Investment (LVL million)

25.1 29.1 22.8 17.2 23.3 19.7

,@LIPHĉL (LVL million)

Equity (LVL million)

Net turnover (LVL million)

+RBGĉGRG>BREBG?B>@K

COMPANY IN 2011

MPH=C@>LBT@BKLHKLP@GULV@GLV@IHKBLBHGHA(/!-*RLTBCRK%ɵQ@as a leader in the Latvian heating market by increasing the availability of natural gas, promoting various ways to use it, and providing Latvia with one of the most stable natural gas supplies in Europe.

ur vision is to transform Latvia into one of Europe's largest GRLMPREURKKLHPRU@>@GLP@K MLBEBQBGUHMP>HMGLPOKMGBJM@ geological formations.

ur mission is to contibute to the Baltic region's economy by ensuring the security of energy supply, the development of the sector, and competitive pricing.

Council Report . 6
Council . 8
Board . 10
Shares and Shareholders . 12
Natural Gas in the Energy Resources Market . 14
Development . 16
'GʁMDREGKŸ1G?@PUPHMG?Ÿ%RKŸ/LHPRU@Ÿ\$R>BEBLO 20
Gas Transmission . 22
Personnel . 24
International Co-operation . 26
Corporate Social Responsibility .28
To Society .28
Environmental Policy . 30
Board Report

1. Activity of the Company in the Reporting Year 32
2. Research and Development Measures . 33
Ÿ Ÿ\$BGRG>BREŸXBKDŸ+RGRU@F@GL 33
4. Post Balance Sheet Events . 34
Ÿ Ÿ"BKLPB=MLBHGŸHAŸŸWPHǘLKŸX@>HFF@G?@?Ÿ=OŸLV@Ÿ HRP?Ÿ 34
Ÿ Ÿ\$MLMP@ŸWPHKI@>LK 34
/MFFRPOŸǘGRG>BREŸKLRL@F@GLK 36
Ÿ WPHǘLŸRG?ŸEHKKŸR>>HMGLŸAHPŸLV@ŸO@RPŸ@G?@?Ÿ"@>@F=@PŸ Ÿ 36
Balance sheet as at December 31, 2011 37
Ÿ /LRL@F@GLŸHAŸ>VRGU@KŸBGŸ@JMBLOŸAHPŸLV@ŸO@RPŸ@G?@?Ÿ"@>@F=@PŸ Ÿ . 39
Ÿ !RKVŸǙHNŸKLRL@F@GLŸAHPŸLV@ŸO@RPŸ@G?@?Ÿ"@>@F=@PŸ Ÿ41
Notes
Accounting policies .42

COUNCIL REPORT

he priority of the Joint Stock !HFIRGO -*RLTBCRK %ɵQ@- V@P@BGRǜ@P Y LV@ !HFIRGO BG 2011, just as in previous years, was a continuous and safe natural gas supply to customers both in Latvia and the neighbouring countries: Russia, Estonia and Lithuania. Due

to the unusually cold winter of 2010/2011, almost all RTRBER=E@R>LBT@URKNRKNBLV?PRNGAPHFLV@'GʁMDREGK 1G?@PUPHMG?%RK/LHPRU@\$R>BEBLOV@P@BGRǜ@PY'1%/ by the spring, leaving as little as 41 million m³ at the AR>BEBLO !HGK@JM@GLEO LV@ KMFF@P HA ERKL O@RP KRN LV@VBKLHPB>REEOVBUV@KLGRLMPREURKBGC@>LBHGTHEMF@Y 2261.8 million m³ .

In the priorities of European energy infrastructure till 2020 developed by the European Commission V@P@BGRǜ@P Y #! LV@ RELB> /@R P@UBHG VRK =@@G B?@GLBǘ@?RKHG@HAAHMPIPBHPBLO>HPPB?HPK LVMKG@NURK infrastructure projects are likely to be implemented in these countries. Due to these projects, the role of the '1%/ BG LV@K@>MPBLOHAURKKMIIEOHA=HLV*RLTBRRG? the neighbouring countries and the formation of a gas market will increase. In order to assess the prospects of further development of the facility and to develop IRPLB>MERP L@>VGB>RE KHEMLBHGK AHP LV@ FH?@PGBQRLBHG RG?IHKKB=E@ @SIRGKBHGHA LV@ '1%/ KI@>BREBKLKHALV@ K>B@GLBǘ> RG? L@>VGB>RE BGKLBLML@ 2,''%6 NHPD@? HML R>HG>@IL HAFH?@PGBQRLBHG HA LV@ '1%/ LBEE -G LV@ =RKBK HA LVBK >HG>@IL LV@ '1%/FH?@PGBQRLBHG will continue and the usefulness of storage expansion will be evaluated with a view to further improve the security of gas supply to consumers and to provide the necessary gas volumes.

In 2011, the consumers were sold 1 561.4 billion m³ of GRLMPREURK0V@!HFIRGOKG@LIPHǘLP@R>V@?*2* FBEEBHG#1XFBEEBHG @S>@@?BGULV@ǘUMP@HA =O0V@!HFIRGOBGT@KL@?*2*FBEEBHG#1X FBEEBHG BG FH?@PGBQRLBHG LV@ RLLPR>LBHG HA G@N customers and the improvement of safety. The year 2011 saw a further rise of the total number of gas users, reaching 442,600 at the end of the year.

The key projects completed by the Company in 2011 were the reconstruction of wells and the construction HA R ?POBGU MGBL RL LV@ '1%/ RG? LV@ >HGKLPM>LBHG HA a gas pipeline under the Daugava riverbed using the VHPBQHGLRE ?PBEEBGU F@LVH? >HFFBKKBHG@? ERL@ BG LV@ year. The last year also saw further diagnostics of the technical condition of gas transmission pipelines, and in summer the possible leakages in these pipelines were searched for via laser technologies by a specially @JMBII@?MELPRFH?@PGV@EB>HIL@PHA--I@G%PB?#MPHI@- It should be noted that in recent years the Company has devoted much attention to proper detection and elimination of pipeline damages.

In 2011, during its meetings, the Council heard and discussed the reports to the Council on the operation of the Company prepared by the Board, reviewed RG? R>>@IL@? LV@ ?PRǜ RGGMRE P@IHPL HA RG? LV@ ?PRǜ =M?U@L HA 0V@ !HMG>BE URT@ LV@ HRP? directions and recommendations on improving the Company's operation. The Council reviewed and approved the amendments to the agreements with the GRLMPREURKKMIIEB@PKLV@-(/!-%RQIPHF-RG?LV@**! "ITERA Latvija" prepared by the Board. Thus, Latvia is guaranteed stable natural gas supplies till 2030 and the competitiveness of gas in the energy resource market has been ensured.

The Council has studied the Corporate Governance Report for the last year prepared by the Board in compliance with the "Principles of Corporate Governance and Recommendations on the Implementation thereof" issued by the JSC "NASDAQ OMX Riga" and holds a TB@NLVRLLV@ HRP?VRK?HG@KBUGBǘ>RGLNHPDLH@GKMP@ that the Company complies with the recommended principles of corporate governance. The Council follows the same principles.

Over the reporting period, the Council regularly received reports by the Board regarding the operation, @>HGHFB> RG? ǘGRG>BRE KLRG?BGU HA LV@ !HFIRGO 0V@ Council supervised the operation of the Company in all key aspects and made sure the Company works in compliance with the laws, the Company's Articles of Association and the resolutions of the Shareholders' F@@LBGU T@PBǘ@? RG? R>>@IL@? LV@ =M?U@L KM=FBLL@? by the Company and made proposals for improving the Company's work.

The Annual Accounts 2011 of the Company were audited by the International Auditor Company PricewaterhouseCoopers LLC. The Council has received LV@RM?BLHPKP@IHPLKRLL@KLBGULVRLLV@ǘGRG>BRE statements provide a fair and clear presentation HALV@(/!-*RLTBCRK%ɵQ@-RG?BLKǘGRG>BREP@KMELK RG?>RKVǙHNKBGBG>HFIEBRG>@NBLVLV@ Annual Accounts Law of the Republic of Latvia. The Council has reviewed and accepted the Board report on the operation of the Company in the reporting year, research and development F@RKMP@K ǘGRG>BRE PBKD FRGRU@F@GL RG? KMUU@KLBHGKRKLHLV@?BKLPB=MLBHGHALV@IPHǘL of 2011.

The Council of the Company acknowledges the successful performance of the Board and employees in 2011 and also wishes it future success and progress.

COUNCIL

Chairman of the Council

&@R?HA%RKRG?*BJMB?&O?PH>RP=HG+RPD@LBGURG?WPH>@KKBGU "BTBKBHGHA-(/!-%RQIPHF-KBG>@+RP>V +@F=@PHALV@ HRP?HA-(/!-%RQIPHF-YUPR?MRL@?APHF /LW@L@PK=MPU/LRL@1GBT@PKBLOBG!P@?BL0V@HPORG?\$BGRG>@ +RGRU@F@GLYUPR?MRL@?APHF RELB>/LRL@0@>VGB>RE 1GBT@PKBLOHA/LW@L@PK=MPUGRF@?Rǜ@P"\$1KLBGHTBGLV@ ǘ@E?HA@GUBG@@PBGUHAFHF@GLMF?@TB>@KRG?RMLHFRL@? rotation lines.

Vice-chairman of the Council

/BG>@YWP@KB?@GLHA**!-'0#X*RLTBCR- Y'GL@PGRLBHGREX@ERLBHGK\$R>MELOHA1GBT@PKBLOAHP .MREBǘ>RLBHGXRBKBGUHA#S@>MLBT@K YWHKLUPR?MRL@!HMPK@RLXBURWHEOL@>VGB>RE Institute.

PeterFrankenberg

Vice-Chairman of the Council (since July 2, 2010)

/BG>@Y&@R?HA-+1W#%'GT@KLF@GL+RGRU@F@GL and International Shareholdings Mid-/Downstream", Senior 2B>@IP@KB?@GLHA-#-,XMVPURK%- +RGRUBGU"BP@>LHPHA -#-,XMVPURK'GL@PGRLBHGRE-Y"PP@PH@>"PWV 'GL@PGRLBHGRE>>HMGLBGU 1GBT@PKBLOHAXMVP H>VMF

Joachim Hockertz

/BG>@Y&@R?HA RELB>/LRL@K-ǚ>@-XMVPURK %- KBG>@-#-,XMVPURK'GL@PGRLBHGRE%- Y+RSWERGD'GKLBLML@BG+M@EV@BFRG?@PXMVP "PWV

Mario Nullmeier

/BG>@Y&@R?HA RELB>/LRL@K-ǚ>@HA-#-,XMVPURK International AG" in Tallinn, Estonia. Y+RKL@P"@UP@@BG%EH=RE MKBG@KK?FBGBKLPRLBHG

Alexander Krasnenkov

/BG>@Y%@G@PRE"BP@>LHPHA**!- RELB>*,%- 'GL@PGRLBHGRE'GKLBLML@HA\$BGRG>@RG?#>HGHFB>K /I@>BREBLOHA International Economics and International Relations.

Uwe Fip

/BG>@Y/@GBHP2B>@IP@KB?@GLHA-#-,XMVPURK%- Head of Eastern Gas Supply Department. Master's Degree in -BE#GUBG@@PBGU "@UP@@BG MKBG@KK+RGRU@F@GL"BIEHFRY +@P>VRGL

Heinz Watzka

/BG>@Y/@GBHP2B>@IP@KB?@GLHA-#-,XMVPURK%- responsible for maintenance of southern gas pipeline system. YKLM?B@KHA+R>VBG@+RGMAR>LMPBGURL2B@GGR0@>VGB>RE 1GBT@PKBLOMKLPBR KI@>BREBQ@?BGIMFIKLRLBHGN@E?BGURG? hydraulic design for oil industry.

Yelena Karpel

/BG>@Y+@F=@PHALV@ HRP?HA"BP@>LHPKHA-(/! -%RQIPHF-AHEEHNBGURP@KHEMLBHG=OKVRP@VHE?@PKF@@LBGU Y)HPHL>V@GDH)OBT#>HGHFB>'GKLBLML@ /I@>BREBLOHA Industry Planning.

Igor Nazarov

/BG>@Y&@R?HA#SIHPL"BTBKBHGHA-,%)'0#X-+HK>HN XMKKBRY+HK>HN/LRL@1GBT@PKBLOHA\$HP@BUGǗRBPK +%'+-NBLVBGLV@APRF@NHPDHA+BGBKLPO HA\$HP@BUGǗRBPK "BIEHFRHA!HFF@P>BRE"BTBKBHG@JMBTRE@GL LH+RKL@PHA#>HGHFB>KY#>HGHFBKLNBLVIPHǘ>B@G>OHAAHP@BUG ERGUMRU@K'LREBRGRG?#GUEBKV

Vlada Rusakova

/BG>@Y+@F=@PHALV@ HRP?HA-(/!-%RQIPHF- Head of Strategic Development Division. Y+HK>HN-BERG?%RK'G?MKLPO'GKLBLML@GRF@? Rǜ@P'+%M=DBG .MREBǘ>RLBHGHA#GUBG@@P in design, planning and operation of oil and gas pipelines, gas storage facilities and oil tanks; postgraduate course at Moscow Oil and Gas Industry 'GKLBLML@GRF@?Rǜ@P'+%M=DBG

BOARD

(/!-*RLTBCRK%ɵQ@-!VRBPFRGHALV@ Board since 1988; working in the gas industry KBG>@YWVOKB>RE#G@PUO'GKLBLML@HA

Latvian Academy of Sciences, Doctorate BG#GUBG@@PBGU"PK>BGU

Gints Freibergs

Board Member

(/!-*RLTBCRK%ɵQ@- HRP?F@F=@P since 1997; working in the gas industry since 1984. YXBURWHEOL@>VGB>RE'GKLBLML@ Engineer of Industrial Heat Energy.

Anda Ulpe

Board Member

(/!-*RLTBCRK%ɵQ@- HRP?F@F=@P since 1997; working in the gas industry KBG>@Y1GBT@PKBLOHA*RLTBR Master's Degree of Social Sciences in Economics.

Board Member, Vice-chairman of the Board

Tumat

Joerg

2B>@>VRBPFRGHALV@ HRP?HA(/!-*RLTBCRK%ɵQ@- KBG>@Y&@R?HA"@IRPLF@GLRL #RKL@PG%RK>JMBKBLBHGK"BTBKBHGHA-#-,XMVPURK AG/Ruhrgas AG"; agreements concerning OJSC

-%RQIPHF-KVRP@K @RKL@PGURKIMP>VRK@K working in the gas industry since 1998. Y1GBT@PKBLOHA&RU@G "BIEHFRBG MKBG@KK?FBGBKLPRLBHG"BIE @LPB@=KNBPL

Alexander Miheyev

Board Member, Vice-chairman of the Board

\$BPKL"@IMLOHA&@R?HA%RKRG?*BJMB?&O?PH>RP=HG +RPD@LBGURG?WPH>@KKBGU"BTBKBHGHA-(/!-%RQIPHF- since 2003; working in the gas industry since 1968. Y+HK>HN-BERG?%RK'G?MKLPO'GKLBLML@GRF@? Rǜ@P'+%M=DBG .MREBǘ>RLBHGHA#GUBG@@PBG?@KBUG and operation of oil and gas pipelines, gas storage facilities and oil tanks.

ShaRes aNd ShaReholdeRs

+HP@>LBTBLOHG/@>MPBLB@K+RPD@L

V@KVRP@KHALV@(/!-*RLTBCRK%ɵQ@- have been listed on NASDAQ OMX XBUR @S>VRGU@ KBG>@ \$@=PMRPO 1999. The shares are traded on the second list, their trading ticker as HA MUMKL BK %6#X RG? LV@GHFBGREKVRP@TREM@ BK*2* The total number of shares is 39.9 million, while the number of securities in public trading is 25,328,520.

According to the statistics of the Latvian Central Depository, the security market of Latvia in 2011 was FHP@R>LBT@LVRGLV@O@RP=@AHP@YLV@LPR?BGUHAKVRP@K P@R>V@?*2*FBEEBHG NVB>VBK=OFHP@LVRG in 2010. 9,370 new securities accounts were opened with Latvian banks and broker companies in 2011.

0PRGKR>LBHGKNBLVKVRP@KHA(/!-*RLTBCRK%ƦQ@-RL(/!-,/".-+4X'%- KLH>D@S>VRGU@BG

	2000	2001	2002	2003	2004	2005	2006	2007	2008	2009	2010	2011
/VRP@ŸIPB>@Ÿ2
/VRP@ŸIPB>@Ÿ2
ŸŸŸ\$BPKL	0.00	3.65	6.65	5.45	5.51	6.20	9.95	10.35	7.25	4.55	4.57	4.800
Highest	3.70	11.35	6.80	6.25	6.60	9.90	11.13	11.25	8.20	6.00	6.00	7.000
Lowest	1.80	3.50	4.80	5.40	5.40	6.15	9.27	7.05	3.62	3.32	4.57	4.601
Average	2.93	6.16	5.35	5.51	5.85	7.67	10.22	10.34	6.77	4.31	5.15	5.320
Last	3.60	6.65	5.49	5.50	6.50	9.61	10.32	7.12	4.55	4.10	4.90	5.651
Change		82.19%	-17.44%	0.92%	17.97%	55.00%	3.72%	-31.21%	-37.24%	-9.89%	7.22%	17.73%
Share turnover. pcs			8.728.020 8.363.161 3.982.263 4.962.617		181.611	63.360	128.844	154.825	46.565	64.319	85.493	218.132
Share turnover. million
2	25.565	51.480	21.314	27.340	1.062	0.486	1.316	1.600	0.315	0.277	0.440	1.160
Number of transactions	2.122	2.892	3.606	1.719	863	864	1.066	1.074	1.711	1.267	988	1.284
WPHǘLŸI@PŸKVRP@							0.526	0.822	0.477	0.480	0.646	0.645
!RIBLREBQRLBHGŸ
FBEEBHGŸ2	143.640	265.335	219.051	219.450	259.350	383.439	411.768	284.088	181.545	163.590	195.510	225.475

(/!-*RLTBCRK%ƦQ@-KVRP@IPB>@

,H!VRGU@KBGLV@/LPM>LMP@HA /VRP@VHE?@PKRG?/VRP@!RIBLRE

0V@ (/! -*RLTBCRK %ɵQ@- >HFIE@L@? LV@ P@IHPLBGU O@RP with an unchanged structure of shareholders. As of the end of 2011, the company had three main shareholders: the German company "E.ON Ruhrgas International GmbH", which holds 47.2% of shares, the Russian OJSC -%RQIPHF-NBLVHAKVRP@KRG?LV@**!-'0#X*RLvija" with 16% of shares. The remaining 2.8% of shares are owned by minority shareholders, including employees of the company. The share capital of the company at the end of the year had not changed and amounted to *2*FBEEBHG#1XFBEEBHG NVB>V=P@RDK?HNG LHRKFRGOTHLBGUKVRP@KNBLVRGHFBGRETREM@HA*2* #1X

'FIPHT@?WHKBLBHGKRL-,/". -+4 RELBCR-

The capitalisation value of the company at the end of P@R>V@?*2*FBEEBHG NVB>VBK=O*2* million more than a year before. In terms of the stock market capitalisation, the company ranked number one among companies listed on "NASDAQ OMX RIGA" and number four among those listed on "NASDAQ OMX" in the Baltics. In the previous reporting period, the company ranked number one and number eight respectively.

/VRP@WPB>@RG?0MPGHT@P%H1I

0V@ IPB>@ HA HG@ KVRP@ HA LV@ (/! -*RLTBCRK %ɵQ@- RL -,/".-+4X'%-ǙM>LMRL@?APHF*2*LH*2* APHF#1XLH#1X?MPBGULV@P@IHPLBGU O@RP P@R>VBGU*2*#1XRLLV@@G?HA RG?KMPIRKKBGULV@ǘUMP@HALV@@G?HA=O Meanwhile, the share turnover at "NASDAQ OMX RIGA" RFHMGL@?LH KVRP@KTREM@?RL*2*FBEEBHG

/VRP@VHE?@PKLPM>LMP@

1X FBEEBHG NVB>V BK =O KVRP@K FHP@ than in 2010.

X@>HP?BG"BTB?@G?K

0V@IPHIHKREAHP?BKLPB=MLBHGHALV@IPHǘLHALV@P@IHPL-BGUO@RP ?PRǜ@?=OLV@ HRP?HALV@(/!*RLTBCRK%ɵQ@ @GTBKRU@K?BTB?@G?IROF@GLBGLV@RFHMGLHA*2* I@PKVRP@HP*2*FBEEBHG#1XFBEEBHGBG LHLRE 0VBK >HFIPBK@K HA LV@ >HFIRGOK IPHǘL BG 2011. The proposal is pending review at the general meeting of the company's shareholders. The amount to =@IRB?BG?BTB?@G?KI@PKVRP@VRKUPHNG=O*2*HP 20.0% compared with 2010 and will be the highest ever KBG>@ LV@ (/! *RLTBCRK%ɵQ@KVRP@KVRT@=@@G LPR?@? on the market.

"BTB?@G?I@PKVRP@*2*
KVRP@

"OGRFB>KHA(/!-*RLTBCRK%ƦQ@-KVRP@IPB>@KRG?-+4XBURRG? -+4 RELB>%''G?@S@K

Natural Gas iN the ENergy Resources MarKet

V@ UPHKK ?HF@KLB> IPH?M>L %"W of Latvia grew by 5.5% in 2011, including a rise of 5.7% year-on-O@RP BG LV@ AHMPLV JMRPL@P RG? although the reporting year saw a reduced consumption of energy and energy resources, such a

tendency of economic growth suggests an imminent increase of energy consumption in the future.

According to provisional data of the Central Statistics MP@RM!/ LV@LHLRE@G@PUO>HGKMFILBHGHA*RLTBRBG NRKUBURNRLLVHMPK%3V AREEBGU=@VBG? that of 2010. The volume of electricity generation reached 6093 GWh, which is by 8% less than the year before. Net import of electricity in 2011, however, saw an increase by 43%.

E@>LPB>BLO U@G@PRLBHG NRK KM=KLRGLBREEO RǗ@>L@? =O LV@N@RLV@P>HG?BLBHGK Y =HLV LV@NRL@P BGǙHN BG LV@ Daugava River and the mild winter. These factors resulted in a lower output at the hydro power plants of the Daugava cascade and at the thermal power plants.

While households consumed 8.6% less electricity, the industry sustained its positive trend with an increase of 5% in the reporting year.

Total natural gas consumption in 2011 reached 1561 million m³ , which is by 12.7% less than the year before. The sharpest drop in sales year-on-year was recorded BGLV@AHMPLVJMRPL@PHANV@GLV@P@ERLBT@EOVBUV outdoor air temperature resulted in a reduced demand for thermal energy, thus the cogeneration plants consumed less natural gas.

0V@ D@O AR>LHPK BGǙM@G>BGU LV@ >HFI@LBLBT@G@KK HA natural gas in the energy resources market were the RUP@@F@GL HA LV@ (/! -*RLTBCRK %ɵQ@- RG? LV@ -(/! -%RQIPHF-HGLV@P@?M>LBHGHALV@GRLMPREURKIMP>VRK@ price, as well as the increase of taxes for natural gas during the reporting year.

WPB>@\$EM>LMRLBHGKRG?0RS!VRGU@K X@KMELBG0RPBĈ'G>P@RK@

The agreement signed in December 2010 between the (/!-*RLTBCRK%ɵQ@- RG? LV@-(/!-%RQIPHF- @GTBKRU@? a reduction of the natural gas prices by 15% provided the conditions are the same as when the previous price calculation formula was applied. A key condition was to keep the previous natural gas consumption volumes. A new agreement with terms and conditions similar to those of the previous supply contract was also signed for 2012.

'G@RPEO LV@P@?M>@?PRL@HATREM@R??@?LRS20 applied to natural gas was raised from 10% to 12%, but this factor did not prevent the natural gas prices from ?PHIIBGU'GLV@ǘPKLVREAHA LV@LRPBǗK?@>P@RK@? by 6% for households using natural gas for heating and =OAHPVHMK@VHE?KMKBGUBLBGKLHT@K0V@LRPBǗKAHP households are revised once in 6 months.

KLHBG?MKLPBRE>MKLHF@PK LV@LRPBǗK>VRGU@FHGLVEO depending on the purchase price. Due to a favourable KBLMRLBHG BGLV@KLJMRPL@PHABG?MKLPBRE>MKLHF@PK @GCHO@?=ORGRT@PRU@HA EHN@P LRPBǗK LVRG BG ERL@ 2010. However, by the end of the year, with the rapid rise of the prices of oil and its products, which the GRLMPREURKIMP>VRK@IPB>@BKI@UU@?LH LV@LRPBǗKN@P@ back to their pre-2011 level.

0V@ GRLMPRE URK IPB>@ NRK KM=KLRGLBREEO BGǙM@G>@? =O LV@ LRS >VRGU@K RK HA (MEO \$PHF LV@G HG LV@ P@?M>@?20PRL@HANRK>RG>@EE@? AHPVHMK@VHE? customers, thus the tax rose to 22%. Moreover, natural gas used in household stoves and heating, as well as in heat and electricity production was applied an excise LRS HA *2* I@P >M=B> F@LP@K !HGK@JM@GLEO LV@LRPBǗKBG>P@RK@?=OAHPKLHT@MK@PKRG?=O for heating, while the price of excised natural gas for industrial consumption went up by 5-6%.

The resolution to expand the range of users liable to the excise tax with the inclusion of electricity generation RG?>HU@G@PRLBHGYB@ LV@K@>LHPKR>>HMGLBGUAHPLV@ TRKLFRCHPBLOHAGRLMPREURK>HGKMFILBHGYNRKR?HIL@? =OLV@*RLTBRGUHT@PGF@GLBG\$@=PMRPO UPHMG?BGU it on the need for additional budget consolidation measures.

!HFI@LBLBT@G@KKHG#1/>RE@ X@LRBG@?

Against the backdrop of other member states of the #MPHI@RG 1GBHG LV@ (/! -*RLTBCRK %ɵQ@-NRK R=E@ LH HǗ@PGRLMPREURK LH BLK>MKLHF@PK AHPIPB>@K LVRLN@P@ among the lowest in Europe.

According to the estimates of "Eurostat", the industrial customers in Latvia had the sixth lowest natural gas IPB>@K BG LV@#1 BG LV@ǘPKLVREAHA RG? LV@ǘǜV lowest in the second half of 2011.

The data of "Eurostat" show that in the second half of 2011 the industrial customers in Latvia (consumption APHF LH %(IRB?#1XI@PD3V HAGRLMPREURK@S>EM?BGULRS@K NVBE@LVHK@BG#KLHGBRY #1X BGLV@,@LV@PERG?K#1X BGLV@1)Y #1X RG?BGXHFRGBR#1X

In the household segment, the prices in Latvia in N@P@LV@LVBP? EHN@KL BGLV@#1@S>EM?BGULRS@K In the second half of 2011, the Latvian households >HGKMFILBHG APHF%( LH%(IRB?#1X I@P D3V HA GRLMPRE URK -GEO LVHK@ BG #KLHGBR #1X RG?XHFRGBR#1XVR?EHN@PIPB>@K

"HFBGRG>@BG!HU@G@PRLBHG +RBGLRBG@?

According to the data of the CSB, the structure of natural gas consumption is still distinctly dominated by the conversion sector, the share of which has grown by 3% over the year reaching 68%.

In 2011, 84 cogeneration plants with the total electric >RIR>BLO HA F@URNRLLK +3 N@P@ BG HI@PRLBHG in Latvia, generating 3122 GWh of electricity and 4175 %3VHAV@RL NVB>V@JMREKLHHALV@LHLRETHEMF@ of thermal energy produced.

Over the reporting year, the number of cogeneration IERGLKUP@N=O NVBE@LV@BPBGKLREE@?@E@>LPB>>RIR>BLOY by 18.7 MW or 1.95%. In 2011, 92.3% of cogeneration plants used natural gas to generate electricity and heat. The year 2011 saw a further reconstruction of the Riga G?0V@PFREWHN@P!@GLPRE0#! ?M@AHP>HFIE@LBHG =O(MEOǜ@PLV@P@>HGKLPM>LBHG LV@LHLRE@E@>LPB> capacity of both power units of the Riga TEC 2 in cogeneration mode will reach 811 MW, thus this power plant will remain the biggest gas consumer in Latvia.

!HGKLPM>LBHGHA*BJM@ĉ@?,RLMPRE %RK0@PFBGRE/LBEE1G>@PLRBG

0V@ BKKM@ HA =MBE?BGU R EBJM@ǘ@? GRLMPRE URK *,% terminal in Latvia or any of the Baltic States was still topical in the reporting year.

'G R A@RKB=BEBLO KLM?O HA R P@UBHGRE EBJM@ǘ@? natural gas terminal was conducted by a consortium of the British companies "GL Noble Denton" un "Energy Contract Company". Having analysed 22 possible locations of a terminal in the Baltics, the experts named Riga as the optimum location for such a project P@A@PPBGU LH LV@IPHSBFBLOHA LV@'GʁMDREGK1%/RKBLK main advantage.

During international negotiations, the Latvian government also insisted on the selection of Riga as the place of construction. However, at the meeting of the European Transport, Telecommunications and Energy Council held in Brussels on November 24 Latvia, Lithuania and Estonia failed to agree upon the construction of a regional LNG terminal, therefore the European Commission decided to conduct an independent feasibility study to determine the most advantageous location for implementing the project from economic aspect.

,RLMPRE%RKLH)@@IXHE@BG\$MLMP@ #G@PUO/MIIEO

0V@ D@O ?H>MF@GL HA LV@ P@IHPLBGU O@RP BG LV@ ǘ@E? of energy in Latvia was the "Energy strategy 2030" ?PRǜ@?=OLV@+BGBKLPOHA#>HGHFB>K?M@AHPRIIPHTRE in 2012. The document states that, considering the substantially lower intensity of emissions and the market development in the world, natural gas along with renewable energy resources will have a dominant PHE@BGLV@IPBFRPO@G@PUO=RERG>@HA*RLTBRRG?LV@#1 At the same time, the authors of the strategy do not expect an increase in total natural gas consumption in Latvia by 2030, whereas its structure is likely to change, NBLV E@KKGRLMPREURK>HGKMF@? BG>@GLPREBQ@?V@RLBGU RG? FHP@ BG LPRGKIHPL BG?MKLPO RG? ?@>@GLPREBQ@? heating systems.

'L BK@FIVRKBQ@? BGLV@?H>MF@GLLVRLLV@GRLMPREURK infrastructure of Latvia has been ranked third in the #1BGL@PFKHAK@>MPBLOHAKMIIEO0V@KMIIEOHA=BHURK and in the long term also shale gas into the common KOKL@F LV@IPHTBKBHGHA>RIR>BLB@KHAREBJM@ǘ@?GRLMPRE gas import terminal and, depending on the demand, the URKBǘ>RLBHGHAG@NRP@RKHALV@>HMGLPORP@F@GLBHG@? in the strategy as further directions of development of the infrastructure.

It is planned that natural gas received from the EBJM@ǘ@? GRLMPRE URK L@PFBGRE NBEE =@ BGC@>L@? BGLH LV@ 'GʁMDREGK 1%/ =ML LV@ IPHKI@>LK HA BLK KLHPRU@ depend on the development of the regional market and BGL@P>HGG@>LBHGK @KI@>BREEONBLV\$BGERG?RG?WHERG?

As pointed out in the "Energy strategy 2030", Latvia is the geographic centre of the Eastern Baltic region where the gas supply system has been historically designed to operate from a single centre, Latvia, where the region's only underground gas storage facility is located. Hence, the functions of the regional transmission system HI@PRLHP NHME? =@ FHKL @ǚ>B@GLEO I@PAHPF@? =O LV@ Latvian gas transmission system operator.

DevelopmeNt

+RSBFMF!HGKMFILBHG=O#G@PUO /@>LHP

ccording to the data of the (/!-*RLTBCRK%ɵQ@- LV@THEMF@HA natural gas actually sold in 2011 reached 1561 million nm³ , which is by 227 million nm³ less than in 2010 when 1788 million nm³ of natural gas was sold in Latvia. However, in terms of natural gas

consumption in the energy sector, the reporting year saw the maximum growth of last six years.

In 2011, the energy sector consumed 67% or 1046 million nm³ of natural gas sold in Latvia, while manufacturing consumed 13.7% (213 million nm³ utilities and commercial companies 10.8% (169 million nm³ RG?VHMK@VHE?KFBEEBHGGF³

'G?BTB?MRE&HMK@KRG?IRPLF@GLK NBLV%RK&@RLBGU"HFBGRL@

The reporting year saw a growth of the number of H=C@>LKURKBǘ@?=OLV@(/!-*RLTBCRK%ɵQ@-APHF on January 1, 2011 to 442 582 on January 1, 2012.

The total number of new connections in 2011 reached BG>EM?BGUHPBG?BTB?MRE?N@EEBGUVHMK@K 114 apartments with heating and 6 apartments with gas stoves. Compared with 2010, the number of new connections grew by 10% or 110 connections.

Out of 241 connections of capacity increase made in 2011, in 205 boilers were installed at apartments REP@R?OURKBǘ@?

The structure of customers indicates that the trend seen BGIP@TBHMKO@RPKI@PKBKL@?BGLV@P@IHPLBGUO@RPYLV@P@ was a further decrease in the number of households using gas stoves only, while the number of households MKBGUV@RLBGURIIEBRG>@KREHGUNBLVURKKLHT@KRG?ǙHN water boilers increased.

Just as in previous years, the largest number of new connections was recorded in Riga and the family house areas in its vicinity, which accounted for 63% of new >HGG@>LBHGK BG>EM?BGU G@N >HGG@>LBHGK BG XBURRG?BGLV@!RPGBDRTRFMGB>BIREBLO

137 new connections or 14% of total were established BG LV@ RP@R HA LV@ (˚PFRER K@PTB>@ MGBL -LV@P K@T@G units accounted for less than 5% of the total number of new connections.

+RCHP!HU@G@PRLBHGWERGLKBG -ERBG@RG?"RMURTIBEK

The total consumption by the new connections in 2012 is projected around 15.4 million m³ of natural gas. The households, dominating in terms of number, are expected to consume only about 2.2 million m³ of this THEMF@ NVBE@ LV@ BG?MKLPBRE>MKLHF@PKYFBEEBHG m³ . The major contributor among the latter will be

P@RD?HNGHAG@N>HGG@>LBHGK KBG>@LV@=@UBGGBGUHA– >HGG@>LBHGK

the new cogeneration plants, which are expected to consume around 12 million m³ of natural gas in 2012.

In the reporting year, the number of industrial customers grew by 30, while that of commercial customers by 82. Heat generating companies are still interested in using natural gas to produce electricity in cogeneration, thus also reducing their costs of thermal energy.

In 2011, six new cogeneration plants were connected to the natural gas distribution networks in Latvia. The cogeneration plant of the JSC "Olenergo" in Olaine is expected to consume around 5780 thous. m³ in 2012, NVBE@LV@>HU@G@PRLBHGIERGLHALV@**!-"*XX#G@PʗBCR- in Daugavpils about 2100 thous. m³ .

'G LV@ P@IHPLBGU O@RP LV@ (/! -*RLTBCRK %ɵQ@- REKH KRLBKǘ@? LV@ P@JM@KLKHA BG?MKLPBRERG?>HFF@P>BRE customers for an increase of capacity.

It should be noted that the actual natural gas consumption of the new industrial customers connected in 2011 in the year of connection was by 1442 thous. m³ or 195% higher than in 2010 and by 1002 thous. m³ or 85% higher than anticipated.

+HP@'GL@P@KLAPHF 'G?MKLPBRE!MKLHF@PK

The reporting year saw an increased activity in the segment of industrial customers. In 2011, 266 industrial >MKLHF@PK =OFHP@LVRG BGN@P@R?TBK@?=O the employees of the company regarding options of gas supply, technical solutions, appliances and their >RIR>BLB@K RKN@EERKLV@IHL@GLBRE>HKLKHAURKBǘ>RLBHG In the reporting year, 133 detail designs of industrial customers were coordinated and 61 connection contracts were concluded, with the total connection >HKLK RFHMGLBGU LH*2* #1X L LV@ KRF@ LBF@ BG?MKLPBRE >MKLHF@PK P@JM@KL@? LV@ technical regulations for the design of gas distribution pipelines, branch lines and interior lines and for capacity increases.

In the reporting period, the company also processed the formalities for several large-scale construction objects due for implementation in 2012, notably the establishment of connection for seven industrial >MKLHF@PKBGXBUR 2ʇCQRʪKRER

)BEHF@LP@KHA%RK"BKLPB=MLBHG WBI@EBG@K MBEL

In 2011, new gas distribution pipelines in the total length of 35.8 km were built in Latvia. The total >HGKLPM>LBHG >HKLK RFHMGL@? LH *2* FBEEBHG #1X FBEEBHG 0V@FRCHPBLO HA >HGKLPM>LBHGNRK IRPL HA LV@ >HFIRGOK BGT@KLF@GL IPHC@>LK NV@P@ *2* FBEEBHG#1XFBEEBHGNRKKI@GL?MPBGULV@O@RPAHP building 24.6 km of gas pipelines.

Overall, 100 objects were put into operation in 2011, including 30 objects under the company's investment contracts. The biggest project of the distribution system during this time was the replacement of high- (P < =RP RG?FB?IP@KKMP@ W =RP URK ?BKLPB=MLBHG IBI@EBG@KBG*B@IɵCR

In order to ensure the prospective development of LV@ URK KMIIEO KOKL@F LV@ (/! -*RLTBCRK %ɵQ@- ?PRNK MI K>V@F@K HA URKBǘ>RLBHG HA >HGKLPM>LBHG H=C@>LK ?M@ AHP BGT@KLF@GL K>V@F@K N@P@ ?PRǜ@? AHP LV@ construction objects of gas supply systems budgeted for 2011.

+HP@!HGLPR>LK/BUG@?

In 2011, 1,333 contracts on an object's connection to gas distribution pipelines were concluded. This is by 197 more than in 2009 and by 203 more than in 2010, mostly under contracts envisaging investments by the

(/!-*RLTBCRK%ɵQ@-

Since the beginning of 2011, 508 contracts without the company's investments and 107 reconstruction contracts have been signed as well.

0V@FRCHPBLOHA>HGLPR>LKYYN@P@>HG>EM?@?NBLV individual consumers. The contracting entities also included 27 industrial and 132 commercial customers, while 283 contracts were signed due to a need for an increase of capacity.

,@N!MKLHF@PK /@RP>V@?,@RP=OXBUR

'G LV@>HFIRGO>HGLBGM@?BLK@ǗHPLKHAAMEǘEEBGU the investment recoupment plan for construction objects by attracting new natural gas consumers for the gas pipelines already built. The highest activity of customers during this time was recorded in Riga and its vicinity, and more than 2,400 potential customers were addressed by implementing marketing activities BGXBUR RKN@EERKLV@%RPDREG@ /LHIBʹBFMGB>BIREBLB@K RG? RE?HG@ REHȼBRG?ʩ@DRTRLHNGKVBIK

The company's Customer Promotion Department also NHPD@?HGP@UMERLBHGKAHPKLP@RFEBGBGULV@URKBǘ>RLBHG procedure, reviewed the situations as to the application of the connection fee and connection costs for apartment VHMK@K RG? IP@IRP@? IPHIHKREK AHP ?PRǜ RF@G?F@GLK LH LV@ (/! -*RLTBCRK %ɵQ@- F@LVH?HEHUO NBLV P@URP? to setting the total connection costs for connecting the natural gas users' gas supply systems to the gas distribution pipelines and the increase of permissible load.

!HGKLPM>LBHGHAG@NURKIBI@EBG@K DF

2006 2007 2008 2009 2010 2011 160 4258 4418 4586 4713 4757 168 127 ⁴⁴ ³⁹ 4796 36 MBEL?MPBGU LV@O@RP *@GULVHAURKIBI@EBG@K RLLV@=@UBGGBGUHALV@O@RP

,MF=@PHA>MKLHF@PK LVHMKRG?

'G+RP>V LV@>HFIRGOLHHDIRPLBGLV@ARBP-+ɵCR 'Y-0VBKBKRG@ǚ>B@GLNROLHRLLPR>LGRLMPREURK consumers, as potential and existing customers are FR?@ RNRP@ HA LV@ >HFIRGOK URKBǘ>RLBHG IERGK RG? IHKKB=BEBLB@K RG? REKH LV@ KI@>BRE HǗ@PK AHP >MKLHF@P attraction.

#K@PTB>@K @BGU"@T@EHI@?

The employees of the company's Customer Service Centre in Riga received 55,049 customers over the reporting year, i. e. 219 customers on average daily.

The company's Contact Centre received 179,526 incoming and made 43,043 outgoing calls to customers over this period. The total number of contacts serviced grew by 3% compared with 2010, while the number of faxes and e-mails sent increased by 92%.

In order to promote the use of e-services, the employees HA LV@!HGLR>L!@GLP@GHLBǘ@?FHP@ LVRG MK@PK of the possibilities of using the e-portal, while 10,900 persons were aided in the use of the portal. To the KRF@ @Ǘ@>L R >MKLHF@P L@PFBGRE NRK BGKLREE@? RL LV@ !MKLHF@P /@PTB>@ !@GLP@ HA LV@ (/! -*RLTBCRK %ɵQ@-BG Riga.

,RLMPREURKĊHNKBG

PAGE 19

#(ƖND:E(L¡/(=>K@,HN(=¡ Gas StoRage Facility

'GƲMDREGK1G?@PUPHMG?%RK /LHPRU@\$R>BEBLO

V@ 'GʁMDREGK 1G?@PUPHMG? %RK /LHPRU@ \$R>BEBLO 'GʁMDREGK 1%/ is a gas supply object of regional importance ensuring a stable supply of this resource not only to Latvia, but also in Estonia, the Northwestern part of Russia and, if necessary, Lithuania.

+HP@%RK'GC@>L@?

0V@GRLMPREURKBGC@>LBHGK@RKHGRLLV@'GʁMDREGK1%/ began on April 26, 2011 and was completed on October 17, 2011. Over 2011, 2,261.7 million m³ of natural gas was injected into the facility, surpassing the volume of 2010 by 227.3 million m³ . The total volume of active GRLMPREURK Rǜ@P BGC@>LBHG P@R>V@?FBEEBHGF³ , i. e., by 308.5 million m³ more than the year before. The injected volumes covered the demand for natural gas in the heating season 2011/2012 both in Latvia and the neighbouring countries.

+H?@PGBQRLBHGHA 3@EEK!HFIE@L@?

0V@P@IHPLBGUO@RPKRN>HFIE@LBHGHALV@FH?@PGBQRLBHG HA ǘǜ@@GN@EEK RL LV@ 'GʁMDREGK 1%/ KLRPL@? BG The company implemented this project using the cofunding granted by the European Commission. The >HKLK HA N@EE FH?@PGBQRLBHG P@R>V@? *2* FBEEBHG #1XFBEEBHG NVBE@ LV@NVHE@IPHC@>L>HKLREFHKL *2*FBEEBHG#1XFBEEBHG

The Russian company LLC "Georesurs" (шшшˍ"нџѨѪџѫѭѪѫ-ˍ PHGˍ :Gˍ HI>Gˍ BGM>KG:MBHG:Eˍ M>G=>Kˍ :G=ˍ P:Lˍ >GMKNLM>=ˍ MHˍ I>K?HKFˍ MA>ˍ FH=>KGBS:MBHG NV@P@RK LV@ **! -%RQIPHF %RQH=@QHIRKLGHKLC- ˿˿˿ нњѡѩѪѨѦˍ ѝњѡѨћџѡѨѩњѫѧѨѫѬѶ- was in charge of safety supervision.

0V@ L@>VGHEHUB>RE N@EE @JMBIF@GL P@JMBP@? AHP reconstruction was supplied by the companies OJSC -6RTH?/B=ʹ@ǜ@URQFRȻ---̸̩̹̻̺͈̆̈̂̾̓̇̈́̇̆̽͂̆ͅ- XMKKBR -0 #G@PUO *L?- 1/ RG? -3@RLV@PAHP? %F=&- %@PFRGO 1/ NVBE@ LV@ IMFI >HFIP@KKHP IBI@KY=O-2H@KLREIBG@0M=MERPK%F=&-MKLPBR

In order to avoid cross-column gas migration, innovative technologies, such as cross-sectional I@PAHPRLBHGRG?ǘEEBGUHAFBUPRLBHGIRLVKNBLVRKI@>BRE substance known as thermogel, were used in the course of reconstruction.

%@HUPRIVB>'GAHPFRLBHG/OKL@F /@@K'GLPH?M>LBHG

In 2009, the company concluded a contract on the development of a database of geographical information KOKL@F %'/ RG? BLK IRPLBRE ǘEEBGU NBLV L@>VGB>RE ?RLR 0V@ IPHC@>L NRK BFIE@F@GL@? =O LV@ 1DPRBGBRG >HFIRGO **! -'00PRGQBL- ˿˿˿ -̪̃0̊̆̓̽̾̈́- RG? the introduction of GIS, envisaged in the contract, was completed in the reporting year.

By using this information system it is possible to obtain the visual and technical information on any unit NBLVBG LV@ 'GʁMDREGK1%/ RKN@EE RK BLKU@HUPRIVB>RE location data. The system also allows for accumulation of graphical information regarding the units.

A full completion of the information system together with the expansion of data range is due in 2012 with RG R??BLBHGRE BGT@KLF@GL HA RPHMG? *2* #1X 0V@P@=O LV@ LHLRE >HKLK HA LV@ IPHC@>L NBEE P@R>VREFHKL*2* #1X

%RK"POBGU1GBL %@LK&BUV@P!RIR>BLO

'G LV@ (/! -*RLTBCRK %ɵQ@- >HG>EM?@? R >HGLPR>L with the LLC "Olimps" on the design of a gas drying unit. When the design was completed, the Italian company -WB@LPH\$BHP@GLBGB/IR-NRKK@E@>L@?RKLV@KMIIEB@PHA @JMBIF@GLTBRL@G?@P

3BLV LV@ @JMBIF@GL P@>@BT@? LV@ >HGKLPM>LBHG HA R drying unit began in July 2010, and it was performed by LV@1GEBFBL@?WRPLG@PKVBI- RELBCRK#G@PUH ˚T@-

0V@>HGKLPM>LBHGNRKǘGREBQ@?BG"@>@F=@P NVBE@ the adjustment and run was completed on March 30, 2012.

With the launch of the gas drying unit, the daily throughput of the gas preparation system at the 'GʁMDREGK 1%/ BG>P@RK@? =O FBEEBHGF³ . Thus, the facility's initial daily gas extraction capacity also grew from 24 to at least 30 million m³ .

0V@LHLRE>HKLKHALVBKIPHC@>LN@P@REFHKL*2*FBEEBHG #1XFBEEBHG

!HFIP@KKHP,H1G?@PUH@K !RIBLREX@IRBPK

In 2010, the capital repairs to the gas compression unit %!1,H=@URGNBLVRTB@NLHBFIPHT@BLKHI@PRLBHG safety.

The capital repairs included a full replacement of power section and motor unit, an exchange of prelaunch lubrication pump and pneumo-engine, as well as a replacement of plate-type valves with mushroomdesign "CECO" valves. The components were supplied by LV@ 1/=RK@? FRGMAR>LMP@PK -!HFIP@KKBHG /OKL@FK Inc." and "CECO", while the repairs were carried out by LV@KLRǗHALV@'GʁMDREGK1%/

The capital repairs were completed in May 2011. The %!1,HIRKK@?RL@KLHAVHMPHI@PRLBHGRG?NHPD@? properly without a single unapproved stop in the process of natural gas injection.

0V@LHLRE>HKLKHALV@IPHC@>LN@P@REFHKL*2*FBE-EBHG#1XFBEEBHG

!HG>@ILHA"@T@EHIF@GL0BEE "PRNG1I

'G LV@ P@IHPLBGU O@RP BG >HHI@PRLBHG NBLV LV@ -%RQ-IPHF-/>B@GLBǘ>X@K@RP>V'GKLBLML@HA,RLMPRE%RKRG? %RK0@>VGHEHUB@KY-%RQIPHF2,''%6-˿˿˿-˻̆̽̉̊̈͂ ˺˾̪̪˻˹̩-YR>HG>@ILHA?@T@EHIF@GLHALV@'GʁMDREGK 1%/AHPLV@I@PBH?LBEENRKNHPD@?HML

The preparation of concept included an analysis of the L@>VGB>RE>HG?BLBHGHALV@'GʁMDREGK1%/RG?LV@B?@GLBǘ>RLBHGHAL@>VGB>REF@RKMP@KLH=@LRD@GBGLV@>HFBGU years to ensure a safe operation of the facility.

Within the framework of the concept, a schedule of in-T@KLF@GLKI@G?BGUNRK?PRNGMIRKN@EE'LP@Ǚ@>LKRG HILBHGHA@SIRG?BGULV@>RIR>BLOHALV@'GʁMDREGK1%/ to 5.5 billion m³ , featuring a calculation of the investments needed for such a scenario of development. The LHLRE>HKLKHALV@>HG>@ILRP@REFHKL*2* #1X

,RLMPREURKKMIIEOAPHF'GʁMDREGK1%/ Y million m³

Gas TRaNsmissioN

he functions of natural gas transmission system operator at the (/!-*RLTBCRK%ɵQ@-RP@I@PAHPF@?=O the operation unit "Gas Transport". The company's natural gas transmission system consists of gas LPRGKFBKKBHGIBI@EBG@KV@P@BGRǜ@PY %0W URK P@UMERLBHG KLRLBHGK

V@P@BGRǜ@P Y %X/ RGLB>HPPHKBT@ @JMBIF@GL HA electrochemical protection of underground pipelines, communication and remote control lines, the information system SCADA, as well as the commercial international URKF@L@PBGUKLRLBHG-)HPG@LB-

"Gas Transport" ensures natural gas reception and KMIIEOLHLV@'GʁMDREGK1%/ ?@EBT@POLHLV@GRLMPREURK distribution system in Latvia and abroad. "Gas Transport" is also in charge of gas pressure regulation in the natural URKLPRGKFBKKBHGKOKL@F URKIMPBǘ>RLBHG RKN@EERKBLK odorisation and commercial metering.

#!!HAMG?@?X@IRBPKHA%RK WBI@EBG@XBURWRG@T@ŭOK!HFIE@L@?

The reporting year saw a further reconstruction of the MG?@PNRL@PIRKKRU@HA LV@%0WXBURWRG@T@ȼOK R>PHKK the Daugava River. This project, commenced in May 2010 and co-funded by the European Commission, was BFIE@F@GL@? =O LV@ **! - *0'(/ #,#X%- ˙2#- with the involvement of subcontractors.

The key stage of the project was the laying of the IBI@EBG@MKBGULV@VHPBQHGLRE?PBEEBGUF@LVH?0V@NHPDK suspended in the winter of 2010 were resumed in April 2011 when in co-operation with the German company "LMR Drilling" the laying of pipeline was completed, followed by the connection of GTP valves to the newlylaid pipeline on both banks of the Daugava, as well as LH LV@ =R>DMI BGT@PL@? KBIVHG HG LV@ E@ǜ =RGD HA LV@ Daugava.

The reconstruction of the underwater passage of the GTP XBURWRG@T@ȼOK R>PHKK LV@ "RMURTR NRL@P>HMPK@ NRK ǘGREBK@? BGMUMKL NV@G LV@ G@N K@>LBHG HA LV@ IBI@EBG@NRKǘEE@?NBLVURKRG?IMLBGLHHI@PRLBHG0V@ employees of the Line Maintenance Service of the unit "Gas Transport" took part in all key works at the object.

Activities near the underwater passage of the GTP Riga-WRG@T@ȼOK>HGLBGM@?BGLV@RMLMFGHARKN@EE'G August and September, in co-operation with the LLC -X1+ - RIBUP@>@BT@PNRK?BKFRGLE@?RG?RG@NTRET@ unit was connected to the existing gas pipelines. In ->LH=@P LV@**!-X1+ ->HFIE@L@?LV@>HGKLPM>LBHG of a new pig receiver and the replacement of a line valve, as well as connected the newly-built valve units to the %0WXBURWRG@T@ȼOK

!HRLBGUX@KLHP@?HGWBI@EBG@K

During the reporting year, based on an inspection conducted earlier, "Gas Transport" carried out a large-K>RE@P@KLHPRLBHGHARGLB>HPPHKBT@>HRLBGUHGLV@ǘPKLRG? K@>HG?EBG@HALV@URKIBI@EBG@XBUR'GʁMDREGK1%/

The sections due for restoration were selected based on the inspection and advice by the **! -%RQIPHF@G@PUH?BRUGHKLBDR- --- -˻͍̺̻̺̆̽̉̊̈͂̓̇̊̈̾̆̓̈̋̈́̾̀̆- RK N@EE RK LV@ ?RLR HA internal diagnostics and the recommendations by the Physical-Technical Institute of Belarus.

The restoration of the outer anticorrosive coating, I@PAHPF@? =O LV@ **! -#1X- #,#Xʖ'(/ /#X2'//- encompassed pipeline sections in the total length of F@LP@KHG LV@ǘPKL EBG@HA LV@URKIBI@EBG@XBUR 'GʁMDREGK1%/RG?F@LP@KHGLV@K@>HG?EBG@

In the reporting period, the employees of the Line Maintenance Service of the unit "Gas Transport" took charge of the acceptance of coating restoration and the BGKI@>LBHGHABLKJMREBLOMKBGURKI@>BREBGKI@>LBHG?@TB>@ ?@A@>LHK>HI@HALV@%@PFRG>HFIRGO-#*+#"%F=& as well as participated in all key works at these objects. In December 2011, the coating was also repaired on the %0WXBURWRG@T@ȼOK LHU@LV@PNBLV LV@ ?BKFRGLEBGU HA casing pipe.

WP@IRP@?AHP'GL@PGRE"BRUGHKLB>K "@A@>LK!E@RP@?-Ĉ

The reporting period saw the construction of numerous launcher and receiver units for cleaning and intelligent pigs and the replacement of outdated line valves of gas transmission pipelines with new ones, the internal throughput of which ensures a free movement of pigs along the pipelines.

With a view to continue the internal diagnostics of the gas transmission system pipelines and to eliminate the defects already found, the company performed these and other repairs in co-operation with the LLC -)0*','#)/- LV@**!-X1+ -RG?LV@**!-',0X- 'GMUMKL LV@%0W'@>RTR*B@IɵCRMG?@PN@GLLV@ construction of a reduction unit without interruption HA URK ǙHN NVBE@ BG /@IL@F=@P R TRET@ NRK P@IER>@? NBLV=PRG>V EBG@TRET@K LH LV@)REG>B@FK%X/RG? LV@ underwater passage of the said gas pipeline across the Ciecere River was repaired together with a replacement of a section of 65 metres.

EKHBGMUMKL R=PRG>VEBG@APHFLV@BQDPRMDE@ GRS gas pipeline was connected to the GTP Riga-Daugavpils.

'GHP?@PLH@GKMP@LBUVLG@KKRG?RKRA@URKǙHN?MPBGU pigging and to raise the level of safety at the gas pipelines WKDHTXBURRG?'Q=HPKD'GʁMDREGK1%/ LV@PB?@PHATRET@ of the gas pipeline was replaced in November 2011. Several sections of the pipeline, found to be defective Rǜ@PRP@I@RL@?BGL@PGRE?BRUGHKLB>K N@P@REKHP@IER>@? ǜ@P R P@I@RL@? RGREOKBK HA LV@ ?RLR HA BGL@PGRE diagnostics, a damaged pipeline section of the GTP Pskov-Riga of 108 metres in length, located in a casing IBI@ =@G@RLV PRBENRO NRK B?@GLBǘ@? RG? P@IER>@? BG November 2011.

%RKX@?M>LBHG1GBL MBELHG%RK WBI@EBG@'@>RTR*B@IƦCR

In order to improve the operation safety for the GTP '@>RTR*B@IɵCR RURKP@?M>LBHGMGBL%X1NRK=MBELHG BL0V@%X1 REEHNK P@?M>BGU LV@HI@PRLBHGIP@KKMP@BG the pipeline for a safe inspection and repair of defects.

0V@?@KBUGHALV@%X1-'@>RTR*B@IɵCR-NRK?PRNGMIBG 0V@'LREBRG>HFIRGO-WB@LPH\$BHP@GLBGB/IR-NRK BG>VRPU@HABLKBFIE@F@GLRLBHGRG?ǘGREBK@?LV@CH=BG October 2011.

Diagnostics Completed on 85% of Gas Pipelines

The internal diagnostics of gas pipelines and a due elimination of damage found thereby are major preconditions for seamless performance of the gas transmission system. By the end of 2011, internal diagnostics covered already 85% of the total length of gas transmission pipelines, except for branch lines to GRS.

Another reason for implementing the internal diagnostics of pipes is to determine the maximum permissible operation pressure in pipelines and to maintain a higher IP@KKMP@BAP@JMBP@??M@LHBG>P@RK@?URKTHEMF@K

During the reporting year, the diagnostics of four pipelines of the gas transmission system was carried out =OLV@>HFIRGO-3@RLV@PAHP?)HII%F=&-

The year 2011 saw a further internal diagnostics HA LV@ %0W '@>RTR*B@IɵCR "M@ LH LV@ VBUV E@T@E HA contamination of the pipeline during pigging, three cleaning pigs had to be cut.

'G >HHI@PRLBHG NBLV LV@ **! -)0*','#)/- LV@ KRB? NHPDKLHHDIER>@NBLVHMLBGL@PPMILBGULV@URKǙHN0V@ company managed to complete the internal diagnostics of this pipeline within the reporting year.

Also in 2011, the GTP Riga-Daugavpils underwent a repeated internal diagnostics, which included the launch of both a cleaning pig and a contour meter. The diagnostics of this pipeline will continue in 2012.

During the reporting period, diagnostics also took place on the gas pipelines connecting Latvia and Lithuania, RG? *RLTBR RG? #KLHGBR 0V@ %0W XBURWRG@T@ȼOK MG?@PN@GL R AMEE ?BRUGHKLB>K NVBE@ LV@ %0W 2BP@ȻB 0REEBGGYRIRPLBREHG@ NVB>VBK?M@LH>HGLBGM@BG

\$BPKL1K@HA'GAPRP@?*RK@PBG 'GKI@>LBHG

In August 2011, the system of natural gas transmission IBI@EBG@KHA LV@(/!-*RLTBCRK%ɵQ@-NRKKMPT@O@? APHF R V@EB>HIL@P @JMBII@? NBLV BGAPRP@? ERK@PK RG? HLV@P -!&X+°- L@>VGHEHUO @JMBIF@GL 0V@ L@>VGHEHUO =@EHGUKLHLV@>HFIRGO--W#,%X'"#1X-W#%F=&- RG?NRKMK@?BG*RLTBRAHPLV@ǘPKLLBF@0V@RGREOKBKHA the inspection data yielded 67 possible spots of methane E@RDRU@ǜ@PP@>@BTBGURP@IHPL LV@>HFIRGO>HG?M>L@? a detailed survey of the spots indicated.

+RGO1G?@PNRL@PWRKKRU@KHA%RK WBI@EBG@KX@IRBP@?

In 2011, twenty three GTP passages across rivers were inspected both visually and with measuring devices.

Based on the results of inspections conducted in previous years and in compliance with the programme HAFRBGL@GRG>@HAǘS@?RKK@LKHALV@(/!-*RLTBCRK%ɵQ@- 17 underwater passages were repaired during the reporting year. These repairs took place based on the data obtained during the walking surveys of GTP and the route inspection with a helicopter.

Moreover, the external anticorrosive coating was also restored on gas pipeline crossings over small rivers, brooks and ditches.

!RLVH?B>WPHL@>LBHG/LRLBHGK 1G?@PUHX@>HGKLPM>LBHG

'G =O BLK HNG @ǗHPL LV@ >HFIRGO IRBGL@? LV@ L@>VGHEHUB>RE@JMBIF@GL E@T@EE@?LV@>HT@PBGUK P@KLHP@? the "ground-air" coating and repaired the fencing at 10 GTP objects. Over the reporting period, eight outdated cathodic protection stations saw reconstruction and are now capable of operating in automatic mode and linked with the SCADA system.

See map on p.19

PersoNNel

XBK@HA#FIEHOF@GL RG?3HPDAHP>@!HKLK

ccording to the results of a workforce survey by the Latvian Central Statistics Bureau, 862,800 people were employed in Latvia in 2011. The number of job seekers reached 166,100 or 16.1% of the economically active population, i. e., almost one

percent less than the year before. The costs of one-hour NHPDAHP>@BGLV@LVJMRPL@PHAN@P@VBUV@P year-on-year. In the energy sector, which was less RǗ@>L@?=OKRERPOǙM>LMRLBHGKHT@PLV@P@>@GLO@RPK LV@ increase was 0.1%.

+HP@#FIEHO@@KBG%RK "BKLPB=MLBHGRG?/RE@K

'G BLK KLM?O HA LV@ KLRǗ P@>PMBLF@GL >HFIRGO -3HPDBGU "RO- PRGD@? LV@ (/! -*RLTBCRK %ɵQ@- LV@ LV most desirable employer in Latvia.

As at the end of the reporting year, the company employed 1,272 people, which is by 15 more than the year before. 54% of the employees worked at gas distribution, AHEEHN@? =O URK KRE@K URK LPRGKFBKKBHG R?FBGBKLPRLBHG URK KLHPRU@ RG? LV@ ?@IRPLF@GL HA IRB? K@PTB>@K 'G >HFIRPBKHGNBLV the previous year, there was an increase of the number of employees at gas distribution and sales.

'G>P@RKBGU/VRP@HA#FIEHO@@K NBLV&BUV@P#?M>RLBHG

The company keeps supporting its employees in =HLV R>R?@FB> @?M>RLBHG RG? JMREBǘ>RLBHGPRBKBGU RL specialised courses, seminars and experience exchange programmes.

The number of employees with a higher education rose by 1% against 2010 and reached 32%. The company predominantly employs people with a secondary special @?M>RLBHGY NVBE@VRT@RG@E@F@GLRPORG? a secondary education.

In 2011, the costs of the employees' professional @?M>RLBHGP@R>V@?*2* NVB>VBK=O*2* E@KK LVRG LV@ O@RP =@AHP@ \$HP LV@ R>R?@FB> @?M>RLBHG at the higher education establishments of Latvia, with studies in the speciality of gas technologies as priority, the company granted material backing to 23 employees BGLV@LHLRERFHMGLHA*2* BG>EM?BGU*2* from the 2nd term of the academic year 2010/2011 RG?*2* AHP LV@KL L@PFHA LV@R>R?@FB>O@RP 2011/2012.

'G LNH (/! -*RLTBCRK %ɵQ@- K>VHERPKVBI VHE?@PK attended master courses at the Russian State Oil and %RK 1GBT@PKBLO GRF@? Rǜ@P ' + %M=DBG NVBE@ HG@ employee began 1st year studies. There are currently ten graduates of the said university working at the company, and eight of them have held the JSC "Latvijas %ɵQ@-K>VHERPKVBI

P@RD?HNGHA@FIEHO@@K=ORP@RK HAR>LBTBLO RTU,HHAI@HIE@

page 24

&BUVWPHIHPLBHGHA#SI@PB@G>@? Employees

47% of the employees have between 11 to 30 years of E@GULVHAK@PTB>@0V@P@RP@REFHKLRKFRGO@FIEHO@@KY 45% - with less than ten years of standing. This indicates =HLVLV@P@CMT@GRLBHGHAKLRǗRG?RKMǚ>B@GLIPHIHPLBHG of experienced employees ensuring the inheritance of experience and knowledge. 7% or 88 employees are specialists with more than 31 years of service at gas supply, while 13 employees have been working at gas supply for more than 41 years. The structure of employees of the company is consistent, and its changes do not pose risks to the company's operation in general.

WPHIHPLBHGHAX@LBP@F@GLU@? #FIEHO@@KXRIB?EO\$REEBGU

The structure of age of the company's employees remained almost unchanged in the reporting year. The RT@PRU@RU@HALV@KLRǗBGNRKO@RPK

As at December 31, 2011, there were 72 retirement-aged employees at the company, which is 41% less than in 2010. This group accounted for 5.7% of all employees.

The company still has many employees over 61 years of age. Although the proportion of this age group fell by 1% in the reporting year, at the end of the period they comprised 9% of the people employed by the company.

31% of the company's employees are women and 69% are men. This ratio has been constant for a long time, RG?LV@IP@?HFBGRG>@HAF@GBKBGV@P@GLLHLV@KI@>Bǘ> character of work of the company.

&BUV@P3HPDEHR?AHP'GKLPM>LHPKRL Training Centre

In 2011, a new information system was introduced at the Training Centre of the company. The reporting year KRN P@TBKBHG >ERKKBǘ>RLBHG RG? >H?BGU HA LV@ @SBKLBGU >MPPB>MER RIIPHT@? =O LV@*RLTBRG1GBHG HA&@RL %RK RG?3RL@P0@>VGHEHUO#GUBG@@PK*/%˙0'/

Overall, 1,551 specialists attended the Training Centre in the reporting year, including 727 employees of the company. In comparison with 2010, the number of the company's employees instructed at the Training Centre A@EE=O NVBE@LVRLHAHLV@PKY=O0VBKKL@FKAPHF the cyclical nature of training process for the employees HALV@(/!-*RLTBCRK%ɵQ@-

&HN@T@P LV@NHPDEHR?HA BGKLPM>LHPKY LV@>HFIRGOK @FIEHO@@K Y RL E@>LMP@K IPR>LB>RE RKKBUGF@GLK @SRFK grew substantially from 882 hours in 2010 to 1986 hours in 2011, whereas for invited freelance instructors the load decreased.

PAGE 25

INterNatioNal Co-operation

'GL@PGRLBHGRE!HHI@PRLBHG

n the reporting year, the company had three main directions of international co-operation. It continued the previously commenced co-operation with the institutions of the European 1GBHG ?@T@EHI@? LV@ EBGDK NBLV LV@ German and Russian shareholder >HFIRGB@K HA LV@ (/! -*RLTBCRK %ɵQ@-

RKN@EE RKNBLV LV@ BGL@PGRLBHGRE HPURGBQRLBHGK HAURK industry.

X@UBHGREXBKDKK@KKF@GL "H>MF@GLWP@IRP@?

In 2011, based on the Regulation No.994/2010 of the European Parliament and of the Council concerning measures to safeguard security of gas supply and in collaboration of representatives of the Latvian, Lithuanian and Estonian Ministries of Economics and Energy, regulators and gas companies, a document of regional risk assessment was drawn up.

On the basis of an analysis of scenarios of gas supply disruption, this document features particular projects to be implemented with a view to enhance the regional security of gas supply. The analysis of scenarios >HGǘPF@? HG>@ RURBG LVRL LV@ 'GʁMDREGK 1%/ BK HA utmost importance for a secure gas supply of the region. The Baltic States approved the document in March 2012.

RLTBRGRG?BLVMRGBRG 'GL@P>HGG@>LBHG!RIR>BLO#GVRG>@?

Within the framework of the European Energy Program for Recovery (EEPR LV@ >HFIRGO LHU@LV@P NBLV colleagues from the Lithuanian company "Lietuvos Dujos" AB continued the implementation of the project designed to increase the capacity of the Latvian-Lithuanian interconnection. The Latvian part of the project included the construction of a gas pipeline =@G@RLVLV@"RMURTRPBT@P=@?RG?LV@FH?@PGBQRLBHGHA N@EEKRLLV@'GʁMDREGK1%/

With regard to the said project, in September 2011 LV@ >HFIRGO NRK TBKBL@? =O Hǚ>BREK HA LV@ #MPHI@RG Court of Auditors and the European Commission LH >RPPO HML LV@ ǘGRG>BRE RM?BL HA LV@ ##WXAMG?@? IPHC@>L-+H?@PGBQRLBHGHAURKIRKKRU@R>PHKK"RMURTR and construction of pig receiver". The audit found no infringements in the implementation of the project.

X@UBHGRE%RK'GT@KLF@GLWERG "PRNG1I

Jointly with gas transmission system operators from WHERG? /N@?@G "@GFRPD \$BGERG? *BLVMRGBR RG? #KLHGBR LV@ (/! -*RLTBCRK %ɵQ@- NRK BGTHET@? BG LV@ development of the Gas Regional Investment Plan (GRIP NBLVBG LV@ APRF@NHPD HA LV@ RELB> #G@PUO Market Interconnection Plan "(&+.

According to the Regulation of the European Parliament and of the Council on guidelines for trans-European energy infrastructure, the inclusion of the said cooperation project in GRIP is one of the preconditions for obtaining the status of a project of common interest W!' NVB>VBGLMPGFROK@>MP@@EBUB=BEBLOAHPAMG?BGU APHFLV@#MPHI@RG1GBHG

The European Network of Transmission System Operators for Gas (ENTSOG BK P@KIHGKB=E@ AHP LV@ implementation of this plan.

+H?@PGBQRLBHGHA'GƲMDREGK1%/ RG?/RA@-I@PRLBHGHA%RK/MIIEO /OKL@FRKWBTHLHA!HHI@PRLBHG

The reporting year saw a further successful co-operation with specialists of the enterprises and subsidiaries of LV@>HFIRGOKFRBGKVRP@VHE?@PKYLV@-(/!-%RQIPHF- and "E. ON Ruhrgas International GmbH".

The main directions of co-operation were a further FH?@PGBQRLBHGHALV@'GʁMDREGK1%/ LV@BFIPHT@F@GL of operation safety of the gas supply system, issues of operation of gas transmission pipelines, gas pipeline inspections using intelligent pigs and other technologies, as well as work with customers etc.

In September 2011, a delegation of employees of LV@ "BKIRL>V@P /@PTB>@ HA LV@ (/! -*RLTBCRK %ɵQ@- UHL R>JMRBGL@?NBLVLV@NHPDHA?BKIRL>V@PKHA--I@G%PB? Europe GmbH" in Germany and visited the Dispatcher !@GLP@RG? LV@#LQ@EKREL>RTBLOURKKLHPRU@ AR>BEBLOHA "E. ON Gas Storage GmbH".

Also in the reporting year, all gas transmission pipelines HALV@(/!-*RLTBCRK%ɵQ@-MG?@PN@GL?BRUGHKLB>KMKBGU R V@EB>HIL@P @JMBII@? NBLV F@RKMPBGU ?@TB>@K HA LV@ CHARM technology. This job was performed by the specialists of "Open Grid Europe GmbH", a subsidiary of "E. ON Ruhrgas International GmbH". The German specialists introduced not only the employees of the (/!-*RLTBCRK%ɵQ@- =MLREKHP@IP@K@GLRLBT@KHALV@URK >HFIRGB@K -W@L@P=MPUURQ- - @ELHIURQ- - @ELPRGKURQ- -#%2HPUML@GMK-RG? LV@*RLTBRGRǚEBRL@KHA LV@-(/! -%RQIPHF-LHLVBKMGBJM@L@>VGHEHUO

+@F=@PKVBIBG#,0/-%

In the reporting year, the company took part in the R>LBTBLB@K HA LV@ 'GL@PGRLBHGRE %RK 1GBHG DVGW

!>NMLˍ />K>BGB@NG@ˍ =>Lˍ \$:L ˍ NG=ˍ 0:LL>K?:L, the World Energy Congress, "Eurogas", "Baltic Gas", as well as the Inter-republic Association for Applied and Science-Technical Gas Co-operation.

0V@(/!-*RLTBCRK%ɵQ@->HGKB?@P@?CHBGBGULV@#MPHI@RG Network of Transmission System Operators for Gas ").-*\$ and became an associated partner of this operation. ENTSOG was founded in 2009 and currently incorporates 39 members and two associated partners from 24 European countries.

0V@ >HHI@PRLBHG NBLV "2%3 NRK T@PO P@NRP?BGU BG 2011, especially in terms of training. Specialists of the (/!-*RLTBCRK%ɵQ@-IRPLB>BIRL@?BGRTRPB@LOHAK@FBGRPK HPURGBQ@?=O"2%3BG%@PFRGORG?BG>HMPK@KRLLV@ 0PRBGBGU!@GLP@HALV@(/!-*RLTBCRK%ɵQ@-

In 2011, employees and specialists of the JSC "Latvijas %ɵQ@-REKHLHHDIRPLBGTRPBHMK>HGA@P@G>@KRG?K@FBGRPK and exchanged information with foreign colleagues in IM=EB>HPURGBQRLBHGK

PAGE 27

CoRpoRate Social Responsibility

V@ (/! -*RLTBCRK %ɵQ@- BK R successful and socially responsible company that is well aware of its responsibility towards the society. #T@POO@RP-*RLTBCRK%ɵQ@-KMIIHPLK the areas and projects that help >P@RL@ R =@LL@P AMLMP@ Y >VBE?P@G education, science, culture, sports and environment protection or

projects uniting the society in the name of a better AMLMP@ 0V@ (/! -*RLTBCRK %ɵQ@- KM=KLRGLBREEO BGT@KLK in the improvement of production technologies and infrastructure and in environment protection, thus facilitating a sustainable economic, environmental and social development.

0H/H>B@LO

T@POO@RP LV@(/!-*RLTBCRK%ɵQ@-REEH>RL@KAMG?KAHPLV@ purposes of culture, art, education, science and charity, KMIIHPLBGU=HLVBG?BTB?MREHPURGBQRLBHGKBGU@G@PRERG? particular events and activities.

#?M>RLBHG

The company has close links with both the largest L@>VGB>REVBUV@P@?M>RLBHG@KLR=EBKVF@GLHA*RLTBRYLV@ XBUR0@>VGB>RE1GBT@PKBLO X01YRG?HLV@PR>R?@FB> RG?K>B@GLBǘ>BGKLBLMLBHGK

In the reporting year, the foundation "Riga Technical 1GBT@PKBLO "@T@EHIF@GL \$MG?- NRK ?HGRL@? AMG?K LH be spent on scholarships for students majoring in gas technologies, as well as for the support of outstanding Latvian scientists and prospective scientists. The company supported the publishing of the third part of LV@=HHD-%ɵQ@KRIUɵ?@-%RK/MIIEO

0V@ >HFIRGO REKH V@EI@? HPURGBQ@ LV@ @T@GLK HA LV@ LV RGGBT@PKRPO HA X01 /LRPLBGU LV@ CM=BE@@ O@RP RG VHGHPRPO =HRP? HA X01 KIHGKHPK RG? IRLPHGK was unveiled. It features 118 main supporters of the MGBT@PKBLO NBLVLV@(/!-*RLTBCRK%ɵQ@-RFHGULV@F

0V@>HFIRGO REEH>RL@? AMG?K AHP RNRP?BGU IPBQ@K RG? ?BIEHFRKLHLV@KMPU@HGKNVHI@PAHPF@?LV@ǘPKLEBT@P transplantation in Latvia in early 2011 at the Pauls /LPR?BʹȻ!EBGB>RE1GBT@PKBLO&HKIBLRE

The Latvian Academy of Sport Education, for its part, was funded the preparation and publishing of the book of historical descriptions and photos regarding the *RLTBRG>R?@FOHA/IHPL#?M>RLBHG-UR?BYBQUEʟLʟ=RB MGKIHPLRF-5@RPKYLH#?M>RLBHGRG?/IHPLK

Culture

In order to preserve the national cultural heritage of opera and ballet, to develop the culture of opera, HI@P@LLR =REE@L RG?FMKB> RK N@EE RK LH IHIMERPBQ@ BL in Latvia and abroad and ensure the accessibility of global achievements in the culture of opera, ballet and music, the company makes an annual donation to the *RLTBRG,RLBHGRE-I@PR*,-KBKLPR?BLBHGRE LV@G@N theatre season is inaugurated by the ceremony of the (/!-*RLTBCRK%ɵQ@- RNRP? RG? LV@>HG>@PLHA LV@IPBQ@ winners.

0VBKO@RP LV@(/!-*RLTBCRK%ɵQ@-RNRP?KYRKLRLM@=O LV@RPLBKLE?BK*HP@G>KRG?R>RKVIPBQ@HAHG@LVHMKRG? ERLKYN@P@IP@K@GL@?LHL@GIPBQ@NBGG@PK

The company's contribution to the Hermann Braun \$HMG?RLBHGBGLV@HPURGBQRLBHGHAA@KLBTREK-/MFF@PLBF@- and "Winterfest" has also become a tradition. In 2011, additional support was rendered to the cycle of concerts ?@?B>RL@?LHLV@LVRGGBT@PKRPOHA\$*BKQL HPURGBQ@? by the foundation.

Just as in previous years, the company also contributed LHLV@AMG?BGUHALV@RGGMRE R>V+MKB>\$@KLBTRE

Non-classical music was not neglected in 2011 either. \$HP LV@ IP@IRPRLBHG RG? P@>HP?BGU HAXRBFHG?KWRMEK IPHC@>L-,HKIʇEʇFRGM?QʟTB-WERO+O*BA@RG?VBK >HG>@PLK BG 2B?Q@F@ RG? )MPQ@F@ RK N@EE RK AHP LV@ HPURGBQRLBHGHALV@>HG>@PLK@PB@KHALV@A@KLBTRE-XʟURK XBLFB- R >HGLPB=MLBHG NRK FR?@ LH LV@ \$HMG?RLBHG -+˚K?B@GMF˚QBDRK>@GLPK-

'FRGLK /DPRKLBʹȻ LV@ -UMRP?BRG- HA P@F@F=PRG>@ HA R>LHP #?URPK *B@IBʹȻ RG? LV@ *RLTBRG KKH>BRLBHG HA Local and Regional Governments received funding for HPURGBQBGURUPRG?>HG>@PL BG/RMEDPRKLB A@RLMPBGULV@ IPBQ@NBGG@PKHALV@#?URPK*B@IBʹȻRNRP?RG?*RLTBRG artists.

In 2011, the company also supported the events dedicated to the 80th anniversaries of the prominent *RLTBRG >HFIHK@P RPPRGU@P RG? TBHEBGBKL EGBK 6RʪBK RG?LV@*RLTBRGCRQQFRKL@P'TRPK+RQMPK HPURGBQ@?=O LV@/H>B@LOAHP/MIIHPLHA(RQQ-P>V@KLPRK

Moreover, support was rendered to the Mikhail Chekhov XBURXMKKBRG0V@RLP@AHPKLRUBGULV@IERO-,@TB@GFʇP PMG>BF DPʇCMFRIH?K- #T@PO"RO 'K,HL/MG?RO =O A. Ostrovsky, new productions of the Latvian National Theatre, as well as for an art exhibition at the Large Hall of the Daile Theatre in relation to the main staging of

the season 2011/2012 "Romeo and Juliet".

The Latvian State Historical Archives, for their part, were ǘGRG>BREEORB?@?BGK@LLBGUMILV@@SVB=BLBHG-)MPQ@F@K MG 6@FURE@K V@P>HUBKL@ Y GH V@P>HUR %HLVRP?R Eʟ?Q V@P>HURF (ʇDR=RF- 0V@ "M>VO HA )MPQ@F@ RG? 6@FURE@ Y APHF"MD@%HLLVRP? LH"MD@ (R>H= NVBE@ LV@XBUR+HGMF@GLKU@G>OYBGLV@@T@PO?RO>RP@HA /R>P@? ǘP@ HA LV@ PHLV@PK !@F@L@PO HAXBUR RG? LV@ maintenance of the ensemble of said cemetery.

!HHI@PRLBHGNBLV#F=RKKB@K

0V@ (/! -*RLTBCRK %ɵQ@- BK RG BGL@PGRLBHGRE >HFIRGO which rendered support to a variety of activities of ?BIEHFRLB> =H?B@K ?MPBGU LV@ P@IHPLBGU O@RP \$HP instance, the company helped transport the hospital beds furnished by the German Embassy in Riga to the Latgale Region social care centres.

0V@>HFIRGOREKHKMIIHPL@?LV@P@>@ILBHGHPURGBQ@?=O the Embassy of the Republic of Latvia in the Russian \$@?@PRLBHG BG VHGHMP HA LV@ P? RGGBT@PKRPO HA LV@ proclamation of independence of Latvia.

Charity

In 2011, the company continued the tradition of helping LV@ *RLTBRG !VBE?P@GK \$MG? 0V@ @T@GLK HPURGBQ@? =O the fund and supported by the company include the large-scale Christmas charity concert at the Riga Latvian Society House, traditionally a part of the charity >RFIRBUG-,@IR@CURPɵF-"HGLWRKK O

GHLV@P @T@GL LH =@ GHL@? BK LV@ HG@ HPURGBQ@? =O LV@ AMG? AHMG?RLBHG ʇPGM T@K@Eʟ=R YF˚KM GɵDHLG@- !VBE?P@GK &@RELV Y -MP \$MLMP@ RL LV@ XBUR !BP>MK for children from orphanages and those from socially disadvantaged families.

In the reporting year, support was also rendered to the KKH>BRLBHG-*RLTBCRK=ʇPGB@FRPDMKLʟ=MLPRM>ʇCMFB@F- \$HP *RLTBRG !VBE?P@G NBLV WVOKB>RE "BKR=BEBLB@K AHP BFIE@F@GLBGU LV@ IPHC@>L -2RKRPRK P@VR=BEBLɵ>BCRK IPHUPRFFRY-/HEBKRMUȻMI-- RKN@EERKLV@ RMKDR Society of Disabled Persons.

/M>V@GTBPHGF@GLIPHL@>LBHGHPURGBQRLBHGKRKLV@-*RD@ #GUMP@ ,RLMP@ WRPD \$HMG?RLBHG- RG? -%RMCR ,RLBHGRE WRPD\$HMG?RLBHG-N@P@REKHRFHGULV@=@G@ǘ>BRPB@KLV@ (/!-*RLTBCRK%ɵQ@-KMIIHPLBG

In the reporting year, the company also collaborated NBLV LV@ 'GʁMDREGK FMGB>BIREBLO NV@P@ LV@ 'GʁMDREGK 1%/ BK EH>RL@? \$MG?K N@P@ >HGLPB=ML@? AHP LV@ IMP>VRK@ HA IPBQ@K RG? ?BIEHFRK HG LV@ @T@GLK HA LV@ "ROAHPWPHL@>LBHGHA!VBE?P@GHPURGBQ@?=OLV@2RGURȼB !HFFMGBLO&REE RKN@EERKAHPHPURGBQBGULV@>HG>@PL HA(ɵGBKWRMDȻL@EEHBG,HT@F=@P

/IHPLK

0V@(/!-*RLTBCRK%ɵQ@-BKHG@HALV@FRCHP>HGLPB=MLHPK to sports in Latvia, having aided the development of the Latvian Olympic Movement and professional sports for

over a decade.

The company has been supporting the Latvian Olympic Committee since 1997. The company's contribution is allocated for co-funding the best athletes who are training for the Olympic Games as the Latvian Olympic Team members, or entering other professional competitions. In 2011, the company was also among LV@ KMIIHPL@PK HA ǙHHP=REE L@GGBK =BRLVEHG =H=KE@BUV RG?HPB@GL@@PBGUHPURGBQRLBHGK RKN@EE RK LV@*RLTBRG national teams of basketball and volleyball.

0V@ *RLTBRG WHN@P LVE@L@K \$@?@PRLBHG P@>@BT@? funding for the training and preparation of the Latvian strength athletes and for their participation in the Latvian championships and a variety of international tournaments. The company also supported the participation of Jolanta Logina, a female strength athlete HALV@*RLTBRGWHN@PLVE@L@K\$@?@PRLBHG BGLV@*RLTBRG championships and various international tournaments. 3BLVLV@KMIIHPLHALV@(/!-*RLTBCRK%ɵQ@- LV@*RLTBRG youth, junior and adult national orienteering teams of competed in international orienteering events and in the Latvia Cup rounds.

0V@ *RLTBRG "RG>@ /IHPL \$@?@PRLBHG AHP BLK IRPL P@>@BT@? AMG?BGU AHP LV@ HPURGBQRLBHG HA LV@ *RLTBRG Championships in standard dances and the traditional >HFI@LBLBHG-"QBGLRPC˚PR-

-NG RKD@L=REE!VRFIBHGK

The employees of the company actively participate in public events, for instance, the Riga marathon, the skiing FRPRLVHG-IDɵPLERMDKLRF-@L>0V@>HFIRGOREKHVRK ice-hockey and basketball teams. In the reporting year, LV@ =RKD@L=REE L@RF HA LV@ (/!-*RLTBCRK%ɵQ@- =@>RF@ LV@>VRFIBHGKHALV@FHKLIP@KLBUBHMKY@EBL@YUPHMIHA the Double Amateur League.

/>B@G>@

0V@KMIIHPLHALV@(/!-*RLTBCRK%ɵQ@-LHK>B@G>@?RL@K back to 1995, which was a very hard time for students and scientists. Since then, almost 170 young people have become holders of the scholarships funded by LV@-*RLTBCRK %ɵQ@- /BG>@ RNRP?K HA LV@ *RLTBRG >R?@FOHA/>B@G>@KRG?-*RLTBCRK%ɵQ@-BGLV@P@E@TRGL engineering and medical sciences are also presented. The goal is to promote the development of science and modern technologies in Latvia concerning gas, heat engineering and related branches of chemical technology and to appreciate the contribution of the Latvian scientists, practitioners and would-be scientists ?H>LHPRE KLM?@GLK /BFMELRG@HMKEO F@?B>RE K>B@G>@ BG V@RPL KMPU@PO RG? >RP?BHEHUO R ǘ@E? HA GH E@KK importance, also enjoys the support from the company.

#GTBPHGF@GLREWHEB>O

In 2011, the company implemented its environmental policy under >BP>MFKLRG>@K HA HILBFBQRLBHG and economy of resources. The environmental policy of the JSC -*RLTBCRK %ɵQ@- BG LVBK I@PBH? HA LBF@ featured the following objectives:

Ú LH P@R>V KMKLRBGR=E@ BG?B>@K HA @GTBPHGF@GL protection and economic activity;

ÚLHFRBGLRBG>EHK@EBGDKHA>HFFMGB>RLBHGRG? promote mutual understanding with the state and municipal institutions and the society in general;

ÚLHAR>BEBLRL@LV@?@T@EHIF@GLHAKLRǗ

Ú LH @GKMP@ R ?M@ B?@GLBǘ>RLBHG HA LV@ D@O environmental impacts of economic activity, the analysis and assessment of causes thereof;

ÚLHKLM?O RGREOK@RG?H=K@PT@LV@P@JMBP@F@GLK of normative acts;

ÚLHLRD@IPHI@PR>LBHGBG@F@PU@G>OKBLMRLBHGK

During the reporting year, the company successfully AMEǘEE@? LV@ P@JMBP@F@GLK HA GHPFRLBT@ R>LK BG BLK natural gas storage, transmission and distribution systems.

'GƲMDREGK1%/X@>@BT@K !RL@UHPOW@PFBL HAWHEEMLBT@>LBTBLB@K

One of the key achievements of the environmental policy implemented was the B-category permit of IHEEMLBT@ R>LBTBLB@K ,H2' UPRGL@? LH LV@ 'GʁMDREGK1%/0V@I@PFBLNRKBKKM@?=OLV@2REFB@PR Regional Environmental Board.

The previous permit issued for the object expired in the reporting year. In order to obtain a new permit BG >HFIEBRG>@ NBLV LV@ P@JMBP@F@GLK HA LV@ @Ǘ@>LBT@

environmental normative acts, the Operation and Technical Department of the company developed a document identifying and comprehensively describing the sources of emissions from the technological objects RLLV@'GʁMDREGK1G?@PUPHMG?%RK/LHPRU@\$R>BEBLO

The said sources were calculated and the emission volumes substantiated, on the basis of which the >HFIRGO NRK R=E@ LH P@JM@KL RG? P@>@BT@ RIIPHIPBRL@ emission limits.

'G>P@RK@?FHMGLHA\$P@@%P@@GVHMK@%RK #FBKKBHGEEHNRG>@K

The responsible state authorities passed another resolu-LBHGI@PLRBGBGULHLV@HI@PRLBHGHALV@'GʁMDREGK1%/ The resolution No.40 adopted on September 2, 2011 by the Ministry of Environmental Protection and Regional Development of the Republic of Latvia, whereby LV@ >HF=MKLBHG @JMBIF@GL RL LV@ 'GʁMDREGK 1%/ NRK granted a higher number of free greenhouse gas emission allowances, was important for the company both in environmental and economic terms.

The Ministry's resolution applies to the period of 2008 to 2012, and the increase of greenhouse gas emission allowances is 20%.

!HGK@JM@GLEO LV@ (/!-*RLTBCRK%ɵQ@-VRKP@>@BT@?LV@ full amount of greenhouse gas emission allowances KM=KLRGLBRL@?RG?P@JM@KL@?=O LV@ 'GʁMDREGK1%/ AHP the period till 2012.

Board Report

>LBTBLOHALV@!HFIRGOBG LV@X@IHPLBGU5@RP

he Joint Stock Company -*RLTBCRK %ɵQ@- V@P@BGRǜ@P Y LV@ !HFIRGO BK RG @G@PUO KMIIEO company engaged in natural gas transmission, storage, distribution and sale. In 1997, the Energy Supply Regulation Council of the

Republic of Latvia issued to the Company exclusive licences for the provision of regulated public services LBEE\$@=PMRPO -G(RGMRPO LV@!HMG>BE HALV@WM=EB>1LBEBLO!HFFBKKBHGV@P@BGRǜ@PYLV@W1! issued to the Company a licence for natural gas sale till \$@=PMRPO 0V@EB>@G>@AHPGRLMPREURKKRE@APHF \$@=PMRPO LVPM\$@=PMRPO NRKBKKM@?=O LV@W1!!HMG>BEHG(RGMRPO 1G?@PLV@#G@PUO Law, the Company is a natural gas supply system operator, which ensures uninterrupted and safe natural gas supply to customers in Latvia, avoiding overloads of system capacity.

Over the reporting year, the users were supplied 1,561.4 million m³ of natural gas. In comparison with 2010, natural gas sales in m³ fell by 12.7%. The decrease of natural gas sales stemmed from the relatively high air L@FI@PRLMP@KBGLV@LVJMRPL@PHA RKN@EERKLV@ investments of heat supply companies in the use of renewable energy sources and partial replacement of AHKKBE AM@EK NBLV NHH?>VBI \$HP K@T@PRE O@RPK REP@R?O the natural gas purchase prices set for Latvia have reached the level of the natural gas market of European >HMGLPB@K RG? BG LV@O N@P@ HGEO BGǙM@G>@? =O >VRGU@KBGHBEIPH?M>LJMHLRLBHGKRLLV@KLH>D@S>VRGU@ >MPP@G>OPRL@KRG?URKKMIIEOǙHNK

In 2011, natural gas was sold to the customers for the GRLMPRE URK KRE@ @G?MK@P LRPBǗK K@L BG LV@ P@KHEMLBHG ,H--GGRLMPREURKKMIIEOLRPBǗKHALV@(HBGL/LH>D !HFIRGO-*RLTBCRK%ɵQ@--HALV@W1!!HMG>BE?RL@?(MEO 24, 2008, which under the resolution No.258 "On the procedure of application of resolution No.247" of the W1!!HMG>BE?RL@?(MG@ RP@@S>EMKBT@HA@S>BK@ tax.

0V@RIIEB@??BǗ@P@GLBREGRLMPREURKKRE@@G?MK@PLRPBǗK >HGKBKLHALNHIRPLKǘS@?P@UMERL@?K@PTB>@LRPBǗKRG? the natural gas sale price, which changes with a step HA*2*
GF³ depending on the actual natural gas IMP>VRK@>HKLK \$HPMK@PKNBLV LV@ RGGMREGRLMPRE URK consumption over 25,000 nm³ , the applicable natural URK KRE@ @G?MK@P LRPBǗ >VRGU@KFHGLVEO NV@P@RK AHP users with the annual natural gas consumption up to 25,000 nm³ YHG>@BGKBSFHGLVK B@ HG(RGMRPORG? July 1.

"MPBGU LV@GRLMPREURKKRE@@G?MK@PLRPBǗKAHPLV@ natural gas consumers also changed due to tax changes, =@>RMK@ RK HA (MEO LV@ P@?M>@? 20 PRL@ AHP natural gas supplied to households was revoked, while natural gas used as fuel was applied an excise tax of 12 *2*
LVK?GF³ #1X
LVHMKGF³

In 2011, the Company sold natural gas and provided K@PTB>@K LH >MKLHF@PK AHP *2* FBEEBHG #1X FBEEBHG NVB>V ?H@K GHL KBUGBǘ>RGLEO ?BǗ@P from the net turnover of 2010, with the expenditures @S>EM?BGUR?FBGBKLPRLBT@@SI@GK@KRFHMGLBGULH*2* FBEEBHG #1XFBEEBHGRG?LV@UPHKKIPHǘL Y*2*FBEEBHG#1XFBEEBHG0V@>VRGU@KBG the structure of net turnover resulted from changes in the natural gas sales volume and the natural gas KRE@IPB>@ RKN@EERK LV@ BG>P@RK@?@ǚ>B@G>OHAMKRU@ HA LV@ 'GʁMDREGK 1G?@PUPHMG? %RK /LHPRU@ \$R>BEBLO V@P@BGRǜ@PY'GʁMDREGK1%/

Over the season of 2011, 2.26 billion m³ of natural gas NRKBGC@>L@?BGLHLV@'GʁMDREGK1%/RG?=BEEBHGF³ was withdrawn. Compared with the season of 2011, the volume of natural gas injected grew by 11.3%, whereas that of natural gas withdrawn remained at the level of the previous season.

0V@!HFIRGO>HFIE@L@?LV@O@RPNBLVRG@LIPHǘL HA*2*FBEEBHG#1XFBEEBHG NVB>VBK*2* FBEEBHG#1XFBEEBHGHPR=HT@LVRLHAY*2* FBEEBHG#1XFBEEBHG0V@G@LIPHǘLR=BEBLOHA business activity was 7.7% in 2011 and 7.5% in 2010.

'G LV@!HFIRGOBGT@KL@?*2* FBEEBHG#1X FBEEBHG BG LV@ FH?@PGBQRLBHG HA LV@ URK KMIIEO KOKL@F RG? LV@>P@RLBHG HAG@N ǘS@? RKK@LK HA LV@ LHLRE BGT@KLF@GL NRK KI@GL HG LV@ FH?@PGBQRLBHG HA URK LPRGKFBKKBHG IBI@EBG@ KOKL@F Y HG LV@ BFIPHT@F@GLHAHI@PRLBHGKRA@LORG?LV@FH?@PGBQRLBHG HA@JMBIF@GLRLLV@'GʁMDREGK1%/ RG?YHGLV@ expansion of distribution networks and the renewal of ǘS@?RKK@LK0V@LHLREGMF=@PHAURK@GR=E@?H=C@>LKRL the end of the year reached 442,600.

On August 17, 2010, the Company received the

P@KHEMLBHG ,H ! HA LV@ #MPHI@RG Commission dated August 13, 2010 on the award of R ǘGRG>BRE UPRGL LH >LBHG ,H ##WX',0UX\$ *2*0'
'
/'
/' under the EC Regulation No. 663/2009 on gas and electricity interconnections. With this resolution, the FH?@PGBQRLBHGHAN@EEKRLLV@'GʁMDREGK1%/RG?LV@ construction of a gas passage under Daugava and a pig P@>@BT@P NRK UPRGL@? *2* FBEEBHG #1X FBEEBHG NBLV R TB@N LH KLR=BEBQ@ GRLMPRE URK KMIIEB@K =@LN@@G Lithuania and Latvia in emergency situations.

\$HMPN@EEKHALV@'GʁMDREGK1%/N@P@P@>HGKLPM>L@?BG RG?@E@T@GBGLV@P@IHPLBGUI@PBH?*2*FBEEBHG #1X FBEEBHG NRK KI@GL ?MPBGU LV@ P@IHPLBGU year, and the reconstruction of a gas drying unit at the CS-1 was also completed in 2011. The object was commissioned in January 2012 with the total project >HKLKRFHMGLBGULH*2*FBEEBHG#1XFBEEBHG NV@P@HA*2*FBEEBHG#1XFBEEBHGNRKKI@GLBG the reporting year.

The elimination of damage found during the diagnostics HA URK LPRGKFBKKBHG IBI@EBG@K BK BG IPHUP@KK *2* FBEEBHG #1X FBEEBHG VRK =@@G KI@GL HG LV@ renovation of gas pipelines. The construction of an underwater gas pipeline under Daugava and a pig P@>@BT@P VRK =@@G >HFIE@L@? *2* FBEEBHG #1X FBEEBHGNRKKI@GLBGLV@P@IHPLBGUO@RP NBLVLV@LHLRE >HKLKHALV@H=C@>LRFHMGLBGULH*2*FBEEBHG#1X FBEEBHG

'G *2*FBEEBHG#1XFBEEBHGNRKKI@GLHG the construction of gas distribution pipelines and the repair of coating on the gas pipeline from GRS "Riga- - LH %X/ -6B@F@ʯB- NRK >HFIE@L@? Y LV@ LHLRE >HKLK HA LV@ IPHC@>L RFHMGL@? LH *2* FBEEBHG #1X FBEEBHG NBLV*2*FBEEBHG#1XFBEEBHGKI@GLBG the reporting year.

The reconstruction of GRS "Riga-2" also began in 2011, NBLVLNHG@N>HGLRBG@PLOI@%XWK?M@LH=@=MBELYLV@ LHLRE>HKLKHALV@IPHC@>LRP@*2*FBEEBHG #1X FBEEBHG NBLV*2*FBEEBHG #1XFBEEBHGKI@GL in the reporting year. The works are due for completion in 2012.

The year 2011 also saw completion of the replacement HAURKIBI@EBG@BG*B@IɵCR PʟTʟ=RK/LP@@L >HFF@G>@? BG0V@LHLRE>HKLKHALV@IPHC@>LRFHMGL@?LH*2* FBEEBHG#1XFBEEBHG RG?*2*FBEEBHG#1X FBEEBHGNRKKI@GLBGLV@P@IHPLBGUO@RP

X@K@RP>VRG?"@T@EHIF@GL Measures

In order to ensure uninterrupted natural gas supply to users and safe operation of the gas supply system in long term, the Company has developed the "Plan of measures for the improvement of safety of the gas sup-IEOKOKL@FHALV@(HBGL/LH>D!HFIRGO-*RLTBCRK%ɵQ@- 2010-2015". It has been prepared based on the con- >EMKBHGK FR?@ =O LV@ XMKKBRG >HFIRGB@K -%RQH=@QH-IRKGHKLC- RG? -*@GLPRGKURQ- LV@ BGKLBLML@K -2,''%6- RG? -%BIPHKI@>URQ- RKN@EE RK LV@ %@PFRG >HFIRGB@K -WBI@EBG@#GUBG@@PBGU%F=&- -1GL@PUPMG?KI@B>V@PMG? %@HL@>VGHEHUB@ Y /OKL@F@ %F=&- -#-,#GUBG@@PBGU GmbH", "E.ON Ruhrgas International AG" and other IRPLG@PKP@URP?BGULV@L@>VGB>RE>HG?BLBHGHALV@@JMBI-F@GLRG?FH?@PGBQRLBHGHILBHGK

The plan of measures envisages investment in safety BFIPHT@F@GLAHPLV@LHLRERFHMGLHA*2*FBEEBHG #1XFBEEBHG0VBK=RKB>REEOBG>EM?@KIPHC@>LKRBF@? RLLV@BFIPHT@F@GLHAKOKL@FKRA@LO LV@URKBǘ>RLBHGHA new objects and the enhancement of gas supply stability in the whole region.

'GLV@P@IHPLBGUO@RP LV@-(/!-%RQIPHF2,''%6-IP@- IRP@?RIPHUPRFF@HAFH?@PGBQRLBHGHALV@'GʁMDREGK 1%/MILH0V@>HG>@IL>HT@PKLNH?@T@EHIF@GL K>@GRPBHKYNBLVRG?NBLVHMLBG>P@RKBGULV@GRLMPREURK KLHPRU@>RIR>BLO0V@IPHC@>L@?>HKLKRP@*2*FBE-EBHG#1XFBEEBHGRG?*2*FBEEBHG#1X FBEEBHGP@KI@>LBT@EO

\$BGRG>BREXBKD+RGRU@F@GL

The operation of the Company is exposed to a variety HAǘGRG>BREPBKDK BG>EM?BGU>P@?BLPBKDRG?PBKDKHAǙM> tuation of foreign currency rates and interest rates. The FRGRU@F@GL HA LV@ !HFIRGO KLPBT@K LHFBGBFBQ@ LV@ G@URLBT@BFIR>LHAIHL@GLBREǘGRG>BREPBKDKHGLV@ǘGRGcial state of the Company.

0V@!HFIRGOBKGHL?BP@>LEOKM=C@>LLHLV@PBKDHAǙM> tuation of foreign currency rates as the gas purchase IPB>@BKK@LBG1/"RG?KM=K@JM@GLEOP@>RE>MERL@?BGLH #1X NV@P@RKURKKRE@LRPBǗKRP@K@LBGERLK/@LLE@F@GLK AHPLV@KMIIEB@?URKRP@FR?@ BG#1X0V@ ERLKPRL@ BK I@UU@?LHLV@@MPHPRL@KBG>@(RGMRPO KHǙM>- LMRLBHGKHA LV@*2*

1XPRL@RP@ EBFBL@?RG?MGEBD@EO LHVRT@RGHLR=E@BGǙM@G>@HGAMPLV@PǘGRG>BREP@KMELK %RKIMP>VRK@IPB>@>VRGU@K BG1/"?@I@G?BGUHG LV@ HBEIPH?M>LKJMHLRLBHGRP@>HT@P@?=OLV@W1!RIIPHT@? GRLMPREURKKRE@LRPBǗK NVB>VLHR>@PLRBG@SL@GL>HT@P LV@ǙM>LMRLBHGKHA=HLVLV@2

1XRG?#1X

1/"PRL@ 0V@PBKDHAǙM>LMRLBHGHAAHP@BUG>MPP@G>OPRL@KRK>HGcerns debts to suppliers is kept under control by holding a considerable part of cash assets in deposits of the respective currency.

As of the end of the reporting year, the Company has no loans, thus it is not subject to interest rate risk.

0V@ǘGRG>BRERKK@LKKM=C@>LLH>P@?BLPBKD=RKB>REEO>HGsist of customer debts and cash. The Company is exposed to a considerable degree of credit risk because a notable share of the net turnover applies to a limited num- =@PHA>MKLHF@PK\$HMPHALV@!HFIRGOK>MKLHF@PKFRD@MILHBG–HAKRE@K RG?HG@HALV@K@ debtors as at December 31, 2011 comprised 21.8% (in 2010 –HALV@LHLRERFHMGLHA>MKLHF@P?@=LK LV@ K@>HG?RG?LVBP?FRCHP?@=LHPKRG?P@KI@>LBT@EOBGYRG?

The Company has introduced and observes a credit policy that envisages selling goods on credit only to customers with a good credit history, controlling the amount of credit set for each customer.

The customer debts are shown at their recoverable value. The Company's partners in monetary transactions are EH>REǘGRG>BREBGKLBLMLBHGKNBLVRIPHI@P>P@?BLVBKLHPO

0V@!HFIRGOH=K@PT@K>RMLBHMKEBJMB?BLOPBKDFRGRU@F@GL @GKMPBGUKMǚ>B@GLRTRBER=BEBLOHA>P@?BLP@KHMP>@KAHP meeting liabilities in due time.

WHKL RERG>@/V@@L#T@GLK

0V@P@RP@GHKM=K@JM@GL@T@GLKKBG>@LV@ERKL?RL@HALV@P@IHPLBGUO@RPLVRLNHME?VRT@RKBUGBǘ>RGL@Ǘ@>LHGLV@ ǘGRG>BREIHKBLBHGHALV@!HFIRGORKRL"@>@F=@P

On January 23, 2012 the Board of the Company agreed to sign an agreement with JSC "BDO" on revaluation of the !HFIRGOKǘS@?RKK@LKRKRL\$@=PMRPO =OMKBGULV@RFHPLBK@?P@IER>@F@GL>HKLF@LVH?

"BKLPB=MLBHGHAWPHĉLKX@>HFF@G?@?=OLV@ HRP?

Ÿ Ÿ	Ÿ	Ÿ
Ÿ Ÿ	2Ÿ	#1X

WPHĉLŸHAŸLV@ŸP@IHPLBGUŸO@RPŸ	Ÿ
/VRP@ŸHAŸIPHĉLŸGHLŸRTRBER=E@ŸAHPŸ?BKLPB=MLBHGŸ
MGP@REBQ@?Ÿ?@A@PP@?ŸLRSŸURBGŸP@ERL@?ŸLHŸ
LV@ŸP@TREMRLBHGŸHAŸĉS@?ŸRKK@LKŸ	Ÿ
/VRP@ŸHAŸIPHĉLŸRTRBER=E@ŸAHPŸ?BKLPB=MLBHGŸ	Ÿ
/MUU@KL@?Ÿ?BKLPB=MLBHGŸHAŸIPHĉLŸ
ŸŸŸŸ?BTB?@G?KŸLHŸKVRP@VHE?@PKŸŸŸŸ	Ÿ
ŸŸŸŸ?BTB?@G?KŸI@PŸKVRP@Ÿ2 ŸKVRP@Ÿ	Ÿ
/LRLMLHPOŸP@K@PT@KŸ	Ÿ

Some members of the Council and the Board of the Company hold shares and interests at numerous companies registered in the Registry of Enterprises of the Republic of Latvia, and they perform managerial functions there. Over the reporting year, the Company has not executed transactions of considerable amount (except for those listed BGLV@ǘGRG>BREKLRL@F@GLNBLVLV@K@>HFIRGB@K

Information of the shares of the Company held by members of the Board and the Council of the Company is available at the Board of the Company.

\$MLMP@WPHKI@>LK

Having regard of the investments in the improvement of the system operation safety, the expansion of the gas pipeline network and the attraction of new customers made in previous years and in the reporting year, as well as considering the situation in the fuel market of Latvia, the Board of the Company believes that in 2012 the Company will continue successful development and take a stable place in the fuel supply market.

Chairman of the Board "ɵTBK

HRP?F@@LBGUFBGML@K,H Riga, April 27, 2012

page 34

"@KBUGHAXBUR\$BPKL%RK\$R>LHPOKBL@IERGMLVHP)B@VG@E(RGMRPO

Summary fiNaNcial statemeNts

WPHĉLRG?EHKKR>>HMGLAHPLV@O@RP@G?@?"@>@F=@P

		Ÿ2	Ÿ2	ŸŸ#1X	Ÿ#1X
	Net sales
	!HKLŸHAŸKRE@K
3	%PHKKŸIPHĉLŸ	41,761,533	38,671,903	59,421,308	55,025,161
	?FBGBKLPRLBT@Ÿ@SI@GK@K
	-LV@PŸHI@PRLBGUŸBG>HF@Ÿ
	-LV@PŸHI@PRLBGUŸ@SI@GK@K
	-LV@PŸBGL@P@KLŸBG>HF@ŸRG?ŸKBFBERPŸ
	BG>HF@
	!VRGU@KŸHAŸEHGUŸL@PFŸĉGRG>BREŸBG
	T@KLF@GLKŸRG?ŸKVHPLŸL@PFŸK@>MPBLB@K
	'GL@P@KLŸ@SI@GK@KŸRG?ŸKBFBERPŸ@S
	penses
	WPHTBKBHGKŸAHPŸ=R?ŸRG?Ÿ?HM=LAMEŸ
	?@=LHPK ŸG@L
	WPHTBKBHGKŸAHPŸH=KHE@L@ŸRG?ŸKEHNŸ
	FHTBGUŸBGT@GLHPB@K ŸG@L
16	WPHĉLŸ=@AHP@ŸLRS@K	31,431,923	31,327,886	44,723,597	44,575,566
	!HPIHPRL@ŸBG>HF@ŸLRSŸAHPŸLV@ŸP@IHPL
	ing year
	"@A@PP@?ŸBG>HF@ŸLRS
	-LV@PŸLRS@K
20	!MPP@GLŸO@RP™KŸIPHĉLŸ	27,175,200	26,466,382	38,666,826	37,658,269
	1GP@REBK@?Ÿ?@A@PP@?ŸLRSŸURBGŸP@ERL@?Ÿ
	LHŸĉS@?ŸRKK@LKŸP@TREMRLBHG
	!MPP@GLŸO@RP™KŸIPHĉLŸRTRBER=E@ŸAHPŸ
	distribution	25,696,249	24,922,246	36,562,468	35,461,161

page 36

RERG>@KV@@LRKRL"@>@F=@P

	LVL	LVL	#1X	#1X
Assets
*HGUL@PFŸBGT@KLF@GLK
I. Intangible assets:
Ÿ!HG>@KKBHGK ŸIRL@GLK ŸEB>@GK@K ŸLPR?@
FRPDKŸRG?ŸKBFBERPŸPBUVLK
Ÿ?TRG>@ŸIROF@GLKŸAHPŸBGLRGUB=E@ŸRKK@LK
Total intangible assets:	2,075,950	2,229,241	2,953,810	3,171,924

''Ÿ\$BS@?ŸRKK@LK
Ÿ*RG? Ÿ=MBE?BGUK Ÿ>HGKLPM>LBHGKŸRG?ŸURKŸ
transmission system
Ÿ#JMBIF@GLŸRG?ŸFR>VBG@PO
Ÿ-LV@PŸĉS@?ŸRKK@LK
Ÿ?TRG>@KŸAHPŸĉS@?ŸRKK@LKŸRG?ŸĉS@?ŸRK
K@LKŸMG?@PŸ>HGKLPM>LBHG
0HLREŸĉS@?ŸRKK@LK	315,129,884	316,989,625	448,389,429	451,035,602

2Ÿ*HGUL@PFŸĉGRG>BREŸBGT@KLF@GLK
Ÿ'GT@KLF@GLŸBGŸRKKH>BRL@?Ÿ>HFIRGB@K
Ÿ-LV@PŸK@>MPBLB@KŸRG?ŸBGT@KLF@GLK
Ÿ-LV@PŸEHGUL@PFŸ?@=LHPK
0HLREŸEHGUL@PFŸĉGRG>BREŸBGT@KLF@GLK	1,898,428	3,201	2,701,220	4,554
0HLREŸEHGUL@PFŸBGT@KLF@GLK	319,104,262	319,222,067	454,044,459	454,212,080

Current assets
'Ÿ'GT@GLHPB@K
ŸXRNŸFRL@PBREKŸRG?Ÿ>HGKMFR=E@K
Ÿ?TRG>@KŸAHPŸUHH?KŸP@>@BTR=E@
0HLREŸBGT@GLHPB@K	76,627,746	35,203,468	109,031,459	50,090,022

III. Debtors:
Ÿ0PR?@Ÿ?@=LHPK
ŸX@>@BTR=E@KŸAPHFŸRċEBRL@?Ÿ>HFIRGB@K
Ÿ-LV@PŸ?@=LHPK
Ÿ"@A@PP@?Ÿ@SI@GK@K
Total debtors:	33,780,344	37,852,059	48,065,100	53,858,628

'2Ÿ/VHPLL@PFŸĉGRG>BREŸBGT@KLF@GLK
Ÿ-LV@PŸK@>MPBLB@KŸRG?ŸBGT@KLF@GLK
Ÿ0@PFŸ?@IHKBLK
0HLREŸKVHPLL@PFŸĉGRG>BREŸBGT@KLF@GLK	9,206,930	198	13,100,282	282
V. Cash and bank:	25,057,210	37,572,880	35,653,197	53,461,392
Total current assets:	144,672,230	110,628,605	205,850,038	157,410,324
Total assets	463,776,492	429,850,672	659,894,497	611,622,404

RERG>@KV@@LRKRL"@>@F=@P

	LVL	LVL	#1X	#1X
Liabilities
Shareholders' funds:
Ÿ/VRP@Ÿ>RIBLRE
Ÿ/VRP@ŸIP@FBMF
Ÿ*HGUL@PFŸBGT@KLF@GLKŸP@TREMRLBHGŸ
reserve
ŸX@K@PT@K
>ŸKLRLMLHPOŸP@K@PT@
ŸX@LRBG@?Ÿ@RPGBGUK
RŸIP@TBHMKŸO@RPKŸP@LRBG@?Ÿ@RPGBGUK
=Ÿ>MPP@GLŸO@RP™KŸP@LRBG@?ŸIPHĉL
Total shareholders' funds:	345,536,764	338,960,474	491,654,521	482,297,303

Creditors:
Long-term creditors:
Ÿ"@A@PP@?ŸBG>HF@
Ÿ>>PMREKŸAHPŸIHKLŸ@FIEHOF@GLŸ=@G@ĉLKŸ
RG?ŸHLV@PŸ@FIEHO@@Ÿ=@G@ĉLK
Ÿ"@A@PP@?ŸLRSŸEBR=BEBLB@K
Total long-term creditors:	51,059,053	46,884,161	72,650,486	66,710,150

Short-term creditors:
Ÿ?TRG>@KŸP@>@BT@?
Ÿ0PR?@Ÿ>P@?BLHPK
Ÿ>>HMGLKŸIROR=E@ŸLHŸP@ERL@?Ÿ>HFIRGB@K
Ÿ0RS@KŸRG?ŸKLRL@Ÿ>HFIMEKHPOŸKH>BREŸ
BGKMPRG>@Ÿ>HGLPB=MLBHGK
Ÿ-LV@PŸ>P@?BLHPK
Ÿ"@A@PP@?ŸBG>HF@
Ÿ>>PM@?ŸEBR=BEBLB@K
Total short-term creditors:	67,180,675	44,006,037	95,589,490	62,614,951
Total creditors:	118,239,728	90,890,198	168,239,976	129,325,101
Total liabilities and shareholders' funds	463,776,492	429,850,672	659,894,497	611,622,404

page 38

/LRL@F@GLHA>VRGU@KBG@JMBLOAHPLV@O@RP@G?@?"@>@F=@P

			*HGUL@PFŸ
			investments
			revaluation	/LRLMLHPOŸ	X@LRBG@?Ÿ
	/VRP@Ÿ>RIBLRE	/VRP@ŸIP@FBMF	reserve	reserve	earnings	Total
	LVL	LVL	LVL	LVL	LVL	LVL
Balance as at 31
December 2009	39,900,000	14,320,210	186,218,357	61,706,378		26,915,185 329,060,130
"BTB?@G?K
0PRGKA@PP@?ŸLHŸ
reserves
X@TREMRLBHGŸHAŸĉS@?Ÿ
assets
"@A@PP@?ŸLRSŸEBR=BE
ity arising on the
P@TREMRLBHGŸHAŸĉS@?Ÿ
assets
"BKIHKREŸHAŸP@TRE
M@?ŸĉS@?ŸRKK@LK
"@A@PP@?ŸLRSŸHGŸ
?BKIHKREŸHAŸP@TREM@?Ÿ
ĉS@?ŸRKK@LK
WPHĉLŸAHPŸLV@ŸO@RP
Balance as at 31
December 2010	39,900,000	14,320,210	185,612,319	64,076,387		35,051,558 338,960,474
"BTB?@G?K
0PRGKA@PP@?ŸLHŸ
reserves
X@TREMRLBHGŸHAŸĉS@?Ÿ
assets
"@A@PP@?ŸLRSŸEBR=BE
ity arising on the
P@TREMRLBHGŸHAŸĉS@?Ÿ
assets
"BKIHKREŸHAŸP@TRE
M@?ŸĉS@?ŸRKK@LK
"@A@PP@?ŸLRSŸHGŸ
?BKIHKREŸHAŸP@TREM@?Ÿ
ĉS@?ŸRKK@LK
WPHĉLŸAHPŸLV@ŸO@RP
Balance as at 31
December 2011	39,900,000	14,320,210	184,963,409	69,048,633		37,304,512 345,536,764

/LRL@F@GLHA>VRGU@KBG@JMBLOAHPLV@O@RP@G?@?"@>@F=@P >HGLBGM@?

			*HGUL@PFŸ
			investments
			revaluation	/LRLMLHPOŸ	X@LRBG@?Ÿ
	/VRP@Ÿ>RIBLRE	/VRP@ŸIP@FBMF	reserve	reserve	earnings	Total
	#1X	#1X	#1X	#1X	#1X	#1X
Balance as at 31
December 2009	56,772,585	20,375,823	264,964,851	87,800,266		38,296,858 468,210,383
"BTB?@G?K
0PRGKA@PP@?ŸLHŸ
reserves
X@TREMRLBHGŸHAŸ
ĉS@?ŸRKK@LK
"@A@PP@?ŸLRSŸEBR=BE
ity arising on the
P@TREMRLBHGŸHAŸĉS@?Ÿ
assets
"BKIHKREŸHAŸP@TRE
M@?ŸĉS@?ŸRKK@LK
"@A@PP@?ŸLRSŸHGŸ
?BKIHKREŸHAŸP@TRE
M@?ŸĉS@?ŸRKK@LK
WPHĉLŸAHPŸLV@ŸO@RP
Balance as at 31
December 2010	56,772,585	20,375,823	264,102,536	91,172,485		49,873,874 482,297,303
"BTB?@G?K
0PRGKA@PP@?ŸLHŸ
reserves
X@TREMRLBHGŸHAŸ
ĉS@?ŸRKK@LK
"@A@PP@?ŸLRSŸEBR=BE
ity arising on the
P@TREMRLBHGŸHAŸĉS@?Ÿ
assets
"BKIHKREŸHAŸP@TRE
M@?ŸĉS@?ŸRKK@LK
"@A@PP@?ŸLRSŸHGŸ
?BKIHKREŸHAŸP@TRE
M@?ŸĉS@?ŸRKK@LK
WPHĉLŸAHPŸLV@ŸO@RP
Balance as at 31
December 2011	56,772,585	20,375,823	263,179,221	98,247,353		53,079,539 491,654,521

Changes in Statutory reserves can only be made with shareholders' approval. Revaluation reserve and share premium cannot be distributed to shareholders.

!RKVĊHNKLRL@F@GLAHPLV@O@RP@G?@?"@>@F=@P

	LVL	LVL	#1X	#1X
'Ÿ!RKVŸĊHNKŸAPHFŸHI@PRLBGUŸR>LBTBLB@K
ŸWPHĉLŸ=@AHP@ŸLRS@K
Adjustments for:
ŸĉS@?ŸRKK@LŸ?@IP@>BRLBHGŸRG?ŸNPBL@?HNGŸHAŸ
BGLRGUB=E@ŸRKK@LK
Ÿ?BĈ@P@G>@Ÿ=@LN@@GŸLV@ŸR>LMREŸRG?ŸAHP@>RKL@?Ÿ

IMP>VRK@Ÿ>HKLŸHAŸGRLMPREŸURKŸRG?ŸBG>HF@ŸAPHFŸ
IRPLB>BIRLBHGŸ>VRPU@
Ÿ>VRGU@ŸBGŸIPHTBKBHGKŸAHPŸBGT@GLHPB@K
Ÿ>VRGU@ŸBGŸIPHTBKBHGKŸAHPŸEHGUL@PFŸĉGRG>BREŸ
investments
Ÿ>VRGU@ŸBGŸR>>PM@?Ÿ@SI@GK@KŸAHPŸ=HGMK@KŸAHPŸ
P@IHPLBGUŸO@RP™KŸĉGRG>BREŸP@KMELK
Ÿ>VRGU@ŸBGŸR>>PM@?ŸMGMK@?ŸRGGMREŸE@RT@Ÿ@S
penses
Ÿ>VRGU@ŸBGŸHLV@PŸIPHTBKBHGK
Ÿ>VRGU@KŸBGŸR>>PMREKŸAHPŸIHKLŸ@FIEHOF@GLŸ=@G
@ĉLKŸRG?ŸHLV@PŸ@FIEHO@@Ÿ=@G@ĉLK
ŸHLV@PŸBGL@P@KLŸRG?ŸKBFBERPŸBG>HF@
ŸBGL@P@KLŸRG?ŸKBFBERPŸ@SI@GK@
ŸIPHĉLŸHGŸKRE@ŸHAŸĉS@?ŸRKK@LK
Adjustments for:
0PR?@Ÿ?@=LHPKŸ?@>P@RK@Ÿ ŸŸBG>P@RK@
'GT@GLHPB@KŸBG>P@RK@Ÿ Ÿ?@>P@RK@Ÿ
0PR?@Ÿ>P@?BLHPK™ŸBG>P@RK@Ÿ Ÿ?@>P@RK@
-LV@PŸ?@=LHPK™Ÿ?@>P@RK@
-LV@PŸ>P@?BLHPK™Ÿ?@>P@RK@
3. Cash generated from operations	39,991,314	41,517,662	56,902,513	59,074,312
'GL@P@KLŸRG?ŸKBFBERPŸBG>HF@
!HPIHPRL@ŸBG>HF@ŸLRSŸIRB?
Ÿ,@LŸ>RKVŸĊHNKŸU@G@PRL@?ŸAPHFŸHI@PRLBGUŸ
R>LBTBLB@K	32,760,400	40,898,423	46,613,850	58,193,214
''Ÿ!RKVŸĊHNKŸMK@?ŸBGŸBGT@KLBGUŸR>LBTBLB@K
>JMBKBLBHGŸHAŸĉS@?ŸRKK@LKŸRG?ŸBGLRGUB=E@ŸRKK@LK
WPH>@@?KŸAPHFŸKRE@ŸHAŸĉS@?ŸRKK@LK
'G>P@RK@ŸHAŸHLV@PŸBGT@KLF@GLKŸBGŸL@PFŸ?@IHKBLKŸ
HT@PŸŸ?ROK ŸG@L
Ÿ,@LŸ>RKVŸMK@?ŸBGŸBGT@KLBGUŸR>LBTBLB@K	(28,878,447)	(23,175,830)		(41,090,329) (32,976,236)
'''h!QJBh¥GMJhLJ@?hCFh¤FQF>CFThQ>KCSCKC@J
#!ŸAMG?BGUŸP@>@BT@?Ÿ
"BTB?@G?KŸIRB?
Ÿ,@LŸ>RKVŸMK@?ŸBGŸĉGRG>BGUŸR>LBTBLB@K	(16,397,623)	(15,960,000)		(23,331,716) (22,709,034)
Net (decrease) / increase during the reporting
O@RPŸBGŸ>RKVŸRG?Ÿ>RKVŸ@JMBTRE@GLK	(12,515,670)	1,762,593	(17,808,195)	2,507,944
!RKVŸRG?Ÿ>RKVŸ@JMBTRE@GLKŸRLŸLV@Ÿ=@UBGGBGUŸHAŸ
the reporting year
!RKVŸRG?Ÿ>RKVŸ@JMBTRE@GLKŸRLŸLV@Ÿ@G?ŸHAŸLV@Ÿ
reporting year	25,057,210	37,572,880	35,653,197	53,461,392

>>HMGLBGUIHEB>B@K

R'GAHPFRLBHGHGLV@!HFIRGO

0V@E@URER??P@KKHALV@(HBGL/LH>D!HFIRGO-*RLTBCRK%ɵQ@-BK2RUHGMKLP@@L XBUR0V@!HFIRGOBKP@UBKL@P@? in Commercial Register with common registration number 4000 300 0642. The Company's main shareholders are #-,XMVPURK'GL@PGRLBHGRE% (/!%RQIPHFRG?**!'L@PR*RLTBCR0V@ HRP?HALV@ !HFIRGO>HGKBKLKHA?PBRGK"ɵTBK!VRBPFRGHALV@ HRP? E@DKRG?PK+BV@C@TK˹̻́̇̀̋̆̓̊˽̹̾̍̇̇+@F=@P HALV@ HRP? "@IMLO!VRBPFRGHALV@ HRP? (ɫPU0MFRL+@F=@PHALV@ HRP? "@IMLO!VRBPFRGHALV@ HRP? G?R 1EI@ +@F=@P HA LV@ HRP? RG? %BGLK \$P@B=@PUK +@F=@P HA LV@ HRP? 0V@ !HFIRGOK RM?BLHP BK LV@ >@PLBǘ@?RM?BL>HFIRGO/'WPB>@NRL@PVHMK@!HHI@PKRG?>@PLBǘ@?RM?BLHPBG>VRPU@*HEBLRʀRID@TBʁR

=\$BGRG>BREKLRL@F@GLKIP@IRPRLBHG=RKBK

\$BGRG>BREKLRL@F@GLKRP@IP@IRP@?BGR>>HP?RG>@NBLVLV@*RNHG>>HMGLBGURG?*RNHGGGMREX@IHPLKHALV@ Republic of Latvia.

0V@IPHǘLRG?EHKKR>>HMGLBKIP@IRP@?BGR>>HP?RG>@NBLVLMPGHT@PF@LVH?

!RKVǙHNKLRL@F@GLBKIP@IRP@?MKBGUBG?BP@>L>RKVǙHNF@LVH?

The accounting policies used by the Company are consistent with those used in the previous accounting period.

>,@LKRE@KRG?BG>HF@P@>HUGBLBHG

Sales are recognised upon delivery of gas or performance of services. Net sales represent the total of goods and K@PTB>@KKHE??MPBGULV@O@RPG@LHA?BK>HMGLK TREM@R??@?LRSRG?LV@?BǗ@P@G>@=@LN@@GLV@R>LMRERG?AHP@>RKL@? purchase cost of natural gas, which is used for determination of applicable natural gas selling price for the following FHGLVIIEB>R=E@GRLMPREURKK@EEBGUIPB>@BK>RE>MERL@?=RK@?HGERL@KLRTRBER=E@?RLR0V@@S>VRGU@PRL@AHP#1X 1/"K@L=O#! BGLV@ERKL?ROHALV@IP@TBHMKFHGLV R>LMREUPHKK>REHPBǘ>TREM@RKN@EERKIERGG@?THEMF@HA received and delivered gas are used in the calculation. Actual purchase costs of natural gas are calculated based on F@LVH?HEHUORIIPHT@?=OLV@LV@WM=EB>1LBEBLO!HFFBKKBHGW1!BE LRDBGUBGLHR>>HMGLLV@@S>VRGU@ PRL@HA#1X
1/"RLLV@ERKL?ROHALV@FHGLVNV@GURKBK?@EBT@P@? R>LMREUPHKK>REHPBǘ>TREM@RKN@EERKR>LMRE volume of gas received from suppliers. The part of income to be written down in the next reporting periods related LH?BǗ@P@G>@=@LN@@GLV@R>LMRERG?AHP@>RKL@?IMP>VRK@>HKLHAGRLMPREURKBKP@>HP?@?RK?@A@PP@?BG>HF@

'GL@P@KLBG>HF@BKP@>HUGBQ@?R>>HP?BGULHLV@IPBG>BIE@HALBF@IPHIHPLBHGMKBGU@Ǘ@>LBT@BGL@P@KLPRL@'GL@P@KL BG>HF@APHFL@PF?@IHKBLKBK>ERKKBǘ@?RKHLV@PHI@PRLBGUBG>HF@ NVBE@BGL@P@KLBG>HF@APHFKVHPLL@PF?@IHKBLK >RKVRG?>RKV@JMBTRE@GLK ERL@IROF@GLRG?HLV@PI@GRELB@KBK>ERKKBǘ@?RKBGL@P@KLBG>HF@

Accrual of interest income is ceased if its recoverability is uncertain. Based on prudence principle, penalties, BG>EM?BGUǘG@KAHPERL@IROF@GLKAHPURK RP@P@>HUGBK@?NV@GP@>@BT@?

0V@ BG>HF@ APHF P@KB?@GLK RG? @GL@PIPBK@K >HGLPB=MLBHG LH ǘGRG>BGU HA >HGKLPM>LBHGNHPDK HA URK IBI@EBG@K BK R>>HMGL@? AHPRK?@A@PP@? BG>HF@RG?P@>HUGBK@? BGLV@IPHǘLRG? EHKKR>>HMGLHT@P LV@@SI@>L@?MK@AME EBA@HA >HGKLPM>L@?ǘS@?RKK@LKHALHO@RPK

'G>HF@APHF#!AMG?BGUP@ERL@?LHIPHI@PLO IERGLRG?@JMBIF@GLBKP@>HUGBQ@?RK?@A@PP@?BG>HF@RG?BK>P@?BL@? to the income statement systematically over the expected lives of the related assets.

?\$HP@BUG>MPP@G>OLPRGKERLBHG

The Company maintains its accounts in Latvian Lats. All transactions denominated in foreign currencies are converted to Lats at the exchange rate set by the Bank of Latvia prevailing on the day on which the transactions took place. Monetary assets and liabilities denominated in foreign currencies are translated in Lats in accordance NBLVLV@Hǚ>BRE RGDHA*RLTBR@S>VRGU@PRL@AHPLV@ERKL?ROHALV@P@IHPLBGUI@PBH?\$HP@BUG@S>VRGU@URBGKRG? losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of FHG@LRPORKK@LKRG?EBR=BEBLB@K?@GHFBGRL@?BGAHP@BUG>MPP@G>B@KRP@P@>HUGBK@?BGLV@IPHǘLRG?EHKKR>>HMGL

	31.12.2011.	31.12.2010.
	2	2
Ÿ1/"	0.544	0.535
Ÿ#1X	0.702804	0.702804

MPHǘGRG>BREKLRL@F@GLKRP@IP@IRP@?MKBGUR>>HMGL>EHKBGU=RERG>@KBG2RLLV@ERKL?ROHALV@P@IHPLBGUI@PBH? I@PAHPFBGU>HGT@PKBHGLH#1X=OMKBGULV@Hǚ>BREǘS@?#1X

*2*PRL@K@L=OLV@ RGDHA*RLTBR#1X*2* #1X*2* ?@L@PFBG@?=O RGDHA*RLTBRRKHA"@>@F=@P P@IHKBGULHP@KHEMLBHGHA LV@!HMG>BEHA RGDHA*RLTBRAHPREEI@PBH?(RGMRPO LBEE"@>@F=@P

@'GLRGUB=E@RKK@LK

Intangible assets are recorded at historic cost net of accumulated amortisation and impairment charge. Amortisation is calculated on a straight-line basis to write down each intangible asset to its estimated residual value over its estimated useful life. Generally, intangible assets are amortised over a period of 5 years.

A\$BS@?RKK@LK

\$BS@?RKK@LKRP@P@>HP?@?RLVBKLHPB>>HKLHPP@TREM@?RFHMGLG@LHAR>>MFMERL@??@IP@>BRLBHGRG? BFIRBPF@GL >VRPU@0V@>HFIRGOP@TREM@K=MBE?BGUK URKLPRGKFBKKBHGRG??BKLPB=MLBHGKOKL@FKRG?@JMBIF@GL@T@POO@RPK

'G>P@RK@BGTREM@RPBKBGUHGP@TREMRLBHGBKKVHNGBG@JMBLOMG?@P-*HGUL@PFBGT@KLF@GLKP@TREMRLBHGP@K@PT@- "@>P@RK@LVRLHǗK@LKRIP@TBHMKBG>P@RK@HALV@KRF@RKK@LKTREM@P@>HUGBK@?BGLV@KRB?P@K@PT@BK>VRPU@?RURBGKL LVRLP@K@PT@RGOAMPLV@P?@>P@RK@BK>VRPU@?LHLV@>MPP@GLO@RPKIPHǘLRG?EHKKR>>HMGL

"@IP@>BRLBHGBK>RE>MERL@?HGRKLPRBUVLEBG@=RKBKLHNPBL@?HNG@R>VǘS@?RKK@LLHBLK@KLBFRL@?P@KB?MRETREM@ over its estimated useful life using following rates set by management:

	% per annum
Buildings	1 - 3
Gas transmission system	2 - 2.5
+R>VBG@POŸRG?Ÿ@JMBIF@GLŸ	ŸŸ
\$MPGBLMP@ŸRG?ŸǘLLBGUKŸ	ŸŸ
!HFIML@PKŸRG?Ÿ@JMBIF@GLŸ

"@IP@>BRLBHGBKGHL>RE>MERL@?AHPERG?RG?=MǗ@PURK R?TRG>@KAHPǘS@?RKK@LKRG?RKK@LKMG?@P>HGKLPM>LBHG

0V@!HFIRGO>RIBLREBK@KǘS@?RKK@LKNBLV>HKL@S>@@?BGU*2*#1XRG?MK@AMEEBA@@S>@@?BGUO@RP

"BP@>L>VRPU@KP@ERL@?LHLV@IRPLB>MERPǘS@?RKK@LMG?@P>HGKLPM>LBHGRP@>RIBLREBK@? ?MPBGULV@I@PBH?HALBF@LVRL BKP@JMBP@?LH>HFIE@L@RG?IP@IRP@LV@RKK@LAHPBLKBGL@G?@?MK@ RKIRPLHALV@>HKLHALV@RKK@L

3V@P@LV@>RPPOBGURFHMGLHARǘS@?RKK@L@S>@@?KBLK@KLBFRL@?P@>HT@PR=E@RFHMGL BLBKNPBLL@G?HNGBFF@?BRL@EO LHBLKP@>HT@PR=E@RFHMGLRG?LV@BFIRBPF@GLEHKKBKP@>HUGBK@?RKRG@SI@GK@BGLV@IPHǘLRG?EHKKR>>HMGLHP HǗK@LRURBGKLLV@P@TREMRLBHGP@K@PT@BALV@ǘS@?RKK@LBK>RPPB@?RLP@TREM@?RFHMGLX@>HT@PR=E@RFHMGLBKLV@ VBUV@PHALV@ARBPTREM@E@KK>HKLKLHK@EERG?LV@TREM@BGMK@HALV@P@ERL@?ǘS@?RKK@L

/M=K@JM@GL>HKLKRP@BG>EM?@?BGLV@RKK@LK>RPPOBGURFHMGLHPP@>HUGBK@?RKK@IRPRL@RKK@L RKRIIPHIPBRL@ HGEO NV@GBLBKIPH=R=E@LVRLAMLMP@@>HGHFB>=@G@ǘLKRKKH>BRL@?NBLVLV@BL@FNBEEǙHNLHLV@!HFIRGORG?LV@>HKL of the item can be measured reliably. Such costs are depreciated over the remaining useful life of the related asset. !RIBLREBKBGULV@>HKLHAFHMGL@?KIRP@IRPLK LV@>RPPOBGUTREM@HALV@IRPLP@IER>@?BKNPBLL@GHǗLHLV@IPHǘLRG? loss account.

X@IRBPKRG?FRBGL@GRG>@RP@>VRPU@?LHLV@IPHǘLRG?EHKKR>>HMGL?MPBGULV@I@PBH?BGNVB>VLV@ORP@BG>MPP@? Gains or losses on disposals are determined by comparing carrying amount with proceeds and gains from related RKK@LKP@TREMRLBHGP@K@PT@NPBL@HǗRG?RP@>VRPU@?LHLV@IPHǘLRG?EHKKR>>HMGL?MPBGULV@I@PBH?BGNVB>VLV@O are incurred.

(g) Inventories

0V@>HKLHAGRLMPREURKBG'GʁMDREGK1%/RG?BGURKLPRGKFBKKBHGIBI@EBG@KBK?@L@PFBG@?K@IRPRL@EOMKBGULV@ ǘPKLBGǘPKLHML\$'\$-F@LVH?=RK@?HGLHLREGRLMPREURKFHT@F@GL0V@>HKLHAGRLMPREURK>HFIPBK@K>HKLHAURK purchased. Materials, spare parts, gas meters and other inventories cost is determined by the weighted average method. Direct labour, other direct costs and related production overheads are recognised on an accruals basis and >VRPU@?LHLV@IPHǘLRG?EHKKR>>HMGLBGLV@I@PBH?NV@GBG>MPP@?

Inventories are recorded at the lower of cost and net realisable value. Net realisable value is the estimated selling price in the ordinary course of business, less the costs of completion and selling expenses. When the net realisable value of inventories is lower than its cost, provisions are created to reduce the value of inventories to its net realisable value.

V>>HMGLKP@>@BTR=E@

Accounts receivable are recorded in the balance sheet at their amortised cost less provisions made to cover anticipated loss on bad and doubtful accounts receivable. Provisions for bad and doubtful accounts receivable are established when there is an objective evidence that the Company will not be able to collect all amounts due according to the original terms of receivables. The amount of provisions for bad and doubtful accounts receivable BKLV@?BǗ@P@G>@=@LN@@GLV@RFHPLBK@?>HKLRG?LV@P@>HT@PR=E@RFHMGL0V@RFHMGLHALV@IPHTBKBHGAHP=R?RG? ?HM=LAMER>>HMGLKP@>@BTR=E@BKP@>HUGBK@?BGLV@IPHǘLRG?EHKKR>>HMGL

B-LV@PEHGUL@PFBGT@KLF@GLK

Other long-term investments are disclosed at the cost less provisions created to cover losses on other than temporary diminution of value of investments. Assessment of investments is made each year based on latest RTRBER=E@ǘGRG>BREBGAHPFRLBHG

C HPPHNBGUK

HPPHNBGUK RP@ P@>HUGBK@? BGBLBREEO RL LV@ IPH>@@?K P@>@BT@? G@L HA LPRGKR>LBHG >HKLK BG>MPP@? 'G KM=K@JM@GL I@PBH?K =HPPHNBGUKRP@KLRL@?RLRFHPLBK@?>HKLMKBGULV@@Ǘ@>LBT@OB@E?F@LVH?RGO?BǗ@P@G>@=@LN@@GIPH>@@?K G@LHALPRGKR>LBHG>HKLKRG?LV@P@?@FILBHGTREM@BKP@>HUGBK@?BGLV@IPHǘLRG?EHKKR>>HMGL

D0RS@K

Corporate income tax for the reporting period is included in the annual accounts based on the management's calculations prepared in accordance with Latvian Republic tax legislation.

"@A@PP@? LRS BK IPHTB?@? AHPMKBGU EBR=BEBLOF@LVH? HG REE L@FIHPRPO ?BǗ@P@G>@K RPBKBGU =@LN@@G LV@ LRS =RK@K of assets and liabilities and their carrying amounts in the annual accounts. The deferred tax is calculated based HG>MPP@GLEO@GR>L@?LRSPRL@KLVRLRP@@SI@>L@?LHRIIEONV@GLV@L@FIHPRPO?BǗ@P@G>@KP@T@PK@0V@IPBG>BIRE L@FIHPRPO?BǗ@P@G>@KRPBK@APHF?BǗ@P@GLǘS@?RKK@LK?@IP@>BRLBHGRG?BGLRGUB=E@RKK@LRFHPLBKRLBHGPRL@K R>>PM@? MGMK@?RGGMREE@RT@RG?=HGMK@SI@GK@K R>>PMREKAHPIHKL@FIEHOF@GLRG?HLV@P=@G@ǘLKRG?IPHTBKBHGKAHP=R?

page 44

and doubtful debts where the management is of the opinion that they will meet the criteria stated in Article 9 of the law "On Corporate Income Tax", and other accrued expenses and provisions for write down to net realisable value of BGT@GLHPO0V@?@A@PP@?BG>HF@LRSRKK@LKRP@P@>HUGBK@?LHLV@@SL@GLLVRLBLBKIPH=R=E@LVRLAMLMP@LRSR=E@IPHǘL NBEE=@RTRBER=E@RURBGKLNVB>VLV@L@FIHPRPO?BǗ@P@G>@K>RG=@MLBEBK@?

'G>P@RK@ BG?@A@PP@?LRS EBR=BEBLOLVRLP@KMELK APHFP@TREMRLBHGHAǘS@?RKK@LK BK>VRPU@?LH@JMBLORKP@KI@>LBT@ BG>P@RK@ BG*HGUL@PF BGT@KLF@GLKP@TREMRLBHGP@K@PT@?@>P@RK@"@>P@RK@ BG?@A@PP@?LRS EBR=BEBLOLVRLP@KMELK APHF?@IP@>BRLBHGHAP@TREM@?ǘS@?RKK@LKBK>VRPU@?LHLV@IPHǘLRG?EHKKR>>HMGLRG?LV@P@KI@>LBT@MGP@REBK@? tax gain is shown in the notes to the annual accounts.

E>>PM@?MGMK@?RGGMREE@RT@@SI@GK@KRG?R>>PM@?EBR=BEBLB@K

Accrued liabilities are recognised when the Company has a present legal or constructive obligation as a result HAIRKL@T@GLK BLBKIPH=R=E@LVRLRGHMLǙHNHAP@KHMP>@KNBEE=@P@JMBP@?LHK@LLE@LV@H=EBURLBHG RG?RP@EBR=E@ estimate of the amount of the obligation can be made.

Amount of accrued unused annual leave expenses is determined by multiplying the average daily wage of employees for the last six months of the reporting year by the amount of accrued but unused annual leave at the end of the reporting year.

0V@!HFIRGOIPHTB?@K?@ǘG@?=@G@ǘLKMIHGP@LBP@F@GLRG?BGLV@I@PBH?HA@FIEHOF@GLAHP@FIEHO@@KNVHK@ @FIEHOF@GL>HG?BLBHGKF@@L?@ǘG@?>PBL@PBRR>>HP?BGULHLV@#FIEHOF@GL>HGLPR>LFHMGLHA=@G@ǘLEBR=BEBLO is calculated based on current salary level and number of employees, which are entitled or may become entitled to receive those payments, as well as based on actuarial assumptions. Once a year an actuary evaluates these EBR=BEBLB@K#SI@>L@?=@G@ǘL@SI@GK@KRP@R>>PM@??MPBGULV@@FIEHOF@GLI@PBH?

*BR=BEBLB@KAHPLV@@FIEHO@@=@G@ǘLKRP@IP@K@GL@?BGLV@=RERG>@KV@@LRLLV@BPIP@K@GLTREM@#FIEHO@@=@G@ǘL EBR=BEBLB@K RP@>RE>MERL@? AHP @R>VO@RPMKBGUWPHC@>L@?1GBL!P@?BLF@LVH? HLV R>LMRPB@K?@ǘG@? RG?IM=EB>EO RTRBER=E@RKKMFILBHGKRP@MK@?BG>RE>MERLBHGKP@URP?BGU>VRGU@KBG?@FHUPRIVB>RG?ǘGRG>BRETRPBR=E@K

F!RKVRG?>RKV@JMBTRE@GLK

!RKVRG?>RKV@JMBTRE@GLK>HFIPBK@>RKVHGVRG? =RERG>@KHA>MPP@GLR>>HMGLNBLV=RGDKRG?KVHPLL@PF?@IHKBLK NBLVLV@HPBUBGREFRLMPBLOMILHFHGLVK NVB>V>RG=@@RKBEO>HGT@PL@?LH>RKVRG?RP@GHLKM=C@>LHAKBUGBǘ>RGL change in value.

GX@ERL@?IRPLB@K

X@ERL@?IRPLB@K RP@ ?@ǘG@? RK LV@!HFIRGOKFRCHPKVRP@VHE?@PK NVB>VVRT@ RKBUGBǘ>RGL BGǙM@G>@ F@F=@PK HALV@!HMG>BERG?F@F=@PKHALV@ HRP? LV@BP>EHK@P@ERLBT@KRG?>HFIRGB@K BGNVB>VLV@OVRT@RKBUGBǘ>RGL BGǙM@G>@HP>HGLPHE

HWPHĉLRTRBER=E@AHP?BKLPB=MLBHG

-GP@TREMRLBHGHAǘS@?RKK@LKR??BLBHGREL@FIHPRPO?BǗ@P@G>@RPBK@K=@LN@@GǘS@?RKK@LTREM@KAHPǘGRG>BRERG?LRS IMPIHK@K>>HP?BGULHR>>HMGLBGUIHEB>B@KK@>LBHGDLV@P@KI@>LBT@BG>P@RK@BG?@A@PP@?LRSEBR=BEBLOBKRLLPB=ML@? LHLV@*HGUL@PFBGT@KLF@GLKP@TREMRLBHGP@K@PT@"@>P@RK@BG?@A@PP@?LRSEBR=BEBLOLVRLP@KMELKAPHF?@IP@>BRLBHG HAP@TREM@?ǘS@?RKK@LKBK>VRPU@?LHLV@IPHǘLRG?EHKKR>>HMGLRKLRSURBG

In order to comply with the "Annual Accounts Act" of the Republic of Latvia Section 29 article 4, the said income >RGGHL=@?BKLPB=ML@?0V@P@AHP@ LV@IPHǘLRTRBER=E@AHP?BKLPB=MLBHG BK>RE>MERL@?RKG@L?BǗ@P@G>@=@LN@@GG@L IPHǘLRG?MGP@REBK@??@A@PP@?LRSURBGP@ERL@?LHǘS@?RKK@LP@TREMRLBHG

I RK@KHAIP@IRPRLBHGHAKMFFRPOĉGRG>BREKLRL@F@GLK

0V@K@KMFFRPOǘGRG>BREKLRL@F@GLK NVB>V>HFIPBK@LV@=RERG>@KV@@LRKRL"@>@F=@P LV@IPHǘLRG?EHKK R>>HMGL LV@KLRL@F@GLHA>VRGU@KBG@JMBLORG?LV@>RKVǙHNKLRL@F@GLAHPLV@O@RPLV@G@G?@? RG?LV@RII@G?BS ->>HMGLBGUIHEB>B@K-VRT@=@@GIP@IRP@?=O@SLPR>LBHG NBLVHMLRGOFH?Bǘ>RLBHG APHFLV@P@E@TRGLBGAHPFRLBHG BG>EM?@?BGLV@!HFIRGOKRGGMRER>>HMGLK>>HP?BGUEO LV@K@KMFFRPOǘGRG>BREKLRL@F@GLKRP@>HGKBKL@GLNBLV those accounts.

				Gāzes fabrikas rīcības pārskats
	par 1940 gadu men. 19 g.
Deggaze.		Methina 30 1	Mercelals Ja 2 11	NUPE
1 race Meritāju stāvoklis mēmeša beiglis - - kb. p.		210 67000	Advisorial
Meritaju stavoklis meneša sākumā - - - kh. p.
Haiots kb. p.		2/0967800	1 18819000	1.633336	tti-
一本的出版 Tvertněs měnešu sákumii - do ma - - - - - - - - - - - - - - - - - - -			45040 - kb. p. ಸ್ 3-ಡಿನ್ನೆ ಮಾಡಿದ್ದಾರೆ.
		111	ED IT President	kh, p. 10522
				144309	n in-
			L 1000 = 1,13, 11,
Tverturs menesa beigks - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -		IL -	131400 - ktr. 14- 1988553
		III. -	태	- kh. p. 7722	m
Paterets ===================================================================================================================================================================== Paspaterius:				8536129	m
1) Fahrikus laternām na degliem - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -			= =
2) Günes krastin upkure ! Meritajs mēn. beigās - - ma
Meritajs men. sakumā - r --		FREA		전 740 -	日
Nodots pilsētas tiklam sara par parties parties parties parties program in approgram a					10
			18:5 Inde	11 27 1975
Rubota derigates			1635396	602466
Nodots polsetan likkem			16200971	主体育在线上
Plogitus tikli nolotis degraires piesugumo resp passuxisaliums
Akmeņogles.
			· · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · ·	1787 211	一、直营
Atlikums meneku sakuma Piegādas			SANITE - IT TATATE
* FARMIN - PELLINGER			1197.811 1997	3074660 -
「日本一第二次世 · · · Patereis:			From V	- Partin Page	11 14 一下午
I 164 Holet Hargary 2017		11:48 : 12 : 48 : 15 : 10 : 10 : 10 : 10 : 10 : 10 : 10 : 10 : 10 : 10 : 10 : 10 : 10 : 10 : 10 : 10 : 10 : 10 : 10 : 10 : 10 : 10 : 10 : 10 : 10 : 10 : 10 : 10 : 10 : 10 : 1 14.07	2017-07-11 - RE
		1734	12 17
A Carresaming			2022 22 157 194
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			ਕੀ ਨੇ ਕੇ ਸਾਂਡ
TVARA ENTREM - STATE FOR BERTAIN ANTERSEA Darbicam II. E. - - - - - - -			2500

page 46

PricewaterhouseCoopers SIA PVN - LV40003142793 K. Valdemāra iela 19, Rīga, LV-1010, Latvija Tālrunis +371 67094400, Fakss +371 67830055 [email protected]

Translation from Latvian original*

Independent Auditor's Report

**0HLV@/VRP@VHE?@PKHA(/!*RLTBCRK%ƦQ@ Report on the Summary Financial Statements**

0V@R>>HFIRGOBGUKMFFRPOǘGRG>BREKLRL@F@GLK NVB>V>HFIPBK@LV@=RERG>@KV@@LRKRL"@>@F=@P RG? LV@BG>HF@KLRL@F@GL KLRL@F@GLHA>VRGU@KBG@JMBLORG?>RKVǙHNKLRL@F@GLAHPLV@O@RPLV@G@G?@? RP@?@PBT@? APHFLV@RM?BL@?ǘGRG>BREKLRL@F@GLKHA(/!*RLTBCRK%ɵQ@AHPLV@O@RP@G?@?"@>@F=@P3@@SIP@KK@? RGMGFH?Bǘ@?RM?BLHIBGBHGHGLVHK@ǘGRG>BREKLRL@F@GLKBGHMPP@IHPL?RL@?IPBE 0VHK@ǘGRG>BREKLRL@- F@GLK RG?LV@KMFFRPOǘGRG>BREKLRL@F@GLK ?HGHLP@Ǚ@>LLV@@Ǘ@>LKHA@T@GLKLVRLH>>MPP@?KM=K@JM@GLLHLV@ ?RL@HAHMPP@IHPLHGLVHK@ǘGRG>BREKLRL@F@GLK

0V@KMFFRPOǘGRG>BREKLRL@F@GLK?HGHL>HGLRBGREELV@?BK>EHKMP@KP@JMBP@?=OGGMRE>>HMGL>LX@R?BGULV@ KMFFRPOǘGRG>BREKLRL@F@GLK LV@P@AHP@ BKGHLRKM=KLBLML@ AHPP@R?BGULV@RM?BL@?ǘGRG>BREKLRL@F@GLKHA(/! *RLTBCRK%ɵQ@

(:G:@>F>GM`Lˍ,>LIHGLB;BEBMRˍ?HKˍMA>ˍ-NFF:KRˍ#BG:GF>GML

+RGRU@F@GLBKP@KIHGKB=E@AHPLV@IP@IRPRLBHGHARKMFFRPOHALV@RM?BL@?ǘGRG>BREKLRL@F@GLKBGR>>HP?RG>@ NBLVLV@P@E@TRGLP@JMBP@F@GLK@KLR=EBKV@?BG>>HMGLBGUIHEB>B@KK@>LBHGWWP@IRPRLBHGX@UMERLBHGKHA/MFFRPO \$BGRG>BRE/LRL@F@GLK

N=BMHK`Lˍ,>LIHGLB;BEBMR

-MPP@KIHGKB=BEBLOBKLH@SIP@KKRGHIBGBHGHGLV@KMFFRPOǘGRG>BREKLRL@F@GLK=RK@?HGHMPIPH>@?MP@K NVB>V N@P@ >HG?M>L@? BG R>>HP?RG>@NBLV 'GL@PGRLBHGRE /LRG?RP? HGM?BLBGU '/ #GURU@F@GLK LHX@IHPL HG /MFFRPO\$BGRG>BRE/LRL@F@GLK

*IBGBHG

'GHMPHIBGBHG LV@KMFFRPOǘGRG>BREKLRL@F@GLK?@PBT@?APHFLV@RM?BL@?ǘGRG>BREKLRL@F@GLKHA(/!*RLTBCRK %ɵQ@ AHP LV@O@RP@G?@?"@>@F=@P RP@>HGKBKL@GL BGREEFRL@PBREP@KI@>LK NBLV LVHK@ǘGRG>BREKLRL@- F@GLK BGR>>HP?RG>@NBLVLV@P@E@TRGLP@JMBP@F@GLK@KLR=EBKV@?BG>>HMGLBGUIHEB>B@KK@>LBHG WWP@IRPRLBHG X@UMERLBHGKHA/MFFRPO\$BGRG>BRE/LRL@F@GLK

PricewaterhouseCoopers SIA CertiDed audit company Licence No. 5

Ahmed Abu Sharkh Chairman of the Board Председатель Правления

Lolita Čapkeviča CertiDed auditor in charge CertiDcate No. 120

Riga, Latvia 17 June 2012

* This version of our report is a translation from the original, which was prepared in Latvian. All possible care has been taken to ensure that the translation is an accurate representation of the original. However, in all matters of interpretation of information, views or opinions, the original language version of our report takes precedence over this translation.

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