Interim report

H1 2020

Consolidated interim report for the first half year of 2020 and Company's financial statements for the period ended 30 June 2020, prepared in accordance with IAS 34

Overview	3
Business model	9
Results	15
Operating segments	27
About the Company and the Group	34
Annexes	51
Company's condensed financial statements	57

Overview

Management's foreword	4
Ignitis Group – a sustainable energy leader in the Baltics	5
Performance highlights	6
The most significant events	8

Management's foreword

Dear Customers, Partners, Employees, Shareholders,

First half of 2020 was a challenging time for all businesses, including Ignitis Group. We faced challenges related to the coronavirus pandemic and quarantine. It affected everyone, so Ignitis Group took the necessary steps to ensure the safety of our employees, business continuation, and the provision of support to our financially affected customers.

This extraordinary situation proved that, during times of uncertainty, the help of a dedicated and professional team is of vital importance. It is fair to say now that we managed the situation well and at the same time made big steps towards the implementation of long-term goals of Ignitis Group.

In first half of 2020, Ignitis Gamyba in Lithuania installed ¹ MW solar power plant and continues developing it. The solar power plant, which will be of 4 MW capacity in total, will be the biggest in the Baltic States. The construction works of an onshore 94 MW windfarm in Pomerania, Poland, were continued successfully: almost half of planned 29 turbines are already erected. At the same time, we were also preparing for the implementation of ⁶³ MW windfarm in Mažeikiai, Lithuania -the works will start in Q3 2020.

These are just a few examples of our projects, which we implement driven by our mission. Creating an Energy Smart world and committing to a more sustainable future remains core to all our activities.

Our strategy update, released in June 2020, follows the expectations from the Group's shareholder for the consistent and sustainable growth of Ignitis Group through the modernisation of its energy infrastructure and the further development of its green power generation portfolio.

The Strategy is aligned with the targets of Lithuania's National Energy Independence Strategy. This includes the adoption of smart metering, innovative technologies and the digitisation of the Lithuanian energy sector, as well as the development of additional green energy generation capacity (including offshore in the Baltic sea) and synchronization with continental European energy grids.

Active development of green generation remains key priority of sustainable development for the Group. Ignitis Group targets 4 GW of installed green generation capacity by 2030 while creating value for shareholders. The Group is also looking to maintain leadership in its home markets -the Baltic countries, Poland and Finland - and will explore new opportunities in countries which are in the energy transition path.

In first half 2020, we continued transforming our company to create the leading green energy business in the region and create a more sustainable world.

Chairman of the Board and the CEO AB Ignitis Grupė

Ignitis Group – a sustainable energy leader in the Baltics

Ignitis Group is a leading utility and renewable energy company in the Baltic region.

Core business is focused on operating electricity and gas distribution Networks and managing and developing its Green Generation portfolio.

Ignitis Group also manages strategically important Flexible Generation assets and provides Customers and Solutions services, including the supply of electricity and gas, solar, e-mobility, improved energy efficiency and innovative energy solutions for household and businesses.

Ignitis Group operates in its home markets (Lithuania, Latvia, Estonia, Poland and Finland) and evaluates opportunities in other countries on the energy transition path.

The Ministry of Finance of the Republic of Lithuania is the sole shareholder of the Company.

Performance highlights

Profits and returns*

Adjusted EBITDA APM EURm

Adjusted EBITDA slightly decreased. Lower Customers and Solutions segments result caused by temporary negative result from B2B electricity activity was partly offset by strong performance of Networks segment mainly due to growing RAB.

Net debt APM EURm

1 200,0

-25,0 -5,0 15,0 35,0 55,0 75,0 95,0

Adjusted net profit increased by 3.6% driven by decrease of current year income tax and deferred income tax.

Adjusted ROE LTM reached 8.1%.

Cash flow and balance sheet*

Investments APM

EURm

0,0 50,0 100,0 150,0 200,0 250,0

0,0 20,0 40,0 60,0 80,0 100,0 120,0 140,0

Net debt increased by 5.5%. In H1 2020 we generated FCF of EUR -9.5 million, paid out EUR 28.0 million in dividends and bought back EUR 25.7 million worth of shares in our subsidiaries. FFO/Net debt APM %

FFO / Net debt improved from 19.6% to 22.5%, as FFO LTM growth outpaced that of Net Debt.

Investments decreased mainly due to delayed constructions of Vilnius CHP due to COVID 19 and lower networks segment investments mostly due to decrease of new customers connections and upgrades and lower connecting fees. Decrease was partly offset by increased investments to Kaunas CHP and Pomerania.

* Because of the change of the H1 2019 financial figures, performance indicators presented here (and throughout this report) for H1 2019 might differ from those presented in the H1 2019 Interim Report. Changes of the financial figures of H1 2019 are disclosed in the H1 2020 Financial Statements. In case of a change of calculation of APM in H1 2020, measures of H1 2019 were recalculated as to calculation of H1 2020.

APM Alternative Performance Measure - Adjusted figures used in this report refer to measures used for internal performance management. As such, they are not defined or specified under International Financial Reporting Standards (IFRS), nor do they comply with IFRS requirements. Definitions of alternative performance measures can be found on the Company's website (link).

Sustainable development

Green electricity generated TWh

Green share of generation

Green share of generation decreased by 34.8% as a result of significant increase of electricity generated from gas fired Elektrėnai Complex, as a result of low gas and emission allowance prices and changes in the regulation of provided regulated services.

Green Generation portfolio remained unchanged. After the reporting period Kaunas CHP started was commissioned.

Quality and efficiency Social Customer engagement

conditions.

0 0,1 0,2 0,3 0,4 0,5 0,6 0,7

Green electricity generated increased by 29.8% which was mainly driven by higher generation at Kruonis PSHP and better wind

H1 2019 H1 2020

Deterioration of electricity quality indicators was mainly caused by storm Laura (12-13th March). Improvement of gas quality indicators resulted from the decrease in network disruptions by third parties.

0,0 10,0 20,0

120

% Customers and Solutions

Networks

From 2020 the Group started to monitor relationship NPS. Relationship NPS in Customers and Solutions segment will be measured only two times a year in Q1 and Q4, while in Networks monitoring will be done every quarter.

Net Promoter Score (NPS)

From 2019 the Group started to monitor eNPS, which improved from 16.0% in H1 2019 to 54.2% in H1 2020. The growth of the eNPS was due to the Group's actions taken during the coronavirus pandemic, updated remuneration policy and greater focus on employee development. Also, salary review in 2020 focused more on employees who do not reach the bottom of the salary range.

The most significant events

− At the beginning of January, Ignitis entered the Finnish market, becoming one of the first independent gas suppliers in the country and reached 15% market share.
− In January, Group sold the last real estate objects offered in auction, which is in line with the Group's strategy of divesting non-core activities.
− In January, Ignitis Gamyba started the installation of the largest 3 MW solar power plant in the Baltic States.
− In February, the first heat produced from waste by Kaunas' CHP reached Kaunas households.
− In February, working group formed by Ministry of Finance, provided a recommendation to prepare for the Company's IPO and to use the primary proceeds to fund the Company's development program.
− In March, European Investment Bank (EIB) allocated EUR 60 million for the development of the first Group wind farm in Poland.
− During the extreme situation due to Covid-19, Group continued to support the community by applying preferential payment terms to the most affected, no charging self-service system service fees.
− In March, an agreement between the Company and minority shareholders of ESO and Ignitis Gamyba has been reached on the delisting of shares and the claims have been withdrawn.
− Government of the Republic of Lithuania approved the conversion of the Company from a private limited liability company (UAB) into a public limited liability company (AB) and agreed that the share capital of the public limited liability company shall be increased by additional contributions by issuing new ordinary registered uncertificated shares.
− The Articles of Association of the Company have been amended – number of Supervisory Board members has been increased from 5 to 7.
− Circulars of ESO and Ignitis Gamyba official tender offers have been approved by the Bank of Lithuania.
− In April, the official tender offers of ESO and Ignitis Gamyba have been finalised.
− After the annual credit ratings review, the international credit rating agency S&P Global Ratings affirmed its BBB+ rating for Ignitis Group, leaving the negative rating outlook.
− Ignitis Group issued 10-year senior unsecured bonds in the par value of EUR 300 million, with a fixed coupon of 2.00% payable annually, yield at 2.148%. The bonds have been acquired by 70 investors. The bonds, which are listed on Luxembourg and Nasdaq Vilnius Stock Exchanges, have been acquired by institutional investors globally and across all investor types.
− Ignitis Group started the mandatory buyout of shares of its subsidiaries ESO and Ignitis Gamyba. The last day of the mandatory buyout was 17 August 2020 (inclusive).
− Nasdaq Vilnius decided to delist the shares of Ignitis Group subsidiaries ESO and Ignitis Gamyba from trading on the Baltic Main List on July 1, 2020 (the last trading day on the Baltic Main list of shares was on 30 June 2020).
− In June, the Company together with LITGRID, AB signed a sale-purchase agreement with QEIF II Development Holding Sàrl, a subsidiary of Quaero European Infrastructure Fund II, managed by Quaero Capital, regarding the sale of its subsidiary UAB Duomenų Logistikos Centras. Transaction was closed on 7 July 2020, which is in line with the Group's strategy of divesting non-core activities.
− In June, the Supervisory Board of the Company approved updated long-term corporate strategy of Ignitis Group and strategic plan for the period 2020–2023.
− The Ministry of Finance of the Republic of Lithuania, the authority implementing the rights of the sole shareholder of the Company, adopted a decision to convert UAB Ignitis Grupė into public limited liability company – AB Ignitis Grupė. On 28 July 2020 new Articles of Association which establishes the change were registered in the Register of Legal Entities.

Q1 2020 Q2 2020 After the reporting period

− Ignitis Group, according to Company's Green Bond Framework, published the Green Bond Investor's Letter 2019. Actual reduction of CO² emissions from projects financed by Green Bonds were 143 thousand tons in 2019.
− Ignitis Group demonstrated an impressive jump in this year's Corporate Reputation Index. The company jumped from 33rd place to 12-13th, which is a record growth in the entire history of this index. The reputation rating of Ignitis Group has increased significantly in the eyes of all the audiences interviewed during the survey
− The Ministry of Finance submitted for consideration draft resolutions of the Government of the Republic of Lithuania regarding the amount of dividends of UAB Ignitis Grupė.
− The Mažeikiai wind farm project is being prepared to be implemented by Ignitis Renewables: road equipping and other preparatory works will begin in Q3. In the end of 2022, up to 15 wind turbines with a total installed capacity of about 63 MW will generate electricity in this wind farm.
− Ignitis Polska, a Polish subsidiary of Ignitis, entered the country's market of electricity and natural gas supply for business customers. Strengthening the position in the Polish market is one of the goals set in the renewed long-term corporate strategy of Ignitis Group.
− The Ministry of Finance of the Republic of Lithuania announced the selection of two independent members to the Supervisory Board of the Company. The selection is being announced for two vacant positions of independent members of the Supervisory Board.
− Kaunas' CHP started its commercial activities.
− The mandatory buyout of ESO has been suspended as Vilnius Regional Court applied the temporary protection measures due to the claim received from one ESO shareholder.
− The mandatory buyout of shares of Ignitis Gamyba has been completed on 17 August 2020 (inclusive).

Business model

Activities of the Group 10 Business environment 13 Securities of the Group 14

Activities of the Group

The Group is the leading company across Lithuania's energy value chain, engaged in the energy generation, distribution and supply, and the development of Energy Smart solutions.

Together, it has been transformed to lead the energy transition across the region from conventional to Green Generation asset focus, from local to regional Group and from state monopoly to the competitive and innovative business.

Structure of the Group

At the date of this report, the entities showed in the picture to the right were controlled, directly or indirectly, by the Group * .

Model of management:

The Supervisory Board is formed of 7 non -executive members (2 shareholder representatives, 5 independent)**.

The Board is formed of 5 executive members. CEO – Chairman of the Board.

The Supervisory Board is formed of 5 non -executive members (at ESO: 2 shareholder representatives, 2 independent members and 1 employees' representative)

2 or 3 non -executive members (2 shareholder representatives and 1 independent member). The Board is formed of 5 or 3 executive members. CEO – Chairman of the Board.

The Board is formed of 3 non -executive members (2 shareholder representatives and 1 independent member). The structure of the Board is different across companies . The Board is not formed until the company starts operations . The Board of Ignitis Grupės Paslaugų Centras

3 is formed ensuring representation of all shareholders, taking into account the implementation of specific legislation. The Boards of Ignitis Latvija and Ignitis Polska are formed of 1 member – CEO, the Supervisory Boards are formed from shareholders representatives. CEO is not a member of the Board.

4 CEO.

The Board is not formed.

* The color structure in the picture reflects companies' assignment to a particular business segment (according to the information on page 12 et seq. in this report).

** This composition of the Supervisory Board is valid from April 8, 2020, when the updated Articles of Association of the Company were registered. *** After the reporting period, legal form of the Company was changed from private limited liability company to a public limited liability company. ****After the reporting period, UAB Duomenų logistikos centras has been

sold.

Segments

Networks

Resilient and efficient energy distribution enabling the energy transition

The core activities of Networks segment are to operate, maintain, manage and develop electricity and gas distribution networks and to ensure the safe and reliable operation, as well as guaranteed electricity and gas supply.

Strategic goals:

− We continuously invest country-wide to modernize our strategic assets used for electricity and natural gas distribution to ensure network resilience and efficiency for our business and residential customers. We target to reduce electricity SAIFI by 15-17% by 2023.
− We digitise our distribution network and strive to develop a smart grid which would be one of the most advanced in the region. We target to install ~1.2 million smart meters by 2023.
− We enable energy innovations, renewable energy transition and facilitate the local energy market and its efficiency through datadriven network solutions.

Green Generation Focused, sustainable and profitable growth

The Green Generation portfolio consists of 1.1 GW of total installed capacity. This includes four operating wind farms in Lithuania and Estonia with a total installed capacity of 76MW, and two hydro powerplants in Lithuania: Kaunas HPP (101 MW) and Kruonis PSHP (900 MW) which is fundamental for enabling future renewable energy growth in the region.

In addition to operating assets, our Green Generation portfolio contains projects with additional 273 MW of electrical capacity and 299 MW of thermal capacity under construction or under development. These are two wind farms, one in Poland (94 MW) and one in Lithuania (63 MW) and two waste-to-energy/biomass CHP plants in Lithuania: Vilnius (92 MW electric, 229 MW heat) and Kaunas (24 MW electric, 70 MW heat).

Strategic goals:

We target to reach 1.6 to 1.8 GW of installed Green Generation capacity (including hydro assets) by 2023 and 4 GW by 2030 while ensuring that the build-out creates value for our shareholders.

18% of Group's Adjusted EBITDA H1 2020

Almost fully regulated Material share of contracted activities Mostly regulated Serves 1.7m customers

Flexible Generation Reliable and flexible power system

Flexible Generation segment operates the largest electricity generation capacity in Lithuania, 1,055 MW Elektrėnai Complex. Facilities of Elektrėnai Complex provide system services and ensure stability and security of Lithuania's electricity system.

Strategic goals:

− We invest to ensure flexibility and high reliability of the Lithuanian energy system by providing reserve and ancillary services.
− We are phasing out/decommissioning old conventional energy generation capacities.
− We aim to contribute to the synchronization of the Baltic states with continental European network by providing new balancing services.
− We develop additional flexible generation capacities provided they are required to balance renewable energy growth and secure required level of adequacy in the Lithuanian energy system.

Customers and Solutions Innovative solutions for easier life and energy evolution

Activities of Customers and Solutions segment include electricity and gas supply, trading and balancing, energy efficiency projects, installation of solar power plants for businesses and residents, installation and operation of electric vehicle charging stations, energy solutions. Our Customers and Solutions business is active in Lithuania, Latvia, Estonia, Finland and Poland.

Strategic goals:

− We scale our core energy supply and trading business complementing it with innovative, value-added energy solutions.
− We innovate together with our partners to help our customers become more energy smart and contribute to their environmental goals.
− We enable industrial scale renewable energy expansion by helping to secure long-term offtake contracts and capitalizing on our competences in balancing services.

75% of Group's Adjusted EBITDA H1 2020

Business environment

GDP forecast

Until the start of COVID-19 pandemic it was forecasted that the growth of Lithuania's gross domestic product (GDP), which lasted for several years will continue. However, after announcement of quarantine, the situation changed dramatically. Bank of Lithuania in its forecast published in June 2020, announced the expected GDP decrease of the Lithuanian economy by 9.7% in 2020, and recover by 8.3% in 2021.

COVID-19 factors

The Group has a COVID-19 situation management team that constantly monitors the situation and analyzes the latest information, as well as changes in external factors and their impact on the Group and makes additional decisions to ensure the health and safety of employees, customers, suppliers, visitors of the Group companies and business continuity. Customer service centers were closed during quarantine and customers were served remotely. During the quarantine, customers were given the opportunity to pay for utilities in the Ignitis self-service system free of charge. The employees of the Group, who can perform their functions remotely, work from home, others are provided with additional personal protection and personal hygiene measures, unnecessary contacts with other persons are restricted. The Group companies have developed and are implementing actions to ensure the rotation of employees and business continuity in order to ensure, first of all, the health and safety of employees, the continuity of electricity generation, ensuring the stability of the energy system, electricity and gas distribution and supply activities. The main factors affecting the Group's operations due to the situation described above in relation to COVID-19 are set out in the interim financial statements.

Energy markets review

Wholesale electricity market

In Q2 2020, prices fell remarkably in all the bidding areas of the Nord Pool Nordic power exchange. Compared to the Q2 2019, the average system price was lower by approx. 84% (Q2 2019 – 35.60 Eur/MWh, Q2 2020– 5.61 Eur/MWh), in the fourth price area of

Sweden, with which Lithuania is connected through the NordBalt power link – approx. 50% (Q2 2019– 34.57 Eur/MWh, Q2 2020 – 17.29 Eur/MWh), in Finland – approx. 40% (Q2 2019 – 37,36 Eur/MWh, Q2 2020 – 22.48 Eur/MWh), in Baltic region – approx. 34% (Q2 2019 – 43.6 Eur/MWh, Q2 2020 – 28.81 Eur/MWh). As well, power prices fell in polish commodity exchange TGE – approx. 29% (Q2 2019 – 56.54 Eur/MWh, Q2 2020 – 45.23 Eur/MWh).

It is noteworthy that in Lithuania during certain periods prices were lower than in Latvia and Estonia, approx. 1.9% in Q2 2020. In Q2 2020, the average price difference between Lithuania and Sweden in the fourth zone was approx. 11.49 Eur/MWh (Q2 2019 – approx. 9.52 Eur/MWh).

In Q2 2020, compared to the same quarter 2019, total energy consumption in the price areas of Nord Pool power exchange decreased by approx. 0.8%, wind farm production increased by approx. 12.9% (in Lithuania – approx. 8.5%), hydroelectric power plant – approx. 17.4%, nuclear power plant production decreased by approx. 26.4%. Lower consumption and nuclear power production with increased hydroelectric power plant production have been affected by milder spring and COVID-19 in all price areas, in Q2 2020 average temperature was approx. 0.5 degrees lower compared to the same period 2019 and approx. 0.7 degrees higher than normal.

According to Nord Pool data electricity demand in Lithuania decreased approx. 8.63% compared to the same quarter 2019 – approx. 2.68 TWh (excl. Kruonis PSHP demand). In Latvia demand decreased by approx. 4.9%, totalled 1.63 TWh, in Estonia – approx. 3.7%, totalled 1.79 TWh. In Q2 2020 Lithuania produced approx. 35.2% more electricity than in Q2 2019, meanwhile Latvia – approx. 2.7% and Estonia – approx. 38.3% produced less. Lithuania remains an energy-deficit country, producing around 42% of the country's demand, in Latvia local production covers 80% of country's demand, Estonia remains an energy-deficit country too, producing around 46% of the country's demand. Based on ENTSO-e data during Q2 2020 demand in Poland decreased approx. 9.2% (36.7 TWh) compared to Q2 2019. Poland is still net power importer, because local production decreased by 12.3% totalling 30.3 TWh, which covered 82.7% of country's demand. In Q2 2020, compared to the same quarter 2019, wind farm and biomass production increased by approx. 4% (2.96 TWh) and 22% (0,53 TWh) respectively, while hydroelectric

power plant and fossil fuel production decreased –approx. 17% (0.62 TWh) and 14% (26.22 TWh) respectively.

In Q2 2020, commercial import from third countries decreased by approx. 2.6 times compared to Q2 2019 (from approx. 1.6TWh to approx. 0.6TWh), from Scandinavia and Poland increased approx. 33%. Significant increment of the import from Scandinavia has been affected by increased production of renewable energy sources, which formed lower prices in the region.

Natural gas market

In Q2 2020, prices in the natural gas market have kept at the lowest levels in decade. Consumption fell sharply due to COVID-19, European gas storage year-on-year levels were at record high, many liquefied natural gas (LNG) vessels designated to Europe were cancelled, but flows of natural gas from Norway and Russia remained relatively high and oversupply persisted in Europe.

In May 2020, European spot and front month natural gas prices fell below US prices. Thus, with low demand around the world US LNG production facilities started shutting down to reduce surplus of LNG cargos. As a result, in a second half of Q2 2020 spot natural gas prices in Europe recovered a bit. As well, natural gas consumption in Asian market started to increase as quarantine restrictions were eased. This resulted in LNG vessel being redirected to Asia.

As at 30 June 2020, the European natural gas storage filling rate stood at 80%, which was 45% higher than average of last 5 years. At the same time storage filling rate in Latvia reached 69% and in Poland 57%, 120% and 21% respectively higher than average of last 5 years.

In Q2 2020, 5.8 TWh or 4% more natural gas was supplied from the Klaipėda LNG terminal to customers of Lithuania than in Q2 2019, while customers in Poland received 12.5 TWh or 22% more from Świnoujście LNG terminal comparing the same tenors. According to the data of the Lithuanian transmission system operator, the consumption of natural gas in the country was 16% higher than in Q2 2019 and reached 5.8 TWh. In 2020 interconnection between EE-FI started operation, in 2020 Q2 - 2.1TWh, amounting to 4.8TWh in H1 2020 have been supplied to Finland from Baltics.

Securities of the Group

Issuers of shares

The shares of ESO and Ignitis Gamyba were listed on the Nasdaq Vilnius Stock Exchange as of this report date. The trading in shares of the companies was started on 11 January 2016 and 1 September 2011, respectively. Both companies concluded the securities accounting agreements on the accounting of securities issued and management of personal securities accounts with SEB bankas AB.

Structure of the issued capital and shareholders owning more than 5% of the issuer's issued capital as at 30 June 2020
Company	Number of ordinary registered shares issued	Nominal value per share	Total nominal value of shares (in EUR)	ISIN code	Securities' abbreviation	Trading list	Full name of the shareholder	Voting rights conferred by shares owned, %
Ignitis Gamyba	648,002,629	0.29	187,920,762.41	LT0000128571	LNR1L	Baltic main list	The Company	97.45%
ESO	894,630,333	0.29	259,442,796.57	LT0000130023	ESO1L	Baltic main list	The Company	97.66%

On 4 December 2019, the Extraordinary General Meetings of Ignitis Gamyba and ESO took the decision to delist the shares of these companies from the Nasdaq Vilnius Stock Exchange to approve the Company as the entity who will make a formal offer to buy out the shares of both companies listed on the Nasdaq Vilnius Stock Exchange. On 21 May 2020, Nasdaq Vilnius decided to delist the shares of ESO and Ignitis Gamyba from trading on the Baltic Main List on 1 July 2020 (the last trading day on the Baltic Main list of shares was on 30 June 2020). After the reporting period, the buy-out of Ignitis Gamyba has been finished after which the Company increased its holdings in Ignitis Gamyba to 98.20%.

Debt securities

As at 31 March 2020, the Company had two green bond issues outstanding, both listed on the Luxembourg and NASDAQ Vilnius stock exchanges. Total nominal value of these bonds was EUR 600 million. During the end of reporting period, the Company placed a bond issue of EUR 300 million.

Credit rating

In May 2020, credit rating agency S&P Global Ratings affirmed BBB+ credit rating for the Company. Credit rating outlook remained negative.

Debt securities issued by the Company

Company	Total nominal values of the issue, EUR	ISIN code	Buy-out date
Ignitis Group	300,000,000.00	XS1646530565	2027.07.14
Ignitis Group	300,000,000.00	XS1853999313	2028.07.10
Ignitis Group	300,000,000.00	XS2177349912	2030.05.21

Significant agreements

There are no agreements concluded between the Issuer and the members of the management bodies or employees that provide for compensation in case of their resignation or dismissal without a reasonable cause or in case of termination of their employment as a result of the change in control of the Issuer.

No significant agreements were concluded to which the Issuer is a party and which would enter into force, change or terminate as a result of the changed control of the Issuer, as well as their effect, except where because of the nature of the agreements their disclosure would cause significant harm to the Issuer.

During the reporting period, the Issuer did not conclude any harmful agreements (which do not correspond to the Company's objectives, current market conditions, violate the interests of shareholders or other groups of persons, etc.) or agreements concluded in the event of a conflict of interests between the issuer's managers, the controlling shareholders or other related parties obligations to the issuer and their private interests and / or other duties.

Results

Key operating indicators	16
Analysis of key operating indicators	17
Key financial indicators	18
Analysis of Key Financial Indicators	19

Key operating indicators

		H1 2020	H1 2019	∆	∆,%
Electricity
Electricity distributed	TWh	4.69	4.81	(0.12)	(2.5%)
Electricity generated	TWh	0.95	0.47	0.48	2x
Green share of generation	%	63.2%	98.0%	-	34.8%
Green electricity generated	TWh	0.60	0.46	0.14	31.3%
Green Generation capacity	MW	1,350	1,350	-	0.0%
Green Generation installed capacity	MW	1,077	1,077	-	0.0%
Green Generation projects under construction	MW	210	210	-	0.0%
Green Generation projects under development	MW	63	63	-	0.0%
Electricity sales in retail market	TWh	3.32	2.88	0.44	15.4%
Lithuania	TWh	2.88	2.47	0.40	16.3%
Latvia	TWh	0.44	0.41	0.03	7.5%
Other	TWh	0.01	0.00	0.01	459.7x
Electricity wholesale trading	TWh	1.22	2.26	(1.04)	(46.2%)
New connection points and upgrades	units	18,246	19,025	(779.00)	(4.1%)
SAIDI	min.	179.23	51.26	127.97	3.5x
SAIFI	units	0.87	0.69	0.18	25.8%
Gas
Gas distributed	TWh	3.59	3.80	(0.21)	(5.6%)
Gas sales	TWh	7.24	5.02	2.21	44.0%
New connection points and upgrades	units	4,030	5,850	(1,820.00)	(31.1%)
SAIDI	min.	0.24	0.68	(0.44)	(64.9%)
SAIFI	units	0.003	0.005	(0.00)	(42.9%)
Heat
Heat generated	TWh	0.15	0.06	0.09	2.4x

Electricity generated, TWh

Analysis of key operating indicators

Electricity

Distributed electricity in H1 2020 decreased by 2.5% and amounted to 4.69 TWh, compared to 4.81 TWh in H1 2019. Decrease was mainly influenced by COVID-19. Independent supply distribution during quarantine period decreased by about 8-9%, which was partly offset by an increase in public supply distribution during quarantine period by 5-6%.

Electricity generated increased 2 times in comparison to H1 2019 and amounted to 0.95 TWh in H1 2020. Increase was mainly driven by higher electricity generation in the CCGT at Elektrenai Complex and Kruonis PSHP. Electricity generation volumes in the CCGT at Elektrėnai Complex increased almost 67.4 times from 0.01 TWh in H1 2019 to 0.34 TWh, in H1 2020. This was the result of low gas and emission allowance prices and changes in the regulation of provided regulated services. Electricity generation volumes at Kruonis PSHP increased by 92.8% as a result of effective utilisation of fluctuations in electricity prices in H1 2020. Therefore, as a result of higher electricity generation in the CCGT at Elektrenai Complex the share of green electricity generated in H1 2020 decreased to 63.2% from 98.0% in H1 2019.

SAIDI ratio deteriorated and was 179.23 minutes (H1 2019: 51.26 minutes). SAIFI indicator was equal to 0.87 interruptions (H1 2019: 0.69 interruptions). Deterioration of quality indicators of continuous electricity supply was mainly caused by storm Laura (March 12-13).

During H1 2020, 8,502 new connection points and 10,194 upgrades were completed in the electricity distribution network. The number of new electricity connection points and upgrades decreased by 4.1% compared to H1 2019.

Gas

Gas distribution volume decreased by 5.6% and amounted to 3.59 TWh in H1 2020 (H1 2019: 3.80 TWh). In H1 2020, higher average air temperatures were the main contributor to the reduction in gas distribution. The volume of gas sold increased by 44.0% and amounted to 7.24 TWh in H1 2020 (H1 2019: 5.02 TWh). This was mainly influenced by entry into Finnish gas market and higher gas sales in Latvian market because of winning Latvenergo's tender for c. 0.9 TWh.

Gas distribution SAIDI ratio improved in H1 2020 and was 0.24 minutes (H1 2019: 0.68 minutes) and SAIFI ratio was equal to 0.003 interruptions (H1 2019: 0.005 interruptions). Improvement of the quality indicators resulted from the decrease in network disruptions by third parties.

In H1 2020, 4,030 new connection points and upgrades were completed in the gas distribution network, which is 31.1% less than during H1 2019 because quarters are no longer formed and the tariff per user became higher.

Heat

Heat generation in H1 2020 increased 2.4 times, compared to H1 2019, as a result of Kaunas CHP commissioning and test runs. The plant was commissioned in August.

H1 2020 H1 2019 H1 2018

Electricity distributed and sold, gas distributed and sold, TWh

Key financial indicators

		H1 2020	H1 2019	∆	∆,%
Revenue	EURm	590.9	557.9	33.0	5.9%
EBITDA APM	EURm	149.8	105.0	44.8	42.7%
EBITDA margin APM	%	25.4%	18.8%	-	-
Adjusted EBITDA APM	EURm	129.1	129.9	(0.8)	(0.6%)
Adjusted EBITDA margin APM	%	22.7%	22.3%	-	-
EBIT APM	EURm	93.4	46.0	47.4	103.0%
Adjusted EBIT APM	EURm	74.6	75.5	(0.9)	(1.2%)
Net profit	EURm	71.9	28.8	43.1	149.7%
Adjusted net profit APM	EURm	54.6	52.7	1.9	3.6%
Investments APM	EURm	187.1	207.9	(20.8)	(10.0%)
FFO APM	EURm	141.5	101.8	39.7	39.0%
FCF APM	EURm	(9.5)	(62.4)	52.9	84.8%
		2020.06.30	2019.12.31	∆	∆,%
Total assets	EURm	3,400.4	3,198.1	202.3	6.3%
Equity	EURm	1,337.8	1,348.6	(10.8)	(0.8%)
Net debt APM	EURm	1,019.2	966.5	52.7	5.5%
Net working capital APM	EURm	36.6	52.6	(16.0)	(30.4%)
ROE LTM APM	%	7.7%	4.4%	-	-
Adjusted ROE LTM APM	%	8.1%	8.0%	-	-
ROCE LTM APM	%	4.2%	2.9%	-	-
Adjusted ROCE LTM APM	%	4.9%	5.3%	-	-
Net debt/EBITDA LTM APM	times	4.05	4.67	-	-
Net debt/Adjusted EBITDA LTM APM	times	3.94	3.72	-	-
FFO LTM/Net debt APM	%	22.5%	19.6%	-	-

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Analysis of Key Financial Indicators

Revenue*

In H1 2020 Revenue increased by 5.9% compared to the same period last year, and totalled EUR 590.9 million. The main reasons causing Revenue changes were as follows:

1. Higher Revenue of the Networks segment (EUR +27.6 million compared to H1 2019). The increase was mainly driven by higher electricity distribution revenue (EUR 20.3 million) and transmission revenue (EUR 13.7 million) due to on average 11 per cent higher tariff of power distribution service, which is comprised of power transmission, distribution and public service obligations (PSO) components and is approved by the regulator. Increase was partly offset by decreased supply of last resort of electricity revenue (EUR -7.4 million) due to decrease of electricity market price.
1. Higher Revenue of the Customers and Solutions segment (EUR +11.2 million compared to H1 2019). The increase was mainly driven by increase of revenue from B2C electricity supply activities due to 14.6% higher electricity tariff set by the regulator and higher sales volumes by 5.3% (EUR +16.9 million) and increase of B2B electricity supply revenue (EUR +16.0 million) due to higher volume of sold electricity. Increase was partly offset lower gas sales to B2B customers due to lower gas market price (EUR -17.7 million) and lower gas sales to residential customers due to lower tariff set by regulator (EUR -6.7 million).
1. Higher Revenue of the Green Generation segment (EUR +3.5 million compared to H1 2019). Revenue growth was driven by higher sales of Kruonis PSHP (EUR +5.4 million) and higher sales of wind farms (EUR +0.5 million).The above reasons outweighed lower revenue of Kaunas HPP (EUR -2.2 million) due to lower water level in Nemunas river and lower captured electricity prices.
1. Lower Revenue of the Flexible Generation segment (EUR -8.9 million compared to H1 2019). The segment's Revenue decrease was mainly driven by one-off EUR 9.3 million compensation received in H1 2019 from the Ministry of Finance of the Republic of Lithuania for the indemnification of potentially inflicted damage by Alstom Power Ltd during the implementation of the project of Lietuvos Elektrinė in 2005–2009. 2019 H1 sales were also boosted by sales of fuel oil stocks that were no longer in use (EUR -4.3 million). 2020 H1 revenue decrease was partly offset by higher revenue of CCGT (EUR +7.0 million). Due to CCGT provision of isolated regime instead of tertiary reserve services in H1 2020 CCGT was able to operate under market conditions and result of sales to the market was higher than return on investment included in tariff of 2019.

* Revenue by segments presented in this report correspond to Sales revenue from external customers presented in Consolidated Interim Financial statements for H1 2020, Note 22 "Operating segments".

Revenue by segment, EURm

	H1 2020	H1 2019	∆	∆,%
Customers and Solutions	272.7	261.5	11.2	4.3%
Networks	236.1	208.5	27.6	13.2%
Green Generation	39.5	36.0	3.5	9.7%
Flexible Generation	38.5	47.4	(8.9)	(18.8%)
Other*	4.1	4.5	(0.4)	(8.9%)
Revenue	590.9	557.9	33.0	5.9%

* Other – other activities and eliminations.

Revenue by segment H1 2020, EURm

In H1 2020, the Group earned 89.6% of its revenue in Lithuania (EUR 529.6 million). The Group's Revenue from foreign countries (Latvia, Estonia, Poland and Finland) increased by 52.1% and reached EUR 61.3 million (H1 2019: EUR 40.3 million).

Revenue by country, EURm

	H1 2020	H1 2019	∆	∆,%	2020 H1, %
Lithuania	529.6	517.6	12.0	2.3%	89.6%
Other	61.3	40.3	21.0	52.1%	10.4%
Revenue	590.9	557.9	33.0	5.9%	100.0%

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Expenses

In H1 2020 total operating expenses decreased by 2.8% compared to the same period last year, and totalled EUR 497.5 million.

Purchases of electricity and gas

The Group's purchases of electricity and gas amounted to EUR 360.7 million in H1 2020 and decreased by 5.2% compared to H1 2019. Decrease was caused by lower gas purchases for trade (EUR -22.1 million) due to lower gas market price.

SG&A expense

In H1 2020 SG&A expense was equal to EUR 78.9 million and rose by 8.8% (EUR +6.4 million). This change was mainly driven by increase in Salaries and related expenses by EUR 7.8 million (or +18.6%) which increased mainly due to an increase of head count, the Group's average salary growth, increased vacation accrual and increased overtime resulted from repair of failures in the electricity distribution network after storm Laura in H1 2020. Also other SG&A expenses increased by EUR 2.7 million (or +17.6%) which increased mainly due to management and other fees of "Smart Energy Fund powered by Ignitis Group" for the years 2017-2020 which were capitalised in balance sheet and now transferred to expenses (EUR +0.7 million) and higher customer service expenses (EUR +1.2 million).

Other operating expenses

Impairment expenses and write-offs of property, plant and equipment decreased due to depreciation of assets that were reclassified as assets held for sale reclassification to impairment expenses of property, plant and equipment in H1 2019.

Write-offs and impairments of short term and long-term receivables, inventories and other increased due to increase of impairments of receivables in Networks segment due to COVID-19 in 2020 and impairment of receivables reversal in Flexible Generation segment in 2019.

Revaluation of emission allowances expenses decreased due to increased prices of emission allowances in June 30, 2020 compared to June 30, 2019.

		Operating expenses, EURm
	H1 2020	H1 2019	∆	∆,%
Purchases of electricity and gas	360.7	380.6	(19.9)	(5.2%)
Purchases of electricity and related	236.1	238.6	(2.5)	(1.0%)

Purchases of electricity and related services	236.1	238.6	(2.5)	(1.0%)
Purchases of gas for trade and related	107.9	130.0	(22.1)	(17.0%)
services
Purchases of gas for production	16.7	12.0	4.7	39.2%
SG&A expense APM	78.9	72.5	6.4	8.8%
Salaries and related expenses	49.7	41.9	7.8	18.6%
Repair and maintenance expenses	11.2	15.3	(4.1)	(26.8%)
Other	18.0	15.3	2.7	17.6%
Depreciation charge	54.5	54.4	0.1	0.2%
Impairment expenses and write-offs of	2.3	4.4	(2.1)	(47.7%)
property, plant and equipment
Write-offs and impairments of short term and	1.5	(0.3)	1.8	n.m.
long-term receivables, inventories and other
Revaluation of emission allowances	(0.4)	0.2	(0.6)	n.m.
Total operating expenses	497.5	511.8	(14.3)	(2.8%)

Adjusted EBITDA*

Adjusted EBITDA amounted to EUR 129.1 million in H1 2020 and was 0.6% or EUR 0.8 million lower than in H1 2019. Adjusted EBITDA margin reached 21.7% (H1 2019: 22.3%).

Adjusted EBITDA by segments

The main reasons causing H1 2020 Adjusted EBITDA changes compared to H1 2019 were as follows:

1. Networks grew by EUR 8.5 million. The increase was mainly driven by the growing value of regulated assets. Electricity distribution regulated assets increased from EUR 1,227 million in 2019 to EUR 1,399 million in 2020, gas distribution regulated assets increased from EUR 189 million in 2019 to EUR 225 million in 2020. WACC of electricity distribution increased from 5.04% in 2019 to 5.28% in 2020, WACC of gas distribution increased from 3.59% in 2019 to 3.84% in 2020. Adjusted EBITDA also increased due to positive changes in new connection and upgrade fees.
1. Green Generation decreased by EUR 0.2 million. The decrease was mainly influenced by worsened result of Kaunas HPP (EUR -3.6 million) due to lower water level in Nemunas river and lower captured electricity prices. Segment's adjusted EBITDA decrease was also influenced by the increased SG&A expense of Vilnius and Kaunas CHP projects, as the launch of plants is approaching (EUR -1.0 million). Adjusted EBITDA of wind farms decreased by EUR 0.1 million. The decrease was positively impacted by better result of Kruonis PSHP (EUR +5.5 million) which was mainly caused by effective utilisation of fluctuations in electricity prices.
3. Flexible Generation decreased by EUR 0.2 million. Decrease was mainly caused by gain from sale of fuel oil stocks in H1 2019 (EUR -1.8 million) which was partly offset by better result from CCGT, 7 and 8 units of Elektrėnai Complex (EUR +0.9 million) due to commercial activities of CCGT and regulated activities of 7 and 8 units of Elektrėnai Complex as in 2019 these two units were delivering ancillary services only one and two months respectively.
4. Customers and Solutions decreased by EUR 4.7 million. The decrease was mainly driven by lower B2B electricity product results (EUR -4,7 million) due to negative impact of proxy hedge results and reduced electricity consumption of hedged volumes of our B2B customers portfolio because of COVID-19, that was not fully compensated by positive effect from increased B2B customers portfolio and higher total B2B electricity sales volumes (+43.6% YoY in Lithuanian B2B retail market).
1. Result from other activities decreased by EUR 4.2 million mainly due to lower results of parent company, service centre and non-core businesses.

Adjusted EBITDA by segments, EURm

Adjusted EBITDA H1 2020, EURm

	H1 2020	H1 2019	∆	∆,%	H1 2020, %
Networks	96.7	88.2**	8.5	9.6%	74.9%
Green Generation	23.8	24.0	(0.2)	(0.8%)	18.4%
Flexible Generation	11.7	11.9	(0.2)	(1.7%)	9.1%
Customers and Solutions	(1.8)	2.9	(4.7)	(162.1%)	(1.4%)
Other*	(1.3)	2.9	(4.2)	(144.8%)	(1.0%)
Adjusted EBITDA APM	129.1	129.9	(0.8)	(0.6%)	100.0%

* Other – other activities and eliminations.

** H1 2019 adjusted EBITDA was adjusted negatively by EUR 3.1 million after change of its calculation method which affected monthly distribution of adjusted EBITDA.

*Adjusted EBITDA is based on management adjustments. A more detailed description of the management adjustments is presented in Consolidated Interim Financial statements for H1 2020, Note 22 "Operating segments".

Adjusted EBITDA by types of activities

In H1 2020 Adjusted EBITDA of regulated and contracted activities amounted to 90.6% of the total Adjusted EBITDA (H1 2019: 85.0%).

Regulated activities include:

1. Electricity and gas distribution;
1. Reserve and Ancillary services provided to the transmission system operator;
1. Public supply and last resort supply of electricity, gas supply to residents of Lithuania and designated liquefied natural gas supplier service.

Contracted activity includes wind farms with fixed long-term feed-in or feed-in premium tariffs.

Adjusted EBITDA by types of activities, EURm

	H1 2020	H1 2019	∆	∆,%	H1 2020, %
Regulated	109.9	103.6	6.3	6.1%	85.1%
Contracted	7.1	6.9	0.2	2.9%	5.5%
Other	12.1	19.4	(7.3)	(37.6%)	9.4%
Adjusted EBITDA APM	129.1	129.9	(0.8)	(0.6%)	100%

Adjusted EBITDA by types of activities H1 2020, %

EBITDA adjustments*

EBITDA adjustments, EURm

	H1 2020	H1 2019	∆	∆,%
EBITDA APM	149.8	105.0	44.8	42.7%
Adjustments
Temporary regulatory differences (1)**	(45.5)	16.5	(62.0)	n.m.
Temporary fluctuations in fair value of	17.5	14.2	3.3	23.2%
derivatives (2)
Cash effect of new connection points and	5.8	6.7	(0.9)	(13.4%)
upgrades (3)
Other (4)	1.5	(12.5)	14.0	112.0%
Total adjustments	(20.7)	24.9	(45.6)	(183.1%)
Adjusted EBITDA APM	129.1	129.9	(0.8)	(0.6%)
Adjusted EBITDA margin APM	22.7%	22.3%	-	-

(1) Elimination of the difference between the actual profit earned during the reporting period and profit allowed by the regulator. Decreased mainly due to higher Networks (EUR -20.7 million) and Customers and Solutions (EUR -45.1 million) segments profit earned from regulated activities during the reporting period than profit allowed by the regulator. Networks segment's temporary regulatory differences resulted from factual regulated operating expenses savings compared to regulated operating expenses level set by regulator. Customers and Solutions segment's temporary regulatory diffrences resulted from lower factual electricity and gas prices compared to prices set by regulator.

(2) Elimination of temporary fluctuations in the fair value of derivatives related to other periods (including contracts that are settled in the current period but are related to future periods). The Group uses derivatives for economic hedge of electricity and gas supply contracts, however, does not fully apply hedge accounting, therefore management eliminates them when analysing current period results.
(3) According to accounting policy, revenues from new connection points and upgrades are recognized throughout the useful life of the newly created infrastructure, even though the cash is received when the new connection point or upgrade is completed. In order to better reflect the cash flow, and results of connection points and upgrades completed in the current period, revenues are adjusted, as if they were booked at the moment of connection or upgrade.
(4) Other adjustments include add-backs of inventory and receivables impairments and write-offs, as well as elimination of gains or losses from disposal of non-current assets. 2020 H1 other adjustments also include EUR 0.5 million elimination of management and other fees of "Smart Energy Fund powered by Ignitis Group" related to the previous periods (years 2017, 2018 and 2019), leaving only fees related to H1 2020 in Adjusted EBITDA. 2019 H1 other adjustments contains of received compensation of EUR 9.28 million for the indemnification of potentially inflicted damage by Alstom Power Ltd during the implementation of the project of the AB Lietuvos Elektrinė in 2005–2009.

* A more detailed description of the management adjustments is presented in Consolidated Interim Financial statements for H1 2020, Note 22 "Operating segments".

** Calculation method of Networks segments Adjusted EBITDA was changed in H1 2020 and retrospectively Adjusted EBITDA H1 2019 was corrected. Change of calculation method affect only monthly amounts distribution. Adjusted EBITDA H1 2019 without this change would be EUR 4.2 million higher.

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Adjusted EBIT

In H1 2020, Adjusted EBIT amounted to EUR 74.6 million, which was 1.2% (or EUR 0.9 million) lower than in H1 2019.

Adjusted net profit, EURm

than in H1 2019.						H1 2020	H1 2019	∆	∆,%
					Adjusted EBITDA APM	129.1	129.9	(0.8)	(0.6%)
Adjusted EBIT by segments, EURm			Depreciation and amortisation expenses	(54.5)	(54.4)	(0.1)	(0.2%)
H1 2020 H1 2019 ∆ ∆,%		Adjusted EBIT APM	74.6	75.5	(0.9)	(1.2%)
	55.8	48.1	7.7	16.0%	Impairment expenses and write-offs of non	(2.3)	(4.4)	2.1	47.7%
Networks					current assets (excluding material one-off non
Green Generation	17.5	17.6	(0.1)	(0.6%)	cash asset revaluation, impairment and write
Flexible Generation	6.0	6.1	(0.1)	(1.6%)	off effects)
Customers and Solutions	(5.0)	2.2	(7.2)	n.m.	Write-offs of inventories and receivables	(1.5)	0.3	(1.8)	n.m.
Other*	0.3	1.5	(1.2)	(80.0%)	Financial income	1.0	1.3	(0.3)	(23.1%)
Adjusted EBIT APM	74.6	75.5	(0.9)	(1.2%)	Financial expenses	(10.2)	(9.9)	(0.3)	(3.0%)
Adjusted EBIT margin APM	13.1%	13.0%	-	-	Current year income tax (expenses)/benefit	(5.5)	(4.6)	(0.9)	(19.6%)
* Other – other activities and eliminations					Deferred income tax (expenses)/benefit	(6.8)	(4.0)	(2.8)	(70.0%)
					Adjustments' impact on income tax	5.3	(1.5)	6.8	n.m.

Adjusted net profit

Adjusted net profit amounted to EUR 54.6 million in H1 2020 and was 3.6% higher than in H1 2019. Current year and deferred income tax decrease (EUR +3.2 million effect) had the biggest impact on the change.

Net profit adjustments include an additional income tax adjustment of 15% (statutory income tax rate in Lithuania) applied on all other adjustments (except for those where income tax is already included in the adjustment calculations).

Adjusted net profit adjustments, EURm

	H1 2020	H1 2019	∆	∆,%
Net profit	71.9	28.8	43.1	149.7%
Adjustments
Temporary regulatory differences	(45.5)	16.5	(62.0)	n.m.
Temporary fluctuations in fair value of derivatives	17.5	14.2	3.3	23.2%
Cash effect of new connection points and	5.8	6.7	(0.9)	(13.4%)
upgrades
Other adjustments (1)	(0.4)	(12.0)	11.6	96.7%
Adjustments' impact on income tax	5.3	(1.5)	6.8	n.m.
Total adjustments	(17.3)	23.9	(41.2)	(172.4%)
Adjusted net profit APM	54.6	52.7	1.9	3.6%
Adjusted ROE LTM APM	8.1%	7.1%	-	-
ROE LTM	7.7%	-3.9%	-	-

Adjusted net profit APM 54.6 52.7 1.9 3.6%

(1) Other adjustments consist of: i) changes in market value of emission allowances, ii) gains or losses from disposals of non-current assets, iii) management and other fees of "Smart Energy Fund powered by Ignitis Group" related to previous periods, and iv) received compensations related to the previous periods.

Reported net profit

Reported net profit in H1 2020 increased to EUR 71.9 million, compared to net profit of EUR 28.8 million in H1 2019. Reported net profit was higher mainly due to higher EBITDA of Networks and Customers and Solutions segments due to higher segment's profit earned from regulated activities during the reporting period than profit allowed by the regulator.

Reconciliation of reported net profit with EBIT and EBITDA, EURm

	H1 2020	H1 2019	∆	∆,%
EBITDA APM	149.8	105.0	44.8	42.7%
Reversal of depreciation and amortisation	(54.5)	(54.4)	(0.1)	(0.2%)
expenses
Reversal of impairment expenses and write	(2.3)	(4.4)	2.1	47.7%
offs of non-current assets
Reversal of expenses of the revaluation of	0.4	(0.2)	0.6	n.m.
emission allowances
EBIT APM	93.4	46.0	47.4	103.0%
Finance income	1.0	1.3	(0.3)	(23.1%)
Financial expenses	(10.2)	(9.9)	(0.3)	(3.0%)
Profit (loss) before tax	84.2	37.4	46.8	125.1%
Current year income tax expenses	(5.5)	(4.6)	(0.9)	(19.6%)
Deferred income tax income (expenses)	(6.8)	(4.0)	(2.8)	(70.0)%
Net profit (losses)	71.9	28.8	43.1	149.7%

Investments

In H1 2020, Investments amounted to EUR 187.1 million and were EUR 20.8 million less than in H1 2019. The largest investments were made in construction of Vilnius and Kaunas CHPs (46.4% from total Investments), construction of Pomerania (22.2% from total Investments), electricity distribution network expansion (13.1%) and gas distribution network expansion (5.8%).

Green Generation segment investments increased to EUR 130.4 million in H1 2020 and were EUR 22.9 million higher than in H1 2019. Major contributor to that was increase of investments in construction of Kaunas CHP (EUR +39.1 million) and Pomerania (EUR +11.5 million). Increase was partly offset by lower investments in construction of Vilnius CHP (EUR -28.9 million) which decreased due to COVID 19.

Networks segment investments amounted EUR 49.3 million and were lower by EUR 46.3 million compared to H1 2019. Decrease was mainly driven by lower investments in expansion of the electricity distribution network due to decrease in new customers connection and upgrades contract work fees (EUR -18.1 million) and maintenance of the electricity distribution network due to postponement of H1 2020 reconstruction works of electricity network objects for later periods (EUR -15.1 million). 18.2k new connection points and upgrades were completed in the electricity distribution network in H1 2020, 4.1% less than in H1 2019. Admissible electric power of new connection points and upgrades reached 187.0 MW in H1 2020 and was 11.5% higher than in H1 2019 (167.7 MW). In H1 2020 investments in the expansion of gas distribution network decreased by EUR 13.6 million compared to H1 2019. 114.2 km of the new gas pipelines were constructed in H1 2020 (241.8 km in H1 2019).

The Group received EUR 17.3 million subsidies for Investments in H1 2020. It contains of subsidies for Vilnius CHP project (EUR 15.4 million) the remaining subsidies were related to electricity and gas distribution networks. The Group also received distribution network new customers connections and upgrades and infrastructure equipment transfers contribution (EUR 9.5 million).

Dynamics of the Group 's Investments by segments, EURm

	H1 2020	H1 2019	∆	∆,%
Green Generation	130.4	107.5	22.9	21.3%
Kaunas CHP	54.7	15.6	39.1	250.6%
Pomerania	41.6	30.1	11.5	38.2%
Vilnius CHP	32.2	61.1	(28.9)	(47.3%)
Other Green Generation investments	1.9	0.7	1.2	171.4%
Networks	49.3	95.6	(46.3)	(48.4%)
Expansion of the electricity distribution network	24.5	42.6	(18.1)	(42.5%)
Expansion of gas distribution network	10.9	24.5	(13.6)	(55.5%)
Maintenance of the electricity distribution network	10.4	25.5	(15.1)	(59.2%)
Maintenance of the electricity distribution network	2.0	1.5	0.5	33.3%
Other Networks Investments	1.5	1.5	0.0	0.0%
Customers and Solutions	0.9	1.3	(0.4)	(30.8%)
Flexible Generation	0.3	0.2	0.1	50.0%
Other*	6.2	3.3	2.9	87.9%
Investments APM	187.1	207.9	(20.8)	(10.0%)
Subsidies	(17.3)	(23.3)	6.0	25.8%
Investments covered by customers**	(11.4)	(10.1)	(1.3)	(12.9%)
Investments (excl. subsidies and investments covered by customers)	158.4	174.5	(16.1)	(9.2%)

* Other – other activities and eliminations.

** Investments covered by customers includes new customers connections and upgrades and infrastructure equipment transfers.

Balance sheet

Assets

As of 30 June 2020, total assets reached EUR 3,400.4 million (6.3% increase from 31 December 2019). The growth was mainly influenced by the increase in cash and cash equivalents due to issuance of additional bond issuance. Also, non-current fixed assets resulting from investments made in H1 2020 increased.

Equity

As at 30 June 2020, equity amounted to EUR 1,337.8 million (0.8% decrease from 31 December 2019).

Liabilities

Total liabilities increased by 11.5% or EUR 213.1 million during H1 2020.

Non-current liabilities rose by 31.6% or EUR 426.3 million, which was mainly influenced by the issuance of bonds (EUR +300.0 million) and increased loans from banks (EUR +110.0 million).

Current liabilities decreased by 42.7% or EUR 213.2 million. It was caused by decrease of Bank overdrafts (EUR -191.3 million) and current portion of non-current borrowings (EUR -16.3 million).

			Balance sheet, EURm
	2020.06.30	2019.12.31	∆	∆,%
Non-current assets	2,887.9	2,770.6	117.3	4.2%
Current assets	512.5	427.5	85.0	19.9%
TOTAL ASSETS	3,400.4	3,198.1	202.3	6.3%
Equity	1,337.8	1,348.6	(10.8)	(0.8%)
Total liabilities	2,062.6	1,849.5	213.1	11.5%
Non-current liabilities	1,776.8	1,350.5	426.3	31.6%
Current liabilities	285.8	499.0	(213.2)	(42.7%)
TOTAL EQUITY AND LIABILITIES	3,400.4	3,198.1	202.3	6.3%
Asset turnover ratio LTM APM	0.33	0.34	-	-
ROA LTM APM	3.2%	1.9%	-	-
Current ratio APM	1.76	0.78	-	-

Working capital/Revenue LTM APM 3.3% 4.8% - -

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Financing

Net debt

As of 30 June 2020, Net debt amounted to EUR 1,019.2 million, an increase of 5.5% or EUR 52.7 million compared to 31 December 2019 was mostly influenced by bonds issuance which were used to refinance banks overdrafts and by new loans obtaining which were used to finance investments to Pomerania, Vilnius CHP, and Kaunas CHP.

During H1 2020, Gross debt increased by 18.6% or EUR 204.1 million, and on 30 June 2019 amounted to EUR 1,302.5 million (on 31 December 2019 – EUR 1, 098.3 million). The main factors for this increase was bonds issuance (EUR +300.0 million) and increase of loans from banks (EUR +110.0 million), what was partly offset by decrease of bank overdrafts (EUR - 191.3 million) and current portion of non-current borrowings (EUR -16.3 million). FFO/Net debt improved from 19.6% at 31 December 2019 to 22.5% at 30 June 2020.

Net debt, EURm

	2020.06.30	2019.12.31	∆	∆,%
Total non-current financial liabilities	1,254.6	855.7	398.9	46.6%
Non-current loans	341.8	231.7	110.1	47.5%
Bonds	886.2	590.1	296.1	50.2%
Interests payable (including accrued)	0.2	0.1	0.1	100.0%
Finance lease	0.0	0.0	0.0	0.0%
Lease liabilities (IFRS 16)	26.4	33.8	(7.4)	(21.9%)
Total current financial liabilities	47.9	242.6	(194.7)	(80.3%)
Current portion of non-current loans	21.2	37.5	(16.3)	(43.5%)
Current loans	0.0	0.0	0.0	0.0%
Current portion of finance lease liabilities	0.0	0.0	0.0	0.0%
Lease liabilities (IFRS 16)	14.8	8.4	6.4	76.2%
Banks overdrafts	0.0	191.3	(191.3)	(100.0%)
Interests payable (including accrued)	11.9	5.4	6.5	120.4%
Gross debt	1,302.5	1,098.3	204.2	18.6%
Cash, cash equivalents and short-term	283.3	131.8	151.5	114.9%
investments
Cash and cash equivalents	283.3	131.8	151.5	114.9%
Short-term investments	0.0	0.0	0.0	0.0%
Net debt APM	1,019.2	966.5	52.7	5.5%
EPSO-G receivable	158.7	158.7	0.0	0.0%
Net debt less EPSO-G receivable	860.5	807.8	52.7	6.5%
Net debt / Adjusted EBITDA LTM APM	3.94	3.72	-	-
Net debt / EBITDA LTM APM	4.05	4.67	-	-
FFO LTM / Net debt APM	22.5%	19.6%	-	-
Gross debt/Equity APM	0.97	0.81	-	-
Equity ratio APM	0.39	0.42	-	-

* A more detailed description presented in Consolidated Interim Financial statements for H1 2020, Note 9.

Maturities

Cash flows

Bonds, which mature in 2027 (EUR 300.0 million, green), in 2028 (EUR 300.0 million, green) and in 2030 (EUR 300.0 million) make the largest portion of the Group's financial liabilities.

The average maturity of the borrowings as at 30 June 2020 was 9.5 years (31 December 2019: 6.3 years). Average maturity increased mainly due to overdraft refinanced using 10-year bonds.

Group's borrowings repayment schedule, EURm

Interest rate, currency, and liquidity risk

On 30 June 2020, borrowings amounting to EUR 1,177.3 million were subject to the fixed interest rate (90.4% of the gross debt) and the remaining amount of borrowings was subject to the floating interest rate. 96.7% of gross debt were in EUR, while 3.3% – in PLN.

The Group manages liquidity risk by entering into the credit line agreements with banks. On 30 June 2020, credit line facilities amounted to EUR 270 million of which all are undrawn, EUR 30 million are frozen for redemption of shares of Ignitis Gamyba and ESO. All the credit lines are committed, i.e. funds must be paid by the bank upon request.

Net cash flows from operating activities (CFO) amounted to EUR 158.0 million in H1 2020. Compared to H1 2019, CFO increased by 57.1% (EUR +57.4 million) mainly due to increase of net profit. Net cash flows to investing activities (CFI) amounted to EUR 141.3 million in H1 2020. Compared to H1 2019, CFI decreased by EUR 26.0 million, from EUR 167.3 million to EUR 141.3 million due to lower Investments. Net cash flows from financing activities (CFF) amounted to EUR 134.8 million in H1 2020. Compared to H1 2019, CFF increased by EUR 33.6 million mostly due to bonds issuance used to refinance overdrafts.

Cash flows, EURm

	H1 2020	H1 2019	∆	∆,%
Cash and cash equivalents at the beginning of the period	131.8	127.8	4.0	3.1%
CFO	158.0	100.6	57.4	57.1%
CFI	(141.3)	(167.3)	26.0	15.5%
CFF	134.8	101.2	33.6	33.2%
Increase (decrease) in cash and cash equival.	151.5	34.5	117.0	n.m.
Cash and cash equivalents at the end of period	283.3	162.3	121.0	74.6%

In H1 2020, the Group's FFO ratio increased by 39.0% (EUR 39.7 million) and amounted to EUR 141.5 million. The main reason for the growth was growth in EBITDA.

FFO, EURm

	H1 2020	H1 2019	∆	∆,%
EBITDA	149.8	105.0	44.8	42.7%
Interest received	0.0	0.0	0.0	0.0%
Interest paid	(1.9)	(1.4)	(0.5)	(35.7%)
Income tax paid	(6.4)	(1.8)	(4.6)	n.m.
FFO APM	141.5	101.8	39.7	39.0%

FCF, EURm

	H1 2020	H1 2019	∆	∆,%
FFO	141.5	101.8	39.7	39.0%
Investments	(187.1)	(207.9)	20.8	10.0%
Grants received	17.3	23.3	(6.0)	(25.8%)
Proceeds from sale of property, plant and equipment and intangible asset	2.8	25.7	(22.9)	(89.1%)
Change in net working capital	16.0	(5.3)	21.3	n.m.
FCF APM	(9.5)	(62.4)	52.9	84.8%

Operating segments

Operating segments	28
Networks	29
Green Generation	31
Flexible Generation	32
Customers and Solutions	33

10 1 မ 14 Customers and Solutions
Adjusted EBITDA (EURm)
H1 2019
2.9
H1 2020 1.8
Main indicators H1 2020 (EURm)
Revenue 272.7
Adjusted EBIT -5.0
nvestments 0.9
Net debt 58.8

Networks

Operating performance in H1 2020

Electricity distribution

Distributed electricity in H1 2020 amounted to 4.69 TWh and decreased by 2.5%, compared to 4.81 TWh in H1 2019. Independent supply distribution decreased by 5.8% whereof during quarantine period distribution decreased by about 8-9%. Decrease in independent supply was partly offset by an increase in public supply by 6.8% whereof during quarantine period distribution increased by 5-6%.

SAIDI ratio deteriorated and was 179.23 minutes (H1 2019: 51.26 minutes). SAIFI indicator was equal to 0.87 interruptions (H1 2019: 0.69 interruptions) in H1 2020. Deterioration of quality indicators of continuous electricity supply mainly caused by storm Laura (March 12- 13). The Laura 's record whirlwind wind of 28-31 m/s left more than 250 thousand of residents without electricity. The hurricane Erwin of such a scope stroke Lithuania for the last time in 2005. More than 90 percent of the storm's consequences were eliminated, and electricity was restored in the record time - only in two or three days.

Gas distribution

The volume of gas distributed in H1 2020 decreased by 5.6% and amounted to 3.59 TWh (H1 2019: 3.80 TWh). In H1 2020, higher average air temperatures were the main contributor to the reduction in gas distribution.

Gas distribution SAIDI ratio improved in H1 2020 and was 0.24 minutes (H1 2019: 0.68 minutes) and SAIFI ratio was approximately equal to 0.003 interruptions (H1 2019: 0.005 interruptions). Improvement of the quality indicators resulted from the decrease in network disruptions by third parties.

		Networks key operating indicators
Distribution key		H1 2020	H1 2019	∆,%
Electricity
Electricity distributed	TWh	4.69	4.81	(2.5%)
Independent supply	TWh	2.93	3.11	(5.8%)
Public supply	TWh	1.54	1.44	6.8%
Supply of last resort	TWh	0.22	0.25	(13.7%)
Electricity distribution network	thous. km	125.9	125.1	0.6%
Technological costs in electricity distribution network	%	5.58%	5.99%	(0.4%)
New connection points and upgrades	thous.	18.3	19.0	(4.1%)
New connection points	thous.	8.1	10.7	(24.9%)
Upgrades	thous.	10.2	8.3	22.8%
Time to connect (average)	c. d.	27.8	34.4	(19.2%)
SAIDI	min.	179.23	51.26	3.5x
SAIFI	unit	0.87	0.69	25.8%
Gas
Gas distributed	TWh	3.59	3.80	(5.6%)
Gas distribution network	thous. km	9.6	9.2	4.3%
Technological costs in gas distribution network	%	2.19%	1.91%	0.3%
New connection points and upgrades	thous.	4.0	5.9	(31.1%)
Time to connect (average)	c. d.	54.1	63.6	(15.0%)
SAIDI	min.	0.24	0.68	(64.9%)
SAIFI	unit	0.003	0.005	(42.9%)

Financial results in H1 2020

In H1 2020, Networks Revenue reached EUR 236.1 million and was 13.2% or EUR 27.6 million higher than in H1 2019. The increase was mainly driven by higher electricity distribution revenue (EUR 20.3 million) and transmission revenue (EUR 13.7 million) due to on average 11 per cent higher tariff of power distribution service, which is comprised of power transmission, distribution and public service obligations (PSO) components and is approved by the regulator. Increase was partly offset by decreased supply of last resort of electricity revenue (EUR -7.4 million) due to decrease of electricity market price.

In H1 2020, Adjusted EBITDA reached EUR 96.7 million and was 9.6% or EUR 8.5 million higher than in H1 2019. The increase was mainly driven by the growing value of regulated assets. Electricity distribution regulated assets increased from EUR 1,227.2 million in 2019 to EUR 1,399.0 million in 2020, gas distribution regulated assets increased from EUR 188.7 million in 2019 to EUR 225.2 million. WACC of electricity distribution increased from 5.04% in 2019 to 5.28% in 2020, WACC of gas distribution increased from 3.59% in 2019 to 3.84% in 2020. Adjusted EBITDA also increased due to positive changes in new connection and upgrade fees.

Compared to H1 2019, segment's property, plant and equipment, intangible and right-of-use assets increased by 2.3% or EUR 37.0 million due to following Investments made. However, compared to H1 2019, Investments decreased by EUR 46.3 million or 48.4%, mainly resulting from lower investments in expansion (EUR -18.1 million) and maintenance (EUR -15.1 million) of the electricity distribution network and expansion of gas distribution network (EUR -13.6 million).

	Main financial results of Networks segment, EURm
	H1 2020	H1 2019	∆,%
Revenue	236.1	208.5	13.2%
Adjusted EBITDA APM	96.7	88.2*	9.6%
EBITDA APM	96.1	70.6	36.1%
Adjusted EBIT APM	55.8	48.1	16.0%
EBIT	47.0	28.3	66.1%
Property, plant and equipment, intangible and right-of-use assets	1,620.3	1,583.3	2.3%
Net debt APM	693.4	640.3	8.3%
Investments APM	49.3	95.6	(48.4%)
Adjusted EBITDA margin, % APM	41.0%	39.0%	-

* H1 2019 adjusted EBITDA was adjusted negatively by EUR 3.1 million after change of its calculation method which affected monthly distribution of adjusted EBITDA.

Green Generation

Operating performance in H1 2020

Electricity generation

Electricity generated in Green Generation segment increased by 31.3% in H1 2020, compared to H1 2019. This mainly resulted from higher electricity generation in hydro portfolio. Electricity generation volumes at Kruonis PSHP increased by 92.8% as a result of effective utilisation of fluctuations in electricity prices in H1 2020, which was slightly offset by decrease in Kaunas HPP by 18.9% caused by a lower level of water in the Nemunas river. Volume of electricity generated at wind farms totalled 0.13 TWh, which is 11.1% more compared to H1 2019. Increase in wind farms generation portfolio were impacted by higher load factors as a result of better weather conditions and availability factors.

Heat generation

Heat generation in H1 2020 increased 2.4 times, compared to H1 2019, caused by Kaunas CHP commissioning and test runs for which gas was used. The plant was commissioned in August. Growth of Kaunas CHP generation was partly offset by lower heat generation in biomass portfolio.

	Green		Generation key operating indicators
		H1 2020	H1 2019	∆,%
Electricity generated:	TWh	0.60	0.46	31.3%
Wind	TWh	0.13	0.12	11.1%
Hydro	TWh	0.46	0.34	36.3%
Waste	TWh	0.01	-	-
Heat generated:	TWh	0.15	0.06	2.4x
Waste	TWh	0.07	-	-
Biomass	TWh	0.06	0.06	(6.2%)
Gas	TWh	0.02	-	-
Wind farms availability factor	%	98%	97%	1.5%
Wind farms load factor	%	39%	35%	8.8%
Installed capacity:
Installed capacity - electricity	MW	1,077	1,077	0.0%
Wind	MW	76	76	0.0%
Hydro	MW	1,001	1,001	0.0%
Projects under construction and under development - electricity	MW	273	273	0.0%
Installed capacity - heat	MW	40	40	0.0%
Projects under construction and under development - heat	MW	299	299	0.0%

Financial results in H1 2020

In H1 2020, Green Generation Revenues reached 39.5 million and was 9.7% or EUR 3.5 million higher than in H1 2019. The increase was mainly driven by higher sales of Kruonis PSHP (EUR +5.4 million) and higher sales of wind farms (EUR +0.5 million). The above reasons outweighed lower revenue of Kaunas HPP (EUR -2.2 million).

In H1 2020, Adjusted EBITDA reached EUR 23.8 million and was 0.8% or EUR 0.2 million lower than in H1 2019. The decrease was mainly driven by worsened result of Kaunas HPP (EUR -3.6 million) due to lower water level in Nemunas river and lower electricity prices. Segment's adjusted EBITDA decrease was also influenced by the increased SG&A expense of Vilnius and Kaunas CHP projects, as the launch of plants is approaching (EUR -1.0 million). Adjusted EBITDA of wind farms decreased by EUR 0.1 million. The decrease was positively impacted by better result of Kruonis PSHP (EUR +5.5 million) which was mainly caused by effective utilisation of fluctuations in electricity prices.

Compared to H1 2019, property, plant and equipment, intangible and right-of-use assets in the Green Generation segment grew due to ongoing Investments in Vilnius and Kaunas CHP plants and Pomerania wind farm. The segment's Net debt increased accordingly.

Main financial results of Green Generation segment, EURm

	H1 2020	H1 2019	∆,%
Revenue	39.5	36.0	9.7%
Adjusted EBITDA APM	23.8	24.0	(0.8%)
EBITDA APM	23.8	24.0	(0.8%)
Adjusted EBIT APM	17.5	17.6	(0.6%)
EBIT	17.5	17.6	(0.6%)
Property, plant and equipment, intangible and right-of-use assets	670.7	396.8	69.0%
Net debt APM	325.4	147.5	120.6%
Investments APM	130.4	107.5	21.3%
Adjusted EBITDA margin, % APM	60.3%	66.7%	-

Flexible Generation

Operating performance in H1 2020

Electricity generation volumes at the Elektrėnai Complex increased almost 36.2 times in H1 2020, compared with H1 2019, and reached 0.35 TWh, as a result of low gas and emission allowance prices and changes in the regulation of provided regulated services.

In 2019, the tertiary active power reserve in the capacity of 260 MW was ensured by the most effective unit of Elektrėnai Complex – the CCGT while in 2020 tertiary power reserve is ensured by Elekrėnai Complex 7 and 8 units with the scope of 475 MW.

In 2020, CCGT is providing the service of operation of the isolated network with the scope of 370 MW. By providing this service, under favourable market conditions the CCGT can produce on a commercial basis also. The rest isolated system operation service is provided by 8 unit with the scope of 45 MW.

Flexible Generation key operating indicators

		H1 2020	H1 2019	∆,%
Electricity generated	TWh	0.35	0.01	36.2x
Total reserve and Isolated Regime Services	MW	890	260	3.4x
Tertiary Power Reserve Services	MW	475	260	82.7%
Isolated Regime Services	MW	415	(1) -	-
Installed capacity:
Installed capacity – electricity	MW	1,055	1,055	0%

(1) Both Units No. 7 and 8 were in preservation mode most of the year when providing this service; the exact power dedicated for the service was not indicated and is thus not provided in the table.

Financial results in H1 2020

In H1 2020, Flexible Generation Revenue reached 38.5 million and was 18.8% or EUR 8.9 million lower than in H1 2019. The segment's Revenue decrease was mainly driven by EUR 9.3 million compensation received in H1 2019 which was received from the Ministry of Finance of the Republic of Lithuania for the indemnification of potentially inflicted damage by Alstom Power Ltd during the implementation of the project of Lietuvos Elektrinė in 2005–2009. 2019 H1 sales were also boosted by sales of fuel oil stocks that were no longer in use (EUR -4.3 million). 2020 H1 revenue decrease was partly offset by higher revenue of CCGT (EUR +7.0 million). Due to CCGT provision of isolated regime instead of tertiary reserve services in H1 2020 CCGT was able to operate under market conditions and result of sales to the market was higher than return on investment included in tariff of 2019.

In H1 2020, Adjusted EBITDA reached to EUR 11.7 million and was 1.7% or EUR 0.2 million lower than in H1 2019. The decrease was mainly driven by lower gain from sale of fuel oil stocks in H1 2019 (EUR -1.8 million) which was partly offset by better result from CCGT, 7 ant 8 units of Elektrėnai Complex (EUR +0.9 million) due to commercial activities of CCGT and regulated activities of 7 and 8 units of Elektrėnai Complex as in 2019 these two units were delivering ancillary services only one and two months respectively.

Main financial results of Flexible Generation segment, EURm

	H1 2020	H1 2019	∆,%
Revenue	38.5	47.4	(18.8%)
Adjusted EBITDA APM	11.7	11.9	(1.7%)
EBITDA APM	7.7	26.0	(70.4%)
Adjusted EBIT APM	6.0	6.1	(1.6%)
EBIT	2.4	19.7	(87.8%)
Property, plant and equipment, intangible and right-of-use assets	390.1	405.6	(3.8%)
Net debt APM	(0.3)	(3.8)	92.1%
Investments APM	0.3	0.2	50.0%
Adjusted EBITDA margin, % APM	27.5%	34.6%	-

Customers and Solutions

Operating performance in H1 2020

Electricity sales

Total electricity sales in retail market in H1 2020 increased and totalled 3.10 TWh, compared to H1 2019. Increase was mainly caused by higher sales levels due to new contracts signed at the end of 2019 for the following year with B2B Lithuanian market clients. Significant growth in total B2B electricity volumes (by 43.6 % in Lithuania) includes COVID-19 effect - due to lockdown B2B electricity consumption reduced by about 8-9% during quarantine period, while B2C - increased by 5- 6%. Electricity sales volume in the wholesale market decreased by 46.2%, as a result of smaller trading portfolio in Polish market, in comparison to H1 2019.

Gas sales

The volume of gas sold increased by 44.0% and amounted to 7.24 TWh in H1 2020 (H1 2019: 5.02 TWh). This was mainly influenced by entry into Finnish gas market and higher gas sales in Latvian market because of won Latvenergo's tender for c. 0.9 TWh. Sales in Lithuanian decreased by 8.4% as a result of increased competition in B2B sector, which was partly offset by the increased sales for B2C customers. Sales in wholesale gas market increased by 3.5% in H1 2020 compared with the same period last year influenced by increase in sales through Get Baltic gas exchange, which was partly offset by decrease in sales through LNG terminal.

		H1 2020	H1 2019	∆,%
Electricity sales
Retail	TWh	3.10	2.63	18.2%
Lithuania	TWh	2.66	2.22	19.8%
B2C	TWh	1.45	1.38	5.3%
B2B	TWh	1.20	0.84	43.6%
Latvia	TWh	0.44	0.41	7.5%
Other	TWh	0.01	0.00	459.7x
Wholesale trading	TWh	1.22	2.26	(46.2%)
Electricity customers	m.	1.70	1.66	2.3%
Gas sales	TWh	7.24	5.02	44.0%
Retail	TWh	5.92	3.75	58.0%
Lithuania	TWh	3.19	3.48	(8.4%)
B2C	TWh	1.26	1.18	6.5%
B2B	TWh	1.93	2.30	(16.0%)
Latvia	TWh	1.10	0.27	4.1x
Finland	TWh	1.63	-	-
Wholesale	TWh	1.32	1.28	3.5%
Gas customers	m.	0.60	0.60	1.4%

Customers and Solutions key operating indicators

Financial results in H1 2020

In H1 2020, Customers and Solutions Revenue reached EUR 272.7 million and was 4.3% or EUR 11.2 million higher than in H1 2019. The increase was mainly driven by increase of revenue from public electricity supply activities due to 14.6% higher electricity tariff set by the regulator and higher sales volumes by 5.3% (EUR +16.9 million) and increase of B2B electricity supply revenue (EUR +16.0 million) due to higher volume of sold electricity. Increase was partly offset lower gas sales to B2B customers due to lower gas market price (EUR -17.7 million) and lower gas sales to residential customers due to lower tariff set by regulator (EUR -6.7 million).

In H1 2020, Adjusted EBITDA reached to EUR -1.8 million and was 162.1% or EUR 4.7 million lower than in H1 2019. The decrease was mainly driven by the B2B electricity product (EUR -4,7 million) due to negative impact of proxy hedge results (ineffective proxy hedge in relation to unfavourable price moves in derivative hedging products) and reduced electricity consumption of hedged volumes of our B2B customers portfolio because of COVID-19, that was not fully compensated by positive effect from increased B2B customers portfolio and higher total B2B electricity sales volumes (+43.6% YoY in Lithuanian B2B retail market).

Compared with H1 2019, Net debt decreased mostly because of lower loans balance.

Main financial results of Customers and Solutions segment, EURm

	H1 2020	H1 2019	∆,%
Revenue	272.7	261.5	4.3%
Adjusted EBITDA APM	(1.8)	2.9	(162.1%)
EBITDA APM	25.0	(16.3)	n.m.
Adjusted EBIT APM	(5.0)	2.2	n.m.
EBIT	21.8	(17.0)	n.m.
Property, plant and equipment, intangible and right-of-use assets	37.9	43.2	(12.3%)
Net debt APM	58.8	79.0	(25.6%
Investments APM	0.9	1.3	(30.8%
Adjusted EBITDA margin, % APM	(0.7%)	1.0%	-

About the Company and the Group

Key information about the Company and the Group	35
Corporate governance	37
Supervisory bodies	38
Management bodies	40
Remuneration	42
Supervisory and management bodies of the listed
companies	42
ESG Disclosure	44
People	49
Culture of organisation	50

➔ Contents

Key information about the Company and the Group

Company name	AB "Ignitis Grupė"*
Company code	301844044
Issued capital	EUR 1,212,156k
Paid-up share capital	EUR 1,212,156k
Address	Žvejų st. 14, LT-09310, Vilnius, Lithuania
Telephone	(+370 5) 278 2998
Fax	(+370 5) 278 2115
E-mail	[email protected]
Website	www.ignitisgrupe.lt
Legal form	Public Limited Liability Company*
Date and place of registration	28 August 2008, Register of Legal Entities
Register accumulating and storing data about the Company	Register of Legal Entities, State Enterprise the Centre of Registers

* , The change in name and legal form of the Company is valid from July 28, 2020, when the updated Articles of Association of the Company were registered.

The company's shareholder is the Republic of Lithuania. On 13 February 2013, the Company's shares were transferred to the Ministry of Finance by the right of trust.

With effect from 30 August 2013, the Company's name Visagino Atominė Elektrinė was changed to Lietuvos Energija. As from 6 September 2019, the name of the Company was changed to Ignitis Grupė.

As of 30 June 2020, the issued capital was divided into ordinary registered shares with the nominal value of EUR 0.29 each. All the shares are fully paid.

**At the date of this report, these entities* were controlled, directly or indirectly, by the Group:**

Company	Company code	Registered office address	Effective ownership interest (%)	Share capital EUR	Profile of activities
Ignitis Gamyba	302648707	Elektrinės st. 21, Elektrėnai	97,45**	187 921	Production electricity
Energijos Skirstymo Operatorius	304151376	Aguonų st. 24, Vilnius	97,66	259 443	Distribution and supply of electricity to the consumers; distribution of natural gas
Ignitis	303383884	Žvejų st. 14, Vilnius	100	40 140	Supply of electricity and gas and trade
Ignitis Latvija	40103642991	Cēsu st. 31 k-2, , LV-1012, Riga	100	5 500	Supply of electricity
Ignitis Eesti	12433862	Narva st. 5, 10117 Tallinn	100	35	Supply of electricity
Ignitis Polska	0000681577	Puławska 2-B, PL-02-566, Warshaw	100	10 million PLN	Supply and trading of electricity
Ignitis Renewables	304988904	P. Lukšio st. 5B, Vilnius	100	3	Analysis and coordination of the activities of legal entities belonging to the Company
Tuuleenergia Osaühing	10470014	Žvejų st. 14, Vilnius	100	499	Production of renewable electricity
Eurakras	300576942	Žvejų st. 14, Vilnius	100	4 621	Production of renewable electricity
Vėjo Gūsis	300149876	Žvejų st. 14, Vilnius	100	7 443	Production of renewable electricity
Vėjo Vatas	110860444	Žvejų st. 14, Vilnius	100	2 896	Production of renewable electricity
VVP Investment	302661590	Žvejų st. 14, Vilnius	100	250	Development of a renewable energy (wind) power plant project
Pomerania Wind Farm	0000450928	Al. Grunwaldzka 82/368, 80- 244 Gdańsk	100	44k PLN	Development of a renewable energy (wind) power plant project
Vilniaus Kogeneracinė Jėgainė	303782367	Žvejų st. 14, Vilnius	100	52 300	Modernization of the provision of centralized supply of heat in Vilnius city
Kauno Kogeneracinė Jėgainė	303792888	Žvejų st. 14, Vilnius	51	40 000	Modernization of the provision of centralized supply of heat in Kaunas city
Gamybos Optimizavimas	304972024	Žvejų st. 14, Vilnius	100	350	Planning, optimization, forecasting, trading, brokering and other electricity related services
Ignitis Grupės Paslaugų Centras	303200016	A. Juozapavičius st. 13, Vilnius	100	12 269***	Shared business support services
Elektroninių Mokėjimų Agentūra	136031358	Žvejų st. 14, Vilnius	100	1 370	Payment aggregation
NT Valdos	300634954	P. Lukšio st. 5B, Vilnius	100	5 000	Management and other related services of real estate
Transporto Valdymas	304766704	Kirtimų st. 47, Vilnius	100	2 359	Vehicle rental, leasing, repair, maintenance, renewal and service
Duomenų Logistikos Centras****	302527488	A. Juozapavičius st. 13, Vilnius	79,64	4 033	Information technology and telecommunication services
Energetikos Paslaugų ir Rangos Organizacija	304132956	Motorų st. 2, Vilnius	100	350	Construction, repair and maintenance of electricity networks and related equipment, connection of customers to electricity networks, repair of energy equipment and production of metal structures
Lietuvos Energijos Paramos Fondas	303416124	Žvejų st. 14, Vilnius	100	-	Provision of support to projects, initiatives and activities, relevant to the society

*More information about the entities and their financial indicators provided in the Company's website (link).

** After 19 August 2020, when process of mandatory buyout of shares of Ignitis Gamyba was completed, the Company owns 98,20 % of its shares.

*** The change in the Company's share capital is valid from July 14, 2020, when the updated Articles of Association of the Company were registered.

****After the reporting period, Duomenų logistikos centras has been sold.

Corporate governance

The sole shareholder of the Company – the Republic of Lithuania, and the rights and obligations of the shareholder are exercised by the Ministry of Finance of the Republic of Lithuania, which adopts the principal decisions relating to the exercise of property rights and obligations. The management of the shares shall be carried out in accordance with the Law on Companies, which establishes the property and non-property rights and obligations of the shareholder, and the Description of the Procedure of the Implementation of State Property and Non-Property Rights in State-Owned Enterprises approved by the Resolution No 665 of the Government of the Republic of Lithuania of 6 June 2012 (hereinafter – the Property Guidelines), Articles of Association of the Company.

The corporate governance model of the Group was implemented following the governance guidelines approved by the Ministry of Finance of the Republic of Lithuania on 7 June 2013. The guidelines were updated on 26 March 2020 (link).

The primary goal of the corporate governance is to achieve the effect of synergy aligning different activities of the Ignitis Group companies and targeting them at the achievement of the common goals at the Group level.

Corporate governance activities are concentrated at the level of the parent company of the Group – the responsibilities of which involve coordination of such areas as finance, law, planning and monitoring, human resources, risk management, audit, technology, communication and other common areas of the Group entities. Activities of the Group entities in these areas are based on mutual agreement, i.e. cooperation with a focus on achievement of common result, and they are coordinated by policies (common provisions and norms) applicable to all Group entities.

Use this link for the description of the corporate governance principles and of the governance and control system. More information on the management bodies ant its members, committees etc. is provided in the annual report of the Company (link).

* This composition of the Supervisory Board is valid from 8 April 2020, when updated Articles of Association of the Company were registered. Until that date the Supervisory Board consisted of 5 members: 2 representatives of the Ministry of Finance and 3 independent members

Members of the Supervisory Board (at the date of publication)

Supervisory bodies

Supervisory board

Under the Corporate Management Guidelines, the Supervisory Board is a collegial supervisory body provided in the Statute of the Company. The Supervisory Board is elected by the General Meeting of Shareholders for the period of four years. The Supervisory Board of the Company consists of 7 members: 2 representatives of the Ministry of Finance and 5 independent members.* The Supervisory Board elects its Chairman from its members. Such a method for the formation of the Supervisory Board is in line with the corporate management principles. No members of the Supervisory Board have any participation in the capital of the company or group enterprises.

The main functions and responsibilities of the Supervisory Board are consideration and approval of the business strategy of the Company and the Group companies' activities, analysis and evaluation of the information on the implementation of the business strategy, provision of this information to the annual General Meeting, election and removal of the Members of the Board, supervision of activities of the Board and the CEO, provision of comments to the General Meeting of Shareholders on a set of financial statements, appropriation of profit or loss, and annual report. The Supervisory Board also addresses other matters within its competence.

The Supervisory Board is functioning at the Group level, i.e., where appropriate, it addresses the issues related not only to the activities of the Company, but also to the activities of its subsidiaries or the activities of their management and supervisory bodies.

Term of office of the current Supervisory board is from 30 August 2017 to 29 August 2021. There were no changes in the composition of the Company's Supervisory Board during the reporting period. The procedure of electing two new independent members of the Supervisory Board is ongoing in accordance to updated Articles of Association of the Company. None of Supervisory Board members holds shares of the Group companies.

1. DARIUS DAUBARAS, chairman, independent member (since 30/08/2017)

Education: University of Cambridge, Master's degree in International Relations; University of Pennsylvania, USA, Business Administration Master's Degree in the field of finance and business management; University of Denver, USA, Bachelor's Degree in Business Administration with a major in finance and management; Place of employment, position: Senior Executive in Strategic Finance & Development Department (part of Treasury) in Financial Advisory Division, and Project manager of strategic and M&A at Saudi Aramco; Supervisory Board Member (independent) at Valstybės investicijų valdymo agentūra (since 23/07/2020), Treasury department Member of the Supervisory Board of "Smart Energy Fund powered by Ignitis Group" (until 01/7/2019)

2. DAIVA LUBINSKAITĖ-TRAINAUSKIENĖ, independent member (since 30/08/2017)

Education: ISM University of Management and Economics, Master's Degree; Public Relations Professional Studies at Vilnius University; Vilnius University, Diploma of a Specialist in Philology

Place of employment, position: Thermo Fisher Scientific Baltics UAB, company code 122351387. Address: V.A. Graičiūno st. 8 Vilnius, Director of Personnel. Association of Personnel Management Professional, company code 300563101, address J. Galvydžio st. 5, Vilnius, Member of the Board.

3. ANDRIUS PRANCKEVIČIUS, independent member (since 22/12/2017)

Education: Kaunas University of Technology, Bachelor's degree in Business Administration and Master's degree in Marketing Management; Harvard Business School, Leadership Development

Place of employment, position: Linas Agro Group AB, company code 148030011, address Smėlynės st. 2C, Panevėžys, Deputy Chief Executive Officer, Member of the Board; Kekava PF, Kekava, Kekavos r., Kekavos mun., Kekava PF, Chief Executive Officer and Chairman of the Board; Linas Agro AB, company code 147328026, address Smėlynės st. 2C, LT-35143 Panevėžys Member of the Board; Lielzeltini SIA,"Mazzeltiņi", Janeikas, Ceraukstes pag., Bauskas nov., Latvija Chairman of the Board; Broileks SIA, company code. 50103262981, address "Mazzeltiņi", Janeikas, Ceraukstes pag., Bauskas nov., LV Chairman of the Board; (Cerova SIA, company code 43603019946, address Bauskas nov., Ceraukstes pag., Mūsa, Centra iela 11, LV, Chairman of the Board; Žilvista ŽŪB, company code 302299020, address Panevėžio r. sav., Velžio mun., Staniūnų k., Paplentės g. 20 Member

4. DAIVA KAMARAUSKIENĖ, member (since 1/2/2019)

Education: Vilnius University Faculty of Economics, master's degree.

Place of employment, position: Ministry of Finances, company code 288601650, Lukiškių st., Vilnius, Budget Department of the Ministry of Finance, Director.

5. AUŠRA VIČKAČKIENĖ, member (since 30/08/2017)

Education: Vilnius University, Master's degree in Management and Business Administration; Vilnius University, Bachelor's degree in Management and Business Administration Place of employment, position: Ministry of Finances, company code 288601650, Lukiškių st., Vilnius, Assets Management Department, Finance, Director; Būsto paskolų draudimas UAB, company code 110076079, Ulonų st. 5 Vilnius, Member of the Board.

* This composition of the Supervisory Board is valid from 8 April 2020, when updated Articles of Association of the Company were registered. The selection of two additional candidates for the positions of an independent members of the Supervisory Board of the Company was announced on 31 July 2020. The deadline for application is 18

August 2020.

Committees of the Supervisory Board

In order to perform its functions and duties effectively the Company's Supervisory Board forms committees. The committees submit their conclusions, opinions and suggestions to the Company's Supervisory Board in accordance with their competence. The committee must have at least three members, where at least one member must be a member of the Supervisory Board and at least 1/3 of the members shall be independent, except for the Audit Committee, which must aim for at least 2/3 of the members to be independent. The members of the committees are elected for the period of four years.

The following committees of the Supervisory Board are operating:

− The Risk management and business ethics supervision committee is responsible for submission of conclusions and suggestions regarding management and control system in the group of companies and/or status of implementation of the main risk factors and risk management tools to the Supervisory Board; for compliance with business ethics, maintenance of bribery and corruption risk system and submission of recommendations to the Supervisory Board;
− The Audit committee is responsible for submission of objective and impartial conclusions and suggestions regarding audit, related party transactions, as provided in the Law on Companies of the Republic of Lithuania, and functioning of internal control system in the group of companies to the Supervisory Board;
− The Nomination and remuneration committee is responsible for submission of conclusions and suggestions about appointment, revocation of the members of management and supervisory bodies of the Group companies, and about incentive issues to the Supervisory Board, as well as for the evaluation of performance of the Board and its members and submission of appropriate opinion. The committee's functions also cover formation of common remuneration policy in the Group companies, determination of the size and composition of remuneration, incentive principles, etc.

If necessary, other committees may be formed according to the ad hoc principle (e.g., to solve special issues, to prepare, supervise or coordinate strategic projects, etc.). On the day when this report was announced, the committees of Risk management and business ethics supervision, Audit and Nomination and remuneration were operating in the Company. In addition, by the decision of the Supervisory Board, the Steering Committee of the Company's IPO has been formed from the representatives of the Company's shareholder, members of the Supervisory Board and the Board.

Composition of the Committees at the date of publication of the interim report is provided to the right. There were no changes in the composition of the Committees during the reporting period. None of the members of the Committees holds shares of the Group companies.

Detailed information on education, place of employment and position of the members of the Committees is provided in the annual report of the Company (link).

Members of the Risk Management and Business Ethics Supervision Committee

Committee member	Term of office
ANDRIUS PRANCKEVIČIUS Chairman, independent member	From April 2018 to April 2022
DARIUS DAUBARAS Independent member	From April 2018 to April 2022
ŠARŪNAS RAMEIKIS Independent member	From April 2018 to April 2022

The term of office of the current Risk Management and Business Ethics Supervision Committee will last until 23 April 2022.

Members of the Audit Committee

Committee member	Term of office
IRENA PETRUŠKEVIČIENĖ Chairwoman, independent member	From October 2017 to October 2021
DANIELIUS MERKINAS Independent member	From October 2017 to October 2021
ŠARŪNAS RADAVIČIUS Independent member	From May 2018 to October 2021
INGRIDA MUCKUTĖ Member	From May 2018 to October 2021
AUŠRA VIČKAČKIENĖ Member	From October 2017 to October 2021

The term of office of the current Audit Committee will last until 12 October 2021.

Members of the Nomination and Remuneration Committee

Committee member	Term of office
DAIVA LUBINSKAITĖ-TRAINAUSKIENĖ Chairwoman, independent member	From September 2017 to September 2021
LĖDA TURAI-PETRAUSKIENĖ Independent member	From March 2018 to September 2021
DAIVA KAMARAUSKIENĖ Member	From March 2019 to September 2021
AUŠRA VIČKAČKIENĖ Member	From September 2017 to September 2021

The term of office of the current Nomination and Remuneration Committee will last until 12 September 2021.

Management bodies

Board

The Board is a collegial management body provided for in the Articles of Association of the Company. The activities of the Board are regulated by the Law on Companies, its implementing legislation, the Guidelines for Corporate Governance of State-Owned Energy Group, the Articles of Association of the Company and the Rules of Procedure of the Board. During the reporting period, the rules governing the election of the members of the Board of the Company were not amended. The members of the Board are employees of the Company, they are elected by the Supervisory Board on the proposal of the Nomination and Remuneration Committee. The Board consists of 5 members and elects the Chairman, the CEO of the Company, from among its members.

The main functions and responsibilities of the Board include implementation of the strategy of the Group, financial management and reporting, performance management, assets, participation in other legal entities, making decisions on approval of significant transactions. The competence of the Board of the Company also includes decisions on the common rules and principles (policies, guidelines, recommendations) applicable to the Group, decisions related to the general interest of the Group, and achievement of its objectives, the structure of the Group and the issues of service activities.

The term of office of the current Board is from 1 February 2018 to 31 January 2022. There were no changes in the composition of the Company's Board during the reporting period. None of the Board members holds shares of the Group companies.

Members of the Board (at the date of publication of this report)

1. DARIUS MAIKŠTĖNAS, Chairman of the Board, CEO

Education: Harvard Business School, General Management Program; Baltic Management Institute, Executive MBA degree; Kaunas University of Technology, Bachelor's degree in Business Administration

Place of employment, position: AB Energijos Skirstymo Operatorius, company code 304151376, address Aguonų st. 24, Vilnius, Chairman and member of the Supervisory board, Eurelectric, member of the Board.

2. DARIUS KAŠAUSKAS, Member of the Board, Finance and Treasury Director

Education: ISM University of Management and Economics, Doctoral studies of Social Sciences in the field of Economics; ISM University of management and Economics, BI Norwegian Business School, Master's degree in Management; Vilnius University, Master's degree in Economics

Place of employment, position: UAB Duomenų Logistikos Centras, company code 302527488, address A.Juozapavičiaus st. 13 Vilnius, Chairman of the Board (until 07/07/2020); Lietuvos Energijos Paramos Fondas, company code K. 303416124, address Žvejų st. 14, Vilnius, Member of the Board; 288th DNSB Vingis, Member of the Revision Commission; AB Energijos skirstymo operatorius, company code 304151376, address Aguonų st. 24, Vilnius, Member of the Supervisory board.

3. VIDMANTAS SALIETIS, Member of the Board, Commerce and Services Director

Education: Stockholm School of Economics in Riga (SSE Riga), Bachelor's degree in Economics and Business

Place of employment, position: UAB Ignitis, company code 303383884, address: Žvejų st. 14, Vilnius Chairman and member of the Supervisory Board; UAB Elektroninių mokėjimų agentūra, company code 136031358, address Žvejų st. 14, Vilnius Member of the Board; NT Valdos, UAB company code 300634954, address P.Lukšio st. 5B, Vilnius, Chairman of the Board; UAB Gamybos Optimizavimas, company code 304972024, address Žvejų st. 14, Vilnius Member of the Board.

4. ŽIVILĖ SKIBARKIENĖ, Member of the Board, Organisational Development Director

Education: Mykolas Romeris University, Faculty of Law, Doctoral degree in Social Sciences Field of Law; Vilnius University, Faculty of Law, Master's degree in Law Place of employment, position:

UAB Ignitis grupės paslaugų centras, company code 303200016, address A. Juozapavičiaus st. 13, Vilnius,Chairwoman and member of the Board; UAB Elektroninių mokėjimų agentūra, company code 136031358, address Žvejų st. 14, Vilnius Member of the Board; AB Ignitis Gamyba, company code 302648707, address Elektrinės st. 21 Member of the Supervisory Board.

5. DOMINYKAS TUČKUS, Member of the Board, Infrastructure and Development director

Education: L. Bocconi University (Italy), Master's degree in Finance; L. Bocconi University (Italy), Bachelor's degree in Business Management and Administration Place of employment, position: AB Ignitis Gamyba, company code 302648707, address Elektrinės st. 21, Elektrėnai, Chairman and member of the Supervisory board; UAB Ignitis, company code 303383884, address: Žvejų st. 14, Vilnius Member of the Supervisory Board; UAB Vilniaus kogeneracinė jėgainė, company code 303782367, address Žvejų st. 14, Chairman and member of the Board; UAB Ignitis Renewables, company code 304988904, address P. Lukšio st. 5B, Vilnius, Member of the Board; Smart Energy Fund KŪB, powered by Ignitis Group, company code 304596351, address Antakalnio st. 17, Vilnius, Member of the Advisory Committee.

The Company's governance structure (at the end of the reporting period)

CEO is a single-person management body of the Company, who organizes, directs, acts on behalf of the Company and concludes transactions unilaterally, except as provided by the Law on Companies, its implementing legislation and the Articles of Association of the Company.

CEO

The competence of CEO, the procedure of appointment and removal, the terms of office shall be established by the Law on Companies, its implementing legislation, the Guidelines for Corporate Governance of State-Owned Energy Group and the Articles of Association of the Company. In accordance with the Guidelines for Corporate Governance of State-Owned Energy Group, the Chairman of the Board elected by the Board is appointed as CEO of the Company. It should be noted that CEO of the Company, as a state-owned enterprise, is also subject to the special recruitment features provided for in the Law on Companies, according to which the term of CEO is limited to 5 years. It is also stipulated that the same person may not be elected as CEO for more than two consecutive terms.

Remuneration

	Headcount at the end of the reporting period		Fixed monthly remuneration		Paid monthly share of annual variable remuneration
Employee category	The Company	The Group	The Company	The Group	The Company	The Group
Head of the company	1	16	9,532	5,551	2,902	1,812
Top level executives	10	33	7,028	6,022	2,050	1,631
Mid-level executives	24	372	5,073	3,421	629	365
Experts, specialists	52	2598	2,949	1,844	243	105
Workers	-	750	-	1,256	-	116
Average	87	3,769	3,984	1,934	585	152

Number and average monthly remuneration of the employees of the Company and the Group during the reporting period (before taxes, Eur)

Supervisory and management bodies of the listed companies

The supervisory and management structure of the subsidiaries of the Group companies is formed considering the activities of a particular company, stock managers, legal status and other aspects. The rule is that the managing and supervisory bodies of the subsidiaries must be optimal, they must ensure the implementation of the interests of the Company as a shareholder, of other shareholders and of stakeholders, and must comply with the international and national best practices on corporate governance.

Listed companies of the Group companies are subject to the management model with the collegial supervisory body - the Supervisory Board (by including the independent member(s) and the shareholders' representatives, as well as, if necessary, and employee representative(s)), and with the collegial managing body – the Board of the Employees of the company.

As at 30 June 2020, the Supervisory Board of ESO consisted of the following members (term of office till 29 March 2022):

Full name	Participation in the capital of the Company and Group companies,%	Term of office	Place of employment
Darius Maikštėnas		From 30/03/2018 to
Chairman	-	29/03/2022	Ignitis Group, Chairman of the Board, CEO
Darius Kašauskas		From 30/03/2018 to
Member	-	29/03/2022	Ignitis Group, member of the Board Finance and Treasury Director
Kęstutis Betingis		From 28/05/2018 to
Independent member	-	29/03/2022	Betingio ir Ragaišio Lawyer Firm, attorney at law
Žaneta Kovaliova		From 15/10/2019 to
Independent member	-	29/03/2022	UP Consulting Group Ltd, CEO
Dalia Jakutavičė		From 15/10/2019 to	Deputy Chairwoman of the Lithuanian Energy Workers' Trade Union
Employee representative, Member	-	29/03/2022	Federation

During the reporting period, there were no changes in the composition of the Supervisory Board of ESO.

➔ Contents

As at 30 June 2020, the Board of ESO consisted of the following members (term of office till 26 December 2022):

Full name	Participation in the capital of the Company and Group companies,%	Term of office	Place of employment
Mindaugas Keizeris		From 27/12/2018 to
Chairman	-	26/12/2022	ESO, CEO
Augustas Dragūnas		From 27/12/2018 to
Member	-	26/12/2022	ESO, Director of Finance and Administration
Virgilijus Žukauskas		From 27/12/2018 to
Member	-	26/12/2022	ESO, Director of Network Operations
Ovidijus Martinonis		From 27/12/2018 to
Member	-	26/12/2022	ESO, Director of Network Development
Renaldas Radvila		From 27/12/2018 to
Member	-	26/12/2022	ESO, Director of the Services

During the reporting period, there were no changes in the composition of the Board of ESO.

As at 30 June 2020, the Supervisory Board of Ignitis Gamyba, consisted of the following members (term of office until 25 March 2022):

Full name	Participation in the capital of the Company and Group companies,%	Term of office	Place of employment
Dominykas Tučkus	-	From 26/03/2018 to	Ignitis Group, member of the Board, Infrastructure and Development
Chairman		25/03/2022	Director
Živilė Skibarkienė	-	From 26/03/2018 to	Ignitis Group, member of the Board, Organisational Development Director
Member		25/03/2022
Edvardas Jatautas Independent member	-	From 26/07/2019 to 25/03/2022	Profectus Novus UAB owner, Chairman of the Board; Addendum Group Inc., founder, President; Addendum Solutions UAB founder, member of the Board. Lithuanian American Business Association in Los Angeles, member of the Board SIA Addendum LV founder, member of the Board. OU Addendum EE founder, member of the Board.

During the reporting period, there were no changes in the composition of the Supervisory Board of Ignitis Gamyba.

As at 30 June 2020, the Board of Ignitis Gamyba, consisted of the following members (term of office until 2 April 2022):

Full name	Participation in the capital of the Company and Group companies,%	Term of office	Place of employment
Rimgaudas Kalvaitis		From 27/03/2019 to
Chairman	-	02/04/2022	Ignitis Gamyba, CEO
Darius Kucinas		From 03/04/2018 to
Member	-	02/04/2022	Ignitis Gamyba, Director of Production
Mindaugas Kvekšas*		From 03/04/2018 to
Member	-	02/04/2022	Ignitis Gamyba, Director of Finance and Administration

During the reporting period, there were no changes in the composition of the Board of Ignitis Gamyba.*On 7 August 2020, Ignitis gamyba received a notice of resignation from M. Kvekšas, The last day of his office on the Board of Ignitis gamyba is 21 August, 2020, and in the position of the Director of Finance and Administration - 27 August 2020.

ESG Disclosure

About ESG disclosure

The following report broadly follows the indicator structure recommended by most common sustainability reporting frameworks. The underlying structure has been derived from the Nasdaq ESG Reporting Guide and additional indicators have been added based on materiality and best-fit for the Group's activities and purpose. Where possible, the report includes references to other reporting frameworks such as the Global Reporting Initiative (GRI), the Sustainability Accounting Standards Board (SASB), the Task Force on Climate-Related Financial Disclosures (TCFD) or states relevance to specific UN Sustainable Development Goals (SDGs) or principles of the UN Global Compact (UNGC).

The ESG indicator data provided in the following report has not been externally verified and represents the best available estimates at the point of disclosure. Additionally, as indicated throughout the report, some indicator values are of preliminary nature and will be updated once more information is available.

Definition of terms used below: "Group" or "Ignitis Group" – the holding company AB Ignitis Grupė and its subsidiaries; "Company" – the holding company AB Ignitis Grupė.

ESG indicator list

Environmental indicators	In line with Nasdaq ESG reporting guide	Social indicators	In line with Nasdaq ESG reporting guide	Corporate governance indicators	In line with Nasdaq ESG reporting guide
1. GHG emissions	Yes	13. CEO Pay Ratio	Yes	26. Board Diversity	Yes
2. Emissions to Air	Added by Company	14. Gender Pay Ratio	Yes	27. Board Independence	Yes
3. Emissions Intensity	Yes	15. Employee Turnover	Yes	28. Incentivized Pay	Yes
4. Energy Usage	Yes	16. Gender Diversity	Yes	29. Collective Bargaining	Yes
5. Energy Intensity	Yes	17. Temporary Worker Ratio	Yes	30. Supplier Code of Conduct	Yes
6. Energy Mix	Yes	18. Non-Discrimination	Yes	31. Ethics & Anti-Corruption	Yes
7. Water Usage	Yes	19. Injury Rate	Yes	32. Data Privacy	Yes
8. Waste Management	Added by Company	20. Global Health & Safety	Yes	33. ESG Reporting	Yes
9. Environmental Operations	Yes	21. Child & Forced Labor	Yes	34. Disclosure Practices	Yes
10. Climate Oversight / Board	Yes	22. Human Rights	Yes	35. External Assurance	Yes
11. Climate Oversight / Management	Yes	23. Staff Benefits	Added by Company	36. Bonds	Added by Company
12. Climate Risk Mitigation	Yes	24. Training	Added by Company	37. Tax	Added by Company
		25. Client and Employee Relations	Added by Company

Environmental Indicators

1. Greenhouse Gas Emissions*		H1 2020	H1 2019
Scope 1	t CO2 eq	130,491**	11,466
Scope 2 (location-based)	t CO2 eq	70,494	39,227
Scope 2 (market-based)	t CO2 eq	199,501	110,712
Scope 3	t CO2 eq	5,814***	26,365
Biomass	t CO2 eq	32,586	38,551

E1 | UNGC: P7 | GRI 305-1,305-2,305-3 | SASB: General Issue / GHG Emissions | TCFD: Metrics & Targets *Not a final result; final value will be specified in future disclosures.

**With the expansion of the scope of system services this year and favorable conditions in the electricity and gas markets, electricity production in the Elektrėnai Complex managed by Ignitis Gamyba is much more intensive this year compared to 2019.

***The reduction in emissions is due to the sale of real estate objects by the company NT Valdos.

2. Emissions to Air		H1 2020	H1 2019
NOx	t	163.61*	61.86
CO	t	83.64	80.10
SO2	t	3.28	2.90
Dust	t	10.05	10.46

*NO^x increased due to higher production from natural gas.

3. Emissions Intensity*		H1 2020	H1 2019
GHG emissions per megawatt-hour consumed	t CO2 eq/GJ	0.043	0.051
GHG emissions per full-time (FTE) employee	t CO2 eq/FTE	55	21
GHG emissions per unit of revenue	t CO2 eq/EURm	350	138

E2 | UNGC: P7, P8 | GRI 305-4 | SDG: 13 | SASB: General Issue / GHG Emissions, Energy Management

*Not a final result; final value will be specified in future disclosures.

4. Energy Usage		H1 2020	H1 2019
Total energy consumption	GJ	4,755,400	1,522,169
Of which energy from natural gas	GJ	2,588,747*	173,299
Of which energy from biomass	GJ	237,965	255,089
Of which energy from petrol	GJ	4,079	6,216
Of which energy from diesel	GJ	33,777	36,382
Of which energy from electricity	GJ	1,880,258	1,041,882
Of which energy from heating	GJ	10,573	9,302
Direct Energy Consumption	GJ	2,864,568	470,986
Indirect Energy Consumption	GJ	1,890,832	1,051,183

E3 | UNGC: P7, P8 | GRI 302-1, 302-2 | SDG: 12 | SASB: General Issue / Energy Management

*Energy usage of fossil fuel increased due to higher production from natural gas.

5. Energy Intensity		H1 2020	H1 2019
Energy per full-time (FTE) employee	GJ/FTE	1,262	414
Energy per unit of revenue	GJ/EURm	8,048	2,729

E4 | UNGC: P7, P8 | GRI 302-3 | SDG: 12 | SASB: General Issue / Energy Management

6. Energy Mix		H1 2020	H1 2019
Fossil Fuel	%	95*	83
Renewable Energy	%	5	17

E5 | GRI 302-1 | SDG: 7 | SASB: General Issue / Energy Management

*Energy usage of fossil fuel increased due to higher production from natural gas.

7. Water Usage		H1 2020	H1 2019
From water supply network	m³	22,448*	77,486
From own boreholes	m³	12,702	10,993
Surface water	million m³	4,610	4,566
Of which water usage for electricity generation in Kruonis PSHP	million m³	1,491	836
Wastewater	m³	343,068	489,031
Of which surface wastewater	m³	300,925	445,055

E6 | GRI: 303-5 | SDG: 6 | SASB: General Issue / Water & Wastewater Management

*The decrease is due to the sale of real estate objects by the company NT Valdos and the subsequent reduction of water consumption.

8. Waste Management		H1 2020	H1 2019
Total waste generated	t	3,607	5,561*
Of which municipal waste	t	221	320*
Of which non-hazardous waste	t	1,297	1285*
Of which iron and steel waste	t	1,819	3591*
Of which hazardous waste	t	270	365*
*Estimated from annual amount, so H1 2020 and H1 2019 data may not be directly compared.

9. Environmental Operations		H1 2020	H1 2019
Does your Group follow a formal Environmental Policy?	Yes/No	Partially*	Partially*
Does your Group follow specific waste, water, energy, and/or recycling policies?	Yes/No	No	No
Does your company use a recognized energy management system?	Yes/No	No	No

E7 | GRI: 103-2 | SASB: General Issue / Waste & Hazardous Materials Management

*The largest Group companies Ignitis Gamyba and ESO have Environmental Policies. Policy for the whole Group was approved on August 17, 2020.

10. Climate Oversight / Board		H1 2020	H1 2019
Does your Management Board oversee and/or manage climate-related risk?	Yes/No	Yes	Yes

E8 | GRI: 102-19, 102-20, 102-29, 102-30, 102-31 | SASB: General Issue / Business Model Resilience, Systematic Risk Management | TCFD: Governance (Disclosure A)

11. Climate Oversight / Management		H1 2020	H1 2019
Does your Senior Management Team oversee and/or manage climate-related risks?	Yes/No	Yes	Yes

E9 | GRI: 102-19, 102-20, 102-29, 102-30, 102-31 | SASB: General Issue / Business Model Resilience, Systematic Risk Management | TCFD: Governance (Disclosure B)

Social Indicators

13. CEO Pay Ratio		H1 2020	H1 2019
CEO Salary & Bonus (X) to median FTE Salary	X:1	8.32:1*	7.49:1*

S1 | UNGC: P6 | GRI 102-38

*Average of quarters; final value will be specified in future disclosures.

14. Gender Pay Ratio		H1 2020	H1 2019
Median total compensation for men (X) to median total compensation for women	X:1	1.11:1*	1.10:1*

S2 | UNGC: P6 | GRI: 405-2 | SASB: General Issue / Employee Engagement, Diversity & Inclusion

*Average of quarters; final value will be specified in future disclosures.

15. Employee Turnover		H1 2020	H1 2019
Change over period for full-time employees	%	1.8*	2.6*
Change over period for part-time employees	%	14*	21*
Change over period for contractors and/or consultants	%	8.1*	14.65*

S3 | UNGC: P6 | GRI: 401-1b | SDG: 12 | SASB: General Issue / Labor Practices

*Average of quarters; final value will be specified in future disclosures.

16. Gender Diversity		H1 2020	H1 2019
Total Group headcount held by men and		Women – 28	Women – 28
women	%	Men – 72	Men – 72
Worker-level positions held by men and	%	Women – 1	Women – 1
women		Men – 99	Men – 99
Specialist-level positions held by men		Women – 35	Women – 35
and women	%	Men – 65	Men – 65
Mid-level positions held by men and		Women – 32	Women – 30
women	%	Men – 68	Men – 70
Senior-level positions held by men and	%	Women – 21	Women – 21
women		Men – 79	Men – 79
Executive-level positions held by men		Women – 19	Women – 18
and women	%	Men – 81	Men – 82

S4 | UNGC: P6 | GRI: 102-8, 405-1 | SASB: General Issue / Employee Engagement, Diversity & Inclusion

12. Climate Risk Mitigation		H1 2020	H1 2019
Total annual investment in climate-related infrastructure, resilience, and product development:
Green generation	EURm	130.4	107.5
Upgrading of electricity networks	EURm	10.4	25.5

E10 | UNGC: P9 | SASB: General Issue / Physical Impacts of Climate Change, Business Model Resilience | TCFD: Strategy (Disclosure A)

17. Temporary Worker Ratio		H1 2020	H1 2019
Total headcount held by part-time employees	%	0.87*	1.65
Total headcount held by contractors and/or consultants	%	1.70*	2.42*

S5 | GRI: 102-8 | UNGC: P6

*Average of quarters; final value will be specified in future disclosures.

18. Non-Discrimination		H1 2020	H1 2019
Does your Group follow a sexual harassment and/or non-discrimination policy?	Yes/No	Yes	Yes

S6 | UNGC: P6 | GRI: 103-2 (see also: GRI 406: Non-Discrimination 2016)|SASB: General Issue / Employee Engagement, Diversity & Inclusion

19. Injury Rate		H1 2020	H1 2019
Total number of employee injuries and fatalities	unit	Injuries – 2 Fatalities – 0	Injuries – 25 Fatalities – 0
Total number of contractor injuries and fatalities	unit	Injuries – 0 Fatalities – 1	Injuries – 3 Fatalities – 0
Total number of resident injuries and fatalities	unit	Injuries – 2 Fatalities – 0	Injuries – 2 Fatalities – 1

S7 | GRI: 403-9 | SDG: 3 | SASB: General Issue / Employee Health & Safety

20. Global Health & Safety	H1 2020	H1 2019
Does your Group publish and follow an occupational health and/or global health Yes/No & safety policy	Yes	Yes

S8 | GRI: 103-2 (See also: GRI 403: Occupational Health & Safety 2018)|SDG: 3|SASB: General Issue / Employee Health & Safety

21. Child & Forced Labor		H1 2020	H1 2019
Does your Group follow a child labor policy?	Yes/No	Yes	Yes
Does your Group follow a forced labor policy?	Yes/No	Yes	Yes
If yes, does your child and/or forced labor policy cover suppliers and vendors?	Yes/No	No	No

S9 | GRI: 103-2 (See also: GRI 408: Child Labor 2016, GRI 409: Forced or Compulsory Labor, and GRI 414: Supplier Social Assessment 2016) |UNGC: P4, P5 | SDG: 8 | SASB: General Issue / Labor Practices

22. Human Rights		H1 2020	H1 2019
Does your Group publish and follow a human rights policy?	Yes/No	Yes	Yes
If yes, does your human rights policy cover suppliers and vendors?	Yes/No	No	No

S10 | GRI: 103-2 (See also: GRI 412: Human Rights Assessment 2016 & GRI 414: Supplier Social Assessment 2016 ) |UNGC: P1, P2 | SDG: 4, 10, 16 | SASB: General Issue / Human Rights & Community Relations

Additional benefits provided to the
Supplemental pension
employees
scheme, supplemental
health insurance, remote
working, financial and social
assistance, employee
referral bonuses, two days
of sick leave without a
medical certificate (further
leave granted automatically
with a medical certificate)
and paid at 100% (further
compensation according to
national legislation),
additional paid holidays,
flexible working hours,
training and continuous
professional development,
cultural and sporting
activities.

➔ Contents

24. Training		H1 2020	H1 2019
Average training hours per employee trained	Hours	6*	5*
New trainees during period	Unit	8	19
Training and education programs		Compliance training and various development sessions and programs to improve general, vocational and managerial competencies focusing, on leadership development, team building, change management, business process & project management.

*Not a final result; final value will be specified in future disclosures.

25. Clients and Employees relations		H1 2020	H1 2019
Customer Satisfaction Score of ESO service (rating scale from 1 to 10)	Unit	9.1*	9.25*
ESO Net Promoter Score (rating scale from 0 to 100)	%	59*	-
Ignitis Transaction Net Promoter Score (rating scale from 0 to 100)	%	62.6*	51*
Ignitis Relationship Net Promoter Score (rating scale from 0 to 100)	%	61**	-
Employee Net Promoter Score (rating scale from 0 to 100)	%	54.2	16

*Average of quarters; final value will be specified in future disclosures.

**Total B2C and B2B. The survey was carried out in March 2020.

Corporate Governance Indicators

26. Board Diversity		H1 2020	H1 2019
Total Management Board seats occupied by women (as compared to men)	%	20	20
Total Supervisory Board seats occupied by women (as compared to men)	%	60	60
Committee Chairs occupied by women	%	67	67

G1 | GRI 405-1 | SDG: 10 | SASB: General Issue / Employee Engagement, Diversity & Inclusion (See also: SASB Industry Standards)

27. Board Independence		H1 2020	H1 2019
Does the company prohibit CEO from serving as Management Board chair?	Yes/No	No	No
Total Management Board seats occupied by independents	%	0*	0*
Total Supervisory Board seats occupied by independents	%	71**	60
Audit Committee meet the criteria of independence	Yes/No	Yes	Yes

Yes/No	Yes	Yes
Yes/No	Yes	Yes
Yes/No	Yes	Yes
Year	3.73	2.73
Year	2.50	1.50
%	0	0
%	0	0

*The Company has a two-tier corporate governance system. Management board is composed of 5 executive directors who are employees of the Company. Independent members are elected only to the Supervisory Board. See more in the Guidelines for Corporate Governance (link).

**On April 8, 2020 the updated Articles of Association of the Company were registered and a total number of Supervisory Board members was changed from 5 to 7. Accordingly the selection procedure of two new independent Supervisory Board members was initiated.

28. Incentivized Pay		H1 2020	H1 2019
Are executives formally incentivized to perform on sustainability	Yes/No	Yes	Yes

G3 | GRI: 102-35

29. Collective Bargaining		H1 2020	H1 2019
Total enterprise headcount covered by collective bargaining agreements to the total employee population	%	73	73
Percentage of employees unionized in ESO	%	27*	30*
Percentage of employees unionized in Ignitis Gamyba	%	61*	61*

G4 | UNGC: P3 | SDG: 8 |GRI: 102-41 | SASB: General Issue / Labor Practices (See also: SASB Industry Standards)

*11 trade unions operate in the Group. These unions were founded by the employees of ESO and Ignitis Gamyba, two largest companies of the Group. Annual measurement.

30. Supplier Code of Conduct		H1 2020	H1 2019
Are your vendors or suppliers required to follow a Code of Conduct	Yes/No	Partially*	No
If yes, what percentage of your suppliers have formally certified their compliance with the code	%	n. d.**	n. d.**

G5 | UNGC: P2, P3, P4, P8 | GRI: 102-16, 103-2 (See also: GRI 308: Supplier Environmental Assessment 2016 & GRI 414: Supplier Social Assessment 2016|SDG: 12|SASB General Issue / Supply Chain Management (See also: SASB Industry Standards)

*There is a Code of Ethics. In 2021, it is planned to prepare a Supplier Code of Conduct. **Data collection is foreseen for 2021, once the Supplier Code of Conduct is in force.

31. Ethics & Anti-Corruption		H1 2020	H1 2019
Does your Group y follow an Ethics and/or Anti-Corruption policy?	Yes/No	Yes	Yes
If yes, what percentage of your workforce has formally certified its compliance with the policy?	%	99*	99*

G6 | UNGC: P10 | SDG: 16 | GRI: 102-16, 103-2 (See also: GRI 205: Anti-Corruption 2016)

*Accurate data is available only for the Company. 99% of the workforce of the Company has formally certified their compliance with the Anti-Corruption policy and 76% with the Code of Ethics.

32. Data Privacy		H1 2020	H1 2019
Does your Group follow a Data Privacy policy?	Yes/No	Yes	Yes
Has your company taken steps to comply with GDPR rules?	Yes/No	Yes	Yes

G7 | GRI: 418 Customer Privacy 2016 | SASB: General Issue / Customer Privacy, Data Security (See also: SASB Industry Standards)

33. ESG Reporting		H1 2020	H1 2019
Does your Group publish a sustainability report?	Yes/No	Yes	Yes
Is sustainability data included in your regulatory filings?	Yes/No	Yes	Yes
G8 UNGC: P8
34. Disclosure Practices		H1 2020	H1 2019
Does your Group provide sustainability data to sustainability reporting frameworks?	Yes/No	Yes	Yes
Does your Group focus on specific UN Sustainable Development Goals (SDGs)?	Yes/No	Yes	Yes
Does your Group set targets and report progress on the UN SDGs?	Yes/No	No	No
G9 UNGC: P8
35. External Assurance		H1 2020	H1 2019
Are your sustainability disclosures assured or validated by a third party?	Yes/No	No	No
G10 UNGC: P8 GRI: 102-56
36. Bonds		H1 2020	H1 2019
Cumulative bonds	EURm	900	600
Cumulative green bonds	EURm	600	600
Avoided emissions from allocated green bonds	t CO2 eq	n. d.	143,440*
*Annual measurement.
37. Tax		H1 2020	H1 2019

Global tax paid	EURm	127.7*	89.3*
Tax paid in Lithuania	EURm	122.6	83.1
EU emissions trading system	EURm	n. d	0.880**
Resource tax	EURm	0.056	0.056

*Including dividends.

**Annual amount.

People

There have been 3,799 employees as of 30 June 2020 (number of employment contracts excluding long-term leave, "headcount"). Compared to the end of Q2 2019 (3,705) the number of employees mainly increased due to the development of the green energy segment and the start-up of the Vilnius CHP.

87 employees worked ("headcount") in the Company on 30 June 2020 (95 on 30 June 2019). The decrease was mainly due to the part of employees being transferred to the Group subsidiary company – Ignitis Grupės Paslaugų Centras.

Employee diversity

Group provides employment opportunities not dependent on gender, age, race, nationality etc. which is emphasized during the staff selection process.

In Q2 2020, males accounted to 72% and females for 28% of total Group employees. There have been 65% males and 35% females' specialists. The gender distribution within middle level managers is similar – males accounted for 67% and females for 33%. These figures have not significantly changed compared to 2019.

Distribution by age

The Group offers employment opportunities for people of all ages. The biggest group of the Group companies' employees are in the age range from 37 to 56 years (~48% of total employees), followed by the age group from 17 to 36 years (34% of total employees). The smallest group (18%) include employees in the age group from 57 to 76 years.

Number of Group employees as of 30 June 2020

Company	Total number of employees*
Energijos Skirstymo operatorius	2,403
Ignitis Grupės Paslaugų Centras	465
Ignitis Gamyba	354
Ignitis	273
Ignitis Grupė	87
Vilnius CHP	72
Kaunas CHP	34
Transporto valdymas	24
Energetikos Paslaugų ir Rangos Organizacija	17
Duomenų Logistikos Centras**	15
Ignitis Polska	12
Ignitis Latvija	11
Ignitis Renewables	8
Gamybos Optimizavimas	7
Elektroninių Mokėjimų Agentūra	5
NT Valdos	3
Pomerania	3
Ignitis Eesti	1
Eurakras	1
Vėjo Gūsis	1
Vėjo Vatas	1
VVP Investment	1
Tuuleenenergia	1
Total	3,799

* In the interim report number of employees refers to the headcounts

**After the reporting period, Duomenų Logistikos Centras has been sold.

Culture of organisation

The Group has a strong focus on its people, and a key part of its strategy at the organisational level is maintaining an engaged, agile and constantly developing workforce, dedicated to its customers and passionate about innovation. The Group seeks diversity in skills and competencies to provide it with unique perspectives, while also empowering its teams for speed, flexibility and innovation. The Group aims to foster new and different models of collaboration in order to create an energy smart world, with its workforce able to adapt to different approaches of developing core and new energy competencies. This strategy is supported by the Group's training system, which enables a constantly growing organisation and the personal development of its staff.

Human rights and equal opportunities

In the provision of its services and activities in different communities, the Group operates in accordance with the principles of the protection of human rights, promotes and respects international protection of human rights in its sphere, and ensures that it does not contribute to violations of human rights and advocates any violation thereof.

The Group implements a fair and transparent remuneration policy, complies with the laws governing overtime and working hours, opposes any discrimination (with regard to employees or during employment) and forced or child labour, respects the right of employees to rest, and promotes work-family balance.

The Group has implemented a Code of Conduct which defines the principles and standards of business ethics, conduct and values which the Group expects each of its stakeholders to adhere to. The key principles are respect and equal opportunities, promoting a culture of safe work and environment, open and fair activities in the market, responsibility and transparency, and

enabling and protecting partnerships. The Group also has a few other policies that apply to all stakeholders including the Anti-Corruption Policy, Gifts and Entertainment Interest Management Procedures and the Rules on the Trust Line (whistleblowing). Management Procedures, Conflicts of

The Code of Ethics and Equal Opportunities Policy, applicable to the entire Group, provides the principles of equal opportunities throughout the Group, measures for their implementation and describes the procedure for reporting and dealing with equal opportunities violations Reports of human rights, equal opportunities or other violations may be made directly to the head of the Company's Human Resources Department may be notified of discrimination of equal opportunities directly by email or via the Trust Line by e-mail [email protected] or by leaving a message on the answering machine +370 640 88889. In Q1 2020, no reports discrimination or other incidents related to human rights violations have been received in Group companies.

Occupational health and safety

The Group has been dedicating significant attention to developing the health and safety culture at the working places and strengthening the responsibility of the employees. The Group has approved its 'Occupational Health and Safety Policy' (OHS) designed to build safety culture in the Company based on personal responsibility and cooperation. The highest-level managers are responsible for a safe and healthy working environment, and safety culture is perceived as a component of the organisational culture.

During Q2 2020, there were no fatal incidents neither involving Group employees nor contractors. There was one light disruption of health involving ESO employee. Major risk factor during Q1 and Q2 was related to COVID -19 pandemic. In order to mitigate the risk, Group has appointed crisis coordinators in each company and Group global crisis management team to coordinate COVID response and preventative actions to ensure health and safety and business continuity. Since the end of February there were 3 COVID cases for Group employees, preventative isolation has been invoked for 110 employees. Group acquired 93k of respirators, 99k of masks, 4k gloves, 18k litres of disinfectant. During the lockdown, 2300 (out of 3777) Group employees were working remotely, to insure that a VPN access has been expanded. In order to get ready for the second wave a 6-week PPE reserve has been formed for each company of the Group.

Atsakomybė Partnerystė Atvirumas Tobulėjimas

Annexes

Other important information	52
Material events of the Company	53
Glossary	55

➔ Contents

Other important information

The Interim Report provides information to the shareholders, creditors and other stakeholders of AB "Ignitis grupė" (hereinafter "Ignitis Group" or the "Company") about the Company's and its controlled companies, which altogether are called Group of companies (hereinafter and the "Group") operations for the period of January-June, 2020.

The Interim Report has been prepared by the Company's Administration in accordance with the Lithuanian Law on Companies, the Lithuanian Law on Consolidated Financial Reporting.

The Company's management is responsible for the information contained in the Interim Report. The report and the documents, on the basis of which it was prepared, are available at the head office of the Company (Žvejų g. 14, Vilnius), on working days from Mondays through Thursdays from 7.30 a.m. To 4.30 p.m., and on Fridays from 7.30 a.m. to 3.15 p.m. (by prior arrangement).

All public announcements, which are required to be published by the Company according to the effective legal acts of the Republic of Lithuania, are published on the Company's website (www.ignitisgrupe.lt) and the website of Nasdaq Vilnius stock exchange (www.nasdaqbaltic.com).

Significant arrangements

The Company was not a party to any significant arrangements that would take effect, be amended or terminated in the event of changes in the Company's control situation.

There were no arrangements between the Company and the members of its management bodies or its employees that would provide for payment of termination benefits in the event of their resignation or dismissal without a valid reason or in the event of termination of their employment t as a result of changes in the Company's control situation.

Detrimental transactions

No detrimental transactions were concluded during the reporting period on behalf of the Company (transactions that are not consistent with the Company's objectives or usual market terms and conditions, infringe interests of the shareholders or other stakeholders etc.), which had or potentially may have a negative impact on the Company's performance and/or results of operation, nor were any transactions concluded resulting in conflict of interests between the responsibilities of the Company's management, majority shareholders or other related parties against the Company and their own private interests and/or other responsibilities.

The main attributes of the internal control and risk management systems involved in the preparation of the consolidated financial statements

The Company's financial statements are prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU.

The employees of the company from which the Company outsources the accounting functions, make sure that the financial statements are prepared properly, and that all data are collected in a timely and accurate manner. The preparation of the Company's financial statements, internal control and financial risk management systems, legal acts governing compilation of the financial statements are monitored and managed.

Information about audit

On 25 February 2019, General Meeting of Shareholders of the Company adopts decision regarding the election of the audit company for the audit of the Company's and its subsidiaries financial and consolidated financial reports and the terms of remuneration for the audit services (UAB "Ernst & Young Baltic" was elected as the audit company for the audits of financial reports of the Company and its subsidiaries for the period of 2019-2021). Sum of 2019 annual audit services of the Company and its subsidiaries financial and consolidated financial reports amounted to 299,991.67 EUR (VAT excluded).

Other agreements with auditors

The Company has not entered any additional arrangements with the entity that audited its financial statements.

Material events of the Company

During the reporting period (H1 2020)

30 June	The Company will be converted into public limited liability company
30 June	Regarding the conclusion of a long-term financing agreement with ESO
30 June	Preliminary financial data of the Group for 5 months of 2020
19 June	The Group publishes an updated long-term corporate strategy and the 2020-2023 strategic plan
8 June	Regarding the sale of the shares of Duomenų logistikos centras, a subsidiary of the Company
29 May	Preliminary financial data of the Group for 4 months of 2020
29 May	The results of the Group in Q1 2020: adjusted EBITDA growth was driven by investments in distribution network; group's revenue from foreign countries increased by 39 percent
22 May	The Company listed new bond emission on the AB Nasdaq Vilnius Stock Exchange
21 May	Regarding decisions to delist the shares of ESO and Ignitis Gamyba from the Nasdaq Vilnius Stock Exchange
18 May	Regarding the beginning of the processes of mandatory buyout of shares of ESO and Ignitis Gamyba
14 May	The Company issued bonds of value EUR 300 million
11 May	The Company plans an issue of bonds
11 May	The Company retained BBB+ credit rating
8 May	Correction: The Company's annual information for the year 2019
8 May	Summary of the Company's webinar
8 May	The Company's annual information for the year 2019
8 May	Regarding the resolutions of the Ordinary General Meeting of the Shareholders of the Company
7 May	The Company holds a Webinar regarding the financial results for the year 2019
7 May	Reminder of a Webinar regarding the financial results for the year 2019 of the Company
5 May	The Bank of Lithuania approved the prices at which Ignitis Grupė will offer the buy-out of ESO and Ignitis Gamyba shares
4 May	Ignitis Group will hold an Investor Conference Webinar to introduce the financial results for the year 2019
30 April	Preliminary financial data of Ignitis Group for 3 months of 2020
23 April	Regarding the end of the Company's official tender offers for shares of ESO Ignitis Gamyba
22 April	Regarding the Company's consolidated annual report for 2019, consolidated and separate financial statements and profit (loss) distribution project
20 April	Correction: Reporting dates of Ignitis Group in 2020
16 April	Regarding conclusion of a credit agreement with Swedbank, AB
10 April	Correction: Reporting dates of the Company in 2020
8 April	The number of members of the Supervisory Board is changed in the Company
2 April	The start of the official tender offer for shares of ESO and Ignitis Gamyba
31 March	Preliminary financial data of the Company for 2 months of 2020
31 March	Regarding approval of the official tender offer circulars of ESO and Ignitis Gamyba shares
27 March	The number of members of the Supervisory Board will be increased in the Company
23 March	The Company will start preparation for its initial public offering
19 March	Courts approved waivers of claims of minority shareholders of ESO and Ignitis Gamyba
18 March	The Government approved the conversion of The Company and the increase of share capital

17 March	The Company and minority shareholders of its subsidiaries ESO and Ignitis Gamyba reached a settlement
10 March	Financing contract for the Pomerania wind farm project is signed
5 March	Correction: Reporting dates of The Company in 2020
28 February	Preliminary financial data of The Company for 1 month of 2020
28 February	In 2019 , the year of transformation, The Company improved its financial indicators
28 February	Regarding recommendation of the working group set up by the Ministry of Finance and the proposal to approve the actions authorizing to prepare for the initial public offering of shares of the Company
25 February	Regarding financing contracts for the Pomerania wind farm project
31 January	Correction: Preliminary financial results of the Company for 12 months of 2019
31 January	Preliminary financial results of the Company for 12 months of 2019
10 January	Regarding the information submitted to the Bank of Lithuania about official tender circulars of subsidiaries shares
8 January	Regarding the decision to appeal the judgement
6 January	Regarding the decision to appeal the judgement
3 January	Regarding the decision of the Court

After the reporting period

20 August	Regarding the decision to appeal the judgement
19 August	Regarding the completed process of mandatory buyout of shares of Ignitis Gamyba
13 August	Correction: Regarding Group consolidated annual report for 2019, consolidated and separate financial statements and profit (loss) distribution project
12 August	Regarding the claim brought before the Court and the temporary protection measures applied
6 August	Regarding the pre-emptive right of the minority shareholders of Ignitis Gamyba and ESO to acquire the shares of the Company during planned initial public offer
4 August	Regarding the claim brought before the Court
31 July	Preliminary financial data of the Group for 6 months of 2020
30 July	Selection for vacant positions of independent members of the Supervisory Board of the Company is announced
28 July	UAB Ignitis Grupė is converted to AB Ignitis Grupė
23 July	The Ministry of Finance submitted for consideration draft resolutions regarding the amount of dividends of the Company
14 July	Regarding the granting a loan from the Company to Ignitis Renewables
8 July	Regarding the granting a loan from the Company to Ignitis
7 July	Regarding the completion of the sale of the shares of Duomenų logistikos centras, a subsidiary of the Company
1 July	Regarding the Investor's Letter of the Company

Glossary

%	Per cent
000 / k	Thousand
AB	Joint stock company
B2B	Business to business
B2C	Business to consumer
BICG	Baltic Institute of Corporate Governance
bn	Billion
c.d.	Calendar days
CCGT	Combined Cycle Gas Turbine Plant
CO2	Carbon dioxide
CHP	Combined heat and power
Customers of independent suppliers	Electricity users who have selected an independent electricity supplier as their supplier
E	Electricity
EA	Emission allowances
Electricity generated	Electricity sold in wind farms, solar power plants, biofuel plants, CHP plants, hydropower plants (including Kruonis pumped storage power plant) and electricity sold in Elektrėnai Complex
Electricity sales in retail market	Amount of electricity sold in Lithuania (B2C, B2B and guaranteed customers) and in Latvia
Electricity sales in wholesale market	Proprietary trading in wholesale market in Poland
Energijos Tiekimas	Energijos Tiekimas UAB
Enerpro	UAB Energetikos paslaugų ir rangos organizacija
eNPS	Employee Net Promoter Score
ESO	AB "ESO"
etc.	et cetera
EU	European Union
Eurakras	UAB "EURAKRAS"
FTE	Full-time equivalent
GDP	Gross domestic product
GDPR	General Data Protection Regulation
Government of the Republic of Lithuania	Government of the Republic of Lithuania
GPAIS	Unified Product, Packaging and Waste Record Keeping System

GPC	UAB "Ignitis grupės paslaugų centras"
Green electricity generated	Electricity sold in wind farms, solar power plants, biofuel plants and CHP plants, hydropower plants (including Kruonis pumped storage power plant)
Green Generation capacity installed	Wind farms, solar power plants, biofuel plants, CHP plants and hydropower plants (including Kruonis pumped storage power plant) that have completed and have passed a final test
Green share of generation,%	Green share of generation shall be calculated as follows: Green electricity generated (including Kruonis pumped storage power plant) divided by total electricity generated in the Group
Group	Group companies of Ignitis Group UAB
Guaranteed supply	Supply of electricity in order to meet electricity demand of customers who have not selected an independent supplier under the established procedure, or an independent supplier selected by them does not fulfil its obligations, terminates activities or the agreement on the purchase and sale of electricity
Hydro power	Kaunas Algirdo Brazauskas hydroelectric power plant and Kruonis pumped storage power plant
IFRS	International Financial Reporting Standards
IFRS	International Financial Reporting Standards
Ignitis	Ignitis UAB (former Lietuvos energijos tiekimas and Energijos tiekimas)
Ignitis Eesti	Ignitis Eesti OÜ
Ignitis Gamyba	AB "Ignitis gamyba"
Ignitis Latvija	Ignitis Latvija SIA
Ignitis Polska	Ignitis Polska sp. z o.o.
Ignitis Renewables	UAB "Ignitis renewables"
Installed capacity	Where all assets have been completed and have passed a final test
Investments	Acquisition of property, plant and equipment and intangible assets, acquisition of shareholdings
IPO	Initial Public Offering
ISO	International Organization for Standardization

Kaunas A. Brazauskas HPP	Kaunas Algirdas Brazauskas Hydroelectric Power Plant
Kaunas CHP	UAB Kauno kogeneracinė jėgainė
Kruonis PSHP	Kruonis Pumped Storage Hydroelectric Plant
KTU	Kaunas University of Technology
Lietuvos energija	"Lietuvos energija", UAB (current UAB "Ignitis grupė")
Lietuvos Energijos Tiekimas	Lietuvos Energijos Tiekimas UAB
Litgas	Litgas UAB
Litgrid	Litgrid AB
LNG	Liquefied natural gas
LNGT	Liquefied natural gas terminal
LRAIC	Long-run average incremental cost
LTM	Last twelve months
LVPA	Lithuanian Business Support Agency
m.	Metai
Mažeikiai	UAB "VVP Investment"
min.	Minimum
MLN / m	Million
mnth.	Month/months
MW	Megawatt
MWh	Megawatt hour
n.m.	Not meaningful
NEIS	National Energy Independence Strategy
NERC	The National Energy Regulatory Council
New connection points and upgrades	Number of new customers connected to the network and capacity upgrades of the existing connection points
NG	Natural gas
NPS	Net promoter score
NT Valdos	NT Valdos, UAB
OECD	Organisation for Economic Co-operation and Development
OHS	Occupational Health and Safety Policy
OPEX	Operating expenses
Pomerania	Pomerania Wind Farm sp. z o. o.
PSO	Public service obligation
Public supply	Electricity supply activity performed in accordance with the procedure and terms established by legal acts by an entity holding a public supply licence
Q	Quarter
RBM	Remuneration of the Board member
RE	Renewable energy

RES	Renewable energy sources
RPA	Robotic process automation
SAIDI	Average duration of unplanned interruptions in electricity or gas transmission
SAIFI	Average number of unplanned long interruptions per customer
SOE	State-owned company
TE-3	Vilnius Third Combined Heat and Power Plant
The Company / Ignitis Group	AB "Ignitis grupė" (former "Lietuvos energija", UAB)
Tuuleenergia	"Tuuleenergia osaühing"
TWh	Terawatt-hour
UAB	Private Limited Liability Company
UN	United Nations
Units	Units
Vėjo Gūsis	UAB "VĖJO GŪSIS"
Vėjo Vatas	UAB "VĖJO VATAS"
VGTU	Vilnius Gediminas Technical University
Vilnius CHP	UAB Vilniaus kogeneracinė jėgainė
Visagino atominė elektrinė	Visagino atominė elektrinė UAB
vs.	Versus

2020

Ignitis grupė AB interim condensed financial statements

Company's Interim Condensed Financial Statements for the six-month period ended 30 June 2020, prepared in accordance with International Accounting Standard 34 'Interim Financial Reporting' as adopted by the European Union, presented together with the Independent Auditor's Report

www.ignitisgrupe.lt

Ignitis grupė AB Žvejų str. 14, 09310 Vilnius, Lithuania E-mail: [email protected] Company code 301844044

Content

Independent Auditor's Report	59
Interim condensed statement of financial position	62
Interim condensed statement of profit or loss and other comprehensive income	63
Interim condensed statement of changes in equity	64
Interim condensed statement of cash flows	65
Notes to interim condensed financial statements	66

The Company's interim condensed financial statements prepared for the six month period ended 30 June 2020 were prepared by Ignitis grupė AB management and signed on 26 August 2020:

Darius Maikštėnas

Chief Executive Officer

Darius Kašauskas

Finance and Treasury Director

Giedruolė Guobienė Ignitis grupės paslaugų centras UAB, Head of Accounting Department acting under, acting under Order No IS-88-20 of 10/04/2020

UAB "Ernst & Young Baltic" Aukštaičių g. 7 LT-11341 Vilnius Lietuva Tel.: (8 5) 274 2200 Faks.: (8 5) 274 2333 [email protected] www.ey.com

Juridinio asmens kodas 110878442 PVM mokėtojo kodas LT108784411 Juridinių asmenų registras

Ernst & Young Baltic UAB Aukštaičių St. 7 LT-11341 Vilnius Lithuania Tel.: +370 5 274 2200 Fax: +370 5 274 2333 [email protected] www.ey.com

Code of legal entity 110878442 VAT payer code LT108784411 Register of Legal Entities

INDEPENDENT AUDITOR'S REPORT

To the shareholders of "Ignitis grupė", AB

Opinion

We have audited the accompanying interim condensed financial statements of "Ignitis grupė", AB, (hereinafter the Company), which comprise the interim condensed statement of financial position as of 30 June 2020, the interim condensed statements of profit or loss and other comprehensive income for the three- and six-month periods then ended, the interim condensed statement of changes in equity, the interim condensed statement of cash flows for the six-month period then ended, and notes to the interim condensed financial statements.

In our opinion, the accompanying interim condensed financial statements have been prepared, in all material respects, in accordance with International Financial Reporting Standards applicable to interim financial reporting as adopted by the European Union ("IAS 34").

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the interim condensed financial statements section of our report. We are independent of the Company in accordance with the International Ethics Standards Board for Accountants' Code of Ethics for Professional Accountants (including International Independence Standards) (IESBA Code) together with the requirements of the Law on audit of financial statements of the Republic of Lithuania that are relevant to the audit in the Republic of Lithuania, and we have fulfilled our other ethical responsibilities in accordance with the Law on Audit of the financial statements of the Republic of Lithuania and the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Other information

Other information consists of the information included in the Interim Report for the six-month period ended 30 June 2020 other than the interim condensed financial statements and our auditor's report thereon. Management is responsible for the other information presentation.

Our opinion on the interim condensed financial statements does not cover the other information and we do not express any form of assurance conclusion thereon, except as indicated below.

In connection to our audit of the interim condensed financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the interim condensed financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

We also have to evaluate, if the financial information included in the Interim Report corresponds to the interim condensed financial statements for the same period and if the Interim Report was prepared in accordance with the relevant legal requirements. In our opinion, based on the work performed in the course of the audit of interim condensed financial statements, in all material respects:

• The financial information included in the Interim Report corresponds to the financial information included in the interim condensed financial statements for the same period; and

• The Interim Report was prepared in accordance with the requirements of the Law on Financial Reporting by Undertakings of the Republic of Lithuania.

Responsibilities of management and those charged with governance for the interim condensed financial statements

Management is responsible for the preparation and fair presentation of the interim condensed financial statements in accordance with International Financial Reporting Standards applicable to interim financial reporting as adopted by the European Union ("IAS 34"), and for such internal control as management determines is necessary to enable the preparation of interim condensed financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the interim condensed financial statements, management is responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Company's interim condensed financial reporting process.

Auditor's responsibilities for the audit of the interim condensed financial statements

Our objectives are to obtain reasonable assurance about whether the interim condensed financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this interim condensed financial statements.

As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Company to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

The partner in charge of the audit resulting in this independent auditor's report is Jonas Akelis.

UAB ERNST & YOUNG BALTIC Audit company's licence No. 001335

Jonas Akelis Auditor's licence Nr. 000003

26 August 2020

Ignitis grupė AB, company code 301844044, Žvejų st. 14, 09310, Vilnius, Lithuania INTERIM CONDENSED STATEMENT OF FINANCIAL POSITION

As at 30 June 2020

All amounts in thousands of euro unless otherwise stated

	Notes	As at 30/06/2020	As at 31/12/2019

ASSETS Non-current assets
Intangible assets		1,874	1,874
Property, plant and equipment		79	86
Right-of-use assets		655	838
Prepayments for non-current assets		144	144
Investments in subsidiaries	4	1,228,891	1,204,494
Non-current receivables	5	710,425	723,201
Other financial assets		4,003	3,474
Deferred tax assets		604	763
Total non-current assets		1,946,675	1,934,874
Current assets
Prepayments and deferred expenses		784	32
Other receivables		946	380
Current loans	6	280,143	270,949
Cash and cash equivalents	7	130,197	144
		412,070	271,505
Assets held for sale	8	4,782	7,141
Total current assets TOTAL ASSETS		416,852 2,363,527	278,646 2,213,520

EQUITY AND LIABILITIES
Equity
Issued capital	9	1,212,156	1,212,156
Reserves	10	82,330	80,720
Retained earnings		104,417	36,525
Total equity		1,398,903	1,329,401
Liabilities
Non-current liabilities
Non-current loans and bonds	11	931,609	639,465
Non-current lease liabilities		399	563
Total non-current liabilities		932,008	640,028
Current liabilities
Current portion of non-current loans	11	16,651	32,901
Current loans	11	11,884	196,737
Lease liabilities		258	277
Trade payables		520	259
Advances received		111	52
Other current amounts payable and liabilities		3,192	13,865
Total current liabilities Total liabilities		32,616 964,624	244,091 884,119
TOTAL EQUITY AND LIABILITIES		2,363,527	2,213,520

Ignitis grupė AB, company code 301844044, Žvejų st. 14, 09310, Vilnius, Lithuania INTERIM CONDENSED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME For the three- and six-month periods ended 30 June 2020

All amounts in thousands of euro unless otherwise stated

	Notes	2020 H1	2020 Q2	2019 H1	2019 Q2

Revenue from contracts with customers	12	1,571	791	1,478	772
Other income		1	-	24	-
Dividend income		103,848	103,848	7,724	7,724
		105,420	104,639	9,226	8,496
Operating expenses Depreciation and amortization		(138)	(65)	(133)	(67)
Salaries and related expenses		(2,720)	(1,380)	(2,710)	(1,349)
Impairment of investments in subsidiaries	4.5	(3,833)	(3,833)	-	-
Reversal of impairment of amounts receivable and loans		806	806	-	-
Other expenses		(2,544)	(1,737)	(1,328)	(754)
Total operating expenses		(8,429)	(6,209)	(4,171)	(2,170)
Operating profit		96,991	98,430	5,055	6,326
Finance income	14	8,966	4,547	7,010	3,703
Finance expense	15	(8,857)	(4,809)	(8,919)	(5,321)
Profit (loss) before tax		97,100	98,168	3,146	4,708
Current income tax (expenses)/benefit		-	-	-	-
Deferred tax (expenses)/benefit		402	334	402	212
Net profit		97,502	98,502	3,548	4,920
Total other comprehensive income (loss)		-	-	-	-
Total comprehensive income (loss) for the period		97,502	98,502	3,548	4,920

Ignitis grupė AB, company code 301844044, Žvejų st. 14, 09310, Vilnius, Lithuania INTERIM CONDENSED STATEMENT OF CHANGES IN EQUITY For the six-month period ended 30 June 2020 All amounts in thousands of euro unless otherwise stated

	Notes	Issued capital	Legal reserve	Retained earnings	Total
Balance as at 1 January 2019 Other comprehensive income		1,212,156 -	19,811 -	78,231 -	1,310,198 -
Total other comprehensive income (loss)		-	-	-	-
Net profit for the reporting period		-	-	3,548	3,548
Total comprehensive income for the period		-	-	3,548	3,548
Dividends	13	-	-	(13,000)	(13,000)
Transfers to legal reserve	10	-	60,909	(60,909)	-
Balance as at 30 June 2019		1,212,156	80,720	7,870	1,300,746
Balance as at 1 January 2020		1,212,156	80,720	36,525	1,329,401
Other comprehensive income		-	-	-	-
Total other comprehensive income (loss)		-	-	-	-
Net profit for the reporting period Total comprehensive income for the period		- -	- -	97,502 97,502	97,502 97,502
Dividends	13	-	-	(28,000)	(28,000)
Transfers to legal reserve	10	-	1,610	(1,610)	-
Balance as at 30 June 2020		1,212,156	82,330	104,417	1,398,903

Ignitis grupė AB, company code 301844044, Žvejų st. 14, 09310, Vilnius, Lithuania INTERIM CONDENSED STATEMENT OF CASH FLOWS

For the six-month period ended 30 June 2020

All amounts in thousands of euro unless otherwise stated

			Company
	Notes	H1 2020	H1 2019
Cash flows from (to) operating activities
Net profit		97,502	3,548
Adjustments to non-cash items:
Depreciation and amortisation expenses		138	133
Reversal of impairment of financial assets		(806)	-
Impairment of investments in subsidiaries	4.5	3,833	-
Income tax expense		(402)	(402)
Elimination of results of investing activities:
- Dividend (income)	13	(103,848)	(7,724)
Elimination of results of financing activities:
- Interest income	14	(8,966)	(7,010)
- Interest expenses	15	7,884	7,200
- Other expenses of financing activities	15	973	1,719
Changes in working capital:
(Increase) decrease in trade receivables and other amounts
receivable		(5)	(951)
(Increase)/decrease in prepayments and other current and non
current assets		(752)	636
(Increase) decrease in trade payables, advanced received and other
liabilities		(1,172)	(1,153)
Net cash flows from (to) operating activities		(5,621)	(4,004)
Cash flows from (to) in investing activities
(Purchase) of property, plant and equipment and intangible assets		-	(42)
Loans (granted)		(18,817)	(111,534)
Loan repayments received		29,426	64,938
(Acquisition) of investments in subsidiaries	4	(37,185)	(48,960)
Disposal of investments in subsidiaries		-	39,748
Interest received	14	3,705	1,493
Dividends received	13	103,848	7,724
Other increases (decreases) in cash flows from investing activities		(529)	(1,518)
Net cash flows from (to) in investing activities		80,448	(48,151)

Cash flows from (to) financing activities
Issue of bonds	11	295,657	-
Repayments of borrowings	11	(20,201)	(20,576)
Lease payments		(131)	(107)
Interest paid	15	(808)	(804)
Dividends paid	13	(28,000)	(13,000)
Other increases (decreases) in cash flows from financing activities		-	(1)
Net cash flows from (to) in financing activities		246,517	(34,488)
Increase (decrease) in cash and cash equivalents (including
overdraft)		321,344	(86,643)
Cash and cash equivalents (including overdraft) at the beginning of the
period	7	(191,147)	(42,029)
Cash and cash equivalents (including overdraft) at the end of
period	7	130,197	(128,672)

General information

Ignitis grupė AB (hereinafter "the Company") is a public limited liability company registered in the Republic of Lithuania. The Company's registered office address is Žvejų g. 14, LT-09310, Vilnius, Lithuania. The Company is a limited liability profit-oriented entity registered on 28 August 2008 with the Register of Legal Entities managed by the public institution the Centre of Registers. Company code 301844044, VAT payer's code LT100004278519. The Company has been founded for an indefinite period.

On 30 June 2020, the Ministry of Finance of the Republic of Lithuania implementing the rights of the Company's shareholder passed the decision to reorganise Ignitis grupė UAB to public limited liability company Ignitis grupė AB. The decision stipulates that the registered office, objectives, issued capital and structure of the supervisory and management bodies of the public limited company operating after the reorganisation will not change. The Articles of Associations of Ignitis grupė AB operating after the reorganisation have been also approved under the decision.

The reorganisation of the Company is considered completed from the moment of registration of the new Articles of Association of Ignitis grupė AB operating after the reorganization with the Register of Legal Entities, i.e. from 28 July 2020.

The Company is a parent company, which is responsible for the management and coordination of activities of group companies (Note 4) engaged in electricity and heat generation (including electricity generation from renewable energy sources), supply, electricity import and export, distribution and trade, natural gas distribution and supply, as well as in service and development of electric energy industry. The Company and its subsidiaries' hereinafter collectively as "the Group".

The Company analyses the activities of group companies, represents the whole group, implements its shareholders' rights and obligations, defines operation guidelines and rules, and coordinates the activities in the fields of finance, law, strategy and development, human resources, risk management, audit, technology, communication, etc.

The Company seeks to ensure effective operation of Group companies, implementation of goals related to the Group's activities set forth in the National Energy Independence Strategy and other legal acts, ensuring that it builds a sustainable value in a socially responsible manner.

The Company is wholly owned by the State of the Republic of Lithuania.

	As at 30 June 2020	As at 31 December 2019
Shareholder of the Company	Issued capital, % thousand EUR		Issued capital, thousand EUR
Republic of Lithuania represented by the Ministry of Finance of the Republic of Lithuania	1,212,156	100	1,212,156	100

As at 30 June 2020, the Company had 95 employees (31 December 2019: 108).

Accounting policies

2.1 Basis of preparation

These financial statements cover the Company's interim condensed financial statements of Ignitis grupė AB" prepared for the 6 months period ended 30 June 2020 (hereinafter "interim financial statements"). The Company's interim financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union and applicable to interim financial reporting (International Accounting Standard (IAS) 34, Interim Reporting). These interim financial statements do not include all the information required to prepare annual financial statements, therefore these interim financial statements should be read in conjunction with the annual financial statements for the year ended 31 December 2019, prepared in accordance with International Financial Reporting Standards as adopted by the European Union.

Interim financial statements are presented in euros and all values are rounded to the nearest thousand (thousand EUR) unless stated otherwise. The Company's interim financial statements provide comparative information in respect of the previous period. The Company's financial year coincides with a calendar year.

2.2 New standards, amendments and interpretations, adopted for application

The accounting policies applied in the preparation of these interim financial statements are consistent with the accounting policies applied in the preparation of the Company's annual financial statements for the year ended 31 December 2019, with the exception of the new standards which entered into force as at 1 January 2020.

Preparing these interim financial statements, the Company did not adopt new standards, amendments and interpretations, the effective date of which is later than 1 January 2020 and early adoption is permitted. The following new standards and amendments to the standards that became effective as at 1 January 2020 and did not affect significantly these interim financial statements.

2.2.1 New and/or amended International financial reporting standards and International financial reporting interpretation committee (hereinafter "IFRIC") interpretations, which entered into force from 1 January 2020 and have been endorsed in EU during the 2020 I half year.

Amendments to References to the Conceptual Framework in IFRS Standards (published 29 March 2018, effective from 1 January 2020)

The Conceptual Framework sets out a comprehensive set of concepts for financial reporting, standard setting, guidance for preparers in developing consistent accounting policies and assistance to others in their efforts to understand and interpret the standards. The IASB has also issued a separate accompanying document, Amendments to References to the Conceptual Framework in IFRS Standards, which sets out the amendments to affected standards in order to update references to the revised Conceptual Framework. Its purpose is to support transition to the revised Conceptual Framework for companies that develop accounting policies using the Conceptual Framework when no IFRS Standard applies to a particular transaction. These amendments had no impact on these interim financial statements of the Company.

Amendments to IFRS 3: Definition of a Business (published 22 October 2018, effective from 1 January 2020)

The IASB issued amendments to the definition of a business in IFRS 3 (amendments to IFRS 3) aimed at resolving the difficulties that arise when an entity is determining whether it has acquired a business or a group of assets. The amendments are effective for business combinations for which the acquisition date is on or after 1 January 2020 and to asset acquisition that occur on or after the beginning of that period, with earlier adoption permitted. These amendments had no impact on these interim financial statements of the Company but may impact future periods if the Company enters to any business combinations.

Amendments to IAS 1 and IAS 8: Definition of a Material (published 31 October 2018, effective from 1 January 2020)

The amendments clarify the definition of 'material' and how it should be applied. New definition clarifies that 'information is material if omitting, misstating or obscuring it could reasonably be expected to influence the decisions that the primary users of general-purpose financial statements make on the basis of those financial statements, which provide financial information about a specific reporting entity.' In addition, the explanations accompanying the definition have been improved. The amendments also ensure that the definition of material is consistent across all IFRSs. These amendments had no impact on these interim financial statements of the Company, nor is there expected to be any future impact to them.

Amendments to IFRS 9, IAS 39 and IFRS 7: Interest Rate Benchmark Reform (published 26 September 2019, effective from 1 January 2020 and must be applied retrospectively)

Amendments to IFRS 9, IAS 39 and IFRS 7 conclude phase one of its work to respond to the effects of Interbank Offered Rates (IBOR) reform on financial reporting. The amendments published, deal with issues affecting financial reporting in the period before the replacement of an existing interest rate benchmark with an alternative interest rate and address the implications for specific hedge accounting requirements in IFRS 9 Financial Instruments and IAS 39 Financial Instruments: Recognition and Measurement, which require forward-looking analysis. The amendments provided temporary reliefs, applicable to all hedging relationships that are directly affected by the interest rate benchmark reform, which enable hedge accounting to continue during the period of uncertainty before the replacement of an existing interest rate benchmark with an alternative nearly risk-free interest rate. There are also amendments to IFRS 7 Financial Instruments: Disclosures regarding additional disclosures around uncertainty arising from the interest rate benchmark reform. Phase two (ED) will focus on issues that could affect financial reporting when an existing interest rate benchmark is replaced with a risk-free interest rate (an RFR). These amendments had no impact on these interim financial statements of the Company.

2.2.2 Standards, amendments and interpretations issued but not yet effective and not early adopted

New standards, amendments and interpretations that are not mandatory for reporting period beginning on 1 January 2020 and have not been early adopted when preparing these interim financial statements are presented below:

IFRS 17: Insurance Contracts (published 18 May 2017, effective from 1 January 2023)

The standard is effective for annual periods beginning on or after 1 January 2021 with earlier application permitted if both IFRS 15 Revenue from Contracts with Customers and IFRS 9 Financial Instruments have also been applied. In its March 2020 meeting the Board decided to defer the effective date to 2023. IFRS 17 Insurance Contracts establishes principles for the recognition, measurement, presentation and disclosure of insurance contracts issued. It also requires similar principles to be applied to reinsurance contracts held and investment contracts with discretionary participation features issued. The objective is to ensure that entities provide relevant information in a way that faithfully represents those contracts. This information gives a basis for users of financial statements to assess the effect that contracts within the scope of IFRS 17 have on the financial position, financial performance and cash flows of an entity. This IFRS will not have any impact on the financial position or performance of the Company as insurance services are not provided. The standard has not yet been endorsed by the EU.

Amendments to IFRS 17 and IFRS 4: The deferral of effective dates for IFRS 17 and IFRS 9 for insurers (published 25 June 2020, effective from 1 January 2021)

The amendments to IFRS 17 are effective, retrospectively, for annual periods beginning on or after January 1, 2023, with earlier application permitted. The amendments aim at helping companies implement the Standard. In particular, the amendments are designed to reduce costs by simplifying some requirements in the Standard, make financial performance easier to explain and ease transition by deferring the effective date of the Standard to 2023 and by providing additional relief to reduce the effort required when applying IFRS 17 for the first time.

The amendments to IFRS 4 change the fixed expiry date for the temporary exemption in IFRS 4 Insurance Contracts from applying IFRS 9 Financial Instruments, so that entities would be required to apply IFRS 9 for annual periods beginning on or after January 1, 2023.

Ignitis grupė AB, company code 301844044, Žvejų st. 14, 09310, Vilnius, Lithuania NOTES TO INTERIM CONDENSED FINANCIAL STATEMENTS

All amounts in thousands of euro unless otherwise stated

These amendments have not yet been endorsed in the EU. The management has assessed that these amendments will not have any impact on the Company's financial statements.

Amendments to IAS 1: Classification of Liabilities as Current or Non-current (published 23 January 2020, effective from 1 January 2022)

The amendments are effective for annual reporting periods beginning on or after January 1, 2022 with earlier application permitted. The IASB has issued an exposure draft to defer the effective date to 1 January 2023. The amendments aim to promote consistency in applying the requirements by helping companies determine whether, in the statement of interim financial position (hereinafter "statement of financial position"), debt and other liabilities with an uncertain settlement date should be classified as current or non-current. The amendments affect the presentation of liabilities in the statement of financial position and do not change existing requirements around measurement or timing of recognition of any asset, liability, income or expenses, nor the information that entities disclose about those items. Also, the amendments clarify the classification requirements for debt which may be settled by the company issuing own equity instruments. The Company is currently assessing the impact of this amendment on their interim financial statements. These amendments have not yet been endorsed by the EU.

Amendments to IFRS 3 Business combinations; IAS 16 Property, Plant and Equipment; IAS 37 Provisions, Contingent liabilities and Contingent Assets as well as Annual Improvements (amendments) (published 14 May 2020, effective from 1 January 2022)

The amendments are effective for annual periods beginning on or after 1 January 2022 with earlier application permitted. The IASB has issued narrow-scope amendments to the IFRS Standards as follows:

IFRS 3 Business Combinations (Amendments) update a reference in IFRS 3 to the Conceptual Framework for Financial Reporting without changing the accounting requirements for business combinations.
IAS 16 Property, Plant and Equipment (Amendments) prohibit a company from deducting from the cost of property, plant and equipment amounts received from selling items produced while the company is preparing the asset for its intended use. Instead, a company will recognise such sales proceeds and related cost in profit or loss.
IAS 37 Provisions, Contingent Liabilities and Contingent Assets (Amendments) specify which costs a company includes in determining the cost of fulfilling a contract for the purpose of assessing whether a contract is onerous.
Annual Improvements make minor amendments to IFRS 1 First-time Adoption of International Financial Reporting Standards, IFRS 9 Financial Instruments, IAS 41 Agriculture and the Illustrative Examples accompanying IFRS 16 Leases

These amendments have not yet been endorsed in the EU. The Company's management is currently assessing the impact of these amendments on the Company's financial statements.

Amendments to IFRS 16: COVID-19 related rent concessions/discounts (published 28 May 2020, effective from 1 June 2020)

The amendment applies, retrospectively, to annual reporting periods beginning on or after 1 June 2020. Earlier application is permitted, including in financial statements not yet authorized for issue at 28 May 2020. IASB amended the standard to provide relief to lessees from applying IFRS 16 guidance on lease modification accounting for rent concessions arising as a direct consequence of the covid-19 pandemic. The amendment provides a practical expedient for the lessee to account for any change in lease payments resulting from the covid-19 related rent concession the same way it would account for the change under IFRS 16, if the change was not a lease modification, only if all of the following conditions are met:

The change in lease payments results in revised consideration for the lease that is substantially the same as, or less than, the consideration for the lease immediately preceding the change.
Any reduction in lease payments affects only payments originally due on or before 30 June 2021.
There is no substantive change to other terms and conditions of the lease.

These amendments have not yet been endorsed in the EU. The Company's management estimated that the application of these amendments will not have a material impact on the Company's financial statements.

Amendments to IFRS 10 and IAS 28: Sale or Contribution of Assets between an Investor and its Associate or Joint Venture (published 11 September 2014, effective date not appointed)

The amendments address an acknowledged inconsistency between the requirements in IFRS 10 and those in IFRS 28, in dealing with the sale or contribution of assets between an investor and its associate or joint venture. The main consequence of the amendments is that a full gain or loss is recognized when a transaction involves a business (whether it is housed in a subsidiary or not). A partial gain or loss is recognized when a transaction involves assets that do not constitute a business, even if these assets are housed in a subsidiary. In December 2015, the IASB postponed the effective date of this amendment indefinitely pending the outcome of its research project on the equity method of accounting. The amendments have not yet been endorsed by the EU. Management has assessed that adoption of these amendments will have no significant effect on the Company's financial statements.

Critical accounting estimates and judgements used in the preparation of these interim financial statements

Preparing these interim financial statements the significant management judgements regarding the application of the accounting policies and accounting estimates were the same as used in preparing the annual financial statements for the year ended 31 December 2019, except those accounting estimates and judgements presented below:

3.1 Impact of COVID-19 on critical accounting estimates, management judgements and estimation uncertainties

Going Concern

The Company's management assessed cash flows, probability of bad debt growth, potential disruptions to funding sources, the risk of COVID-19 infection by workers performing critical functions. Assessment was based on all currently available information on the threats posed by COVID-19. The Company's management has not identified any threats to the Company's going concern when assessing the potential impact of key COVID-19 factors on the Company's results. The Company has taken steps to manage the risks.

Management of the Company's liquidity risk

The following measures are applied by the Company to manage liquidity risk:

Short-term liquidity risk is managed by maintaining obligatory lines of credit and overdrafts. The period of these credit lines must be at least two years, and they must account for at least 20% of the Group's consolidated net debt. Non-obligatory credit lines can be used for maintaining extra liquidity, their extent is not limited.
Long-term liquidity risk is managed through continuous assurance by the Treasury Department of the Partnership of possibilities to finance the activities of the Group using at least two sources, i.e. debt securities, investment bank loans or commercial bank loans, and other means.

During the quarantine period, the Company concluded a loan agreement with AB Swedbank for EUR 100 million and issued bond emission for EUR 300 million (see Note 11).

Risk management of COVID-19 infection in employees

During the quarantine, the Company strictly follows all the recommendations provided by the Government of the Republic of Lithuania regarding the management of the potential threat of COVID-19. All the conditions are in place for efficient teleworking without any disruptions in the performance of principal job.

Change in impairment of non-trade receivables

The Company's management, having assessed the potential impact of COVID-19 factors on the impairment of non-trade receivables (note 5.1), has not identified any circumstances that would require the recognition of an impairment loss of non-trade receivables.

Classification of financial instruments as current and non-current

Management has also reviewed the criteria for classifying loans and borrowings, as well as other receivables/payables, as non-current or current, and has not identified any circumstances that would require a significant adjustment to this classification.

General information on the impact of COVID-19 on the Company's operations

The Company's management, having assessed the potential impact of COVID-19 factors on the Company's operations, did not identify any threats to the Company's operations.

3.2 Non-current assets held for sale

The Company classifies property, plant and equipment and disposal groups as held for sale, if their carrying amount is recovered through a disposal rather than through continuing use, and the assets and disposal groups are available for immediate sale, and a sale is considered highly probable in their current condition and under the conditions that are usual for sale of such assets and disposal groups. The Company is committed to a plan to sell these assets and disposal groups, and initiate an active programme to locate a buyer. The sale of assets is to be performed within one year of classification as held for sale and there are no indications that the plan will be significantly changed or withdrawn.

The Company's investment into Transporto valdymas UAB in the amount of EUR 2,359 thousand, which was accounted for under the line item 'Assets held for sale' was reclassified to 'Investments in subsidiaries' (see Note 4.3).

For the purposes of the Company's statement of financial position at 30 June 2020, the investment into Duomenų logistikos centras UAB in the amount of EUR 4,705 thousand (31 December 2019: EUR 4,705 thousand) was accounted for under the line item 'Assets held for sale''.

Investments in subsidiaries

Details on the Company's investments in subsidiaries as at 30 June 2020 provided below:

	Acquisition cost	Impairment	Carrying amount	Company's ownership interest, %	Group's effective ownership interest, %
Subsidiaries:
Energijos skirstymo operatorius AB	731,981	-	731,981	97.66	97.66
Ignitis gamyba AB	310,610	-	310,610	97.45	97.45
NT Valdos UAB	8,823	(3,833)	4,990	100.00	100.00

Vilniaus kogeneracinė jėgainė UAB	52,300	-	52,300	100.00	100.00
Kauno kogeneracinė jėgainė UAB	20,400	-	20,400	51.00	51.00
Ignitis UAB	47,136	-	47,136	100.00	100.00
Tuuleenergia OÜ	6,659	-	6,659	100.00	100.00
Ignitis grupės paslaugų centras UAB	5,975	-	5,975	50.47	100.00
Elektroninių mokėjimų agentūra UAB	1,428	-	1,428	100.00	100.00
Energetikos paslaugų ir rangos organizacija UAB	22,711	(22,711)	-	100.00	100.00
Lietuvos energijos paramos fondas	3	-	3	100.00	100.00
Gamybos optimizavimas UAB	350	-	350	100.00	100.00
Ignitis renewables UAB	44,700	-	44,700	100.00	100.00
Transporto valdymas UAB	2,359		2,359	100.00	100.00
	1,255,435	(26,544)	1,228,891

Details on the Company's investments in subsidiaries as at 31 December 2019 provided below:

	Acquisition cost	Impairment	Carrying amount	Company's ownership interest, %	Group's effective ownership interest, %
Subsidiaries:
Energijos skirstymo operatorius AB	710,921	-	710,921	94.98	94.98
Ignitis gamyba AB	307,997	-	307,997	96.82	96.82
NT Valdos UAB	8,823	-	8,823	100.00	100.00
Vilniaus kogeneracinė jėgainė UAB	52,300	-	52,300	100.00	100.00
Kauno kogeneracinė jėgainė UAB	20,400	-	20,400	51.00	51.00
Ignitis UAB	47,136	-	47,136	100.00	100.00
Tuuleenergia OÜ	6,659	-	6,659	100.00	100.00
Ignitis grupės paslaugų centras UAB	3,479	-	3,479	50.04	97.94
Elektroninių mokėjimų agentūra UAB	1,428	-	1,428	100.00	100.00
Verslo aptarnavimo centras UAB	298	-	298	51.50	98.41
Energetikos paslaugų ir rangos organizacija
UAB	22,711	(22,711)	-	100.00	100.00
Lietuvos energijos paramos fondas	3	-	3	100.00	100.00
Gamybos optimizavimas UAB	350	-	350	100.00	100.00
Ignitis renewables UAB	44,700	-	44,700	100.00	100.00
	1,227,205	(22,711)	1,204,494

Movement in the Company's investments during 2020 I half-year:

Company	H1 2020
Net book value at 1 January	1,204,494
Increase in issued capital of subsidiaries	2,198
Establishment of subsidiaries	-
Decrease in issued capital of subsidiaries	-
Buyout of shares in subsidiaries	23,673
Acquisition of companies	-
Disposal of investments	-
Coverage of losses	-
Liquidation of subsidiaries	-
Reclassification from assets held for sale	2,359
(Impairment)/reversal of impairment of investments in subsidiaries	(3,833)
Net book value at the end of the period	1,228,891

During 2020 I half-year total cash payments for acquisition of investment to subsidiaries amount to EUR 37,185 thousand including EUR 11,314 thousand payment for share capital of the Company's subsidiary Vilniaus kogeneracinė jėgainė UAB which was increased in 2019 year (Note 4.2).

The changes in the Company's investments in subsidiaries during 2020 I half-year were covered by the following events.

4.1 Reorganisation of subsidiaries

The proceedings of reorganisation of the Company's subsidiaries Ignitis grupės paslaugų centras UAB and Verslo aptarnavimo centras UAB were finalised on 1 January 2020. During the reorganisation Verslo aptarnavimo centras UAB, which ceased its activities without the liquidation procedure, was merged with Ignitis grupės paslaugų centras UAB which continues its activities. All the assets, rights and obligations, including issued capital, of Verslo aptarnavimo centras UAB were taken over by Ignitis grupės paslaugų centras UAB which continues its activities. The Company's carrying amount of investment to Ignitis grupės paslaugų centras UAB increased by EUR 298 thousand and the Company's investment to Verslo aptarnavimo centras UAB of the same carrying amount was written off.

4.2 Change in issued capital of subsidiaries

During 2020 I half-year, the issued capital of the following subsidiaries of the Company was increased:

Subsidiary	Issue date	Number of newly issued shares*	Issue price per share, EUR	Total issue price	Amount paid up	Amount not paid up	Date of amendment to Articles of Association
Ignitis grupės paslaugų centras UAB	25/05/2020	7,577,391	0.29	2,198	2,198	-	25/05/2020
Total:				2,198	2,198	-

*The number of shares owned by the Company.

On 4 June 2020, the Company and its subsidiaries Ignitis gamyba AB, Ignitis UAB and Energijos skirstymo operatorius AB decided to increase the issued capital of Ignitis grupės paslaugų centras to EUR 12,269,066 through the issue of 15,015,247 shares with the par value of EUR 0.29 each. The Company acquired 7,577,391 shares for EUR 2,198 thousand by making a cash contribution. On 14 July 2020, the new version of the Articles of Association of the Group's company Ignitis grupės paslaugų centras UAB related to increase in issued capital was registered with the Register of Legal Entities.

During 2020 I half-year, the issued capital of the Company's subsidiaries was not reduced.

On 16 January 2020, the increase of the issued share capital of the Company's subsidiary Vilniaus kogeneracinė jėgainė UAB was paidin by the Company in the amount of EUR 11,314 thousand (the increase in the issued capital was registered with the Register of Legal Entities on 30 January 2019).

4.3 Reclassification from assets held for sale

On 1 June 2020, the Board of the Company decided to terminate the sales process of shares of Transporto valdymas UAB and to initiate the termination of the transport management business by gradually reducing the activity of Transporto valdymas UAB, i.e. to the extent necessary to fulfil the existing agreements, and to initiate the procedure for the termination of the activities of Transporto valdymas UAB after the expiry of the vehicle lease agreements with Transporto valdymas UAB.

The Company's investment into Transporto valdymas UAB in the amount of EUR 2,359 thousand, which was accounted for under the line item 'Non-current assets held for sale' was reclassified to 'Investments in subsidiaries'.

4.4 Buyout of shares in subsidiaries

During April 2020 and the Company has acquired shares from minority shareholders of subsidiaries Energijos skirstymo operatorius AB (23,932 thousand shares for the price of 0.88 EUR per share) and Ignitis gamyba AB (4,082 thousand shares for the price of 0.64 EUR per share). Acquisition lead to increased percentage of ownership by 2.68% in Energijos skirstymo operatorius AB and 0.63% in Ignitis gamyba AB. Total consideration paid for the acquired shares equal to EUR 25,721 thousand, including premium equal to dividends for year 2019 (EUR 2,048 thousand – Note 13.3).

As at 18 May 2020, when Ignitis grupė AB has exercised its right as the majority shareholder of Energijos skirstymo operatorius AB and Ignitis gamyba AB and has initiated the process of mandatory shares buyout from minority shareholders of these companies, as granted to by the law on securities of the Republic of Lithuania. Deadline for buyout process was set as at 17 August 2020. The price of shares during mandatory buyout was agreed with the Bank of Lithuania and was set at same level as during the non-competitive tender offers (EUR 0.88 per share for Energijos skirstymo operatorius AB and EUR 0.64 per share for Ignitis gamyba AB). On 10 August 2020 the Company received a claim from minority shareholder of Energijos skirstymo operatorius AB and the buyout of this entity is postponed – for more information see Note 19. The management of the Company determined, that as at 30 June 2020 ownership of the shares has not passed to the Company, the shareholders can still exercise voting rights and are eligible for dividends. Thus, the liability and increase in investment in subsidiaries are not recognized as at 30 June 2020. The Company has accounted for the mandatory buyout offers as derivative financial instruments at fair value through profit or loss. As at 30 June 2020, the fair value of the derivatives is not significant as the offers are exercisable at amounts that approximate fair value of the underlying shares at the date of exercise.

On 21 May 2020 Nasdaq Vilnius AB has made a decision to remove the shares of the Company's subsidiaries Energijos skirstymo operatorius AB and Ignitis gamyba AB from the Official Trading List. The shares of Energijos skirstymo operatorius AB and Ignitis gamyba AB were removed on 1 July 2020 (the last day of trading on the Nasdaq Vilnius shares is 30 June 2020).

4.5 Impairment test for investments into subsidiaries

On 30 June 2020, the Company carried out an analysis to determine existence of indications of impairment for investments into subsidiaries. The Company considered information from external and internal sources of information. During the reporting period, there have been no significant adverse changes in the technological, market, economic and legal environment in which subsidiaries operate, and such changes are unlikely to occur soon. The Company considered other information from external and internal sources and, having identified impairment indications for investments in subsidiaries, the Company estimated the recoverable amount, and accounted for the impairment of investments as at 30 June 2020, as described below.

Ignitis grupė AB, company code 301844044, Žvejų st. 14, 09310, Vilnius, Lithuania NOTES TO INTERIM CONDENSED FINANCIAL STATEMENTS

All amounts in thousands of euro unless otherwise stated

Having identified impairment indications for investments in subsidiaries and receivables as at 30 June 2020, the Company performed impairment testing for the following subsidiaries: Energijos skirstymo operatorius AB Ignitis UAB, Ignitis renewables UAB, Tuuleenergia OÜ, NT Valdos UAB. Impairment indication is determined when at least one of the following indicators are met (except for early stage companies):

1 Actual adjusted EBITDA (Earnings Before Interests Taxes Depreciations and Amortizations) is less than budgeted adjusted EBITDA;
2 The actual adjusted net profit is less than the actual dividends paid;
3 Book value of investment is higher than book value of equity.

Energijos skirstymo operatorius AB

As at 30 June 2020, the Company performed an impairment test for investment into subsidiary Energijos skirstymo operatorius AB and determined no impairment for investments into Energijos skirstymo operatorius AB as at 30 June 2020.

The Company analysed impairment test made as at 31 December 2019 and compared actual cash flows for 2020 to the ones, used in the impairment test and identified that there were no significant fluctuations. No other significant assumptions changed compared to impairment test as at 31 December 2019.

Ignitis UAB

As at 30 June 2020, the Company performed an impairment test for investment into subsidiary Ignitis UAB and determined no impairment for investments into Ignitis UAB as at 30 June 2020.

As at 30 June 2020, the Company tested for impairment its investment in subsidiary Ignitis UAB using the discounted cash flow method (post-tax) and by applying the following key assumptions:

1. The cash flow forecast covered the period until 2030, in accordance with long-term financial plan for 2020-2030;
1. In the period of terminal year (after 2030), cash flow growth is forecasted at 2%
1. Discount rate of 8,7% (post-tax) was used to calculate discounted cash flows.

The Company performed the sensitivity analysis on the impairment test in respect of changes in unobservable inputs. The sensitivity analysis showed that a 1.0 p.p. change in the discount rate would not have impact for the carrying amount of investments into Ignitis UAB.

Ignitis renewables UAB

As at 30 June 2020, the Company performed an impairment test for investment into subsidiary Ignitis renewables UAB and determined no impairment for investments into Ignitis renewables UAB as at 30 June 2020. The scope of impairment test of Ignitis renewables UAB included impairment test of wind farms (Eurakras UAB, Vėjo vatas UAB, Vėjo gūsis UAB) controlled by Ignitis renewables UAB. The impairment test was performed by applying the discounted cash flow method (post-tax) and the following key assumptions:

1. The cash flow forecast covered the period until 2040, with reference to the typical operational period of 25 years.
1. The production volume is stable each year, based on the third-party study of a wind farm or actual production capacity (depending on the wind farm).
1. During the first twelve years of operation, the price of electricity is set at the agreed tariff. Following an expiry, a third-party electricity price forecast is applied.
1. Discount rate of 5.3% (after tax) was used to calculate discounted cash flows.

Tuuleenergia OÜ

As at 30 June 2020, the Company performed an impairment test for investment into subsidiary Tuuleenergia OÜ and determined no impairment for investments into Tuuleenergia OÜ as at 30 June 2020.

The impairment test was performed using the discounted cash flow method and using the following key assumptions:

1. The cash flow forecast covered the period until 2038, with reference to the typical operational period of 25 years;
1. The production volume is stable each year, based on the study of the wind power farm prepared by a third party;
1. During the first twelve years of operation, the price of electricity is the market price plus 53.7 EUR/MWh feed-in premium;
1. Discount rate of 5.3% (post-tax) was used to calculate discounted cash flows.

NT Valdos UAB

As at 30 June 2020, the Company tested for impairment indications for investment into subsidiary NT Valdos UAB and recognised impairment loss of EUR 3,833 thousand as at 30 June 2020. Impairment test was carried out, taking into account dividends paid by NT Valdos UAB – the carrying amount was decreased to the carrying value of net assets of the subsidiary.

The Company's other investments in subsidiaries

Apart from the above and the impairment already recognized previously, as at 30 June 2020, there were no indications of impairment in respect of other investments in the subsidiaries of the Company.

Non-current receivables

Non-current receivables comprised as follows:

	As at 30/06/2020	As at 31/12/2019
Non-current receivables
Amount receivable on disposal of LitGrid AB	158,658	158,658
Loans granted	551,767	564,543
Other non-current receivables	-	88
Total:	710,425	723,289
Less: allowance	-	(88)
Carrying amount	710,425	723,201

Under the valid agreement between the Company and EPSO-G, during the period until 2022 EPSO-G will have to cover the debt for the shares of Litgrid AB acquired in 2012. The amount receivable for shares is stated at fair value through profit or loss, because the final amount payable by EPSO-G for shares depends on the recalculation of the final price premium. The amount of the price premium depends on return for 2014–2018 of regulated assets of the electricity transmission activity conducted by Litgrid. As at 30 June 2020, the fair value of the amount receivable that comprises the amount receivable for shares and final price premium, it is equal to EUR 158,658 thousand (31 December 2019: EUR 158,658 thousand). Based on the judgement of the management, the amount of the price premium as at 30 June 2020 was negative and was equal to EUR 15,877 thousand (31 December 2019: EUR 15,877 thousand).

5.1 Expected credit losses of loans granted

As at 30 June 2020, the Company assessed whether credit risk of recipients of non-current and current loans has increased significantly and did not establish any indications and has no information indicating that credit risk of loan recipients on an individual basis has increased significantly. Therefore, no lifetime expected credit loss (from here on further - ECL) was recognized.

5.2 Loans granted

The Company's loans granted as at 30 June 2020 comprised of loans granted to the following subsidiaries:

Company	Interest rate type	Within one year (Note 6)	After one year	Total
Energijos skirstymo operatorius AB (green bonds)	Fixed interest	-	416,288	416,288
Energijos skirstymo operatorius AB (loans taken over)	Variable interest	16,652	45,394	62,046
Tuuleenergia OÜ	Fixed interest	-	19,119	19,119
Eurakras UAB	Fixed interest	-	19,355	19,355
Ignitis UAB	Variable interest	27,998	30,500	58,498
Transporto valdymas UAB	Variable interest	-	21,111	21,111
Vėjo vatas UAB	Fixed interest	2,547	-	2,547
Ignitis renewables UAB	Fixed interest	56,922	-	56,922
Energijos skirstymo operatorius AB	Variable interest	162,527	-	162,527
Carrying amount		266,646	551,767	818,413

On 30 June 2020, the Company signed a long-term loan agreement with Energijos skirstymo operatorius AB (hereinafter 'ESO'), under which EUR 200 million loan is granted to ensure reliability and efficiency of distribution network, and to refinance outstanding liabilities. The repayment date of the loan is 21 May 2030. The fixed interest rate under the agreement coincides with the effective interest rate on the Green Bonds issue and is set as 2.17%. The essential terms and conditions of the agreement coincide with the terms and conditions of the green bonds issue. The agreement does not provide for any other additional obligations (guarantees, suretyship, pledges, etc.) to enforce obligations. As at 30 June 2020 no amounts were disbursed in accordance with this agreement.

The Company's loans granted as at 31 December 2019 comprised loans granted to the following subsidiaries:

Company	Interest rate type	Within one year (Note 6)	After one year	Total
Energijos skirstymo operatorius AB (green bonds)	Fixed interest	-	416,288	416,288
Energijos skirstymo operatorius AB (loans taken over)	Variable interest	32,902	49,345	82,247
Tuuleenergia OÜ	Fixed interest	-	19,119	19,119
Eurakras UAB	Fixed interest	-	24,355	24,355
Ignitis UAB	Variable interest	60,255	30,500	90,755
Transporto valdymas UAB	Variable interest	-	24,936	24,936
Vėjo vatas UAB	Fixed interest	2,547	-	2,547
Energetikos paslaugų ir rangos organizacija UAB	Variable interest	1,480	-	1,480
Ignitis grupės paslaugų centras UAB	Variable interest	1,473	-	1,473
Ignitis renewables UAB	Fixed interest	56,922	-	56,922
VVP investment UAB	Variable interest	400	-	400
Energijos skirstymo operatorius AB	Variable interest	105,164	-	105,164
Vilniaus kogeneracinė jėgainė UAB	Variable interest	3,336	-	3,336
Carrying amount		264,479	564,543	829,022

Current loans

Current loans are the following:

	As at 30/06/2020	As at 31/12/2019
Current portion of long-term loans	16,652	35,449
Cash-pool loans	190,525	171,708
Short-term loans	59,469	57,322
Interest receivable	13,497	7,276
Total:	280,143	271,755
Less: Loan impairment	-	(806)
Carrying amount	280,143	270,949

During 2020 I half-year, the Company reversed impairment for cash-pool receivables from one of the subsidiaries. No additional impairment allowance was estimated and recognized.

Cash and cash equivalents

Cash, cash equivalents and a bank overdraft include the following for the purposes of the cash flow statement:

	As at 30/06/2020	As at 31/12/2019
Cash and cash equivalents Bank overdraft	130,197 -	144 (191,291)
Carrying amount	130,197	(191,147)

As at 30 June 2020 and 31 December 2019, cash and cash equivalents comprised cash in bank.

Assets held for sale

The Company's non-current assets held for sale comprised as follows:

	As at 30/06/2020	As at 31/12/2019
Property, plant and equipment and investment property	77	77
Investments in subsidiaries	4,705	7,064
	4,782	7,141

As at 30 June 2020, the investment into Duomenų logistikos centras UAB in the amount of EUR 4,705 thousand, which was disposed by the Company in July 2020, was accounted for under the line item 'Assets held for sale'. During 2020 I half-year the management changed its decision to sell a subsidiary Transporto valdymas UAB.

On 8 June 2020, the Company together with Litgrid AB concluded a share sale-purchase agreement with QEIF II Development Holding Sàrl, a subsidiary of Quaero European Infrastructure Fund II, managed by Quaero Capital, regarding the sale of shares of its subsidiary Duomenų logistikos centras UAB (hereinafter 'DLC'). Under the agreement, Ignitis grupė will sell 79.64% of shares, and Litgird – 20.36% of shares of DLC. The title to shares of DLC to QEIF II Development Holding Sàrl were transferred following the decision of Coordination Commission for the Protection of Objects of National Security of the Republic of Lithuania on compliance of the transaction with national security interests, and the adoption of decision on consent for the transfer of the DLC shares by extraordinary General Meeting of Shareholders of Litgrid. The total value of the transaction is EUR 10.1 million.

Issued capital

As at 30 June 2020 and 31 December 2019, the issued capital of the Company amounted to EUR 1,212,156,294 and it was divided into 4,179,849,289 ordinary registered shares with a par value of EUR 0.29 each.

As at 30 June 2020 and 31 December 2019 all shares were fully paid.

Reserves

Legal reserve

The legal reserve is a compulsory reserve under the Lithuanian legislation. Companies in Lithuania are required to transfer at least 5% of net profit from distributable profit until the total reserve reaches 10% of the issued capital. The legal reserve shall not be used for payment of dividends and is formed to cover future losses only.

As at 30 June 2020, the Company's legal reserve amounted to EUR 82,330 thousand (31 December 2019: EUR 80,720 thousand). During 2020 I half-year, the Company transferred EUR 1,610 thousand (2019: EUR 60,909 thousand) to the legal reserve. The Company's legal reserve as at 30 June 2020 was not fully formed.

Loans and bonds

The Company's borrowings comprised the following:

	As at 30/06/2020	As at 31/12/2019
Non-current Bonds issued Bank loans	886,215 45,394	590,120 49,345
Current Current portion of long-term loans Bank overdraft Accrued interest	- 16,651 - 11,884	32,901 191,291 5,446
Total borrowings	960,144	869,103

Non-current borrowings by maturity:

	As at 30/06/2020	As at 31/12/2019
From 1 to 2 years	7,901	7,049
From 2 to 5 years	23,703	21,148
After 5 years	900,005	611,268
Total	931,609	639,465

All borrowings of the Company are denominated in euros.

On 16 April 2020 the Company has signed an overdraft agreement with Swedbank AB for EUR 100 million. As at 30 June 2020, the undrawn credit facilities amounted to EUR 100 million. The repayment date of the loan is 16 October 2020.

On 14 May 2020, the Company placed a EUR 300 million issue of bonds with a 10-year term to maturity. Annual interest of 2.00% will be payable for bonds and they have been issued with the yield of 2.148%. Net cash inflows from bond emission comprise 98.55% of the par value of the bond issue or EUR 295,657,500.

During 2020 I half-year expenses related to interest on the issued bonds totalled EUR 7,076 thousand (during 2019 I half-year: EUR 6,360 thousand). The accrued amount of coupon payable as at 30 June 2020 amounted to EUR 11,884 thousand (31 December 2019: EUR 5,446 thousand).

Revenue from contracts with customers

The Company's revenue from contracts with customers during 2020 and 2019 I half-year were as follows:

	H1 2020	H1 2019
Management fee income Other revenue from contracts with customers	1,571 1	1,478 24
Total	1,572	1,502

The Company's revenue from contracts with customers during 2020 and 2019 I half-year comprised the revenue from advisory and management services provided to subsidiaries.

The Company does not have any impact of seasonality on its revenue. Also, the Company did not present any segment information as there is only one segment.

The Company's revenue based on the regularity of transfer of goods or services:

	H1 2020	H1 2019
Performance obligation settled over time	1,571	1,478
Total	1,571	1,478

Dividends

13.1 Dividends declared by the Company

The table below provides dividends declared by the Company during the six-month period ended 30 June 2020 and 30 June 2019:

	H1 2020			H1 2019
Company	(thousand EUR) EUR	Dividends per shares	(thousand EUR) EUR	Dividends per share
Ignitis grupė AB	28,000	0.0067	13,000	0.0031
Number of shares	4,179,849,289			4,179,849,289

13.2 Dividends received by the Company

Dividends received by the Company from Group companies during 1st half of 2020 are the following:

Dividend declared date	Dividends declared by	Period for which dividends are allocated	Dividends per share, in EUR	Declared amount of dividends	Dividend income attributable to the Company	Dividends attributable to the Group's non controlling interest
22/04/2020	Ignitis grupės paslaugų centras UAB	2019	0.0271	739	373	366
27/04/2020	NT Valdos UAB	2019	21.7890	3,762	3,762	-
30/04/2020	Ignitis gamyba AB	2nd half of 2019	0.0560	36,288	35,361	927
30/04/2020	Energijos skirstymo operatorius AB	2019	0.0760	67,992	66,399	1,593
				108,781	105,895	2,886

For the purpose of the statement of profit or loss and other comprehensive income, 1st half of 2020 dividend income was reduced by the amount of dividends paid as premium to the former shareholders of Energijos skirstymo operatorius AB and Ignitis gamyba AB (Note 13.3).

Dividends received by the Company from Group companies during 1st half of 2019 are the following:

Dividend declared date	Dividends declared by	Period for which dividends are allocated	Dividends per share, in EUR	Amount of dividends declared	Dividend income attributable to the Company	Dividends attributable to the Group's non controlling interest
05/03/2019	Duomenų logistikos centras UAB	2018	0.0290	405	324	81
30/04/2019	Ignitis grupės paslaugų centras UAB	2018	0.0150	327	164	7
30/04/2019	Verslo aptarnavimo centras UAB	2018	0.2100	123	63	2
30/04/2019	Tuuleenergia OÜ	2018	1.8000	899	899	-
29/04/2019	EURAKRAS UAB	2018	11.7200	1,870	-	-
12/04/2019	Ignitis gamyba AB	2nd half of 2018	0.0100	6,480	6,274	206
				10,104	7,724	296

13.3 Additional bonus equal to the amount of dividends

The Tender Offer Circular approved by the Bank of Lithuania on 30 March 2020 indicates that if the Ordinary Meetings of Shareholders of Ignitis gamyba AB and Energijos skirstymo operatorius AB held on 30 April 2020 have adopted the resolution to pay dividends to the shareholders of these companies for the year 2019, to the persons who are not the shareholders of the Company on the rights accounting day as a result of selling their shares to the Company, the Company will pay an additional bonus equal to the amount of dividends that a shareholder would have received in proportion to the shares he/she held and sold to the offeror at the time of the official tender offer, if he had been a shareholder of the Company on the rights accounting day.

In line with the resolution of the General Meeting of Shareholders of Ignitis gamyba AB on 30 April 2020 to pay dividends (EUR 0.056 per share), the Company paid additional bonuses equal to the amount of dividends to the former shareholders of Ignitis gamyba AB in May 2020 in the amount of EUR 229 thousand.

In line with the resolution of the General Meeting of Shareholders of Energijos skirstymo operatorius AB on 30 April 2020 to pay dividends (EUR 0.076 per share), the Company paid additional bonuses equal to the amount of dividends to the former shareholders of Energijos skirstymo operatorius AB in May 2020 in the amount of EUR 1,819 thousand.

Finance income

The Company's finance income during 1st half of 2020 and 2019 were as follows:

	H1 2020	H1 2019
Interest income at the effective interest rate	8,966	7,008
Other income from financing activities	-	2
Total	8,966	7,010

The Company earns interest income from long-term and short-term loans, the majority of which is granted to the Group companies (Note 5, 6). During 1st half of 2020, the Company received EUR 3,705 thousand (during 1st half of 2019: EUR 1,493 thousand) interest income in cash, which is presented in the cash flow statement under 'Interest received'.

Finance expense

The Company's finance expense during 1st half of 2020 and 2019 were as follows:

	H1 2020	H1 2019
Interest expense	7,883	7,200
Interest and discount expenses on lease liabilities	1	-
Negative effect of changes in exchange rates	-	15
Other expenses of financing activities	973	1,704
Total	8,857	8,919

The Company incurs interest expense on long-term and short-term loans payable and bonds issued (Note 11). During 1st half of 2020, the Company paid EUR 808 thousand (during 1st half of 2019: EUR 804 thousand) interest, which is presented in the cash flow statement under 'Interest paid'.

Related party transactions

As at 30 June 2020 and 31 December 2019, the Company's controlling party was the Government of the Republic of Lithuania represented by the Lithuanian Ministry of Finance. For the purposes of disclosure of related parties, the Republic of Lithuania excludes central and local government authorities. The below disclosures comprise transactions and balances with the shareholder, subsidiaries (the Company's transactions), associates and all entities controlled by or under significant influence of the state (transactions with these entities are disclosed only if they are material), and management.

The Company's related party transactions conducted during 1st half of 2020 and balances arising on these transactions as at 30 June 2020 are presented below:

Related parties	Amounts receivable	Amounts payable	Sales	Purchases	Finance income	Finance expense

Subsidiaries
Energijos skirstymo operatorius AB	651,429	-	617	(16)	5,143	-
Ignitis gamyba AB	646	-	239	(5)	-	-
Energetikos paslaugų ir rangos organizacija
UAB	2	-	-	-	14	-
Elektroninių mokėjimų agentūra UAB	4	-	31	-	-	-
Transporto valdymas UAB	21,870	10	-	49	159	-
Ignitis grupės paslaugų centras UAB	36	210	116	797	5	-
Ignitis UAB	58,846	-	329	(6)	676	-
Vilniaus kogeneracinė jėgainė UAB	196	-	48	-	787	-
EURAKRAS UAB	19,416	-	-	-	345	-
Tuuleenergia OŪ	19,693	-	1	-	290	-
Kauno kogeneracinė jėgainė UAB	180	-	82	(13)	234	-
Vėjo gūsis UAB	6	-	-	-	32	-
Vėjo vatas UAB	2,797	-	-	-	61	-
Gamybos optimizavimas UAB	1	61	6	-	9	-
VVP Investment UAB	2	-	-	-	10	-
Ignitis renewables UAB	57,112	-	103	(37)	801	-
Pomerania Wind Farm Sp. z o. o.	3	-	-	-	3	-
Other related parties
EPSO-G UAB	159,338	-	-	-	398	-
Total	991,577	281	1,572	769	8,967	-

The Company's related party transactions conducted during 1st half of 2019 and balances arising on these transactions as at 30 June 2019 are presented below:

Related parties	Amounts receivable	Amounts payable	Sales	Purchases	Finance income	Finance expenses
Subsidiaries
Energijos skirstymo operatorius AB	569,846	-	640	-	4,690	-
Lietuvos energijos gamyba AB	50	-	215	-	-	-
Energetikos paslaugų ir rangos organizacija UAB	1,101	-	4	-	24	-
Elektroninių mokėjimų agentūra UAB	1	-	10	-	-	-
Energijos tiekimas UAB	-	-	96	-	91	-
Duomenų logistikos centras UAB	-	1	5	-	-	-
NT Valdos UAB	902	-	32	-	-	-
Transporto valdymas UAB	28,914	11	-	52	175	-
Technologijų ir inovacijų centras UAB	1,288	39	67	166	4	-
Lietuvos energijos tiekimas UAB	69,534	-	153	-	273	-
Verslo aptarnavimo centras UAB	30	90	101	457	1	-
Vilniaus kogeneracinė jėgainė UAB	76	11,314	58	10	168	-
EURAKRAS UAB	25,107	-	10	1	351	-
Tuuleenergia	19,703	-	1	-	361	-
Kauno kogeneracinė jėgainė UAB	124	-	108	-	82	-
Vėjo gūsis UAB	8	-	-	-	37	-
Vėjo vatas UAB	2,728	-	-	-	65	-
Gamybos optimizavimas UAB	-	-	3	-	-	-
VVP investment UAB	405	-	-	-	4	-
Lietuvos energijos renewables UAB	44,133	-	7	-	117	-
Other related parties
EPSO-G UAB	158,658	-	-	-	541	-
Total	922,608	11,455	1,510	686	6,984	-

The Company's dividend income received from subsidiaries during 1st half of 2020 and 2019 are disclosed in Note 13.

Compensation to key management personnel:

	H1 2020	H1 2019
Wages and salaries and other short-term benefits to key management personnel	714	543
Whereof: termination benefits and benefits to Board Members	91	59
Number of key management personnel	11	12

Key management personnel in the table above comprise heads of administration and their deputies, members of the board.

Contingent liabilities and commitments

17.1 Guarantees issued by the Company

The Group's guarantees issued as at 30 June 2020 and 31 December 2019 were as follows:

Name of the subsidiary	Beneficiary of the guarantee	Date of issue of the guarantee	Maturity	Maximum amount of the guarantee	As at 30/06/2020	As at 31/12/2019
Vilniaus kogeneracinė jėgainė UAB	European Investment Bank	30/12/2016	06/12/2033	190,000	139,979	99,881
Kauno kogeneracinė jėgainė UAB	Swedbank AB	18/10/2017	18/10/2022	68,000	48,282	31,125
Vėjo gūsis UAB	Swedbank lizingas UAB	29/01/2019	28/02/2022	9,258	5,563	6,797
Vėjo vatas UAB	Swedbank lizingas UAB	29/01/2019	28/02/2021	9,687	6,271	7,413
Pomerania Wind Farm Sp. z o.o.	European Investment Bank	09/03/2020	31/12/2035	69,318	42,616	-
Group companies of Ignitis grupė AB	Group companies of Ignitis grupė AB	19/02/2019	19/02/2024	-	54,861	54,106
				346,263	297,572	199,322

The Group companies can lend each other their funds by virtually transferring them to the Group's corporate account (cashpool) opened at the bank Swedbank AB. The Company guarantees that funds borrowed by the Group companies at the cashpool account are timely repaid to the Group companies that have lent funds. As at 30 June 2020, the amount lent and borrowed by the Group companies at the Group's cashpool account totalled EUR 245,562 thousand (31 December 2019: EUR 225,783 thousand), including the amount of EUR 190,525 thousand (31 December 2019: EUR 171,708 thousand) lent by the Company (Note 6).

The Pomerania Wind Farm Sp. z o.o., part of the group companies owned by the Company, has entered into an agreement with the European Investment Bank (EIB) for the loan of PLN 258 million (approx. EUR 60 million) for the implementation of the Pomerania wind farm project in Poland. The first loan payment of PLN 190 million (approx. EUR 43 million) was received on 28 April 2020. The first-call guarantee agreement for this loan was concluded between the Company and EIB. The guarantee amounts to 120% of loan amount – i.e. PLN 309.6 million (approx. EUR 69.3 million). The Company's subsidiary Ignitis renewables UAB, which owns all the shares of Pomerania Wind Farm Sp. z o.o. signed an agreement with EIB for pledging 100% of the shares of Pomerania Wind Farm Sp. z o.o. in favour of the lender. The repayment date of the loan is 31 December 2035.

On 5 December 2016, the Company and the European Investment Bank (Luxembourg) signed a guarantee and indemnity agreement under which the Company secured fulfilment of all current and future obligations of subsidiary Vilniaus kogeneracinė jėgainė UAB in the amount of EUR 190,000 thousand under the credit agreement signed on 5 December 2016 with the European Investment Bank for the term of 17 years. The guarantee cover the repayment of all types of payables related to the usage of the provided loan to the European Investment Bank. As at 30 June 2020, amounts withdrawn by Vilniaus kogeneracinė jėgainė UAB from the loan provided by the European Investment Bank totalled EUR 139,979 thousand (31 December 2019: EUR 99,881 thousand).

On 31 May 2017, the Group's subsidiary Kauno kogeneracinė jėgainė UAB and Swedbank AB signed the credit agreement for the amount of EUR 120,000 thousand. The loan is designated for the financing of construction works of the co-generation power plant complex in Kaunas and the financing of the following construction-related expenses of the project being implemented: financing of payments under the agreements on construction, supply of equipment, electrification, general construction works, general systems, installation of automation systems, insurance, management of the construction site, project management, as well as the financing of advance payments (credit funds cannot be used for the financing of interest and unforeseen expenditure), excl. VAT. As at 30 June 2020, amounts withdrawn from the loan provided totalled EUR 94,670 thousand (31 December 2019: EUR 61,029 thousand). Monetary liabilities of Kauno kogeneracinė jėgainė UAB to the bank under the credit agreement are secured by the guarantees issued by the Company and Fortum OYJ (Finland) in proportion to the number of shares of Kauno kogeneracinė jėgainė UAB held, i.e. 51% of shares is held by the Company and 49% is held by FORTUM HEAT LIETUVA UAB.

Fair values of financial instruments

The Company's amounts receivable for disposal of LitGrid AB shares (Level 3) is measured at fair value.

Fair value is determined on the basis of discounted cash flow models and option pricing models as appropriate.

The carrying amount of the Company's financial assets and financial liabilities measured at amortised cost approximated their fair value, except for bond issue debts.

The bond issue debt of EUR 886,215 thousand (31 December 2019: EUR 590,120 thousand) (Note 11), the fair value of which was equal to EUR 897,652 thousand as at 30 June 2020 (31 December 2019: EUR 630,732 thousand), was reported in the Company's statement of financial position at 30 June 2020. The fair value was calculated by discounting future cash flows related to the coupon payments with reference to the interest rate observable in the market and the regular future payments related to issued bonds. The cash flows were discounted using a weighted average discount rate of 1.94% (31 December 2019: 1.29%). Discount rates for certain bond issues are determined as 120 base points interest rate increased by EUR interest rate swap for tenors that is similar to period left until redemption of issued bonds. The bond issue debt is attributed to Level 2 of the fair value hierarchy.

As at 30 June 2020, the fair value of the Company's amounts receivable related to EUR 416,288 thousand (31 December 2019: EUR 416,288 thousand) green bond amounts receivable of the subsidiary Energijos skirstymo operatorius AB was approximately equal to EUR 423,003 thousand as at 30 June 2020 (31 December 2019: EUR 445,059 thousand). The fair value is estimated by discounting cash flows with reference to the interest rate determined as 120 base points interest rate increased by EUR interest rate swap for tenors that is similar to period left until redemption of issued bonds. The cash flows were discounted using a weighted average discount rates of 1.92% (31 December 2019: 1.30%). The fair value of amounts receivables is attributed to Level 2 of the fair value hierarchy.

The carrying amount of debt liabilities to OP Corporate Bank Plc and SEB Bankas AB was equal to EUR 62,045 thousand as at 30 June 2020 (31 December 2019: EUR 82,246 thousand). The fair value of financial liabilities related to the debts, which is calculated by discounting future cash flows with reference to the interest rate observable in the market, is equal to EUR 57,540 thousand (31 December 2019: EUR 80,936 thousand). The cash flows were discounted using a discount rate of 0.981% (31 December 2019: 0.973%). The measurement of financial assets and financial liabilities related to the debts is attributed to Level 2 of the fair value hierarchy.

As at 30 June 2020, the Company accounted for an amount receivable for the sale of LitGrid AB at fair value through profit or loss. The carrying amount of the amount receivable was equal to EUR 158,658 thousand (31 December 2019: EUR 158,658 thousand). Their fair value is attributed to Level 3 in the fair value hierarchy. Fair value was estimated on the basis of discounted cash flows using the rate of 0.614% (31 December 2019: 0.614%).

The table below presents allocation between the fair value hierarchy levels of the company's financial instruments as at 30 June 2020 (refer to Note 2.30 of annual financial statements for the description of the fair value hierarchy levels):

			Level 1	Level 2	Level 3
Company	Note	Carrying amount	Quoted prices in active markets	Other directly or indirectly observable inputs	Unobservable inputs	In total
Financial instruments measured at fair value through profit (loss)
Assets Receivable for the sale of LitGrid AB	5	158,658	-	-	158,658	158,658
Financial instruments for which fair value are disclosed Assets
Green bond receivables from subsidiary Energijos skirstymo operatorius AB	5.1	416,288	-	423,003	-	423,003
Liabilities Bonds issued Debt liabilities to OP Corporate Bank Plc and SEB Bankas AB	11	886,215	-	897,652	-	897,652
	11	62,045	-	57,540	-	57,540

Subsequent Events

On 7 July 2020, the Company together with Litgrid AB (hereinafter 'Litgrid') concluded a share sale-purchase agreement with QEIF II Development Holding Sàrl, a subsidiary of Quaero European Infrastructure Fund II, managed by Quaero Capital, regarding the sale of shares of its subsidiary Duomenų logistikos UAB (hereinafter 'DLC'). Under the agreement, the Company sold 79.64% of shares, and Litgird – 20.36% of shares of DLC. Upon closing, QEIF II Development Holding Sàrl has acquired a title to 100% of DLC. The title to shares of DLC to QEIF II Development Holding Sàrl were transferred following the decision of Coordination Commission for the Protection of Objects of National Security on compliance of the transaction with national security interests, and the adoption of decision on consent for the transfer of the DLC shares by extraordinary General Meeting of Shareholders of Litgrid. The total value of the transaction is EUR 10.1 million. The subsidiary was sold with profit.

On 8 July 2020, the Company concluded a loan agreement of EUR 20 million with Ignitis UAB. The loan will provide financing for projects of Ignitis UAB, which is necessary for participation in public-private partnership tenders. The repayment date of the loan is 21 May 2030. The fixed annual interest rate of 2.96% will be paid under the agreement.

On 14 July 2020, the Company concluded a loan agreement of EUR 30 million with Ignitis renewables UAB. The loan will provide financing for the development of wind farm projects of Ignitis renewables UAB. The repayment date of the loan is 31 December 2020. The fixed annual interest rate of 1.13% will be paid under the agreement.

On 23 July 2020, the Ministry of Finance of the Republic of Lithuania (hereinafter 'the Ministry of Finance'), the authority implementing the rights of the sole shareholder of the Company, submitted for consideration draft resolution of the Government of the Republic of Lithuania 'On the amendments to the Resolution No 20 of the Government of the Republic of Lithuania of 14 January 1997 'On the dividends of company shares held by the State and profit contributions from state enterprises' and draft resolution of the Government of the Republic of Lithuania "On dividends paid by Ignitis grupė AB". After the consideration, the draft resolutions will be submitted to the Government of the Republic of Lithuania. Following the approval of the resolutions by the Government of the Republic of Lithuania, the Company will approve the updated dividend policy. The Company will inform about further related actions in the manner set forth by laws.

On 28 July 2020, the new Articles of Association which establishes amended legal form of the Company from a private limited liability company to a public limited liability company and stipulates the name of the Company – Ignitis grupė AB, were registered with the Register of Legal Entities. The Articles of Association of the Company were amended on 30 June 2020 by the decision of the Ministry of Finance of the Republic of Lithuania. The reorganisation of the Company is considered completed on 28 July 2020.

On 3 August 2020, the Company received a claim from minority shareholder of subsidiary Ignitis gamyba AB regarding buyout of shares (note 4.4). The claim asks to determine fair price of the shares. The Company thinks that this claim does not have significant effect on delisting of subsidiaries or buyout.

On 10 August 2020, the Company received a claim from minority shareholder of subsidiary Energijos skirstymo operatorius AB regarding buyout of shares (Note 4.4). The claim asks to determine fair price of the shares ant to postpone buyout of shares till the fair price will be determined. There is a possibility, that buyout of Energijos skirstymo operatorius AB shares might be postponed, but the Company thinks that this claim would not have significant effect on buyout of Energijos skirstymo operatorius AB shares.

The mandatory buyout of shares of its subsidiary Ignitis gamyba AB (hereinafter – GEN) was finished on 17 August 2020. Completed transactions were settled on 19 August 2020. During the period of the mandatory buyout, which lasted from 18 May 2020 to 17 August 2020, 4 859 782 (four million eight hundred fifty-nine thousand seven hundred and eighty-two) shares of GEN were bought out, which equals to 0.75 % of the authorized capital of GEN. After the mandatory buyout of shares of GEN, the Company owns 98.20% of the shares of GEN, other shareholders own 1.8% or 11 688 245 (eleven million six hundred eighty-eight thousand two hundred and forty-five) of the shares of GEN. At the time of the mandatory buyout of shares of GEN, the Company offered the price agreed with the Bank of Lithuania for the shares, which was the same as that paid during the non-competitive tender offer, i.e. EUR 0.640 per share.

*********

26/08/2020

CERTIFICATION STATEMENT

Referring to the provisions of the Article 13 of the Law on Securities of the Republic of Lithuania and the Rules of disclosure of information of the Bank of Lithuania, we, Darius Maikštėnas, Chief Executive Officer of AB Ignitis grupė and, Darius Kašauskas, Finance and Treasury Director of AB Ignitis grupė, and Giedruolė Guobienė Head of Accounting department UAB Ignitis grupės paslaugų centras acting under Order No IS-88-20 of 10 April 2020, hereby confirm that, to the best of our knowledge, AB Ignitis grupė interim condensed financial statements for the six month period ended 30 June 2020 prepared according to International accounting standard 34 'Interim financial reporting' as adopted by the European Union, give a true and fair view of AB Ignitis grupė assets, liabilities, financial position, profit or loss for the period and cash flows, the Interim Report includes a fair review of the development and performance of the business as well as the condition of AB Ignitis grupė together with the description of the principle risks and uncertainties it faces.

AB Ignitis grupė Chief Executive Officer

Darius Maikštėnas

Darius Kašauskas

AB Ignitis grupė Finance and Treasury Director

UAB Ignitis grupės paslaugų centras, Head of Accounting department, acting under Order No. IS-88-20 (signed 10 April 2020)

Giedruolė Guobienė

www.ignitisgrupe.lt Company code

301844044 VAT payer code LT100004278519

AI Terminal

Ignitis Grupe

2254_ir_2020-08-26_f134f085-e606-476d-b9de-06530facdcee.pdf

Interim report

H1 2020

Contents

Overview

Management's foreword

Dear Customers, Partners, Employees, Shareholders,

Ignitis Group – a sustainable energy leader in the Baltics

Performance highlights

Profits and returns*

Sustainable development

Green electricity generated TWh

Quality and efficiency Social Customer engagement

% Customers and Solutions

The most significant events

Q1 2020 Q2 2020 After the reporting period

Business model

Activities of the Group

Structure of the Group

Model of management:

Segments

Networks

Resilient and efficient energy distribution enabling the energy transition

Strategic goals:

Green Generation Focused, sustainable and profitable growth

Strategic goals:

Flexible Generation Reliable and flexible power system

Strategic goals:

Customers and Solutions Innovative solutions for easier life and energy evolution

Strategic goals:

Business environment

GDP forecast

COVID-19 factors

Energy markets review

Wholesale electricity market

Natural gas market

Securities of the Group

Issuers of shares

Debt securities

Credit rating

Debt securities issued by the Company

Significant agreements

Results

Key operating indicators

Analysis of key operating indicators

Electricity

Gas

Heat

Electricity distributed and sold, gas distributed and sold, TWh

Key financial indicators

Analysis of Key Financial Indicators

Revenue*

Revenue by segment, EURm

Revenue by segment H1 2020, EURm

Revenue by country, EURm

➔ Contents

Expenses

Purchases of electricity and gas

SG&A expense

Other operating expenses

Adjusted EBITDA*

Adjusted EBITDA by segments

Adjusted EBITDA by segments, EURm

Adjusted EBITDA by types of activities

Adjusted EBITDA by types of activities, EURm

Adjusted EBITDA by types of activities H1 2020, %

EBITDA adjustments*

EBITDA adjustments, EURm

➔ Contents

Adjusted EBIT

Adjusted net profit, EURm

Adjusted net profit

Adjusted net profit adjustments, EURm

Reported net profit

Reconciliation of reported net profit with EBIT and EBITDA, EURm

Investments

Dynamics of the Group 's Investments by segments, EURm

Balance sheet

**At the date of this report, these entities* were controlled, directly or indirectly, by the Group:**