Amber Grid — Interim / Quarterly Report 2017

Aug 24, 2017

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

Phone +370 5 236 0855 $Fax + 37052360850$ E-mail info@ambergrid.lt

CONFIRMATION OF RESPONSIBLE PERSONS

24 August 2017 No. 5-310-19

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, we, Saulius Bilys, Director General of AB Amber Grid, and Rimantas Šukys, 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 June 2017 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.

Director General

Financial Director

Rimantas Šukys

Saulius Bilys

AB AMBER GRID

CONDENSED FINANCIAL STATEMENTS AS OF 30 JUNE 2017 PREPARED ACCORDING TO INTERNATIONAL FINANCIAL REPORTING STANDARDS AS ADOPTED BY THE EUROPEAN UNION

Statement of financial position

			As of	As of
			30 June	31 December
			2017	2016
	ASSETS	Notes	(unaudited)	(audited)
А.	Non-current assets
$\mathbf{I}$ .	Intangible assets		342,196	348,715
ΙΙ.	Property, plant and equipment		598	631
II.1.	Land		340,923	347,409
II.2.	Buildings and structures		125	125
II.2.1.	Buildings		274,666	276,153
II.2.2.	Gas transmission pipelines and related		6,106	6,244
	installations		263,785
II.2.3.	Gas distribution pipelines and related			264,918
	installations		102	103
II.2.4.	Other buildings and structures		4,673	4,888
II.3.	Machinery and equipment		52,976	55,565
II.4.	Motor vehicles		921	1,101
II.5.	Other equipment, tools and devices		2,176	2,717
II.6.	Other property, plant and equipment		636	611
II.7.	Construction in progress	$\overline{4}$	9,423	11,137
III.	Non-current financial assets	$\mathbf{1}$	675	675
в.	Current assets		21,089
$\mathsf{I}$ .	Inventories and prepayments		1,685	42,583
1.1.	Raw materials, spare parts and other			1,515
	inventories		1,478	1,360
1.2.	Prepayments		207	155
$\mathsf{II}.$	Accounts receivable		19,352	25,444
II.1.	Trade receivables	5	5,017	6,858
II.2.	Other receivables	6,17	14,335	18,586
Ш.	Other financial assets	7	43	1,658
IV.	Cash and cash equivalents	8	9	13,966
	Total assets		363,285	391,298

(cont'd on the next page)

Statement of financial position (cont'd)

			As of	As of
			30 June	31 December
			2017	2016
	EQUITY AND LIABILITIES	Notes	(unaudited)	(audited)
C.	Equity
Ι.	Share capital		192,757	202,810
П.	Reserves		51,731	51,731
II.1.			130,151	130,151
II.2.	Legal reserve		5,173	5,173
	Other reserves		124,978	124,978
Ш.	Retained earnings (deficit)		10,875	20,928
III.1.	Current year profit (loss)		10,875	20,928
III.2.	Previous year profit (loss)
D.	Accounts payable and liabilities		170,528	188,488
1.	Amounts payable after one year and
	non-current liabilities		141,953	152,816
1.1.	Non-current borrowings	$\overline{9}$	70,778	82,222
1.2.	Grants (deferred revenue)	10	64,141	64,450
1.3.	Non-current employee benefits		426	426
1.4.	Deferred income tax liability		6,608	5,718
	Accounts payable within one year and
ΙΙ.	short-term liabilities		28,578	35,672
II.1.	Current financial liability		3,998
II.2.	Current portion of non-current
	borrowings	9	6,444	11,444
II.3	Current year portion of non-current
	employee benefits		80	80
II.4.	Trade payables	12	2,303	5,694
II.5.	Advance amounts		5
II.6.	Income tax payable		338	5
II.7.	Payroll related liabilities			876
II.8.	Other payables and current liabilities	13	1,463	1,422
			13,944	16,151
	Total equity and liabilities		363,285	391,298

Director General	Saulius Bilys	24 August 2017
Chief Accountant	Dzintra Tamulienė	24 August 2017

(all amounts are in euro thousand unless stated otherwise)

Income statement

		Notes	For the period of three months ended 30 June 2017 (unaudited)	For the period of three months ended 30 June 2016 (unaudited)	For the period of six months ended 30 June 2017 (unaudited)	For the period of six months ended 30 June 2016 (unaudited)
$\mathbf{L}$	Revenue	15	13,325	12,629	32,617	33,904
Н.	Expenses		(9,788)	(9,605)	(19, 616)	(20, 365)
II.1.	Cost of natural gas		(1, 538)	(1, 282)	(3, 130)	(4,007)
II.2.	Depreciation and amortization		(3,628)	(3,965)	(7, 288)	(7, 947)
II.3.	Remuneration and related
	social security tax expenses		(1,946)	(1,853)	(3,955)	(3,952)
II.4.	Repair and technical
	maintenance expenses		(1, 541)	(1, 403)	(3,041)	(2, 304)
II.5.	Taxes other than income tax		(446)	(456)	(888)	(923)
II.6.	Telecommunications and IT
	systems expenses		(166)	(129)	(302)	(257)
II.7.	Other expenses		(523)	(517)	(1,012)	(975)
Ш.	Operation profit (loss)		3,537	3,024	13,001	13,539
IV.	Financial activity		(188)	(127)	(157)	(272)
IV.1.	Income	17	(114)	24	20	69
IV.2.	Expense		(74)	(151)	(177)	(341)
v.	Profit (loss) before income		3,349	2,897	12,844	13,267
VI.	tax
	Income tax	11	(575)	(200)	(1,969)	(1,731)
VI.1. VI.2	Current period income tax		(315)	(298)	(1,079)	(1, 148)
	Deferred income tax		(260)	98	(890)	(583)
VII.	Net profit (loss)		2,774	2,697	10,875	11,536
	Basic and diluted earnings (loss)
	per share (Eur)	14			0,06	0,06

Director General	Saulius Bilys	24 August 2017
Chief Accountant	Dzintra Tamulienė	24 August 2017

Statement of comprehensive income

		For the period of three months ended 30 June 2017 (unaudited)	For the period of three months ended 30 June 2016 (unaudited)	For the period of six months ended 30 June 2017 (unaudited)	For the period of six months ended 30 June 2016 (unaudited)
ı.	Net profit (loss)	2,774	2,697	10,875	11,536
н.	Total comprehensive income (loss)	2,774	2,697	10,875	11,536

Director General	Saulius Bilys	24 August 2017
Chief Accountant	Dzintra Tamulienė	24 August 2017

Statement of changes in equity

	Share capital	Legal reserve	Other reserves	Retained earnings (deficit)	Total
Balance as of
31 December 2015 (audited)	51,731	5,166	121,789	15,978	194,664
Transfer from other reserves			3,189	(3, 189)
Transfer to legal reserve		7		(7)
Dividends declared	$\qquad \qquad \blacksquare$	$\qquad \qquad \blacksquare$		(12, 782)	(12, 782)
Total comprehensive income (loss)		$\overline{\phantom{0}}$		11,536	11,536
Net profit (loss) for the year Balance as of				11,536	11,536
30 June 2016 (unaudited)	51,731	5,173	124,978	11,536	193,418
Total comprehensive income (loss)	$\overline{\phantom{a}}$	٠		9,392	9,392
Net profit (loss) for the year Balance as of	$\overline{a}$			9,392	9,392
31 December 2016 (audited)	51,731	5,173	124,978	20,928	202,810
Dividends declared				(20,928)	(20, 928)
Total comprehensive income (loss)				10,875	10,875
Net profit (loss) for the year	$\overline{\phantom{0}}$		٠	10,875	10,875
Balance as of
30 June 2017 (unaudited)	51,731	5,173	124,978	10,875	192,757

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

* Result of share capital conversion into the euro.

Director General	Saulius Bilys	24 August 2017
Chief Accountant	Dzintra Tamulienė	24 August 2017

Statement of cash flows

		30 June 2017	30 June 2016
		(unaudited)	(unaudited)
ı.	Cash flows from (to) operating activities
1.1.	Net profit (loss)	10,875	11,536
	Adjustments of non-cash items and other corrections:
1.2.	Depreciation and amortisation	8,187	8,913
1.3.	Loss (gain) on property, plant and equipment, doubtful trade
	accounts receivable and inventories write-off and disposal	(12)	(10)
1.4.	Impairment losses (reversal of impairment) for property, plant
	and equipment, financial assets, allowance for doubtful trade
1.5.	accounts receivable and inventories	26	21
1.6.	Income tax expenses (income)	1,969	1,731
1.7.	Interest (income)	(2)	(2)
1.8.	Interest expenses	177	341
1.9.	Amortisation of grants (deferred revenue) Elimination of other non-cash items	(918)	(994)
		(18)	(67)
		20,284	21,469
1.10.	Changes in working capital:
1.11.	Decrease (increase) in inventories	(141)	109
1.12	Decrease (increase) in trade accounts receivable	1,800	4,582
	Decrease (increase) in other accounts receivable and
1.13.	prepayments	1,707	(542)
1.14.	Increase (decrease) in trade accounts payable	(250)	(1, 118)
	Increase (decrease) in other accounts payable and other current liabilities
1.15.	Decrease (increase) in other financial assets	(2, 199)	(30, 698)
1.16.	Income tax (paid)	1,615	31,376
		(1,617)	(958)
	Total changes in working capital	915	2,751
	Net cash flows from operating activities	21,129	24,220
н. II.1.	Cash flows from (to) investing activities
	(Acquisitions) of property, plant and equipment and intangible assets
II.2.		(4, 753)	(9,844)
II.3.	Proceeds from sales of property, plant and equipment Acquisition of investments in joint venture	12	10
II.4.	(Acquisition) of held-to maturity investment		(132)
II.5.	(Disposal) of held-to-maturity investment
II.6.	Loans granted
II.7.	Interest received	(70)
	Disposal (acquisition) of other short term investments	2	2
	Net cash flows (to) investing activities	(4,809)	(9,964)

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

Statements of cash flows (cont'd)

		30 June 2017 (unaudited)	30 June 2016 (unaudited)
Ш.	Cash flows from (to) financing activities
III.1.	Dividends (paid)	(20, 892)	(12, 778)
III.2.	Proceeds from borrowings	3,998
III.3.	(Repayments) of borrowings	(16, 444)	(21, 454)
III.4.	Grants received	3,170	34
III.5.	Interest (paid)	(197)	(333)
III.6.	Other cash flows from (to) financial activities	18	67
	Net cash flows from (to) financing activities	(30,347)	(34, 464)
IV.	Net increase (decrease) in cash and cash equivalents	(13, 957)	(20, 208)
v.	Cash and cash equivalents at the beginning of the period	13,966	26,969
VI.	Cash and cash equivalents at the end of the period	9	6,761

Director General	Saulius Bilys	24 August 2017
Chief Accountant	Dzintra Tamulienė	24 August 2017

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 obligations attributed to the activity in question. The Company's operations date back to 1 August 2013.

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 the obtaining of a positive decision from the European Commission, the NCC issued in respect of the Company 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's largest shareholder is UAB EPSO-G. UAB EPSO-G is 100-percent owned by the Republic of Lithuania and is managed by trust by the Ministry of Energy of the Republic of Lithuania. UAB EPSO-G is in charge of the management of the shareholdings of the electricity and gas transmission system operators of the Republic of Lithuania.

Since 1 August 2013, the Company's shares have been traded on a stock exchange; they are listed on the Baltic Secondary Trading List of NASDAQ OMX Vilnius Stock Exchange (ISIN code LT0000128696, instrument AMG1L).

As of 30 June 2017, 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
THE REPORT OF THE REPORT OF PROPERTY AND RELEASED FOR A 200 FEMALE CONTINUES.	178,382,514	100.00

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

AB Amber Grid has a single subsidiary, UAB GET Baltic. In the financial statements as of 30 June 2017 and 2016, UAB GET Baltic is accounted for at acquisition cost.

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

On 23 December 2016, AB Amber Grid acquired from the Finnish natural gas company, Gasum Oy, the remaining 34 % stake in UAB GET Baltic, and in this way AB Amber Grid became the only shareholder of UAB GET Baltic, which controls 100 % of the authorised share capital. As at 30 June 2017, UAB GET Baltic's authorised share capital amounted to EUR 580,450 and was composed of 3,055,000 units of ordinary registered shares with par value of EUR 0.19 each.

Company	Company	Registered address of	Stake of shares held as	Stake of shares held as
	code	the company	of 31 March 2017	of 31 March 2016
UAB GET Baltic	302861178	Savanorių pr. 28, Vilnius	100 %	66 %

In accordance to the exemption provisions of Article 6.1 of the Law on Consolidated Financial Statements, the financial statements of the subsidiary were not subject to consolidation since from the point of view of the Company they are negligent, as of the end of the financial year, the value of the subsidiary's assets did not exceed 5 percent of the value of the Company's assets and the subsidiary's net income from Sales did not exceed 5 percent of the Company's net income over the same period.

UAB GET Baltic's condensed financial statements as of 30 June 2017 were drawn up in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU and have not been audited.

General information (cont'd)

The Company is engaged in the natural gas transmission system operator's activity and 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 intended to compensate for the installation and fixed operating costs of the Liquefied Natural Gas Terminal, its infrastructure and connector and, as from 2016, for reasonable costs of the designated supplier for the supply of an obligatory quantity of liquefied natural gas.

As of 30 June 2017, the Company was party to 96 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 3 natural gas balancing agreements.

AB Amber Grid's condensed financial statements, including the financial statements as of 30 June 2017, the profit (loss) accounts, the comprehensive income statements, the cash flow statements and the statement of changes in equity have not been audited. The Company's financial statements as of 31 December 2016 have been 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 of 2016.

2 Accounting principles

The Company's condensed financial statements as of 30 June 2017 were prepared in accordance with International Accounting Standard 34 'Interim Financial Reporting'.

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

3 Information according to segments

The Company is engaged in natural gas transmission activity and operates as one segment. All non-current assets of the Company are located in Lithuania, where the Company carries out its activity.

During the first six months of 2017, the Company earned 76 percent of its revenue from Lithuanian system users (in 2016: 76 percent) and 24 percent of its revenue was received from the transit service, i.e. transportation of gas to the Kaliningrad Region of the Russian Federation and in the direction of Latvia (in 2016: 24 percent).

4 Construction in progress

The largest objects of construction in progress of the Company as of 30 June 2017 were as follows:

Object	30 June 2017 (unaudited)	31 December 2016 (audited)
Implementation of the Gas Interconnection Poland-Lithuania (GIPL) Project in the territory of the Republic of Lithuania
	6,337	6,262
Modernisation of Panevėžys Gas Compressor Station	2,405	1,861
Modernisation of gas transmission pipelines' line block valve units Construction of an interconnection of Vilnius-Kaunas and Kaunas-Šakiai gas	30	1,765
transmission pipelines Introduction of automation into the supervision of the cathodic protection of gas transmission pipelines through the installation of a remote supervision and	551	551
control system	144	430
Other	536	848
* Less: Impairment of construction in progress	(580)	(580)
	9,423	11,137

* Impairment for the Project "Construction of interconnection between the gas transmission pipelines Vilnius-Kaunas and Kaunas-Šakiai (spatial planning and design services)" was made because the construction of the pipeline was postponed for later periods until its funding issues and further development issues are resolved.

5 Trade receivables

	30 June 2017 (unaudited)	31 December 2016 (audited)
Gas transmission services receivables	4,856	6,859
Other trade receivables Less: allowance for the decrease in value of trade receivables	218 (57)	15 (16)
	5,017	6,858

The trade receivables do not include any interest; the payment period is 15 calendar days.

6 Other receivables

	30 June 2017 (unaudited)	31 December 2016 (audited)
LNG terminal funds receivable (administered by the Company)
	13,166	13,279
Other receivables (grants)	927	3,488
Receivables accrued for natural gas transportation	$\overline{\phantom{a}}$	1,676
Other receivables	242	143
	14,335	18,586

The LNG terminal funds receivable as at 30 June 2017 include the overdue amount of EUR 4,668 thousand, of which AB Achema's overdue amount is EUR 3,568 thousand and the overdue amount of UAB Kauno Termofikacinė Elektrinė is EUR 994 thousand. For more information about AB Achema's liabilities see Note 16 'Commitments and contingencies'.

The Company's Other Receivables are not subject to impairment.

$\overline{7}$ Other financial assets

As of 30 June 2017, 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), for the sake of brevity referred to as LNG terminal funds. These funds are received from system users, are kept in a separate bank account for LNG terminal funds opened in compliance with legislative requirements and are designated to be paid out to the beneficiaries of LNG terminal funds: to the operator of the LNG terminal (AB Klaipėdos Nafta) and to the designated supplier (UAB Litgas) and to AB Amber Grid compensate for the cost of the administration of the LNG terminal funds. On 17 November 2016, the NCC adopted Resolution No O3-369 on the setting of a new natural gas supply security-related additional price component to be added to the basic natural gas transmission price, and the Resolution came into effect and was started to be applied to system users as from 1 January 2017. On 7 December 2016, the NCC by Letter No. R2-(D)-3066 assigned the specific shares (in percentage), in which the LNGT funds administered by AB Amber Grid shall on a monthly basis be distributed and paid out to the beneficiaries of the LNGT funds.

8 Cash and cash equivalents

	30 June 2017 (unaudited)	31 December 2016 (audited)
Cash at bank	q	13,966
	q	13,966

The Company keeps its cash balance in bank accounts. Cash balance as of 30 June 2017 decreased due to the fact that the Company, under the impact of the negative interest rates prevailing on the market, decided to change the Company's treasury management policies, the aim being minimum cash balance. Nevertheless, where there is such a possibility, the Company invests in deposits with the shortest term possible (overnight). As of 30 June 2017, the Company had no overnight deposit contracts.

Loans

	30 June 2017 (unaudited)	31 December 2016 (audited)
Long-term loans
Loans from credit institutions of Lithuania	45,778	57,222
Loan from international financial institutions	25,000	25,000
Short-term loans
Loans from credit institutions of Lithuania	3,998	$\overline{\phantom{a}}$
Current portion of long-term loans	6,444	11,444
	81,220	93,666

In February and April of 2017, the Company repaid prior to maturity part (EUR 16,444 thousand) of its long-term loan to Swedbank, AB. After the repayment, the outstanding loan to Swedbank, AB amounts to EUR 57,222 thousand.

On 22 December 2015, the Company entered into an agreement with the European Investment Bank on the possibility of borrowing of up to EUR 28,000 thousand for the period of up to 20 years. As of 30 June 2017, the loan was not used. The repayment of the loan or its part is possible until 21 December 2017.

In order to balance its working capital, on 1 March 2017 the Company concluded an overdraft contract for the amount of up to EUR 10,000 thousand. As at 30 June 2017, the share of the overdraft used by the Company amounted to EUR 3,998 thousand.

(all amounts are in euro thousand unless stated otherwise)

9 Grants (deferred revenue)

	Deferred revenue	Asset- related grants	Revenue- related grants	Total
Balance as at 31 December 2016	1,535	62,915	$\overline{\phantom{0}}$	64,450
Received / receivable		607	2	609
Depreciation/amortisation	(17)	(899)	(2)	(918)
Balance as at 30 June 2017	1,518	62,623	$\overline{\phantom{0}}$	64,141

In the profit (loss) statement, the depreciation of the asset-related grants as at 30 June 2017 amounting to EUR 899 thousand (in 2016: EUR 966 thousand) was presented by cross-covering the costs of depreciation of the related assets with the grant-related revenue.

11 Income tax

In 2017, the standard corporate income tax rate applicable to the companies of the Republic of Lithuania was 15 per cent (in 2016: 15 per cent). The income tax expenses for the period comprise the current income tax and the deferred income tax.

In accordance with amendments to the Law on Corporate Income Tax, which provide for a possibility of taking advantage of the corporate income tax relief on investments in new technologies, as at 30 June 2017, the Company had calculated a corporate income tax relief amounting to EUR 1,064 thousand (as at 30 June 2016: EUR 966 thousand).

12 Trade payables

	30 June 2017 (unaudited)	31 December 2016 (audited)
Payables to suppliers under investment programme (new construction)		8
Payables to suppliers under investment programme (reconstruction
and modernisation)	681	3,814
Payables to suppliers of goods and providers of services	716	828
Payables to providers of repairs services under non-current assets
repairs programme	375	381
Payables to suppliers of natural gas	531	663
	2,303	5.694

The decrease in trade payables as at 30 June 2017 came as a result of the Company's lower investments according to Investment Programmes and settlements with contractors, the payment terms range from 30 to 60 days. The trade payables are interest-free.

13 Other payables and current liabilities

	30 June	31 December
	2017	2016
	(unaudited)	(audited)
Payable LNG terminal funds administrated by the Company Accrued LNG terminal funds subject to administration by the	12,279	11,468
Company*	892	3,696
Real Estate Tax payable		423
Value Added Tax (VAT) payable	416	165
Other payables	357	399
	13.944	16.151

Other payables and current liabilities (cont'd) 13

*Accrued LNG terminal funds subject to administration by the Company are accounted when natural gas transmission system users are issued VAT invoices. Accrued funds subject to administration by the Company are included into the account of LNG terminal funds payable when AB Klaipėdos Nafta and UAB Litgas issue a VAT invoice to the Company in respect of the security-of-supply-related extra tariff component added to the regular natural gas tariff.

14 Earnings per share

Basic earnings per share reflect the Company's net profit 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 June 2017 (unaudited)	30 June 2016 (unaudited)
Net profit (loss) attributable to the shareholders (EUR thousand)	10,875	11,536
Weighted average number of shares (thousand)	178,383	178,383
Earnings per share (EUR)	0.06	0.06

15 Revenue

	For the	For the	For the	For the
	period	period	period	period
	of three	of three	of six	of six
	months	month	months	months
	ended	ended	ended	ended
	30 June	30 June	30 June	30 June
	2017	2016	2017	2016
	(unaudited)	(unaudited)	(unaudited)	(unaudited)
Income from natural gas transmission in the
territory of Lithuania	11,567	11,382	29,173	29,902
Income from balancing services in the
transmission system	1,616	1,190	3,237	3,875
Grants recognised as income	8	13	19	28
Income from LNG terminal fund administration	27	36	58	72
Other income	107	8	130	27
	13,325	12,629	32,617	33,904

16 Commitments and contingencies

Litigation

1. Pursuant to the Republic of Lithuania Law on the Liquefied Natural Gas Terminal and resolutions adopted by the NCC, all users of the natural gas system that transport natural gas through the transmission system, when they make payments for natural gas transmission services, are required to pay an integral natural gas transmission price component that is intended to compensate for the costs of the installation and operation of the liquefied natural gas terminal facility, its infrastructure and the connector (hereinafter referred to as the "LNG terminal funds")¹. Since AB Achema, in spite of the fact that it is a transmission system user, has systematically failed to pay the LNG terminal funds, on 7 March 2014, AB Amber Grid filed a claim with Kaunas Regional Court requesting the Court to award from AB Achema its debt for the LNG terminal funds failed to pay for the period from 1 September 2013 to 31 December 2013 plus a late payment penalty for the unpaid LNG terminal funds for the said period. On 16 March 2015, AB Amber Grid filed a new claim with Kaunas Regional Court regarding the adjudgement form AB Achema of the debt for the LNG terminal funds intended to cover the fixed operating costs of the LNG terminal, its infrastructure and connector that were started to be collected as from 3 December 2014, the late payment penalty and 6 percent annual interest. The Court merged the two cases into one and, on 29 September 2015, Kaunas Regional Court satisfied the claim of AB Amber Grid in its entirety, i.e. awarded the debt of EUR 3,188 thousand for the period from 1 September 2013 to 31 December 2013, plus late payment penalty of EUR 545 thousand, plus procedural interest and awarded the debt of EUR 14,721 thousand for the period from 3 December 2014 to 30 April 2015 and a late payment penalty of EUR 305 thousand and procedural interest. AB Achema appealed against the aforesaid court decision. On 8 June 2016, the Court of Appeal of Lithuania upheld the decision of the court of first instance.

On 9 August 2016, the Supreme Court of Lithuania accepted cassation appeal. On 8 December 2016, the Supreme Court of Lithuania accepted AB Achema's request to suspend the judicial proceedings until AB Achema's claim is adjudged by the European Union's General Court in case No T-417/2016. At the Supreme Court of Lithuania, the case has not been adjudged yet.

1. On 19 November 2012, AB Achema applied to Vilnius Regional Administrative Court requesting to revoke paragraphs 3.1 and 4 of the Commission's Resolution No O3-317 of 19 October 2012 'On the establishment of funds intended to compensate for all or part of the construction and operating costs of the liquefied natural gas terminal, its infrastructure and connector for the year 2013', and to revoke paragraph 2 of the NCC's Resolution No O3-330 of 26 October 2012 'On adjustment of the price caps for natural gas transmission and distribution of AB Lietuvos Dujos and establishment of the additional component to be included in the natural gas transmission price cap (the LNG terminal component) for the year 2013'. (hereinafter referred to as the "First Administrative Case"). AB Amber Grid is involved in the proceedings as a third party concerned. On 28 May 2015, Vilnius Regional Court rejected the claim of AB Achema in its entirety. AB Achema filed an appeal. On 24 October 2016, Lithuania's Supreme Administrative Court suspended the judicial proceedings until the final decision of the European Union's General Court in case No. T-417/2016 takes effect.

2. On 22 December 2014, AB Achema applied to Vilnius Regional Administrative Court requesting to revoke paragraphs 1.1, 2.2.1, 2.3 and 3 of the NCC's Resolution No O3-895 as of 20 November 2014 'On the establishment of the upper liquefaction limit of natural gas (additional natural gas supply security component to be included in the natural gas transmission price) for the years 2015-2019'. By the Court ruling as of 7 July 2015, AB Amber Grid was involved in the case as a third interested party. On 11 November 2015, the Court suspended the proceedings by its ruling, and separate appeals were filed. On 11 January 2016, Lithuania's Supreme Administrative Court upheld Vilnius Regional Administrative Court's ruling as of 11 November 2015 on suspension of judicial proceedings until Lithuania's Supreme Administrative Court adjudges the First Administrative Case.

3. On 22 January 2016, AB Achema appealed to the Vilnius Regional Administrative Court requesting to annul paragraph 1 of the Commission's Resolution No O3-683 of 23 December 2015 'On the setting of an additional

¹ The Republic of Lithuania Law on the Liquefied Natural Gas Terminal (the original version) stipulated that the Liquefied Natural Gas Terminal expenses shall be compensated, and the Natural Gas Transmission and Distribution Price Caps Calculation Methodology as approved by the NCC's Resolution No O3-106 as of 8 August 2008 emplyed the term "LNGT-related extra tariff (surcharge)". Since 2014 the Law on the Liquefied Natural Gas Terminal employs the term "natural gas supply security-related extra price component added to the natural gas transmission price".

16 Commitments and contingencies (cont'd)

natural gas supply security-related price component to be included in the natural gas transmission price'. By a was involved in the judicial proceedings as a third interested party. The parties submitted their responses. On 10 November 2016, Vilnius Regional Court decided to suspend the judicial proceedings until Lithuania's Supreme Administrative Court adjudges the First Administrative Case.

1. On 18 April 2016, AB Achema applied to Vilnius Regional Administrative Court requesting to revoke paragraph 1 of the NCC's Resolution No O3-83 of 25 March 2016 'On the setting of an additional natural gas supply security-related price component to be included in the natural gas transmission price'. By a court ruling of 2 May 2016, AB Amber Grid was involved in the proceedings as a third interested party. The parties submitted their responses. On 16 November 2016, Vilnius Regional Administrative Court decided to adjourn the judicial proceedings until Lithuania's Supreme Administrative Court adjudges the First Administrative Case.

2. On 18 August 2016, AB Amber Grid filed a lawsuit with Kaunas Regional Court requesting to adjudge from AB Achema debt amounting to EUR 2,430 thousand of the LNG terminal funds under the natural gas transmission service contracts of 2012 and 2014. At present the case is being prepared for action on the merits.

3. On 6 October 2016, AB Achema filed a complaint against the defendant, the Republic of Lithuania, claiming damages incurred as a result of the provision of state aid that was uncoordinated with the European Commission. AB Amber Grid was involved in the judicial proceedings as a third interested party. In the case, the parties have already submitted their responses. On 15 March 2017 the court rejected the complaint, and AB Achema filed an appeal.

4. On 28 December 2016, AB Achema appealed to Vilnius Regional Administrative Court for the annulment of the NCC's Resolution No O3-369 as of 17 November 2016 "On the setting of an additional natural gas supply securityrelated price component to be included in the natural gas transmission price". AB Amber Grid was involved in the proceedings as a third interested party. In the case, a deadline was set for the submission of responses. On 3 April 2017, a ruling was issued to suspended the judicial proceedings until the coming into effect of the final decision in administrative case No A-162-858/2017 examined at Lithuania's Supreme Administrative Court (judicial proceedings No 3-61-3-02929-2012-0).

5. On 15 June 2017, AB Achema appealed to Vilnius Regional Administrative Court for the annulment of the NCC's Resolution No O3E-145 as of 15 May 2017 "On the recalculation of an additional natural gas supply securityrelated price component to be included in the natural gas transmission price for the year 2017". AB Amber Grid is involved in the proceedings as a third party concerned and on 29 June 2017 submitted a response to AB Achema's appeal.

17 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 June 2017 and as of 30 June 2016, the related parties of the Company were as follows:

• UAB GET Baltic (a subsidiary of AB Amber Grid);
• UAB EPSO-G (the parent company);
• LITGRID AB (a subsidiary of UAB EPSO-G);
• UAB Baltpool (a subsidiary of UAB EPSO-G);
• UAB Tetas (a subsidiary of AB LITGRID);
• UAB LITGRID Power Link Service (a subsidiary of AB LITGRID);
• UAB Duomenų Logistikos Centras (an associated company of AB LITGRID Group);
• Lit Pol Link Sp.z.o.o. (a joint venture co-owned by AB LITGRID and the Polish electricity network operator PSE S.A.);
• Management.

17 Related party transactions (cont'd)

The tables below present the Company's balances and transactions with the related parties as of 30 June 2017 and as of 30 June 2016:

Acquisitions	Sales	Accounts receivable	Accounts payable
68		71
36			21
104		71	22
Acquisitions	Sales	Accounts receivable	Accounts payable
132
132

On 30 March 2017, AB Amber Grid and GET Baltic signed a loan agreement under which AB Amber Grid may extend to GET Baltic UAB a loan of up to EUR 200,000 (two hundred thousand euros). The annual interest rate on the loan is variable consisting of a variable interest rate of 1 (one) month EURIBOR plus a fixed-rate margin of 1.5 percent (one point five percent). The contractual maturity date of the loan is 31 March 2018.

As at 30 June 2017, AB Amber Grid's loan granted to UAB GET Baltic amounted EUR 70,000 (seventy thousand euros).

From 6 April 2017 until 30 June 2017 the interest accrued on the loan amount used stood at EUR 247.40 (two hundred forty seven euros and 40 euro cents).

There were no guarantees either provided or received for receivables from the related parties or for payables to them. As at 30 June 2017, the Company did not account any impairment loss allowances for receivables from any related parties.

Benefits to the Management

During the period of three months ended 30 June 2017, the Company's benefits to the Management of the Company amounted to EUR 233 thousand (during the period of three months ended 30 June 2016: EUR 224 thousand). The Company's Management consists of the Chief Executive Officer (Director General) and his four deputies. The Management of the Company were not given any loans or guarantees and were not subject to any asset transfers.

During the first six months of 2017, benefits paid to the members of the Board amounted to EUR 14 thousand (in 2016: EUR 5 thousand).

18 Subsequent events

On 1 July 2017, the Company, together with other natural gas transmission system operators of the Baltic States, Connexus Baltic Grid AS (Latvia) and Elering AS (Estonia), began using the implicit capacity allocation model in order to raise the efficiency of the allocation of short-term natural gas transmission capacities at the Baltic States' cross-border interconnection points. The capacity allocation is linked to gas trading on the Natural Gas Exchange, UAB GET Baltic. The implicit capacity allocation system will be used for the allocation of short-term transmission capacities between the Member States on the gas exchange platform, along with quantities of gas traded through the Gas Exchange on the Baltic gas markets.

The Company's Board at its meeting of 11 July 2017 decided as from 1 January 2017 start applying UAB EPSO-G Group's Accounting Policy at the Company in full scope with additional regulation and exemptions and to adopt AB Amber Grid's Accounting Policies that were drawn up accordingly.

18 Subsequent events (cont'd)

The main differences between the Company's Accounting Policies as applied until 31 December 2016 and the ones as adopted for application as from 1 January 2017 are as follows:

• $(i)$ Property, plant and equipment will be accounted for at revalued values;
• $(ii)$ In the balance sheet, values of grants received will be offset against values of assets that were acquired with the grants.