Amber Grid — Interim / Quarterly Report 2015

Nov 18, 2015

AB Amber Grid Savanorių pr. 28, LT-03116 Vilnius, Lithuania www.ambergrid.lt

Phone +370 5 236 0855 Fax +370 5 236 0850 E-mail info@ambergrid.lt

CONFIRMATION OF RESPONSIBLE PERSONS

18 November 2015 No. 5-51

Acting in accordance with Article 22 of the Law on Securities of the Republic of Lithuania and the Rules for Drawing up and Submission of Periodic and Additional Information as approved by Resolution No 03-48 of the Board of the Bank of Lithuania as of 28 February 2013, we, Saulius Bilys, the General Manager of AB Amber Grid, and Rimantas Šukys, the Financial Director of AB Amber Grid, hereby confirm that, to the best of our knowledge, the attached condensed financial statements of the company AB Amber Grid as of 30 September 2015 drawn up according to International Financial Reporting Standards as adopted by the European Union, give a true and fair view of the assets, liabilities, financial position, profit or loss and cash flows of AB Amber Grid.

General Manager

Financial Director

Saulius Bilys

Rimantas Šukys

AB AMBER GRID

CONDENSED FINANCIAL STATEMENTS AS OF 30 SEPTEMBER 2015 PREPARED ACCORDING TO INTERNATIONAL FINANCIAL REPORTING STANDARDS AS ADOPTED BY THE EUROPEAN UNION

Statement of financial position

			As of	As of
			30 September	31 December
			2015	2014
		Notes	(unaudited)	(audited)
	ASSETS
А.	Non-current assets		351,173	319,280
1.	Intangible assets		797	653
ΙΙ.	Non-current tangible assets		350,274	318,504
II.1.	Land		113	113
II.2.	Buildings and structures		226,184	232,469
II.2.1.	Buildings		6,472	6,674
II.2.2.	Gas transmission pipelines and related
	installations		214,479	220,227
II.2.3.	Gas distribution pipelines and related
	installations		106	107
II.2.4.	Other buildings and structures		5,127	5,461
II.3.	Machinery and equipment		59,740	63,415
II.4.	Vehicles		1,038	1,365
II.5.	Other equipment, tools and devices		3,427	3,749
II.6.	Other non-current tangible assets		179	219
II.7.	Construction in progress	4	59,593	17,174
III.	Non-current financial assets		102	123
III.1.	Investment into subsidiary		÷
III.2.	Investment into joint venture	$\mathbf 1$	102	123
III.3.	Non-current accounts receivable
В.	Current assets		82,998	54,024
$\mathsf{I}$ .	Inventories and prepayments		5,669	7,146
1.1.	Inventories		5,519	7,076
1.1.1.	Raw materials, spare parts and other
	inventories		1,264	1,294
1.1.2.	Natural gas		4,251	5,777
1.1.3.	Assets held for sale		4	5
1.2.	Prepayments		150	70
ΙΙ.	Accounts receivable		57,721	30,548
II.1.	Trade receivables	5	4,474	6,857
II.2.	Other receivables	6	53,247	23,691
Ш.	Other financial assets	$\overline{7}$	14	14,616
IV.	Cash and cash equivalents	8	19,594	1,714
	Total assets		434,171	373,304

(cont'd on the next page)

Statement of financial position (cont'd)

			As of 30 September 2015	As of 31 December 2014
		Notes	(unaudited)	(audited)
	EQUITY AND LIABILITIES
C.	Equity		188,187	236,615
Ι.	Authorised share capital		51,731	51,663
П.	Reserves		126,955	293,996
II.1.	Legal reserve		5,166	5,166
II.2.	Other reserves		121,789	288,830
Ш.	Retained earnings		9,501	(109, 044)
III.1.	Current year profit (loss)		9,501	(113, 408)
III.2.	Previous year profit (loss)			4,364
D.	Accounts payable and liabilities		245,984	136,689
Ι.	Amounts payable after one year and
	non-current liabilities		192,387	77,655
1.1.	Non-current borrowings	9	125,444	26,076
1.2.	Grants (deferred income)	10	62,155	43,836
1.3.	Non-current employee benefits		455	455
1.4.	Deferred income tax liability		4,333	7,288
ΙΙ.	Accounts payable within one year and
	short-term liabilities		53,597	59,034
II.1.	Current financial liability	9
II.2.	Current portion of non-current	9
	borrowings		12,572	13,057
II.3	Current year portion of non-current
	employee benefits		86	86
II.4.	Trade payable	12	11,427	11.590
II.5.	Prepayments received		473
II.6.	Income tax payable		20	1,033
II.7.	Payroll related liabilities		1,228	731
II.8.	Other payables and current liabilities	13	27,791	32,537
	Total equity and liabilities		434.171	373.304

General Manager	Saulius Bilys	18 November 2015
Chief Accountant	Dzintra Tamulienė	18 November 2015

AS OF 30 SEPTEMBER 2015

(all amounts are in euro thousand unless stated otherwise)

Income statement

			For the	For the	For the	For the
			period of	period	period	period
		Notes	three	of three	of nine	of nine
			months	months	months	months
			ended	ended	ended	ended
			30	30	30	30
			September	September	September	September
			2015	2014	2015	2014
$\mathbf{I}$	Revenue	16	10,545	10,896	37,851	35,782
Н.	Expenses		(9,800)	(10, 365)	(30, 066)	(31, 467)
II.1.	Cost of natural gas		(1, 540)	(719)	(7, 449)	(3, 737)
II.2.	Depreciation and amortization		(3, 764)	(5, 498)	(11, 207)	(16, 456)
II.3.	Payroll and related social
	security tax expenses		(1, 841)	(1,646)	(5,706)	(5,081)
II.4.	Repair and technical
	maintenance expenses		(1,896)	(1,693)	(3,489)	(3,856)
II.5.	Taxes, other than income tax		(355)	(361)	(1,068)	(1,083)
II.7.	Other expenses		(404)	(448)	(1, 147)	(1, 254)
Ш.	Profit (loss) from operations		745	531	7,785	4,315
IV.	Financial activity		(328)	(173)	(406)	(573)
IV.1.	Income		(52)	9	49	27
IV.2.	Expense		(276)	(182)	(455)	(600)
v.	Profit (loss) before tax		417	358	7,379	3,742
VI.	Income tax	11	682	347	2,122	498
VI.1.	Current period income tax		(93)	(223)	(833)	(879)
VI.2.	Deferred income tax		775	570	2,955	1,377
VII.	Net profit (loss)		1,099	704	9,501	4,240
	Basic and diluted earnings per
	share (euro)				0,05	0,02

General Manager	Saulius Bilys	18 November 2015
Chief Accountant	Dzintra Tamulienė	18 November 2015

Statement of comprehensive income

		For the period of three months ended 30	For the period of three months ended 30	For the period of nine months ended 30	For the period of nine months ended 30
		September	September	September	September
		2015	2014	2015	2014
Т.	Net profit (loss)	1,099	704	9,501	4,240
н.	Total comprehensive income (loss)	1,099	704	9,501	4,240

General Manager	Saulius Bilys	18 November 2015
Chief Accountant	Dzintra Tamulienė	18 November 2015

Statement of changes in equity

	Authorised capital	Legal reserve	Other reserves	Retained earnings	Total
Balance as of 31 December 2013 (audited)	51,663	5,166	288,830	4,364	350,023
Total comprehensive income	÷			4,240	4,240
Net profit (loss) for the year			$\overline{\phantom{a}}$	4,240	4,240
Balance as of 30 September 2014 (unaudited)	51,663	5,166	288,830	8,604	354,263
Total comprehensive income			$\overline{\phantom{a}}$	(117, 648)	(117, 648)
Net profit (loss) for the year				(117, 648)	(117, 648)
Balance as of
31 December 2014 (audited)	51,663	5,166	288,830	(109, 044)	236,615
Transfer from other reserves
	÷	$\overline{\phantom{0}}$	(167, 041)	167,041
Approved dividends				(57, 997)	(57,997)
Total comprehensive income	68*		$\qquad \qquad \blacksquare$	9,501	9,501
Net profit (loss) for the year	68*			9,501	9,501
Balance as of 30 September 2015 (unaudited)	51,731	5,166	121,789	9,501	188,187

* Result of the conversion of the authorised share capital to the euro. The accompanying notes are an integral part of these financial statements.

General Manager	Saulius Bilys	18 November 2015
Chief Accountant	Dzintra Tamulienė	18 November 2015

(all amounts are in euro thousand unless stated otherwise)

Statement of cash flows

		30 September 2015 (unaudited)	30 September 2014 (unaudited)
ı.	Cash flows from (to) operating activities
1.1.	Net profit (loss)	9,501	4,240
	Adjustments of non-cash items and other corrections:
1.2.	Depreciation and amortisation	12,211	17,422
1.3.	Loss (gain) on property, plant and equipment,
	doubtful trade accounts receivable and inventories
	write-off and disposal	(7)	$\overline{2}$
1.4.	Impairment losses (reversal of impairment) for
	property, plant and equipment, financial assets,
	allowance for doubtful trade accounts receivable
	and inventories	6	26
1.5.	Income tax expenses (income)	(2, 122)	(498)
1.6.	Interest (income)	(6)	(18)
1.7.	Interest expenses	352	584
1.8.	Amortisation of grants (deferred income)	(1, 171)	(991)
1.9.	Elimination of other non-cash items	87	16
		18,851	20,783
	Changes in working capital:
1.10.	Decrease (increase) in inventories	1,552	970
1.11.	Decrease (increase) in trade accounts receivable	2,383	454
1.12	Decrease (increase) in other accounts receivable and
	prepayments	(11, 810)	2,082
1.13.	Increase (decrease) in trade accounts payable	1,171	(423)
1.14.	Increase (decrease) in other accounts payable and
	other current liabilities	(3,920)	(479)
1.15.	Decrease (increase) in other financial assets	14,602	(1, 512)
1.16.	Income tax (paid)	(240)	(397)
	Total changes in working capital	3,738	695
	Net cash flows from operating activities	22,589	21,478
н.	Cash flows from (to) investing activities
II.1.	(Acquisitions) of property, plant and equipment and
	intangible assets	(45, 331)	(7, 721)
II.2.	Proceeds from sales of property, plant and	7
	equipment
II.3.	Acquisition of investments in joint venture
II.4.	Acquisition of held-to-maturity investment		(4, 344)
II.5.	Sale of held-to-maturity investment
II.6.	Interest received	6	15
II.7.	Disposal (acquisition) of other short term
	investments
	Net cash flows (to) investing activities	(45, 318)	(12,050)

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

(all amounts are in euro thousand unless stated otherwise)

Statements of cash flows (cont'd)

		30 September 2015 (unaudited)	30 September 2014 (audited)
Ш.	Cash flows from (to) financing activities
III.1.	Dividends paid out	(57, 863)
III.2.	Loans received	138,000	$\overline{\phantom{0}}$
III.3.	Loans (due to be repaid)	(39, 117)	(6, 534)
III.4.	Grants received	59	171
III.5.	Interest (paid)	(470)	(584)
	Net cash flows from (to) financing activities	40,609	(6, 947)
IV.	Net increase (decrease) in cash and cash equivalents	17,880	2,480
v.	Cash and cash equivalents at the beginning of the period	1,714	5,711
VI.	Cash and cash equivalents at the end of the period	19,594	8,191

General Manager	Saulius Bilys	18 November 2015
Chief Accountant	Dzintra Tamulienė	18 November 2015

Notes to the Financial Statements

$\mathbf{1}$ General information

AB Amber Grid (hereinafter referred to as the "Company") was registered on 25 June 2013; after the spin-off from AB Lietuvos Dujos of the natural gas transmission activity with respective assets, rights and duties attributed to the activity in question.

The Company's largest shareholder is UAB EPSO-G. UAB EPSO-G is 100-percent-owned by the Republic of Lithuania. which and is managed by trust by the Ministry of Energy of the Republic of Lithuania. On 21 February 2014, the Ministry of Energy of the Republic of Lithuania, when increasing UAB EPSO-G's share capital, transferred 31,575,724 of AB Amber Grid's state-owned ordinary registered non-certificated shares to UAB EPSO-G.

During the second quarter of 2014, the then two major shareholders of the Company sold off their shares held in AB Amber Grid, thus losing their voting rights at the Company:

• On 21 May 2014, E.ON Ruhrgas International GmbH transferred and UAB EPSO-G acquired 69,416,233 ordinary registered non-certificated shares of AB Amber Grid;
• On 19 June 2014, as a result of a takeover bid, OAO Gazprom transferred and UAB EPSO-G acquired 66,112,761 ordinary registered non-certificated shares of AB Amber Grid.

As of 30 September 2015, the Company's shareholders were as follows:

	Number of shares owned	Ownership share (percent)
UAB EPSO-G (Company Code 302826889,	172,279,125	96.58
A. Juozapavičiaus g. 13, Vilnius)
Other shareholders	6,103,389	3.42
	178,382,514	100.0

The Company's share capital, after the conversion into euros, amounts to EUR 51,730,929.06. It is divided into 178,382,514 ordinary registered shares with par value of EUR 0.29.

The Company's authorised share capital was converted into euros as of 1 January 2015, according to the special procedure for the conversion of the authorised capitals into euros as provided for by legislation governing the conversion to the euro. As a result of the conversion the par value per share was received amounting to EUR 0.29, which was then multiplied by the total number of shares and the resulting authorised share capital amount of EUR 51,730,929.06 was approved by the Annual General Meeting of Shareholders of 23 April 2015 through the introduction of respective amendments into the Bylaws of AB Amber Grid.

As a result of the acquisition of AB Amber Grid's control by the UAB EPSO-G, and as a result of the subsequent changes in the composition of the Board of Directors introduced by the Extraordinary General Meeting of Shareholders of on 30 June 2014, the Company's activity and ownership control were effectively unbundled from the natural gas companies engaged in gas production and supply activities.

On 13 January 2015, the National Commission for Energy Control and Prices (hereinafter referred to as the "NCC") stated that AB Amber Grid's transmission activity unbundling was in compliance with provisions of the Law on Natural Gas. On 10 April 2015, upon obtaining of a positive decision from the European Commission, the NCC issued in respect of the Company of an open-ended License No. L2-3 (GDP) for the engagement in the Transmission System Operator's activity within the territory of Lithuania. The Company, being engaged in the natural gas Transmission System Operator's activity, provides system users, other operators, and gas market players with the following services:

• transmission of natural gas in the territory of the Republic of Lithuania; $\bullet$
• balancing of flows of natural gas in the transmission system;
• administration of the funds aimed to compensate for the installation and operation of the Liquefied Natural Gas (hereinafter referred to as the "LNG") Terminal, its infrastructure and connector.

$\mathbf{1}$ General information (continued)

As of 30 September 2015, the Company had entered into 87 natural gas transmission service contracts with natural gas transmission system users (consumers of natural gas, natural gas distribution system operators, natural gas companies which supply gas up to consumer systems). As regards natural gas businesses that trade in natural gas, but do not transmit gas via the Transmission System, the Company had entered with such companies into 4 natural gas balancing agreements.

AB Amber Grid's condensed financial statements; including the financial statements as of 30 September 2015, the profit (loss) account, the comprehensive income statement, the cash flow statement and the statement of changes in equity are unaudited. The Company's financial statements as of 31 December 2014 were audited; they were prepared in accordance with International Financial Reporting Standards (IFRS). For a better understanding of the information contained in these condensed financial statements it is highly recommended to read the present AB Amber Grid's condensed financial statements in conjunction with the Company's annual financial statements for the year ended 31 December 2014.

The Company's ordinary registered shares are traded on the regulated market; they are listed on the Secondary Trading List of NASDAQ OMX Vilnius Stock Exchange (ISIN code LT0000128696, instruments AMG1L).

In the Company's financial statements as of 30 September 2015, the Company's investment in GET Baltic UAB, the joint venture co-owned with AB Lietuvos Dujos and the Finnish gas company Gasum Oy, was accounted by applying the equity method. The condensed financial statements as of 30 September 2015 drawn up by UAB GET Baltic in accordance with International Financial Reporting Standards (IFRS) are unaudited.

$\overline{2}$ Accounting principles

In the Republic of Lithuania, 1 January 2015 was the day of the introduction of the euro. Therefore, accordingly, starting from this date on, the Company's functional currency was also converted to the euro. The exchange rate that was applied when converting the litas to the euro was equal to LTL 3.4528 litas for EUR 1, which had been irrevocably set by the EU Council.

With the introduction of the euro, the Company converted its accounting data as of 31 December 2014 (that used to be denominated in litas) into euros and recorded the results in the accounts. The conversion result of EUR 68 thousand is shown under the Financial Investment Activities item of the income (loss) statement as of the current period.

The Company's condensed financial statements as of 30 September 2015 were prepared in accordance with International Accounting Standard 34 "Interim Financial Reporting".

The Company's financial statements are presented in thousand euros. The financial statements were prepared drawing up on the historical cost basis. The accounting policies are consistent with the accounting principles used the previous year.

3 Information according to segments

The Company is engaged in natural gas transmission activity and it operates as one segment.

All non-current assets of the Company are in Lithuania, where the Company carries out its activity.

During the nine months of 2015, the Company earned 83 percent of its revenue from the Lithuanian system users and 17 percent of its revenue was received from the transit service, i.e. transportation of gas to the Kaliningrad Region of the Russian Federation.

$\overline{\mathbf{4}}$ Construction in progress

Major objects of construction in progress of the Company as of 30 September 2015 were as follows:

Object	30 September 2015 m. (unaudited)	31 December 2014 m. (audited)
Construction of Klaipėda-Kuršėnai gas transmission pipeline DN800 (Capacity
enhancement of Klaipėda-Kiemėnai gas transmission pipeline)	55,698	15,968
Reconstruction of Panevėžys M&R Station No. 1	1,549	727
Other	2,346	479
	59,593	17,174
5 Trade receivables
	30 September 2015	31 2014
Receivables from gas transmission system users for gas transmission and	(unaudited)	(audited)
transit	4,485	6,868
Other trade receivables	5	5
Less: allowance for the decrease in value of trade receivables	(16)	(16)
	4,474	6,857

The Company's trade receivables from the system users for natural gas transmission as of 30 September 2015 decreased due to the decrease in gas transmission volumes.

The trade receivables do not include interest, the time limit for payment thereof is 15 calendar days.

6 Other receivables

	30 September 2015 (unaudited)	31 December 2014 (audited)
LNGT funds receivable (administered by the Company)	27,341	17,372
Other receivables	25,906	6,319
Less: allowance for the decrease in value of other receivables	w.
	53,247	23,691

Total accounts receivable of the LNGT-funds include AB Achema debt of EUR 26,332 thousand. For more information about AB Achema liabilities see Note 17 "Commitments and contingencies".

Other accounts receivable as of 30 September 2015 increased due to the EU financial assistance under the European Union Facility (CEF) to the Project "Construction of Klaipėda-Kuršėnai gas transmission pipeline"-EUR 23,802 thousand.

$\overline{7}$ Other financial assets

Acting in accordance with provisions of the Republic of Lithuania Law on Liquefied Natural Gas Terminal Art. 5 par. 2, the Company performs the functions of an administrator of the Liquefied Natural Gas Terminal (hereinafter referred to as the "LNGT")-funds. The administration of the LNGT-funds is performed in accordance with the Procedures for the Administration of Funds Aimed to Compensate for the Installation Costs and Fixed Operating Costs of the Liquefied Natural Gas Terminal Facility, its Infrastructure and its Connector as approved by the NCC Resolution No. 03-294 as of 9 October 2012 as subsequently amended (the title was changed by the NCC Resolution No. 03-750 of 23 December 2013 effective from 1 January 2014).

$\overline{7}$ Other financial assets (continued)

As of 30 September 2015, the Company's Other Financial Assets consisted of the cash received from the natural gas supply security-related extra tariff component added to the natural gas transmission price (surcharge). These funds are aimed to be paid out to the LNGT funds beneficiaries and are kept in a separate bank account opened for the LNGT-funds, which was selected and opened in compliance with applicable legislative requirements. The natural gas supply safety related extra price component was applicable to the natural gas transmission throughout the year 2013 and from 3 December 2014. In pursuance with the NCC Resolution No. 03-895 as of 20 November 2014, starting from the year 2015 onwards, the collected cash amounts are remitted to the designated payee of the LNG terminal funds. AB Klaipėdos Nafta.

8 Cash and cash equivalents

	30 September 2015	31 December 2014
	(unaudited)	(audited)
Cash at bank	19,594	1,714
	19,594	1,714

The Company keeps its cash in the bank accounts or (where possible) invests in the deposits with the shortest term possible (overnight). The interest rates of the overnight deposits are floating ones. The floating interest rates applied to the overnight deposits depend on EONIA and EURIBOR inter-bank interest rates.

$\mathbf{q}$ Loans

	30 September 2015 (unaudited)	31 December 2014 (audited)
Long-term loans
Loans from credit institutions of Lithuania	100,444	26,066
Loan from NIB	25,000
Leasing	$\qquad \qquad \blacksquare$	10
Short-term loans
Loans from credit institutions of Lithuania	-
Current portion of long-term loans	12,556	13,033
Leasing	16	24
	138,016	39,133

In January of 2015, the Company repaid prior to maturity (refinanced) its loan to Swedbank AB. The funds that were used to refinance the aforesaid loan were aquired via the credit agreement as of 30 December 2014 between the Company and Swedbank AB, for the amount up to EUR 113,000 thousand.

On 19 August 2015, the Company entered into a new long-term loan agreement with the Nordic Investment Bank. The loan is intended for the financing of the Project "Capacity enhancement of Klaipėda-Kiemėnai gas pipeline (Construction of Klaipeda-Kuršėnai pipeline)". Upon the expiration of the term of the loan as provided for by the contract, on 9 September 2015 the Company borrowed EUR 25,000 thousand.

To balance its working capital, on 14 May 2014, the Company concluded an overdraft contract with Danske Bank A/S Lithuania branch for the overdraft amount of up to EUR 5,792 thousand. As of 30 September 2015, the overdraft had not been used.

(all amounts are in euro thousand unless stated otherwise)

10 Grants (deferred revenue)

	Deferred revenue	Asset related grants	Revenue related grants	Total
Balance as at 31 December 2014	1,604	42,232	$\frac{1}{2}$	43,836
Received during the period of 9 months ended 30 September 2015	$\overline{\phantom{a}}$	19,349	142	19,491
Written off during the period of 9 months ended
30 September 2015.	$\overline{a}$	(1)	$\frac{1}{2}$	(1)
Amount of grants used (amortised) during the period of 9 months ended
30 September 2015	(26)	(1,003)	(142)	(1, 171)
Balance as at 30 September 2015	1,578	60,577		62,155

In the profit (loss) statement, the depreciation of the asset-related grants, amounting to EUR 1,003 thousand (over the period of 9 months ended 30 September 2014: EUR 966 thousand) was presented by cross-covering the costs of depreciation of the related assets with the grant-related revenue.

Grants receivable as at 30 September 2015 increased due to the EU grant under the European Union Connecting Europe Facility (CEF) to the Project "Construction of Klaipėda - Kuršėnai gas transmission pipeline" - EUR 23,802 thousand.

11 Income tax

In 2015, the standard corporate income tax rate applicable to the companies of the Republic of Lithuania was 15 per cent (in 2014: 15 per cent).

The income tax expenses for the period comprise the current income tax and the deferred income tax. Following the amendments to the Law on Corporate Income Tax, which provide for a possibility of taking advantage of the corporate income tax relief following investments in new technologies, as at 30 September 2015, the Company calculated the corporate income tax relief amounting to EUR 646 thousand (over the period of 9 months ended 30 September 2014: EUR 1,274 thousand).

12 Trade payables

	30 September 2015 (unaudited)	31 December 2014 (audited)
Payables to suppliers in according to
the Investment Programme (New Construction)	7,933	9,102
Payables to suppliers according to the to
the Investment Programme (Reconstruction & Modernisation)	969	1,134
Payables to service providers	436	378
Payables to suppliers of repairs of non-current assets	539	410
Other	1,550	566
	11,427	11,590

The largest share of payables to suppliers- EUR 7,734 thousand (2014: EUR 9,076 thousand.) - were the payables for the works carried out by the Contractor that was executing a project included into the Company's Investment Programme (New Construction) - i.e. the Project "Construction of Klaipėda - Kuršėnai gas transmission pipeline".

13 Other payables and current liabilities

	30 September 2015 (unaudited)	31 December 2014 (audited)
LNGT funds (administered by the Company) payable	13,246	14,616
Accrued LNGT funds (administered by the Company)*	14,361	17,399
Real Estate Tax (RET) payable		332
Value Added Tax (VAT) payable
Other payables	183	190
	27,790	32,537

*Accrued LNGT funds subject to administration by the Company are accounted when natural gas transmission system users pay them to the Company. Accrued funds subject to administration by the Company are included into the LNGT-funds account when AB Klaipėdos Nafta issues a VAT invoice to the Company in respect of the security-ofsupply-related extra tariff component added to the regular natural gas tariff.

14 Earnings per share

Basic earnings per share reflect the Company net income divided by the weighted average number of shares. There are no diluting instruments, therefore basic and diluted earnings per share are equal. Calculations of the basic earnings per share are presented below:

30 September 2015 (unaudited)	30 September 2014 (audited)
9,501	3,536
178,383	178,383
0.05	0.02

15 Dividends

On 23 April 2015, the Annual General Shareholders' meeting, when approving the Company's 2014 profit and loss appropriation, passed a decision for the year 2014 to pay the Company's shareholders dividends in the amount of EUR 58 million (or EUR 0.33 per ordinary registered share with par value of EUR 0.29).

16 Revenue

	For the period of three months ended 30 September 2015 (unaudited)	For the period of three months ended 30 September 2014 (unaudited) (unaudited)	For the period of nine months ended 30 September 2015	For the period of nine months ended 30 September 2014 (unaudited)
Transmission of natural gas within the territory of Lithuania	10,178	10,577	36,011	34,828
Income from balancing in the Transmission System	240	282	1,527	787
Grants recognised as income	77	8	168	25
Income from LNGT funds administration	37	24	109	71
Other income	13	5	36	71
	10,545	10,896	37,851	35,782

17 Commitments and contingencies (continued)

Legal disputes

According to the Republic of Lithuania Law on Liquefied Natural Gas Terminal and resolutions adopted by the NCC. natural gas system users that transport natural gas via the gas transmission system, when they pay for gas transmission services, are also charged an inseparable price component of the natural gas transmission price - an LNGT-related extra tariff (surcharge).

In the light of the fact that AB Achema, even though it is a gas transmission system user, has systemically failed to pay the LNGT-related extra tariff (surcharge), AB Lietuvos Dujos, being the administrator of the LNGT-funds, on 12 April 2013, filed a lawsuit with Kaunas Regional Court regarding the payment of the LNGT-related extra tariff (surcharge), award of default interest and the obligation to perform the contract. By the transfer and acceptance certificate as of 1 August 2013 AB Lietuvos Dujos transferred the aforesaid case to AB Amber Grid.

On 17 September 2013, AB Amber Grid revised the amount of the claim. By judgement as of 12 December 2013 the court of first instance granted AB Amber Grid's claim in part - the court awarded the total debt amount as requested and the procedural interest amount; nevertheless, the court reduced the rate of interest to be awarded from the original rate of 0.04 percent to 0.02 percent. AB Achema lodged an appeal, and AB Amber Grid also lodged an appeal concerning the award of interest. The Court of Appeal decided to apply to the Constitutional Court of the Republic of Lithuania with a request to investigate whether or not certain individual provisions of the Republic of Lithuania Law on Liquefied Natural Gas Terminal were consistent with the Constitution of the Republic of Lithuania, it also suspended the legal proceedings until the consideration of the aforesaid request by the Constitutional Court of the Republic of Lithuania. At the Constitutional Court session of 17 March 2015, the Constitutional Court examined the case and on 3 April 2015 issued a judgement declaring that neither the provisions on the LNGT-related-extra-tariffcomponent as provided for by Part 2 of Article 5 of the Law on LNGT, nor any other provisions of the Law on LNGT were in breach of the Constitution. On 2 July 2015, the Lithuanian Court of Appeal granted the claim of AB Amber Grid - awarded in full all the debt amount requested, EUR 11,073,428.80, for the period from January 2013 to end August 2013, the procedural interest and the late payment penalty amounting to EUR 488,678.17. In execution of the said judgment, on 9 July 2015, AB Achema paid out to AB Amber Grid EUR 12.953 thousand.

The outcome of this case will have no financial impact on the Company, because should the court grant AB Amber Grid's claim, the amount awarded afterwards has to be remitted to the payee of the LNGT-funds and, vice versa, should the court takes a negative decision in respect of the Company, the Company would not incur any losses either, as it is not the payee but merely the administrator of the LNGT-funds.

On 7 March 2014, AB Amber Grid addressed Kaunas Regional Court with a claim requesting to award from AB Achema its debt for the outstanding LNGT-related extra tariff (surcharge) amounting to EUR 3,188,444.81 for the period from 1 September 2013 to 31 December 2013 and to award the default interest for the LNGT-related extra tariff (surcharge) amounting to EUR 108.801,07 not paid in a timely manner for the said period. On 9 September 2014, a revised claim was filed, which additionally seeks the award of default interest in the amount of EUR 225,741.89. On 2 February 2015, Kaunas Regional Court adjourned the case until the Constitutional Court's verdict on the Lithuanian Court of Appeal's petition regarding the investigation of the compliance of Article 5 part 2 of the Law on the LNGT with the Constitution. At the Constitutional Court Session of 17 March 2015, the Constitutional Court examined the case and on 3 April 2015 gave its ruling stating that neither the LNGT-related extra tariff component provided for by the Law on LNGT Article 5 part 2, nor other provisions of the Law on LNGT were in breach of the Constitution. On 26 March 2015, a revised claim was filed, which seeks the issuance of an order for the award of additional late payment penalty in amount of EUR 210,437.36.

The outcome of the case will have no financial impact on the Company, because should the court grant AB Amber Grid's claim, the awarded amount of money afterwards would have to be remitted to the beneficiary of the LNGTrelated extra tariff (surcharge) and should the court take a negative decision in respect of the Company, in this case the Company would not incur any losses either, as AB Amber Grid is not the beneficiary but merely the administrator of the LNGT-funds.

On 16 March 2015, AB Amber Grid filed a new claim with the Kaunas Regional Court for the award from AB Achema of the debt in amount of EUR 5,000,654.11 resulting from AB Achema's failure to pay the LNGT funds intended to

17 Commitments and contingencies (continued)

cover the fixed operating costs of the LNG terminal, its infrastructure and connector (hereinafter referred to as the "additional security of supply-related price component") applicable with effect from 3 December 2014 and late payment penalty in the amount of EUR 68,387.57 for the failure to timely discharge its payment obligations related to the additional security of supply-related price component and 6 percent annual interest from AB Achema. By ruling as of 8 September 2015, the Court merged this case with the case of 7 March 2014. On 29 September 2015, Kaunas District Court granted in full the claim of AB Amber Grid and awarded from AB Achema repayment of the debt in amount of EUR 3.188.444,81 for the period from 1 September 2013 to 31 December 2013, the late payment penalty in amount of EUR 544.980,33, the procedural interest and the debt in amount of EUR 14.720.648.52 for the period from 3 December 2014 to 30 April 2015, the late payment penalty in amount of EUR 304.823 and, and the procedural interest.

The outcome of the case will have no financial impact on the Company, because should the court satisfy the claim by AB Amber Grid, the awarded amount of money afterwards would have to be remitted to the beneficiary of the LNGTrelated extra tariff (surcharge) and should the court take a negative decision in respect of the Company, in this case the Company would not incur any losses either, as it is not the beneficiary but merely the administrator of the LNGTfunds.

On 19 November 2012, AB Achema addressed Vilnius Regional Administrative Court requesting revocation of Paragraphs 3.1 and 4 of Resolution No 03-317 of 19 October 2012 "On Setting the Amount of Funds Aimed at Full or Partial Compensation of the Costs of Installation and Operation of the Liquefied Natural Gas Terminal, Infrastructure and Connector Thereof for the Year 2013" and requesting to repeal Paragraph 2 of the NCC's Resolution No 03-330 as of 26 October 2012 "On Adjustment of the Tariff Caps for Natural Gas Transmission and Distribution of AB Lietuvos Duios and Setting of the Tariff Cap for the Inseparable Component of the Natural Gas Transmission Price (the LNGT-Related Extra Tariff (Surcharge)) for the Year 2013". AB Amber Grid is involved in the proceedings as a third party concerned. The case is heard in the court of first instance. On 13 October 2014, Vilnius Regional Administrative Court decided to apply to the Constitutional Court of the Republic of Lithuania with a request to investigate whether or not certain individual provisions of the Law on Liquefied Natural Gas Terminal were consistent with the Constitution of the Republic of Lithuania, and adjourned the case until the request is considered by the Constitutional Court of the Republic of Lithuania. On 17 March 2015, the Constitutional Court examined the case and on 3 April 2015 issued a ruling stating that neither the LNGT-Related Extra Tariff (Surcharge) as provided for by Article 5 Part 2 of the Law on LNGT, nor other provisions of the Law in question were in conflict with the Constitution. On 28 May 2015, Vilnius Regional Court fully rejected AB Achema's complaint. AB Achema lodged an appeal.

In the opinion of the Management, the outcome of the case is not clear and cannot be reasonably estimated.

On 22 December 2014, AB Achema addressed the Vilnius Regional Administrative Court requesting annulment of the NCC Resolution No. 03-895 as of 20 November 2014 "On the Setting of a Price Cap of the Liquefaction of Natural Gas (Natural Gas Supply Security Extra Tariff Component Added to the Natural Gas Transmission Price) for 2015-2019" Paragraphs 1.1, 2.2.1, 2.3 and 3. By court judgement as of 7 July 2015 AB Amber Grid got involved in this case as a third interested party.

In the opinion of the Management, the outcome of the case is not clear and cannot be reasonably estimated.

On 10 July 2013, AB Lietuvos Dujos received a notification by Panevėžys District Court, which read that on 3 July 2013 a court ruling was passed to refer the matter to the Special Judicial Panel For Resolution of Jurisdiction-related Disputes to clarify the issue whether the plaintiff's claim according to the Panevėžys District Public Prosecutor's Office Public Interest Defence Department prosecutor's action against the defendants, the Ministry of Economy of the Republic of Lithuania, AB Lietuvos Dujos, the third parties, the Lithuanian Road Administration under the Ministry of Transport, the State Enterprise Panevėžio Regiono Keliai, regarding the the revocation of the orders of the Minister of Economy in part where they concern the transfer of the ownership of the road of national significance, the application of restitution, fall within the jurisdiction of the general competence courts or rather within the jurisdiction of the Administrative Court. By the transfer and acceptance certificate as of 1 August 2013, AB Lietuvos Dujos transferred the afore-mentioned case to AB Amber Grid. A part of the road belonging to AB Amber Grid by ownership right which leads to the Panevėžys Gas Compressor Station falls within a section of Piniava-Paliūniškis Road, which has the status of a road of national significance. As all roads of national significance shall be owned by

17 Commitments and contingencies (continued)

the right of exclusive ownership exclusively by the State itself, the prosecutor requests annulment of the orders adopted by the Minister of Economy and the acceptance certificates in question whereby the above road was registered as the property of AB Lietuvos Dujos and is currently registered as property of AB Amber Grid. The claim has been revised several times, as the prosecutor revised his claims. On 19 November 2014, the court upheld the action in part: it recognized registration of the property rights to the road as made by the State Enterprise Centre of Registers invalid. The parties lodged appeals.

On 7 July 2015, Panevėžys Regional Court in the case based on the prosecutor's action against the defendants: the Ministry of Economy of the Republic of Lithuania, AB Lietuvos Dujos, and the third parties: the Lithuanian Road Administration under the Ministry of Transport, the State Enterprise Panevėžio Regiono Keliai, regarding the revocation of the orders of the Minister of Economy in part where they concern the transfer of the ownership of the road of national significance and the application of restitution, annulled the judgment of the Court of First Instance and granted the prosecutor's claim.

18 Related party transactions

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

As of 30 September 2015 and as of 30 September 2014, the related parties of the Company were as follows:

• UAB GET Baltic (joint venture in which the Company has an interest);
• $\frac{1}{2}$ UAB EPSO-G (the parent company);
• UAB LITGRID (co-shareholders);
• UAB Baltpool (subsidiary of AB LITGRID); $\frac{1}{2}$
• UAB Tetas (subsidiary of AB LITGRID);
• UAB Tinklo Priežiūros Centras (subsidiary of AB LITGRID);
• UAB Duomeny Logistikos Centras (associated company of AB LITGRID Group);
• Lit Pol Link Sp.z.o.o. (joint venture co-owned by LITGRID AB and the Polish electricity network operator PSE $S.A.$ );
• Management.

The tables below present the Company's balances and transactions with related parties as of 30 September 2015 and as of 30 September 2014.

As of 30 September 2015 (unaudited)	Purchases	Sales	Accounts receivable	Accounts payable
UAB GET Baltic		5	1
		5
As of 30 September 2014 (unaudited)	Purchases	Sales	Accounts receivable	Accounts payable
UAB Tetas	1	٠
UAB GET Baltic	300
	301

There were no guarantees either provided or received for receivables from the related parties or for payables to them. As at 30 September 2015, the Company had not accounted any impairment loss allowances for receivables from the related parties.

18 Related party transactions (continued)

Management remuneration

During the period of 9 months ended 30 September 2015, payments to the management of the Company amounted to EUR 282 thousand (during the period of 9 months ended 30 September 2014: EUR 265 thousand). The Management consists of the Chief Executive Officer, the Deputies thereof, and the Chief Accountant. The management of the Company did not receive any loans, guarantees; no other payments or property transfers were made or accrued.

19 Subsequent events

On 15 October 2015, Poland's and Lithuania's Gas Transmission System Operators, AB Amber Grid and Gaz-System S.A., signed a tripartite agreement with the European Union's (EU) Innovation and Network Executive Agency (INEA) regarding financial assistance to fund the project action "Construction of a Gas Interconnection Poland-Lithuania Including Supporting Infrastructure" (GIPL). Under the agreement, the Project was granted a financial assistance of the EU in the amount of EUR 295.4 million under the Connecting Europe Facility (CEF). AB Amber Grid was granted financial assistance of up to EUR 55 million, and GAZ-SYSTEM S.A. was granted up to EUR 240.3 million. Besides the financial assistance of the EU, the GIPL construction works will be financed by Lithuania, Latvia, and Estonia which, according to the cross-border cost allocation solution, will cover part of the GIPL infrastructure costs in the Polish territory. Total indicative project value is EUR 558 million, and the value of the construction works is EUR 492.2 million.

The 70-cm-diameter gas pipeline will connect Lithuania's Jauniūnai (Vilnius District) Gas Compressor Station and Poland's Rembelszyzna Gas Compressor Station (located in the vicinity of Warsaw). Total length of the new pipeline will be 534 km, of which in Lithuania will be 177 km. The pipeline will be constructed in the Municipalities of Širvintos, Vilnius, Elektrėnai, Kaišiadorys, Prienai, Birštonas, Alytus, Marijampolė and Lazdijai.

The gas transmission pipeline will enable annual transportation to the Baltic States of 27 TWh of gas, and to Poland 22.5 TWh. In the future, there will be a possibility of expansion of the capacities of transportation of gas supplies via the GIPL to the Baltic States to up to 46 TWh of gas per year, through an additional construction or expansion of the capacities of the Gas Compressor Stations in Lithuania and Poland. The construction of the gas transmission pipeline is scheduled for completion by the beginning of the year 2020.

On 20 October 2015, the General Assembly of the European Network of Transmission System Operators for Gas (ENTSOG) endorsed the admission of AB Amber Grid to full membership of this organisation with effect from 1 November 2015. The full membership status will enable the Company to even more actively contribute to the development of the European gas market and to engage in joint activities with gas transmission system operators of other countries. Until now, AB Amber Grid had an associated partner status and was not entitled to vote in the decision-making processes and had only limited opportunities of participation in ENTSOG activities.

In pursuit of the strategic goal of the development of a competitive regional natural gas market, AB Amber Grid is acquiring from AB Lithuanian Gas a 34% stake in UAB GET Baltic. On 6 November 2015, AB Amber Grid and AB Lietuvos Dujos concluded a purchase and sale agreement of the said stake. The transaction value is EUR 130,832. AB Amber Grid became the largest shareholder of UAB GET Baltic and will control 66% of the authorised share capital. The remaining 34% stake is owned by the Finnish natural gas company, Gasum Oy.

UAB GET Baltic is a company with a natural gas market operator's license, whose main function is to organise and develop trade on the Natural Gas Exchange.