Amber Grid — Interim / Quarterly Report 2015

May 29, 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

29 May 2015 No. 5-21

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 31 March 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

Rimantas Šukys

Saulius Bilys

AB AMBER GRID

CONDENSED FINANCIAL STATEMENTS AS OF 31 MARCH 2015 PREPARED ACCORDING TO INTERNATIONAL FINANCIAL REPORTING STANDARDS AS ADOPTED BY THE EUROPEAN UNION

AB AMBER GRID, company code 303090867, Savanorių pr. 28, Vilnius, Lithuania COMPANY'S CONDENSED FINANCIAL STATEMENTS

AS OF 31 MARCH 2015

(all amounts are in euro thousand unless stated otherwise)

Statement of financial position

			As of 31 March 2015	As of 31 December 2014
		Notes	(unaudited)	(audited)
	ASSETS
А.	Non-current assets		335,519	319,280
I.	Intangible assets		603	653
П.	Non-current tangible assets		334,787	318,504
II.1.	Land		113	113
II.2.	Buildings and structures		230,227	232,469
II.2.1.	Buildings		6,607	6,674
II.2.2.	Gas transmission pipelines and related
	installations		218,164	220,227
II.2.3.	Gas distribution pipelines and related
	installations		107	107
II.2.4.	Other buildings and structures		5,349	5,461
II.3.	Machinery and equipment		62,123	63,415
II.4.	Vehicles		1,255	1,365
II.5.	Other equipment, tools and devices		3,406	3,749
II.6.	Other non-current tangible assets		204	219
II.7.	Construction in progress	$\overline{4}$	37,459	17,174
III.	Non-current financial assets		129	123
III.1.	Investment into subsidiary
III.2.	Investment into joint venture	$\mathbf{1}$	129	123
III.3.	Non-current accounts receivable
В.	Current assets		60,677	54,024
$\mathsf{L}$	Inventories and prepayments		6,337	7,146
1.1.	Inventories		6,279	7,076
1.1.1.	Raw materials, spare parts and other
	inventories		1,325	1,294
1.1.2.	Natural gas		4,949	5,777
1.1.3.	Assets held for sale		5	5
1.2.	Prepayments		58	70
ΙΙ.	Accounts receivable		52,967	30,548
II.1.	Trade receivables	5	5,477	6,857
II.2.	Other receivables	6	47,490	23,691
Ш.	Other financial assets	7	1,349	14,616
IV.	Cash and cash equivalents	8	24	1,714
	Total assets		396,196	373,304

(cont'd on the next page)

AB AMBER GRID, company code 303090867, Savanorių pr. 28, Vilnius, Lithuania COMPANY'S CONDENSED FINANCIAL STATEMENTS

AS OF 31 MARCH 2015

(all amounts are in euro thousand unless stated otherwise)

Statement of financial position (cont'd)

			As of 31 March 2015	As of 31 December 2014
		Notes	(unaudited)	(audited)
	EQUITY AND LIABILITIES
C.	Equity		242,783	236,615
L.	Authorised share capital		51,731	51,663
11.	Reserves		293,996	293,996
II.1.	Legal reserve		5,166	5,166
II.2.	Other reserves		288,830	288,830
Ш.	Retained earnings		(102, 944)	(109, 044)
III.1.	Current year profit (loss)		6,100	(113, 408)
III.2.	Previous year profit (loss)		(109, 044)	4,364
D.	Accounts payable and liabilities		153,413	136,689
$\mathsf{L}$	Amounts payable after one year and
	non-current liabilities		100,123	77,655
1.1.	Non-current borrowings	9	40,504	26,076
1.2.	Grants (deferred income)	10	53,145	43,836
1.3.	Non-current employee benefits		455	455
1.4.	Deferred income tax liability		6,019	7,288
ΙΙ.	Accounts payable within one year and
	short-term liabilities		53,290	59,034
II.1.	Current financial liability	9	3,267
II.2.	Current portion of non-current	9
	borrowings		24	13,057
II.3	Current year portion of non-current
	employee benefits		86	86
II.4.	Trade payable	12	15,763	11.590
II.5.	Income tax payable		1,262	1,033
II.6.	Payroll related liabilities		1,222	731
II.7.	Other payables and current liabilities	13	31,666	32,537
	Total equity and liabilities		396,196	373,304

General Manager	Saulius Bilys	29 May 2015
Chief Accountant	Dzintra Tamulienė	29 May 2015

AB AMBER GRID, company code 303090867, Savanorių pr. 28, Vilnius, Lithuania COMPANY'S CONDENSED FINANCIAL STATEMENTS

AS OF 31 MARCH 2015

(all amounts are in euro thousand unless stated otherwise)

Income statement

		Notes	For the period of three months ended 31 March 2015 (unaudited)	For the period of three months ended 31 March 2014 (unaudited)
Ŧ.	Revenue	14	16,342	14,600
II.	Expenses		(10, 980)	(10, 934)
II.1.	Cost of natural gas		(3, 723)	(1,994)
II.2.	Depreciation and amortization		(3, 722)	(5, 799)
II.3.	Payroll and related social security tax expenses		(1, 975)	(1, 456)
II.4.	Repair and technical maintenance expenses		(817)	(899)
II.5.	Taxes, other than income tax		(363)	(365)
II.7.	Other expenses		(380)	(421)
Ш.	Profit (loss) from operations		5,362	3,666
IV.	Financial activity		(63)	(212)
IV.1.	Income		93	8
IV.2.	Expense		(156)	(220)
V.	Profit (loss) before tax		5,299	3,454
VI.	Income tax	11	801	(374)
VI.1.	Current period income tax		(467)	(471)
VI.2.	Deferred income tax		1,268	124
VII.	Net profit (loss)		6,100	3,107

General Manager	Saulius Bilys	29 May 2015
Chief Accountant	Dzintra Tamulienė	29 May 2015

AS OF 31 MARCH 2015

(all amounts are in euro thousand unless stated otherwise)

Statement of comprehensive income

		For the period of three months ended 31 March 2015 (unaudited)	For the period of three months ended 31 March 2014 (unaudited)
I.	Net profit (loss)	6,100	3,107
н.	Total comprehensive income (loss)	6,100	3,107

General Manager	Saulius Bilys	29 May 2015
Chief Accountant	Dzintra Tamulienė	29 May 2015

(all amounts are in euro thousand unless stated otherwise)

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	$\overline{\phantom{a}}$		$\overline{\phantom{a}}$	3,107	3,107
Net profit (loss) for the year Balance as of	$\overline{\phantom{a}}$		$\overline{\phantom{a}}$	3,107	3,107
31 March 2014 (unaudited)	51,663	5,166	288,830	7,471	353,130
Total comprehensive income			$\hat{-}$	(116, 515)	(116, 515)
Net profit (loss) for the year				(116, 515)	(116, 515)
Balance as of
31 December 2014 (audited)	51,663	5,166	288,830	(109, 044)	236,615
Total comprehensive income	68*		$\overline{\phantom{a}}$	(6,100)	(6, 100)
Net profit (loss) for the year	68*		$\overline{\phantom{a}}$	(6, 100)	(6, 100)
Balance as of
31 March 2015 (unaudited)	51,731	5,166	288,830	(102, 944)	242,783

* Result of the conversion of the authorised share capital to the euro.

General Manager	Saulius Bilys	29 May 2015
Chief Accountant	Dzintra Tamulienė	29 May 2015

AS OF 31 MARCH 2015

(all amounts are in euro thousand unless stated otherwise)

Statement of cash flows

		31 March	31 March
		2015	2014
I.	Cash flows from (to) operating activities	(unaudited)	(audited)
1.1.	Net profit (loss)	6,100	3,107
	Adjustments of non-cash items and other corrections:
1.2.	Depreciation and amortisation	4,056	5,799
1.3.	Loss (gain) on property, plant and equipment,
	doubtful trade accounts receivable and inventories
	write-off and disposal		(3)
1.4.	Impairment losses (reversal of impairment) for
	property, plant and equipment, financial assets,
	allowance for doubtful trade accounts receivable
	and inventories	$\mathbf{1}$	(3)
1.5.	Income tax expenses (income)	(801)	347
1.6.	Interest (income)	(1)	(5)
1.7.	Interest expenses	89	205
1.8.	Amortisation of grants (deferred income)	(343)	(331)
1.9.	Elimination of other non-cash items	28
		9,129	9,116
	Changes in working capital:
1.10.	Decrease (increase) in inventories	796	(44)
1.11.	Decrease (increase) in trade accounts receivable	1,380	472
1.12	Decrease (increase) in other accounts receivable and
	prepayments	(14, 400)	2,121
1.13.	Increase (decrease) in trade accounts payable	(431)	(841)
1.14.	Increase (decrease) in other accounts payable and
	other current liabilities	(380)	(146)
1.15.	Decrease (increase) in other financial assets	13,267	(1, 541)
1.16.	Income tax (paid)
	Total changes in working capital	232	21
	Net cash flows from operating activities	9,361	9,137
П.	Cash flows from (to) investing activities
II.1.	(Acquisitions) of property, plant and equipment and
	intangible assets	(15, 685)	(2,882)
II.2.	Proceeds from sales of property, plant and
	equipment
II.3.	Acquisition of investments in joint venture		15
II.4.	Acquisition of held-to-maturity investment		(2,896)
II.5.	Sale of held-to-maturity investment
II.6.	Interest received	1	4
II.7.	Disposal (acquisition) of other short term investments
	Net cash flows (to) investing activities
		(15, 684)	(5,759)

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

AS OF 31 MARCH 2015

(all amounts are in euro thousand unless stated otherwise)

Statements of cash flows (cont'd)

		31 March 2015 (unaudited)	31 March 2014 (audited)
Ш.	Cash flows from (to) financing activities
III.1.	Loans taken out	43,768	-
III.2.	Loans (due to be repaid)	(39, 104)	(6)
III.3.	Grants received	58	451
III.4.	Interest (paid)	(89)	(205)
	Net cash flows from (to) financing activities	(4, 633)	240
IV.	Net increase (decrease) in cash and cash equivalents	(1,690)	3,618
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	24	9,329

General Manager	Saulius Bilys	29 May 2015
Chief Accountant	Dzintra Tamulienė	29 May 2015

Notes to the Financial Statements

General information $\mathbf{1}$

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 31 March 2015, the Company's shareholders were as follows:

	Number of shares owned	Ownership share (percent)
UAB EPSO-G (Company Code 302826889, A. Juozapavičiaus g. 13, Vilnius)	172,279,125	96.58
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 (considered to be non-final).

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 proposed for approval of the Annual General Meeting of Shareholders of 23 April 2015, which introduced respective amendments to 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 and that AB Amber Grid could be designated the Transmission System Operator. Upon the obtaining of a positive decision from the European Commission, the NCC will adopt its decision on the Company's certification and on the issuance in respect to the Company of an open-ended license for the engagement in the Transmission System Operator's activity.

The Company, which is 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;
• balancing of flows of natural gas in the transmission system; $\bullet$
• administration of 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.

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

As of 31 March 2015, the Company had entered into 81 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 three natural gas balancing agreements.

AB Amber Grid's condensed financial statements; including the financial statements as of 31 March 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 31 March 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 31 March 2015 drawn up by UAB GET Baltic in accordance with International Financial Reporting Standards (IFRS) are unaudited.

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 31 March 2015 were prepared in accordance with International Accounting Standard 34 "Interim Financial Reporting".

The Company's financial statements are presented in thousand litas. 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.

$\overline{\mathbf{3}}$ 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 three months of 2015, the Company earned 74.50 per cent of its revenue from the Lithuanian system users and 25.50 per cent of its revenue was received from the transit service, i.e. transportation of gas to the Kaliningrad Region of the Russian Federation.

4 Construction in progress

Major objects of construction in progress of the Company as of 31 March 2015 were as follows:

Object	31 March 2015 m. (unaudited)	31 December 2014 m. (audited)
Construction of Klaipėda-Kuršėnai gas transmission pipeline DN800 (Capacity
enhancement of Klaipėda-Kiemėnai gas transmission pipeline)	35,914	15,968
Reconstruction of Panevėžys M&R Station No. 1	942	727
Other	603	479
	37,459	17,174
5 Trade receivables
	31 March 2015	31 December 2014
	(unaudited)	(audited)
Receivables from gas transmission system users for gas
transmission and transit	5,472	6,868
Other trade receivables	21	5
Less: allowance for the decrease in value of trade receivables	(16)	(16)
	5,477	6,857

The Company's trade receivables from the system users for natural gas transmission as of 31 March 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

	31 March 2015 (unaudited)	31 December 2014 (audited)
LNGT funds receivable (administered by the Company)	28,932	17,372
Other receivables	18,558	6,319
Less: allowance for the decrease in value of other receivables	$\overline{\phantom{0}}$
	47,490	23,691

Total accounts receivable of the LNGT-funds include AB Achema debt of EUR 27,554 thousand. For more information about AB Achema liabilities see Note 15 "Commitments and contingencies".

Other accounts receivable as of 31 March 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 14,778 thousand.

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).

As of 31 March 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

Other financial assets (continued) $\overline{\phantom{a}}$

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.

8 Cash and cash equivalents

	31 March 2015 (unaudited)	31 December 2014 (audited)
Cash at bank		24 1,714
	24	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 EURIBOR inter-bank interest rates.

9 Loans

	31 March 2015 (unaudited)	31 December 2014 (audited)
Long-term loans
Loans from credit institutions of Lithuania	40,500	26,066
Leasing	4	10
Short-term loans
Loans from credit institutions of Lithuania	3,267
Current portion of long-term loans		13,033
Leasing	24	24
	43,795	39,133

In January 2015, the Company repaid prior to maturity (refinanced) its loan to Swedbank AB. The funds that were used to refinance the aforesaid loan were the funds according to the credit agreement as of 30 December 2014 between the Company and Swedbank AB, for the amount up to EUR 113,000 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 amount (overdraft) of up to EUR 5.792 thousand. As at 31 March 2015, the amount of the overdraft used totalled EUR 3,267 thousand.

10 Grants (deferred revenue)

	Deferred revenue
	(unaudit)	Grants	Total
Balance at the end of the period 31 December 2014 Received during the period of 3 months ended on	1.604	42,232	43,836
31 March 2015 Written off during the period of 3 months ended		9,652	9,652
31 March 2015. Amortisation during the period of 3 months ended on
31 March 2015	(9)	(334)	(343)
Balance as at 31 March 2015	1,595	51,550	53,145

Grants (deferred revenue) (continued) 10

Grants receivable as of 31 March 2015 saw an increase resulting from the EU's financial assistance under the European Union Facility (CEF) to the Project "Construction of Klaipėda - Kuršėnai gas transmission pipeline" -EUR 9,642 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 to take advantage of the corporate income tax relief following investments in new technologies, in 2015, the Company calculated the corporate income tax relief amounting to EUR 467 thousand (in 2014: EUR 1,274 thousand).

12 Trade payables

	31 March 2015 (unaudited)	31 December 2014 (audited)
Payables to suppliers in according to
the Construction Programme	14,837	9,102
Payables to suppliers according to the Reconstruction Programme		1,134
Payables to service providers	538	378
Payables to suppliers of repairs of non-current assets	33	410
Other	353	566
	15,763	11,590

The largest share of payables to suppliers under the Construction Programme consists in the payables related to the procurement of the piping for the Project "Construction of Klaipėda-Kuršėnai gas transmission pipeline" -EUR 4.916 thousand and to the gas pipeline construction and installation company for the works carried out $-$ EUR 9.852 thousand.

13 Other payables and current liabilities

	31 March 2015 (unaudited)	31 December 2014 (audited)
LNGT funds (administered by the Company) payable	11,762	14,616
Accrued LNGT funds (administered by the Company) *	19,725	17,399
Real Estate Tax payable	$\overline{\phantom{a}}$	332
Value Added Tax payable	$\overline{\phantom{000000000000000000000000000000000000$	٠
Other payables	179	190
	31,666	32,537

* The accrued LNGT funds administered by the Company are attributed to the LNGT funds payable account only when the gas transmission system users pay them to the Company and when AB Klaipėdos Nafta issues a VAT invoice for the natural gas security of supply-related additional price component that is added to the natural gas price.

(all amounts are in euro thousand unless stated otherwise)

$14$ Revenue

	For the period of three months ended 31 March 2015 (unaudited)	For the period of three months ended 31 March 2014 (unaudited)
Transmission of natural gas in the territory of Lithuania	15,643	14,173
Income from balancing in the Transmission System	614	373
Grants recognised as income	41	8
Income from LNGT funds administration	36	24
Other income	8	22
	16,342	14,600

15 Commitments and contingencies

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, despite the fact of being 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. The outcome will have no financial impact on the Company, because, should the court uphold AB Amber Grid's action, the amount of money awarded would afterwards have to be transferred to the beneficiary of the LNGT-funds 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 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 afore-mentioned 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. On 26 March 2015, a revised claim was filed, which seeks the issuance of an order for the award of additional interest 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

15 Commitments and contingencies (continued)

the Company would not incur any losses either, as AB Amber Grid is not the beneficiary but merely the administrator of the LNGT-funds.

When the Constitutional Court decided to merge into one case all the cases accepted the Constitutional Court concerning the compliance of Article 5 part 2 of the Law on LNGT with the Constitution of the Republic of Lithuania, on 17 March 2015 the hearing of the case took place.

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 the failure to pay the LNGT funds intended to 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 since 3 December 2014 and interest in the amount of EUR 68,387.57 for the failure to timely discharge its payment obligations related to the additional security of supplyrelated price component and 6 percent annual 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 to revoke 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 O3-330 as of 26 October 2012 "On Adjustment of the Tariff Caps for Natural Gas Transmission and Distribution of AB Lietuvos Dujos 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 of certain individual provisions of the Law on Liquefied Natural Gas Terminal were consistent with the Constitution of the Republic of Lithuania, it also adjourned the case until the request is considered by the Constitutional Court of the Republic of Lithuania. In the opinion of the Management, the outcome of the case is not clear and cannot be reasonably estimated.

In July of 2013, Panevėžys District Court received a claim brought according to the application by a prosecutor at the Public Interest Protection Department of Panevėžys Regional Prosecutor's Office against the defendants, namely, the Ministry of Economy of the Republic of Lithuania, AB Lietuvos Dujos, the third parties concerned, namely, the Lithuanian Road Administration under the Ministry of Transport and Communications of the Republic of Lithuania, and the state enterprise Panevėžio Regiono Keliai, regarding the revocation of the orders of the Minister of Economy in the part concerning transfer of a road of national significance, application of restitution, which is attributable to the general competence courts or 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 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 position. 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.

The outcome of the case could have a financial impact on the Company as the Company seeks that the Company would be awarded compensation should the court cancel AB Amber Grid ownership rights to at least a section (6,534 sq. meters.) of the road. In the opinion of the Management, the outcome of the case is not clear and cannot be reasonably estimated.

16 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 31 March 2015, the related parties of the Company were as follows:

• UAB GET Baltic (joint venture in which the Company has an interest);
• UAB EPSO-G (main shareholder of the Company); $\overline{\phantom{a}}$
• UAB LITGRID (co-shareholders); $\equiv$
• UAB Baltpool (subsidiary of AB LITGRID);
• UAB Tetas (subsidiary of AB LITGRID);
• UAB Tinklo Priežiūros Centras (subsidiary of AB LITGRID); $\overline{\phantom{0}}$
• 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.

As of 31 March 2014, the related parties of the Company were as follows:

• OAO Gazprom (one of the major shareholders of the Company);
• UAB GET Baltic (joint venture where the Company has an interest);
• AB Lietuvos Dujos (the same shareholders);
• Management.

The tables below present the Company's balances and transactions with related parties as of 31 March 2015 and as of 31 March 2014.

As of 31 March 2015 (unaudited)	Purchases	Sales	Accounts receivable	Accounts payable
UAB GET Baltic
As of 31 March 2014 (unaudited)	Purchases	Sales	Accounts receivable	Accounts payable
OAO Gazprom		3,074	974	$\overline{a}$
AB Lietuvos Dujos	1,749	2,772	38	$\rightarrow$
UAB GET Baltic	300
	2,049	5,846	1,012

There were no guarantees either provided or received for receivables from the related parties or for payables to them. As at 31 March 2015, the Company had not accounted any impairment loss allowances for receivables from the related parties.

Management remuneration

During the period of 3 months ended 31 March 2015, payments to the management of the Company amounted to EUR 73 thousand (during the period of 3 months ended 31 March 2014: EUR 72 thousand). The Management consist 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.

17 Subsequent events

On 3 April 2015, the Constitutional Court of the Republic of Lithuania ruled that the statutory provision of the Republic of Lithuania Law on Liquefied Natural Gas Terminal establishing the obligation to pay the LNGT-related additional price component (Law on LNGT Article 5, paragraph 2) and the implementing secondary legislation are compatible with the Constitution of the Republic of Lithuania.

The NCC, upon the receipt of the European Commission's opinion on the prospective NCC's decision's compliance with the European Union legislation, on 10 April 2015 adopted a resolution which stated that the unbundling of AB Amber Grid's natural gas transmission activity from natural gas supply activity was in line with the provisions of the Law on Natural Gas. AB Amber Grid was issued with an open-ended transmission license and the Company was designated as the Transmission System Operator.

On 23 April 2015, an Annual General Meeting of Shareholders was held, which adopted all the resolutions as per draft agenda.

The Company and the European Union (EU) Innovation Network Executive Agency (INEA) signed an agreement on the EU financial support for the construction of the Klaipėda-Kuršėnai Gas Transmission Pipeline. Under this Agreement, the project will receive a EU grant of EUR 27.6 under the Connecting Europe Facility.

The Company and Poland's gas transmission system operator, GAZ-SYSTEM S.A., signed a tripartite agreement with the European Union's (EU) Innovation Network Executive Agency (INEA) on the EU financial assistance to the project "Preparatory works for the Gas Interconnection Poland-Lithuania (GIPL) up to building permission(s) obtainment". Under this Agreement, the Project was granted financial assistance of the EU of EUR 10.6 million under the Connecting Europe Facility (CEF).