion management funds when necessary. The table below summarise the contractual maturity dates of 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 Company can be required to pay. Balances of trade and other amounts payable with repayment terms up to 12 months are equal to their carrying amounts, because the impact of discounting is insignificant. Up to 3 months Between 4 months and 1 year Within the second year Within third – fifth year After five years Total liabilities Balance at 1 January 2023 Trade and other amounts payable 41,263 20,642 131 - - 62,036 Borrowings - 6,452 6,395 12,486 10,143 35,476 Lease liabilities 128 383 511 548 7,549 9,119 Balance at 31 December 2023 41,391 27,477 7,037 13,034 17,692 106,631 Balance at 1 January 2024 Trade and other amounts payable 88,096 28,914 - - - 117,010 Borrowings - 6,395 4,200 12,429 6,057 29,081 Lease liabilities 128 383 373 259 7,464 8,607 Balance at 31 December 2024 88,224 35,692 4,573 12,688 13,521 154,698 227 NOTES TO THE COMPANY’S FINANCIAL STATEMENTS (All amounts are in EUR thousands unless otherwise stated) Market risk a)Interest rate risk The Company’s income, expenses and cash flows from operating activities are substantially independent of changes in market interest rates. From November 2022, the Company has non-current borrowings bearing fixed interest rates. b)Foreign exchange risk To manage the foreign exchange risk, the Company enters into purchase/sale contracts only in the euros. 36.Fair value of financial assets and financial liabilities The Company’s principal financial assets and liabilities not carried at fair value are trade and other amounts receivable, cash and cash equivalents, loans, trade and other amounts payable and other financial assets. The following methods and assumptions are used to estimate the value of each category of financial instruments that are not measured at fair value: The carrying amount of current trade and other amounts receivable, other financial assets, cash and cash equivalents, loans to the related parties, current trade payables and other amounts payable approximates their fair value (Level 3). The fair value of non-current 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 the Company’s non-current borrowings with fixed interest rates was approximately EUR 3,616 thousand lower than their carrying amount as at 31 December 2024 (31 December 2023: EUR 5,593 thousand). 37.Services provided by the audit firm The audit firm provided the following audit and non-audit services to the Company. Information on non-audit services is disclosed based on the date of services rendered. Figures in table are in euros. 2024 2023 Audit services 85 86 Total audit services 85 86 Assurance and other related services 16 15 Other services 2 3 Total non-audit services 18 18 38.Litigations and contingent liabilities The Company charged default interest for the delay in the performance of works and deferred payments against issued VAT invoices totalling EUR 8,943 thousand, which were disclosed under ‘Payables for property, plant and equipment and inventories’ in Note 24. It is likely that, during, or after the term of the contract, the Contractor may bring an action before the Vilnius Court of Commercial Arbitration, requesting a reduction or cancellation of the penalties. In October 2023, the arbitration proceedings were brought before the Arbitration Institute of the Stockholm Chamber of Commerce brought against several transmission system operators, including LITGRID AB, which are still under way. The arbitration proceedings were started in respect of suspension of payments by the TSOs, adhering to international sanctions, disclosed under ‘Payables for electricity’ in Note 24. 39.Events after the reporting period On 8 February 2025, power systems of the Baltic States successfully disconnected from the Russia-controlled IPS/UPS system. On 9 February 2025, the Company, together with the transmission system operators of Estonia and Latvia, synchronized their electricity grids with the Continental Europe Synchronous Area. This is a historic and practically significant event for the Baltic States and Europe, enhancing the region’s energy independence and resilience. The General Meeting of Shareholders of Baltic RCC OÜ will be held in April 2025. The proposed profit appropriation of Baltic RCC OÜ includes the payment of dividends amounting to EUR 53 thousand to the Company. _____ 228 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 shareholders of LITGRID AB Report on the audit of the financial statements Our opinion In our opinion, the financial statements give a true and fair view of the financial position of LITGRID AB (the “Company”) as at 31 December 2024 and of the Company’s financial performance and 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 7 April 2025. What we have audited The Company’s financial statements comprise: ● the Company’s statement of financial position as at 31 December 2024; ● the Company’s statement of comprehensive income for the year then ended; ● the Company’s statement of changes in equity for the year then ended; ● the Company’s statement of cash flows for the year then ended; and ● the notes to the 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 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 and Other Assurance Services that are relevant to our audit of the 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 and Other Assurance Services. To the best of our knowledge and belief, we declare that non-audit services that we have provided to the Company 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 and Other Assurance Services. The non-audit services that we have provided to the Company, in the period from 1 January 2024 to 31 December 2024, are disclosed in note 37 to the financial statements. Our audit approach Overview Materiality ● Overall materiality: EUR 3,760 thousand Key audit matters ● The carrying value of property, plant and equipment As part of designing our audit, we determined materiality and assessed the risks of material misstatement in 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. 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 Company, the accounting processes and controls, and the industry in which the Company operates. 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 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 3,760 thousand (2023: EUR 3,500 thousand) How we determined it 1% of revenue Rationale for the materiality benchmark applied We chose revenue as the benchmark for the Company because it is the measure against which the performance of the Company is assessed by the regulatory bodies as well as external creditors and other stakeholders. The Company’s results depend on approved tariffs for regulated activities, therefore the Company‘s profit before tax fluctuate widely year over year, whereas its revenue is more stable and growth-oriented indicator which can be compared to other market participants.. We chose 1%, which is within the range of acceptable quantitative materiality thresholds. We agreed with the Audit Committee that we would report to them misstatements identified during our audit above EUR 188 thousand, 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 The carrying value of property, plant and equipment (refer to Notes 2.2 and 6) The Company applies the revaluation model for subsequent measurement of property, plant and equipment (‘PPE’). As at 31 December 2024 the carrying value of PPE amounted to EUR 445,479 thousand, being its fair value at the date of the revaluation, less subsequent accumulated depreciation and subsequent accumulated impairment losses. The most recent revaluation of PPE was conducted on 31 December 2023. The management assessed whether the carrying value of PPE materially differed from the amount that would be determined using fair value at the end of the reporting period. The Companys’s management evaluated that there were no regulatory changes in 2024 that could significantly affect the asset value, and the assumptions used in the PPE revaluation on 31 December 2023, remained significantly unchanged, and concluded that the carrying amount of the PPE as at 31 December 2023 was the reasonable approximation of the fair value and therefore no valuation adjustments have been recognised as at 31 December 2024. We focused on this area due to significance of the PPE balance for the Company’s statement of financial position and because the management’s assessment of fair values of PPE is an area of significant management judgement. We obtained an understanding and evaluated management’s policies, processes and controls in determination of fair values of items of PPE. We have examined management’s valuation methodology and their assessment of incurred 2024 changes in tariff setting regulations. We analysed the management’s assumptions applied during the revaluation on 31 December 2023 for future periods, which had material impact on the valuation results: rate of return on regulated assets and discount rate, expected capital expenditures, additional tariff component to finance investments and values of regulated assets. As appropriate, we traced these assumptions to the actual data from 2024, as well as the Company’s internal budgets and investment plans, or market information, to assess whether there were any significant changes in these assumptions that could lead to a significant change in the fair value of the PPE. We considered whether the overall estimate was reasonable and whether the management’s judgement that no revaluation adjustments were needed was appropriate in the given circumstances. We have considered the adequacy of disclosures in Notes 2.2 and 6. Reporting on other information including the management report Management is responsible for the other information. The other information comprises the management report, including the information on corporate governance matters, remuneration and sustainability matters (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 management 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 management report, including the information on corporate governance matters and remuneration and excluding the information on sustainability matters that the legislation did not require the Company to prepare and on which assurance services were not within the scope of our work, we considered whether it includes the disclosures required by the Law of the Republic of Lithuania on Reporting by Undertakings and by Groups of Undertakings. Based on the work undertaken in the course of our audit, in our opinion: ● the information given in the management report for the financial year for which the financial statements are prepared, is consistent with the financial statements; and ● the management report, including the information on corporate governance matters and remuneration and excluding the information on sustainability matters, has been prepared in accordance with the Law of the Republic of Lithuania on Reporting by Undertakings and by Groups of Undertakings. In addition, in light of the knowledge and understanding of the Company and its environment obtained in the course of the audit, we are required to report if we have identified material misstatements in the management 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 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 or to cease operations, or has no realistic alternative but to do so. Those charged with governance are responsible for overseeing the Company’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 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 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 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. 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, 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 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 financial statements, including the management report, for the year ended 31 December 2024 (the “Single Electronic Reporting Format of the financial statements”). Description of a subject matter and applicable criteria The Single Electronic Reporting Format of the 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 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 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 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 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 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 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 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 financial statements, including the preparation of the XHTML format and marking up the financial statements; • verification whether the XHTML format was applied properly; • evaluating the completeness of marking up the 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 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 financial statements for the year ended 31 December 2024 complies, in all material aspects, with the ESEF Regulation. Appointment We were first appointed as auditors of the Company on 24 April 2015 and had an uninterrupted 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 2023-2024 audit on 30 August 2023, representing a total period of engagement appointment of 8 years, out of which 5 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 7 April 2025 The auditor's electronic signature is used herein to sign only the Independent Auditor's Report