20/11/2019

CERTIFICATION STATEMENT

Referring to the provisions of the Article 24 of the Law on Securities of the Republic of Lithuania and the Rules on Preparation and Submission of Periodic and Additional Information of the Bank of Lithuania, we, Darius Maikštėnas, Chief Executive Officer of UAB Ignitis grupė and, Darius Kašauskas, Finance and Treasury Director of UAB Ignitis grupė, and Giedruolė Guobienė Head of Accounting services Centre of Verslo aptarnavimo centras UAB, hereby confirm that, to the best of our knowledge, UAB Ignitis grupė consolidated and Company’s condensed interim financial information for the nine-month period ended 30 September 2019 prepared according to International Accounting Standard 34 ‘Interim financial reporting’ adopted by the European Union, give a true and fair view of UAB Ignitis grupė assets, liabilities, financial position, profit or loss for the period and cash flows, the Interim Report for the nine-month period includes a fair review of the development and performance of the business.

UAB Ignitis grupė Parašas Darius Maikštėnas Chief Executive Officer

UAB Ignitis grupė Darius Kašauskas Finance and Treasury Parašas Director

Verslo aptarnavimo centras UAB, Parašas Giedruolė Guobienė Head of Accounting services Centre, acting under Order No. IS-19-102 (signed 2019 08 29)

UAB Ignitis grupė +370 5 278 2998 www.ignitisgrupe.lt Company code Žvejų str. 14, LT-09310 [email protected] 301844044 Vilnius, Lithuania VAT payer code LT100004278519

UAB IGNITIS GRUPĖ 2019 CONSOLIDATED AND COMPANY‘S CONDENSED INTERIM FINANCIAL INFORMATION

COMPANY’S CONDENSED INTERIM FINANCIAL INFORMATION FOR THE NINE-MONTH PERIOD ENDED 30 SEPTEMBER 2019, PREPARED ACCORDING TO INTERNATIONAL ACCOUNTING STANDARD 34, 'INTERIM FINANCIAL REPORTING' AS ADOPTED BY THE EUROPEAN UNION (UNAUDITED)

www.ignitisgrupe.lt

UAB Ignitis Grupė Žvejų str. 14, LT-09310 Vilnius, Lithuania E-mail [email protected]

Company code 301844044

CONDENSED INTERIM STATEMENTS OF FINANCIAL POSITION All amounts in thousands of euro unless otherwise stated

Group Company Notes 2018.12.31 2018.01.01 2019.09.30 2019.09.30 2018.12.31 (restated*) (restated*)

ASSETS Non-current assets Intangible assets 4 128,286 106,330 36,360 1,874 1,874 Property, plant and equipment 4 2,243,556 2,091,590 1,761,082 89 427 Right-of-use asset 5 49,422 - - 827 - Prepayments for non-current assets 58,054 23,621 21,911 144 816 Investment property 5,530 6,494 14,878 - - Investments in subsidiaries 6 - - 1,191,661 1,206,921 Amounts receivable after one year 159,240 160,606 170,488 735,860 679,593 Other financial assets 4,029 2,008 426 3,929 2,008 Other non-current assets 7,053 6,094 3,239 - - Deferred income tax asset 11,018 14,468 7,084 707 1,077 Total non-current assets 2,666,188 2,411,211 2,015,468 1,935,091 1,892,716 Current assets Inventories 59,839 43,137 56,866 - - Prepayments and deferred expenses 35,760 30,655 38,119 55 62 Trade receivables 97,273 143,120 112,563 - - Other amounts receivable 23,605 25,436 27,511 18,639 631 Other current assets 8 2,147 1,093 - - Prepaid income tax 4,775 4,192 2,102 - 15 Short-term loans - - - 265,116 189,324 Other financial assets 2,212 656 - - - Cash and cash equivalents 7 136,504 127,835 171,756 1,222 231 359,976 377,178 410,010 285,032 190,263 Non-current assets held for sale 8 43,914 65,706 79,301 7,141 7,141 Total current assets 403,890 442,884 489,311 292,173 197,404 TOTAL ASSETS 3,070,078 2,854,095 2,504,779 2,227,264 2,090,120

EQUITY AND LIABILITIES

Equity Share capital 9 1,212,156 1,212,156 1,212,156 1,212,156 1,212,156 Reserves 263,001 212,802 99,380 80,720 19,811 Retained earnings (deficit) (159,443) (151,752) (13,555) 25,188 78,231 Equity attributable to owners of the parent 1,315,714 1,273,206 1,297,981 1,318,064 1,310,198 Non-controlling interests 50,408 48,521 45,801 - - Total equity 1,366,122 1,321,727 1,343,782 1,318,064 1,310,198 Liabilities Non-current liabilities Non-current borrowings 10 777,658 735,410 480,068 645,543 671,245 Lease liabilities 11 23,808 14,334 187 573 - Grants and subsidies 244,638 208,874 200,311 - - Deferred income tax liabilities 41,152 39,796 36,082 - - Provisions 12 32,815 35,446 6,927 - - Deferred revenue 111,992 115,261 54,509 - - Other non-current amounts payable and liabilities 1,452 1,801 1,761 - 378 Total non-current liabilities 1,233,515 1,150,922 779,845 646,116 671,623 Current liabilities Current portion of long-term debts 10 45,453 61,819 119,599 40,901 57,401 Current borrowings 10 207,437 47,727 14,082 207,437 47,721 Current portion of lease liabilities 11 7,512 5,220 145 254 - Trade payables 60,328 93,237 98,338 324 947 Contract liabilities 37,917 49,766 27,765 52 51 Income tax liabilities 5,793 4,544 3,728 - - Provisions 12 949 5,553 2,498 806 806 Deferred revenue 7,912 7,912 5,242 - - Other current amounts payable and liabilities 91,618 102,682 109,421 13,310 1,373 464,919 378,460 380,818 263,084 108,299 Liabilities related to non-current assets held for sale 5,522 2,986 334 - - Total current liabilities 470,441 381,446 381,152 263,084 108,299 Total liabilities 1,703,956 1,532,368 1,160,997 909,200 779,922 TOTAL EQUITY AND LIABILITIES 3,070,078 2,854,095 2,504,779 2,227,264 2,090,120

*Certain amounts presented above do not correspond to the 2017 and 2018 Financial Statements but reflect corrections, disclosed in Note 3.

The accompanying notes form an integral part of this condensed interim financial information.

Consolidated and Company’s condensed financial information for the 9 month period of 2019 3

CONDENSED INTERIM STATEMENTS OF COMPREHENSIVE INCOME All amounts in thousands of euro unless otherwise stated

Group Company 2018, 2018, Notes 2019, 2019, 2019, 2019, 2018, 2018, I-III Q III Q I-III Q III Q I-III Q III Q I-III Q III Q (restated*) (restated*) Revenue from contracts with customers 13 1,147,455 385,154 871,776 268,963 2,430,00 952 2,247 735 Other income 14,389 9,379 29,017 3,373 26,00 2 694 13 Dividend income 15 - - - - 25,918,00 - 67,378 26,326 1,161,844 394,533 900,793 272,336 28,374,00 954 70,319 27,074 Operating expenses Purchases of electricity, gas for trade, and related services (687,022) (261,035) (467,590) (169,694) - - - - Purchases of gas and heavy fuel oil (198,852) (42,868) (210,022) (50,239) - - - - Depreciation and amortization (82,315) (27,743) (64,100) (21,389) (201,00) (68) (5) (1) Wages and salaries and related expenses (61,808) (19,908) (59,333) (18,338) (4,079,00) (1,369) (3,707) (1,279) Repair and maintenance expenses (22,067) (6,718) (14,112) (6,555) - - - - Revaluation of property, plant and equipment (442) (442) 18 18 - - - - (Impairment)/reversal of impairment of investments in subsidiaries - - - - 213,00 213 (1,570) - Reversal (impairment) of amounts receivable and loans 755 (324) 413 (40) - - - - Impairment of property, plant and equipment (312) 17 (2,317) (2,465) - - - - Other expenses 14 (29,262) (11,126) (15,969) (7,586) (2,017,00) (689) (5,199) (570) Total operating expenses (1,081,325) (370,147) (833,012) (276,288) (6,084,00) (1,913) (10,481) (1,850)

Operating profit (loss)) 80,519 24,386 67,781 (3,952) 22,290,00 (959) 59,838 25,224

Finance income 1,299 5 1,139 375 11,025,00 4,015 6,820 2,588 Finance costs (13,870) (3,996) (8,704) (3,644) (12,975,00) (4,056) (7,665) (3,426) Results of the revaluation and closing of derivative financial instruments - - (572) (328) - - (572) (328)

Profit (loss) before tax 67,948 20,395 59,644 (7,549) 20,340,00 (1,000) 58,421 24,058 Current year income tax (expense)/benefit (6,715) (2,139) (7,064) (5,162) - - (894) (899) Deferred income tax (expense)/benefit (3,568) 1,920 (5,113) 135 527,00 125 302 328

Net profit 57,665 20,176 47,467 (12,576) 20,867,00 (875) 57,829 23,487

Attributable to: Owners of the parent 54,889 19,422 46,040 (12,422) 20,867,00 20,867 57,829 23,487 Non-controlling interest 2,775 753 1,429 (155) - - - -

Other comprehensive income (loss) Items that will not be reclassified to profit or loss Gain (loss) on revaluation of non-current assets 17 (2,911) 13,041 7,514 - - - - Deferred income tax related to gain (loss) on revaluation of non-current assets (164) - (116) - - - - - Items that will not be reclassified to profit or loss, total (147) (2,911) 12,925 7,514 - - - -

Items that will be reclassified to profit or loss Change in fair value of available-for-sale financial assets 22 (5) (22) (22) - - - - Other income/(expenses) recognized directly in equity during the period 22 (5) (22) (22) - - - - Translation of net investments in foreign operations into the Group’s presentation currency (125) (2,916) 12,903 7,492 - - - - Items that will be reclassified to profit or loss, total 57,540 17,260 60,370 (5,084) 20,867,00 (875) 57,829 23,487

Attributable to: Owners of the parent 54,761 16,590 58,507 (5,038) 20,867,00 20,867 57,829 23,487 Non-controlling interests 2,779 670 1,866 (46) - - - -

*Certain amounts presented above do not correspond to the 2017 and 2018 Financial Statements but reflect corrections, disclosed in Note 3.

The accompanying notes form an integral part of this condensed interim financial information.

Consolidated and Company’s condensed financial information for the 9 month period of 2019 4

CONDENSED INTERIM STATEMENTS OF CHANGES IN EQUITY All amounts in thousands of euro unless otherwise stated

Equity attributable to owners of the Company Retained Group Revaluation Subtotal Non-controlling Notes Share capital Legal reserve Other reserves earnings Total (restated*) reserve (restated*) interest (restated*)

Balance at 1 January 2018 1,212,156 46,512 52,826 42 (13,706) 1,297,830 45,796 1,343,626 Correction of error (Note 3) - - - - 151 151 5 156 Effect of change in accounting policies following the adoption of new IFRS - - - - (59,489) (59,489) (3,144) 62,792 Restated balance as at 1 January 2018 (restated*) 1,212,156 46,512 52,826 42 (73,044) 1,238,492 42,656 1,280,991 Revaluation of non-current assets, net of deferred income tax effect - - 12,599 - - 12,599 442 13,041 Result of change in actuarial assumptions - - - - (110) (110) (6) (116) Translation of net investments in foreign operations into the Group’s presentation currency - - - (22) - (22) - (22) Total other comprehensive income (loss) - - 12,599 (22) (110) 12,467 436 12,903 Net profit for the reporting period (restated*) - - - - 46,038 46,038 1,429 47,467 Total comprehensive income for the period (restated*) - - 12,599 (22) 45,928 58,505 1,865 60,370 Transfer of revaluation reserve to retained earnings (transfer of depreciation, net of deferred income tax) - - (6,070) - 6,070 - - - Transfer to reserves and movement in reserves - 3,339 - - (3,339) - - - Dividends 15 - - - - (78,265) (78,265) (2,590) (80,855) Increase in share capital of UAB „Kauno Kogeneracinė Jėgainė” attributable to minority interest ------1,176 1,176 Balance at 30 September 2018 (restated*) 1,212,156 49,851 59,355 20 (102,650) 1,218,732 43,107 1,261,682

Balance at 1 January 2019 1,212,156 49,851 162,935 16 (156,763) 1,268,195 48,356 1,316,551 Correction of error (Note 3) - - - - 5,010 5,010 165 5,175 Balance at 1 January 2019 (restated*) 1,212,156 49,851 162,935 16 (151,753) 1,273,205 48,521 1,321,726 Revaluation of non-current assets, net of deferred income tax effect 4 - - 5 - - 5 12 17 Result of change in actuarial assumptions - - - 22 - 22 - 22 Translation of net investments in foreign operations into the

Group’s presentation currency - - - - (156) (156) (8) (164) Total other comprehensive income (loss) - - 5 22 (156) (129) 4 (125) Net profit for the reporting period - - - - 54,889 54,889 2,775 57,664 Total comprehensive income for the period - - 5 22 54,733 54,760 2,779 57,539 Transfer of revaluation reserve to retained earnings (transfer of

depreciation, net of deferred income tax) - - (12,550) - 12,802 252 - 252 Transfer to reserves and movement in reserves - 62,797 - (75) (62,722) - - - Dividends 15 - - - - (13,000) (13,000) (890) (13,890) Other adjustments - - - - 497 497 (2) 495 Balance at 30 September 2019 1,212,156 112,648 150,390 (37) (159,443) 1,315,714 50,408 1,366,122

*Certain amounts presented above do not correspond to the 2017 and 2018 Financial Statements but reflect corrections, disclosed in Note 3.

The accompanying notes form an integral part of this condensed interim financial information.

Consolidated and Company’s condensed financial information for the 9 month period of 2019 5

CONDENSED INTERIM STATEMENTS OF CHANGES IN EQUITY All amounts in thousands of euro unless otherwise stated

Company Notes Share capital Legal reserve Other reserves Retained earnings Total

Balance at 1 January 2018 1,212,156 14,516 - 117,103 1,343,775 Net profit for the period - - - 57,830 57,830 Total comprehensive income for the period - - - 57,830 57,830 Transfer to legal reserves - 5,295 - (5,295) - Dividends 15 - - - (78,265) (78,265) Balance at 30 September 2018 1,212,156 19,811 - 91,373 1,323,340

Balance at 1 January 2019 1,212,156 19,811 - 78,231 1,310,198 Net profit for the period - - - 20,867 20,867 Total comprehensive income for the period - - - 20,867 20,867 Dividends - - - (13,000) (13,000) Transfer to legal reserves - 60,909 - (60,909) - Balance at 30 September 2019 1,212,156 80,720 - 25,189 1,318,065

The accompanying notes form an integral part of this condensed interim financial information.

Consolidated and Company’s condensed financial information for the 9 month period of 2019 6

CONDENSED INTERIM STATEMENTS OF CASH FLOWS All amounts in thousands of euro unless otherwise stated

Group Company Notes 2018 I-III Q 2019 I-III Q 2019 I-III Q 2018 I-III Q (restated*) Cash flows from operating activities Net profit for the period 57,665 47,467 20,867 57,829 Adjustments for non-monetary expenses (income): Depreciation and amortization expenses 4,5,8 88,894 71,159 201 5 Impairment of property, plant and equipment 312 2,317 - - Revaluation of derivative financial instruments (201) (1,493) - - Impairment of financial assets (reversal of impairment) (755) (413) - - Result of revaluation of property, plant and equipment 442 - - - Result of revaluation of investment property - (18) - - Impairment/ (reversal of impairment) of investments in

subsidiaries - - (213) 1,570 Income tax expenses 10,283 12,177 (527) 592 (Depreciation) of grants 4 (6,579) (7,058) - - Increase (decrease) in provisions (7,235) (217) - 2,499 Inventory write-down to net realizable value/ (reversal) 14 (12) (279) - - Non-current assets (except financial assets) write-off

expenses 3,724 - - - Expenses/(income) of revaluation of emission allowances 4 987 (10,784) - - Emission allowances utilized 14 604 908 - - Elimination of results of investing activities: - Dividend (income) 15 - - (25,918) (67,378) - (Gain)/loss on disposal/write-off of property, plant and

equipment (906) (85) - - Elimination of results of financing activities: Interest (income) (1,217) (1,085) (11,023) (6,812) Interest expenses 11,632 8,403 10,813 7,633 Other finance (income) expenses 2,156 249 2,160 24 Changes in working capital: (Increase) decrease in trade receivables and other amounts receivable 47,019 20,902 1,304 2,033 (Increase) decrease in inventories, prepayments and other current assets (28,636) 2,945 679 65 Increase (decrease) in amounts payable, deferred income and contract liabilities (26,158) (2,795) (1,834) (699) Income tax (paid) (1,810) (2,796) - - Net cash flows from (used in) operating activities 150,209 139,504 (3,491) (2,638)

Cash flows from investing activities (Acquisition) of property, plant and equipment and intangible assets (341,976) (261,791) (43) (3) Disposal of property, plant and equipment and intangible assets 35,314 34,180 - - Loans (granted) - - (183,533) (275,906) Loans repaid 37 - 49,728 124,586 (Acquisition) of subsidiaries (27,965) - - (29,147) Disposal of subsidiaries - - 26,448 - Grants received 38,191 14,007 - 0 (Acquisition) of bonds - - - (200) Interest received 1,098 - 12,550 5,802 Dividends received - - 7,724 41,052 Increase (decrease) of cash flows from other from investing activities (1,365) (703) (1,921) (1,074) Net cash flows from (used in) investing activities (296,666) (214,307) (89,047) (134,891) Cash flows from financing activities Proceeds from borrowings 79.502 - - - Issue of bonds - 294.346 - 294.346 Repayments of borrowings (54.913) (109.441) (43.051) (80.701) Lease payments (6.580) (117) (171) - Interest paid (11.626) (8.862) (12.903) (6.379) Dividends paid (13.910) (80.855) (13.000) (78.265) Increase in share capital of UAB “Kauno Kogeneracinė Jėgainė“ - 7.840 - - Other increases (decreases) in cash flows from financing activities - - 1 (9.699) Net cash flows from (used in) financing activities (7.527) 102.911 (69.124) 119.302 Increase (decrease) in cash and cash equivalents (including overdraft) (153.984) 28.108 (161.662) (18.227) Cash and cash equivalents (including overdraft) at the beginning of the period 7 85.575 161.101 (42.029) 34.290 Cash and cash equivalents (including overdraft) at the end of the period 7 (68.409) 189.209 (203.691) 16.063

*Certain amounts presented above do not correspond to the 2017 and 2018 Financial Statements but reflect corrections, disclosed in Note 3.

The accompanying notes form an integral part of this condensed interim financial information.

Consolidated and Company’s condensed financial information for the 9 month period of 2019 7

NOTES TO THE CONDENSED INTERIM FINANCIAL INFORMATION All amounts in thousands of euro unless otherwise stated

1 General information

UAB „Ignitis grupė“ (hereinafter “the Company”) is a private limited liability company registered in the Republic of Lithuania. The Company’s registered office address is Žvejų g. 14, LT-09310, Vilnius, Lithuania. The Company is a limited liability profit-oriented entity registered on 28 August 2008 with the Register of Legal Entities managed by the public institution the Centre of Registers. Company code 301844044, VAT payer’s code LT10004278519. The Company has been founded for an indefinite period.

The Company is a parent company, which is responsible for the management and coordination of activities of group companies engaged in electricity and heat generation (including electricity generation from renewable energy sources), supply, electricity imports and export, distribution and trade, natural gas distribution and supply, as well as in service and development of electric energy industry.

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

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

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

At 30 September 2019 At 31 December 2018 Company’s shareholder Share capital, Share capital, % % in EUR ‘000 in EUR ‘000

Republic of Lithuania represented by the Lithuanian Ministry of Finance 1,212,156 100 1,212,156 100

As at 30 September 2019, the Group had 3,872 employees (31 December 2018 – 3,813), the Company had 109 employees (31 December 2018 – 125).

The Company’s management approved these financial statements on 20 November 2019.

2 Accounting principles

2.1. Basis of preparation

Condensed interim financial information of UAB “Ignitis grupė“ (hereinafter - the Company) and consolidated condensed interim financial information of the Company and its subsidiaries (hereinafter – the Group) for a nine-month period ended 30 September 2019 has been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union and applicable to interim financial reporting (International Accounting Standard (IAS) 34, 'Interim financial reporting'). This unaudited condensed interim financial information should be read together with the annual financial statements for the year ended 31 December 2018, which have been prepared in accordance with IFRS as adopted by the EU.

Financial year of Company and other Group companies coincides with the calendar year.

The accounting policies applied in the preparation of this condensed interim financial information are consistent with those of the annual financial statements for the year ended 31 December 2018.

a) New and amended standards, and interpretations

During nine – month reporting period ended 30 August 2019 the Group and the Company for the first time adopted IFRS 16 „Leases“, that had material impact on Group‘s and Company‘s financial statements.

IFRS 16, Leases (effective for annual periods beginning on or after 1 January 2019). The new standard sets out the principles for the recognition, measurement, presentation and disclosure of leases. All leases result in the lessee obtaining the right to use an asset at the start of the lease and, if lease payments are made over time, also obtaining financing. Accordingly, IFRS 16 eliminates the classification of leases as either operating leases or finance leases as is required by IAS 17 and, instead, introduces a single lessee accounting model. Lessees will be required to recognize: (a) assets and liabilities for all leases with a term of more than 12 months, unless the underlying asset is of low value; and (b) depreciation of lease assets separately from interest on lease liabilities in the income statement. IFRS 16 substantially carries forward the lessor accounting requirements in IAS 17. Accordingly, a lessor continues to classify its leases as operating leases or finance leases, and to account for those two types of leases differently. The value of assets being transferred under the lease agreement and related lease liabilities must be stated in the Group’s and the Company’s statement of financial position.

The Group and the Company applied IFRS 16 Leases starting from 1 January 2019 using the modified retrospective approach for the first time application of IFRS 16.

The Group and the Company performed the calculation of assets transferred according to the lease agreement and related liabilities under IFRS 16. At 1 January 2019, the Group and the Company recognized assets and liabilities managed under the right of use, which indicates the impact of the first-time adoption of IFRS 16 on the Company’s financial statements. The management of the Group is assessing whether the lease of state-owned land is in compliance with the criteria of IFRS 16.

Consolidated and Company’s condensed financial information for the 9 month period of 2019 8

NOTES TO THE CONDENSED INTERIM FINANCIAL INFORMATION All amounts in thousands of euro unless otherwise stated b) Impact of new standards’ adoption on the items in the statement of financial position

The impact of the first-time adoption of IFRS 16 on the items of the Group’s statement of financial position is shown in the table below:

EUR thousands At 31 December 2018 IFRS 16 At 1 January 2019 ASSETS Non-current assets Property, plant and equipment 35,523 (35,523) - Right-of-use asset - 46,797 46,797 EQUITY AND LIABILITIES Non-current liabilities Lease liabilities 14,334 9,843 24,177 Current liabilities Current portion of lease liabilities 5,220 1,431 6,651

The impact of the first-time adoption of IFRS 16 on the Company’s financial statements is shown in the table below: EUR thousands At 31 December 2018 IFRS 16 At 1 January 2019 ASSETS 2018 Non-current assets Right-of-use asset - 847 847 EQUITY AND LIABILITIES Non-current liabilities Lease liabilities - 637 637 Current liabilities Current portion of lease liabilities - 211 211

Elected practical expedients on transition where the Group and the Company is a lessee

Where the Group and the Company is a lessee the following practical expedients are applied on transition on a lease-by-lease basis. The Group and the Company: 1. applies a single discount rate to a portfolio of leases with similar characteristics (such as leases with similar maturity, class of leased asset and economic environment); 2. does apply transitional period adjustments to leases of low value (less than or equal to EUR 4,000). 3. excludes initial direct costs from leases which previously were classified as operating leases by applying the standard at the commencement date to determine the value of the right-of-use assets; 4. uses prior period information, for example, in determining the lease term if the contract provides an option to extend or terminate the lease. Consistently with the IAS 8, prior period information is used only for accounting estimates and judgments and is therefore not applicable to areas such as changes in indices or rates.

IFRS 16 does not specify how a lessee should distinguish and allocate the lease and non-lease components in the contract during the transitional period when the retrospective method is applied. The Group and the Company has chosen to apply a practical measure by accounting for each lease component and any related non-lease component as a single lease component consistently with accounting policy of the Group and the Company.

IFRS 9: Prepayment features with negative compensation (Amendment) The Amendment allows financial assets with prepayment features that permit or require a party to a contract either to pay or receive reasonable compensation for the early termination of the contract (so that, from the perspective of the holder of the asset there may be ‘negative compensation’), to be measured at amortized cost or at fair value through other comprehensive income. Management assessed that adoption of new standard amendment for the first time had no significant effect on financial statements of the Group and the Company.

IAS 28: Long-term Interests in Associates and Joint Ventures (Amendments) The Amendments relate to whether the measurement, in particular impairment requirements, of long-term interests in associates and joint ventures that, in substance, form part of the ‘net investment’ in the associate or joint venture should be governed by IFRS 9, IAS 28 or a combination of both. The Amendments clarify that an entity applies IFRS 9 Financial Instruments, before it applies IAS 28, to such long- term interests for which the equity method is not applied. In applying IFRS 9, the entity does not take account of any adjustments to the carrying amount of long- term interests that arise from applying IAS 28. Management assessed that adoption of new standard amendment for the first time had no significant effect on financial statements of the Group and the Company.

IFRIC INTERPETATION 23: Uncertainty over Income Tax Treatments The Interpretation addresses the accounting for income taxes when tax treatments involve uncertainty that affects the application of IAS 12. The Interpretation provides guidance on considering uncertain tax treatments separately or together, examination by tax authorities, the appropriate method to reflect uncertainty and accounting for changes in facts and circumstances. Management has assessed that adoption of interpretation for the first time had no significant effect on financial statements of the Group and the Company.

IAS 19: Plan Amendment, Curtailment or Settlement (Amendments) The Amendments require entities to use updated actuarial assumptions to determine current service cost and net interest for the remainder of the annual reporting period after a plan amendment, curtailment or settlement has occurred. The Amendments also clarify how the accounting for a plan amendment, curtailment or settlement affects applying the asset ceiling requirements. Management assessed that adoption of new standard amendment for the first time had no significant effect on financial statements of the Group and the Company.

The IASB has issued the Annual Improvements to IFRSs 2015 – 2017 Cycle, which is a collection of amendments to IFRSs: • IFRS 3 Business Combinations and IFRS 11 Joint Arrangements: The amendments to IFRS 3 clarify that when an entity obtains control of a business that is a joint operation, it remeasures previously held interests in that business. The amendments to IFRS 11 clarify that when an entity obtains joint control of a business that is a joint operation, the entity does not remeasure previously held interests in that business.

Consolidated and Company’s condensed financial information for the 9 month period of 2019 9

NOTES TO THE CONDENSED INTERIM FINANCIAL INFORMATION All amounts in thousands of euro unless otherwise stated

• IAS 12 Income Taxes: The amendments clarify that the income tax consequences of payments on financial instruments classified as equity should be recognized according to where the past transactions or events that generated distributable profits has been recognized. • IAS 23 Borrowing Costs: The amendments clarify paragraph 14 of the standard that, when a qualifying asset is ready for its intended use or sale, and some of the specific borrowing related to that qualifying asset remains outstanding at that point, that borrowing is to be included in the funds that an entity borrows generally. Management assessed that adoption of improvements for the first time had no significant effect on financial statements of the Group and the Company. c) Standards issued but not yet effective and not early adopted

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

Conceptual Framework in IFRS standards. The IASB issued the revised Conceptual Framework for Financial Reporting on 29 March 2018. The Conceptual Framework sets out a comprehensive set of concepts for financial reporting, standard setting, guidance for preparers in developing consistent accounting policies and assistance to others in their efforts to understand and interpret the standards. IASB also issued a separate accompanying document, Amendments to References to the Conceptual Framework in IFRS Standards, which sets out the amendments to affected standards in order to update references to the revised Conceptual Framework. Its objective is to support transition to the revised Conceptual Framework for companies that develop accounting policies using the Conceptual Framework when no IFRS Standard applies to a particular transaction. For preparers who develop accounting policies based on the Conceptual Framework, it is effective for annual periods beginning on or after 1 January 2020.

IFRS 3: Business Combinations (Amendments). The IASB issued amendments in Definition of a Business (Amendments to IFRS 3) aimed at resolving the difficulties that arise when an entity determines whether it has acquired a business or a group of assets. The Amendments are effective for business combinations for which the acquisition date is in the first annual reporting period beginning on or after 1 January 2020 and to asset acquisitions that occur on or after the beginning of that period, with earlier application permitted. These Amendments have not yet been endorsed by the EU. At the moment Management is assessing the effect of new standard amendment on financial statements of the Group and the Company.

IAS 1 Presentation of Financial Statements and IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors: Definition of ‘material’ (Amendments). The Amendments are effective for annual periods beginning on or after 1 January 2020 with earlier application permitted. The Amendments clarify the definition of material and how it should be applied. The new definition states that, ’Information is material if omitting, misstating or obscuring it could reasonably be expected to influence decisions that the primary users of general purpose financial statements make on the basis of those financial statements, which provide financial information about a specific reporting entity’. In addition, the explanations accompanying the definition have been improved. The Amendments also ensure that the definition of material is consistent across all IFRS Standards. These Amendments have not yet been endorsed by the EU. At the moment Management is assessing the effect of new standard amendment on financial statements of the Group and the Company.

The management of the Group and the Company does not believe that other newly published and amended standards and their interpretations which the Group and the Company is required to apply from 1 January 2019 will have a material effect on financial statements of the Group and the Company.

2.2 Right-of-use asset

Right-of-use asset is an asset, that represents a Company’s/Group’s right to use an underlying asset for the lease term. Company/Group recognize right-of-use asset to all leases, including leases of right-of-use assets in a sublease, except for leases of intangible assets, short-term leases and leases for which the underlying asset is of low value.

Initial measurement of the right-of-use asset At the commencement date, Company/Group measures the right-of-use asset at cost. The cost of the right-of-use asset shall comprise: the amount of the initial measurement of the lease liability, any lease payments made at or before the commencement date, less any lease incentives received; any initial direct costs incurred by Company/Group; and an estimate of costs to be incurred by Company/Group in dismantling and removing the underlying asset, restoring the site on which it is located or restoring the underlying asset to the condition required by the terms and conditions of the lease, unless those costs are incurred to produce inventories. Company/Group incurs the obligation for those costs either at the commencement date or as a consequence of having used the underlying asset during a particular period. Company/Group recognize the costs described as part of the cost of the right-of-use asset when it incurs an obligation for those costs.

Subsequent measurement of the right-of-use asset After the commencement date, a Company/Group measure the right-of-use asset applying a cost model. To apply a cost model, Company/Group measure the right-of-use asset at cost: less any accumulated depreciation and any accumulated impairment losses; and adjusted for any remeasurement of the lease liability.

Company/Group apply the depreciation requirements in IAS 16 Property, Plant and Equipment in depreciating the right-of-use asset.

If the lease transfers ownership of the underlying asset to Company/Group by the end of the lease term or if the cost of the right-of-use asset reflects that Company/Group will exercise a purchase option, Company/Group shall depreciate the right-of-use asset from the commencement date to the end of the useful life of the underlying asset. Otherwise, Company/Group shall depreciate the right-of-use asset from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term.

Consolidated and Company’s condensed financial information for the 9 month period of 2019 10

NOTES TO THE CONDENSED INTERIM FINANCIAL INFORMATION All amounts in thousands of euro unless otherwise stated

Company/Group presents right-of-use assets separately from intangible and tangible assets in the statement of financial position.

2.3 Lease liability

Initial measurement of the lease liability At the commencement date, Company/Group measure the lease liability at the present value of the lease payments that are not paid at that date. The lease payments discounted using the interest rate implicit in the lease, if that rate can be readily determined. If that rate cannot be readily determined, Company/Group use the lessee's incremental borrowing rate.

At the commencement date, the lease payments included in the measurement of the lease liability comprise the following payments for the right to use the underlying asset during the lease term that are not paid at the commencement date: fixed payments, less any lease incentives receivable; variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date; amounts expected to be payable by Company/Group under residual value guarantees; the exercise price of a purchase option if the Company/Group is reasonably certain to exercise that option; and payments of penalties for terminating the lease, if the lease term reflects Company/Group exercising an option to terminate the lease.

Variable lease payments that depend on an index or a rate include, for example, payments linked to a consumer price index, payments linked to a benchmark interest rate (such as LIBOR) or payments that vary to reflect changes in market rental rates.

Subsequent measurement of the lease liability After the initial measurement, Company/Group measure the lease liability by: increasing the carrying amount to reflect interest on the lease liability; reducing the carrying amount to reflect the lease payments made; and remeasuring the carrying amount to reflect any reassessment or lease modifications or to reflect revised in-substance fixed lease payments.

Interest on the lease liability in each period during the lease term shall be the amount that produces a constant periodic rate of interest on the remaining balance of the lease liability. The periodic rate of interest is the discount rate or if applicable the revised discount rate. After the commencement date, Company/Group shall recognize in profit or loss, unless the costs are included in the carrying amount of another asset applying other applicable Standards, both: interest on the lease liability; and variable lease payments not included in the measurement of the lease liability in the period in which the event or condition that triggers those payments occurs.

Reassessment of the lease liability After the commencement date, Company/Group remeasure the lease liability to reflect changes to the lease payments. Company/Group recognize the amount of the remeasurement of the lease liability as an adjustment to the right-of-use asset. However, if the carrying amount of the right-of-use asset is reduced to zero and there is a further reduction in the measurement of the lease liability, Company/Group recognize any remaining amount of the remeasurement in profit or loss.

Revised discount rate

Company/Group remeasure the lease liability by discounting the revised lease payments using a revised discount rate, if there is a change in the lease term. Company/Group determine the revised lease payments based on the revised lease term or there is a change in the assessment of an option to purchase the underlying asset, assessed considering the events and circumstances described in the context of a purchase option. Company/Group determine the revised lease payments to reflect the change in amounts payable under the purchase option. If either there is a change in the lease term or there is a change in the assessment of an option to purchase, Company/Group determine the revised discount rate as the interest rate implicit in the lease for the remainder of the lease term, if that rate can be readily determined, or the lessee's incremental borrowing rate at the date of reassessment, if the interest rate implicit in the lease cannot be readily determined.

Unchanged discount rate Company/Group remeasure the lease liability by discounting the revised lease payments, if either: - there is a change in the amounts expected to be payable under a residual value guarantee. Company/Group determine the revised lease payments to reflect the change in amounts expected to be payable under the residual value guarantee. - there is a change in future lease payments resulting from a change in an index or a rate used to determine those payments, including for example a change to reflect changes in market rental rates following a market rent review. Company/Group remeasure the lease liability to reflect those revised lease payments only when there is a change in the cash flows (i.e. when the adjustment to the lease payments takes effect). Company/Group determine the revised lease payments for the remainder of the lease term based on the revised contractual payments. Discounting revised lease payments, Company/Group use an unchanged discount rate, unless the change in lease payments results from a change in floating interest rates. In that case, Company/Group use a revised discount rate that reflects changes in the interest rate.

Lease modifications Company/Group account for a lease modification as a separate lease if both: - the modification increases the scope of the lease by adding the right to use one or more underlying assets; and - the consideration for the lease increases by an amount commensurate with the stand-alone price for the increase in scope and any appropriate adjustments to that stand-alone price to reflect the circumstances of the particular contract.

For a lease modification that is not accounted for as a separate lease, at the effective date of the lease modification Company/Group: - allocate the consideration in the modified contract; - determine the lease term of the modified lease; and - remeasure the lease liability by discounting the revised lease payments using a revised discount rate. For a lease modification that is not accounted for as a separate lease, Company/Group account for the remeasurement of the lease liability by: - decreasing the carrying amount of the right-of-use asset to reflect the partial or full termination of the lease for lease modifications that decrease the scope of the lease. Company/Group recognize in profit or loss any gain or loss relating to the partial or full termination of the lease; - making a corresponding adjustment to the right-of-use asset for all other lease modifications.

Consolidated and Company’s condensed financial information for the 9 month period of 2019 11

NOTES TO THE CONDENSED INTERIM FINANCIAL INFORMATION All amounts in thousands of euro unless otherwise stated

Company/Group present lease liabilities separately from other liabilities in the statement of financial position. Company/Group present interest expense on the lease liability separately from the depreciation charge for the right-of-use asset. Interest expense on the lease liability is a component of finance costs, presented in the statement of profit or loss and other comprehensive income.

2.4 Income tax

Taxes on income in the interim periods are accrued using the tax rate that would be applicable to expected total annual profit or loss.

3 3 Critical accounting estimates and judgements used in the preparation of financial statements

Accounting estimates and judgments are continuously reviewed and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

The preparation of financial information according to International Financial Reporting Standards as adopted by the EU requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, income and expenses, and disclosures of contingencies. Changes in the underlying assumptions, estimates and judgments may have a material effect on this financial information. The accounting estimates applied in preparing the condensed interim financial information are consistent with those used in preparing the annual financial statements for the year ended 31 December 2018.

Correction of error

The Group corrected the identified errors from the previous financial periods during the preparation of these interim financial statement. In 2019, the subsidiary AB „Ignitis gamyba“ of the Group reviewed financial statements accounting principles for revenues, receivables, and payables related to secondary power reserve, tertiary power reserve, and system restoration services (hereinafter – regulated activities), which are regulated by the National Energy Regulatory Council (NERC). Tariffs for these regulated activities for the next calendar year are set by NERC based on Group and AB „Ignitis gamyba“ forecasted expenses taking into account planned and factual revenue and expense variance in the prior financial year. In the financial statements, Group and AB „Ignitis gamyba“ reported regulated activities revenues using the accrual principle based on factual expenses incurred, i.e. regulatory activities revenues were recognized by Group and AB „Ignitis gamyba“ in such volume, which under NERC methodology, is permissible taking into consideration permissible return on investment and factual expenses for services provided incurred during the period. Due to variance between planned and factual revenues and expenses set by NERC, regulatory activities revenues and corresponding payables and other payables were corrected. Up until now, revenues were recognized in accordance to substance over form principle, following the assumption about NERC’s ability to promptly and based on unilateral decision initiate legal act amendments, that would be necessary in order to establish an obligation for the company to refund the difference between mentioned regulatory planned and actual service estimates even if Group and AB „Ignitis gamyba“ is no longer providing regulatory services mentioned above. In 2019, by reviewing accounting of previously mentioned operations, it was noted that payable or refundable amounts in the future periods depend on whether or not the Group and AB „Ignitis gamyba“ will provide these services and will carry them out in the future, i.e. these amounts are related to currently uncompleted agreements, and in such case, provision, contingent liabilities and contingent assets should not be accounted (under Conceptual Framework for Financial Reporting and under IAS 37 “Provision, Contingent Liabilities and Contingent Assets”). The following retrospective corrections were made in the Group’s financial statements: 1) As at 31 December 2018 and 1 January 2018 the Group corrected 2016 and 2017 regulatory activities revenues and decreased “Retained earnings” by EUR 289 thousand and in correspondence decreased “Other amounts receivable” balance sheet caption. 2) As at 31 December 2018 and 1 January 2018 the Group corrected 2016 and 2017 regulatory activities revenues and decreased “Other non-current payables and liabilities” caption by EUR 5,398 thousand and “Contract liabilities” caption by EUR 2,283 thousand, while 2018 “Revenue from contracts with customers” caption was increased by EUR 7,710 thousand. 1 January 2018 balance was corrected by increasing “Retained earnings” by EUR 511 thousand, while “Other non-current payables and liabilities” caption was decreased by the corresponding amount. 3) The Group had to recalculate deferred tax liability for 2018 and 2018 opening amount due to the reasons stated in No. 1 and 2 sections. As at 31 December 2018 and 1 January 2018 the Group corrected previously recognized deferred tax asset, thus in correspondence correcting deferred tax liability by increasing “Deferred Tax Liability” caption balance by EUR 1,108 thousand and 2018 “Deferred income tax expenses” statement of comprehensive income caption was increased by EUR 1,075 thousand. 1 January 2018 statement of financial position due to this correction was adjusted in the following way: “Retained earnings” were decreased by EUR 33 thousand while “Deferred Tax Liability” caption was increased by the corresponding amount. 1) The Group had to recalculate current income tax liability for 2018 and 2018 opening amount due to the reasons stated in No. 1 and 2 sections. As at 31 December 2018 and 1 January 2018 the Group correction previously recognized profit tax payable and increased “Income tax payable” balance caption by EUR 1,108 EUR thousand and 2018 statement of comprehensive income caption “Income tax expenses” was increased by EUR 1,075 thousand. 1 January 2018 statement of financial position due to this correction was adjusted in the following way: “Retained earnings” were decreased by EUR 33 thousand while “Income tax payable” caption was increased by the corresponding amount. 2) As at 31 December 2018 the Group reclassified part of other amounts receivable and contract liabilities, which by its nature, should have been classified as other non-current payables and liabilities. Due to this “Other non-current payables and liabilities” of statement of financial position caption was increased by EUR 800 thousand, “Other amounts receivable” caption was increased by EUR 289 thousand, while “Contract liabilities” where decreased by EUR 511 thousand. 3) As at 31 December 2018 and 1 January 2018 the Group did not reclassify part of other non-current payables and liabilities and contract liabilities, which by their nature, should have been classified as provisions. Due to this long-term „Provisions“ caption was increased by EUR 4,875 thousand, and short-term “Provisions” caption was increased by EUR 2,765 thousand, while “Other non- current payables and liabilities” and “Contract liabilities” captions were reduced in corresponding amounts. 1 January 2018 statement of financial position due to this correction was adjusted in the following way: long-term „Provisions“ caption was increased by EUR 5,034 thousand while “Other non-current payables and liabilities” caption was reduced by the corresponding amount. 4) The Group had to recalculate errors impact to non-controlling interests for 2018 and 2018 opening amount due to the reasons stated in No. 1 - 6 sections.

Consolidated and Company’s condensed financial information for the 9 month period of 2019 12

NOTES TO THE CONDENSED INTERIM FINANCIAL INFORMATION All amounts in thousands of euro unless otherwise stated

Retrospectively corrected condensed interim statements of financial position: Correction for the year 2018

2) 5) 7) Errors Correction Reclassifica Impact to of Other tion of 6) non- 1) non-current Other Reclassifica controlling Correction amounts amounts tion of interests of Other payable 3) 4) receivable Other non- 2018 12 31 amounts and Correction Correction and current 2018 12 31 Group Notes before receivable liabilities of deferred of income contract amounts after corrections due to and income tax tax liabilities liabilities to payable corrections regulated Contract liabilities* * Other non- and services liabilities current liabilities income * due to amounts to regulated payable Provisions services and income * liabilities ASSETS

Non-current assets Intangible assets 4 106,330 ------106,330 Property, plant and equipment 4 2,091,590 ------2,091,590 Prepayments for non-current assets 23,621 ------23,621 Investment property 6,494 ------6,494 Amounts receivable after one year 160,606 ------160,606 Other financial assets 2,008 ------2,008 Other non-current assets 6,094 ------6,094 Deferred income tax asset 14,468 ------14,468 Total non-current assets 2,411,211 ------2,411,211 Current assets Inventories 43,137 ------43,137 Prepayments and deferred expenses 30,655 ------30,655 Trade receivables 143,120 ------143,120 Other amounts receivable 25,436 (289) - - - 289 - - 25,436 Other current assets 2,147 ------2,147 Prepaid income tax 4,192 ------4,192 Other financial assets 656 ------656 Cash and cash equivalents 7 127,835 ------127,835

377,178 (289) - - - 289 - - 377,178 8 65,706 ------65,706 Non-current assets held for sale 442,884 (289) - - - 289 - - 442,884 Total current assets 2,854,095 (289) - - - 289 - - 2,854,095 EQUITY AND LIABILITIES Equity Share capital 9 1,212,156 ------1,212,156 Reserves 212,802 ------212,802 Retained earnings (deficit) (147,554) (289) 511 (33) (33) - - (2) (147,400) FY 2018 result (9,209) - 7,170 (1,075) (1,075) - - (163) (4,352) Equity attributable to owners of the parent 1,268,195 (289) 7,681 (1,108) (1,108) - - (165) 1,273,206 Non-controlling interests 48,356 ------165 48,521 Total equity 1,316,551 (289) 7,681 (1,108) (1,108) - - - 1,321,727 Liabilities Non-current liabilities Non-current borrowings 10 735,410 ------735,410 Lease liabilities 11 14,334 ------14,334 Grants and subsidies 208,874 ------208,874 Deferred income tax liabilities 38,688 - - 1,108 - - - - 39,796 Provisions 12 30,571 - - - - - 4,875 - 35,446 Deferred revenue 115,261 ------115,261 Other non-current amounts payable and liabilities 11,274 - (5,398) - - 800 (4,875) - 1,801 Total non-current liabilities 1,154,412 - (5,398) 1,108 - 800 - - 1,150,922 Current liabilities Current portion of long-term debts 10 61,819 ------61,819 Current borrowings 10 47,727 ------47,727 Current portion of lease liabilities 11 5,220 ------5,220 Trade payables 93,237 ------93,237 Contract liabilities 55,325 - (2,283) - - (511) (2,765) - 49,766 Income tax liabilities 3,436 - - - 1,108 - - - 4,544 Provisions 12 2,788 - - - - - 2,765 - 5,553 Deferred revenue 7,912 ------7,912 Other current amounts payable and liabilities 102,682 ------102,682 380,146 - (2,283) - 1,108 (511) - - 378,460 Liabilities related to non-current assets held for sale 2,986 ------2,986 Total current liabilities 383,132 - (2,283) - 1,108 (511) - - 381,446 Total liabilities 1,537,544 - (7,681) 1,108 1,108 289 - - 1,532,368 TOTAL EQUITY AND LIABILITIES 2,854,095 (289) - - - 289 - - 2,854,095 * Correction for FY 2017 balance

Consolidated and Company’s condensed financial information for the 9 month period of 2019 13

NOTES TO THE CONDENSED INTERIM FINANCIAL INFORMATION All amounts in thousands of euro unless otherwise stated

Retrospectively corrected condensed interim statements of financial position (continued): Corrections for the year 2017

1) Correction 6) 7) Errors 2) Correction of of Other Reclassificati Impact to Other non-current amounts 3) Correction 4) Correction on of Other non- 2018-01-01 amounts payable 2018-01-01 receivable of deferred of income non-current controlling Group Notes before and liabilities and after due to income tax tax liabilities amounts interests corrections Contract liabilities corrections regulated liabilities* * payable and due to regulated services liabilities to services income * income * Provisions ASSETS Non-current assets Intangible assets 4 36,360 ------36,360 Property, plant and equipment 4 1,761,082 ------1,761,082 Prepayments for non-current assets 21,911 ------21,911 Investment property 14,878 ------14,878 Amounts receivable after one year 170,488 ------170,488 Other financial assets 426 ------426 Other non-current assets 3,239 ------3,239 Deferred income tax asset 7,084 ------7,084 Total non-current assets 2,015,468 ------2,015,468 Current assets Inventories 56,866 ------56,866 Prepayments and deferred expenses 38,119 ------38,119 Trade receivables 112,563 ------112,563 Other amounts receivable 27,800 (289) - - - - - 27,511 Other current assets 1,093 ------1,093 Prepaid income tax 2,102 ------2,102 Short-term loans ------Other financial assets 7 171,756 ------171,756 Cash and cash equivalents 410,299 (289) - - - - - 410,010 8 79,301 ------79,301 Non-current assets held for sale 489,600 (289) - - - - - 489,311 Total current assets 2,505,068 (289) - - - - - 2,504,779 EQUITY AND LIABILITIES

Equity Share capital Reserves 9 1,212,156 ------1,212,156 Retained earnings (deficit) 99,380 ------99,380 FY 2018 result (13,706) (289) 511 (33) (33) - (5) (13,555) Equity attributable to owners of the parent 1,297,830 (289) 511 (33) (33) - (5) 1,297,981 Non-controlling interests 45,796 - - - - - 5 45,801 Total equity 1,343,626 (289) 511 (33) (33) - - 1,343,782 Liabilities Non-current liabilities Non-current borrowings 10 480,068 ------480,068 Lease liabilities 11 187 ------187 Grants and subsidies 200,311 ------200,311 Deferred income tax liabilities 36,049 - - 33 - - - 36,082 Provisions 12 1,893 - - - - 5,034 - 6,927 Deferred revenue 54,509 ------54,509 Other non-current amounts payable and liabilities 7,306 - (511) - - (5,034) - 1,761 Total non-current liabilities 780,323 - (511) 33 - - - 779,845 Current liabilities Current portion of long-term debts 10 119,599 ------119,599 Current borrowings 10 14,082 ------14,082 Current portion of lease liabilities 11 145 ------145 Trade payables 98,338 ------98,338 Contract liabilities 27,765 ------27,765 Income tax liabilities 3,695 - - - 33 - - 3,728 Provisions 12 2,498 ------2,498 Deferred revenue 5,242 ------5,242 Other current amounts payable and liabilities 109,421 ------109,421 380,785 - - - 33 - - 380,818 Liabilities related to non-current assets held for sale 334 ------334 Total current liabilities 381,119 - - - 33 - - 381,152 Total liabilities 1,161,442 - (511) 33 33 - - 1,160,997 TOTAL EQUITY AND LIABILITIES 2,505,068 (289) - - - - - 2,504,779

* Corrections made have a rolling effect on FY 2018 financial statements (please refer to the Group‘s correction of error disclosures above)

Consolidated and Company’s condensed financial information for the 9 month period of 2019 14

NOTES TO THE CONDENSED INTERIM FINANCIAL INFORMATION All amounts in thousands of euro unless otherwise stated

Retrospectively corrected condensed interim statements of comprehensive income: Correction of 2018, I-III Q

2) Correction of Other 7) Errors non-current amounts Impact to non- 2018 I-III Q 3) Correction of 4) Correction of 2018 m. I- III Q payable and liabilities controlling Group Notes before deferred income income tax after and Contract liabilities interests corrections tax liabilities liabilities corrections. due to regulated services income

Revenue from contracts with customers 13 867,107 4,669 - - - 871,776 Other income 29,017 - - - - 29,017 896,124 4,669 - - - 900,793 Operating expenses Purchases of electricity, gas for trade, and related services (467,590) - - - - (467,590) Purchases of gas and heavy fuel oil (210,022) - - - - (210,022) Depreciation and amortization (64,100) - - - - (64,100) Wages and salaries and related expenses (59,333) - - - - (59,333) Repair and maintenance expenses (14,112) - - - - (14,112) Revaluation of property, plant and equipment 18 - - - - 18 Reversal (impairment) of amounts receivable and loans 413 - - - - 413 Impairment of property, plant and equipment (2,317) - - - - (2,317) Other expenses 14 (15,969) - - - - (15,969) Total operating expenses (833,012) - - - - (833,012)

(Loss) profit from operations 63,112 4,669 - - - 67,781

Finance income 1,139 - - - - 1,139 Finance costs (8,704) - - - - (8,704) Results of the revaluation and closing of derivative financial instruments (572) - - - - (572)

Profit (loss) before tax 54,975 4,669 - - - 59,644 Current year income tax (expense)/benefit (6,363) - - (701) - (7,064) Deferred income tax (expense)/benefit - - (4,412) - (701) (5,113) Net profit 44,200 4,669 (701) (701) - 47,467

Attributable to: ------Owners of the parent 42,877 - - - 3,163 46,040 Non-controlling interest 1,325 - - - 104 1,429

Other comprehensive income (loss) Items that will not be reclassified to profit or loss Gain (loss) on revaluation of non-current assets 13,041 - - - - 13,041 Deferred income tax related to gain (loss) on revaluation of non-current assets (116) - - - - (116) Items that will not be reclassified to profit or loss, total 12,925 - - - - 12,925

Items that will be reclassified to profit or loss

Translation of net investments in foreign operations into the Group’s presentation currency (22) - - - - (22) Items that will be reclassified to profit or loss, total (22) - - - - (22) Total other comprehensive income/(loss) 12,903 - - - - 12,903 Total comprehensive income (loss) for the period 57,103 4,669 (701) (701) - 60,370

Attributable to:

Owners of the parent 55,344 - - - 3,163 58,507 Non-controlling interests 1,762 - - - 104 1,866

Consolidated and Company’s condensed financial information for the 9 month period of 2019 15

NOTES TO THE CONDENSED INTERIM FINANCIAL INFORMATION All amounts in thousands of euro unless otherwise stated

Retrospectively corrected condensed interim statements of comprehensive income (continued): Correction of 2018, III Q

2) Correction of 7) Errors Other non- Impact to non- current amounts controlling 2018 III Q payable and 3) Correction of 4) Correction of interests 2018 m. III Q Group Notes before liabilities and deferred income income tax after corrections Contract tax liabilities liabilities corrections. liabilities due to regulated services income

Revenue from contracts with customers 13 266,757 2,206 - - - 268,963 Other income 3,373 - - - - 3,373 270,130 2,206 - - - 272,336 Operating expenses Purchases of electricity, gas for trade, and related services (169,694) - - - - (169,694) Purchases of gas and heavy fuel oil (50,239) - - - - (50,239) Depreciation and amortization (21,389) - - - - (21,389) Wages and salaries and related expenses (18,338) - - - - (18,338) Repair and maintenance expenses (6,555) - - - - (6,555) Revaluation of property, plant and equipment 18 - - - - 18 Reversal (impairment) of amounts receivable and loans (40) - - - - (40) Impairment of property, plant and equipment (2,465) - - - - (2,465) Other expenses 14 (7,586) - - - - (7,586) Total operating expenses (276,288) - - - - (276,288)

(Loss) profit from operations (6,158) 2,206 - - - (3,952)

Finance income 375 - - - - 375 Finance costs (3,644) - - - - (3,644) Results of the revaluation and closing of derivative financial instruments (328) - - - - (328) - Profit (loss) before tax (9,755) 2,206 - - - (7,549) Current year income tax (expense)/benefit (4,831) - - (331) - (5,162) Deferred income tax (expense)/benefit 466 - (331) - - 135

Net profit (14,120) 2,206 (331) (331) - (12,576)-

Attributable to: Owners of the parent (13,916) - - - 1,494 (12,422) Non-controlling interest (205) - - - 50 (155)

Other comprehensive income (loss) Items that will not be reclassified to profit or loss Gain (loss) on revaluation of non-current assets 7,514 - - - - 7,514 Items that will not be reclassified to profit or loss, total 7,514 - - - - 7,514

Items that will be reclassified to profit or loss

Translation of net investments in foreign operations into the Group’s presentation currency (22) - - - - (22) Items that will be reclassified to profit or loss, total (22) - - - - (22)

Total other comprehensive income/(loss) 7,492 - - - - 7,492

Total comprehensive income (loss) for the period (6,628) 2,206 (331) (331) - (5,084)

Attributable to:

Owners of the parent (6,532) - - - 1,494 (5,038) Non-controlling interests (96) - - - 50 (46)

Consolidated and Company’s condensed financial information for the 9 month period of 2019 16

NOTES TO THE CONDENSED INTERIM FINANCIAL INFORMATION All amounts in thousands of euro unless otherwise stated

Retrospectively corrected condensed interim statements of cash flows for 2018

2018 I-III Q before The difference for 2018 I-III Q after Group Notes correction the 2018 m. I-III Q correction Cash flows from operating activities Net profit for the period 44,200 3,267 47,467 Adjustments for non-monetary expenses (income):

Depreciation and amortization expenses 71,159 - 71,159 Impairment of property, plant and equipment 2,317 - 2,317 Revaluation of investment assets (18) - (18) Revaluation of derivative financial instruments (1,493) - (1,493) Impairment of financial assets (reversal of impairment) (413) - (413) Income tax expenses 10,775 1,402 12,177 (Depreciation) of grants (7,058) - (7,058) Increase (decrease) in provisions 678 (895) (217) Inventory write-down to net realizable value/ (reversal) (279) - (279) Expenses/(income) of revaluation of emission allowances (10,784) - (10,784) Emission allowances utilized 908 - 908 Elimination of results of investing activities: - (Gain)/loss on disposal/write-off of property, plant and equipment (85) - (85) Elimination of results of financing activities:

Interest (income) (1,085) - (1,085) Interest expenses 8,403 - 8,403 Other finance (income) expenses 249 - 249 Changes in working capital: - (Increase) decrease in trade receivables and other amounts receivable 23,975 (3,073) 20,902 (Increase) decrease in inventories, prepayments and other current assets 2,945 - 2,945 Increase (decrease) in amounts payable, deferred income and contract liabilities (2,094) (701) (2,795) Income tax (paid) (2,796) - (2,796) Net cash flows from (used in) operating activities 139,504 - 139,504

Cash flows from investing activities

(Acquisition) of property, plant and equipment and intangible assets (261,791) - (261,791) Disposal of property, plant and equipment and intangible assets 34,180 - 34,180 Grants received 14,007 - 14,007 Increase (decrease) of cash flows from other from investing activities (703) - (703) Net cash flows from (used in) investing activities (214,307) - (214,307) Cash flows from financing activities

Bonds emission 294,346 - 294,346 Repayments of borrowings (109,441) - (109,441) Lease payments (117) - (117) Interest paid (8,862) - (8,862) Dividends paid (80,855) - (80,855) Increase in share capital of UAB “Kauno Kogeneracinė Jėgainė” 7,840 - 7,840 Net cash flows from (used in) financing activities 102,911 - 102,911 Increase (decrease) in cash and cash equivalents (including overdraft) 28,108 - 28,108 Cash and cash equivalents (including overdraft) at the beginning of the period 7 161,101 - 161,101 Cash and cash equivalents (including overdraft) at the end of the period 7 189,209 - 189,209

4 Intangible assets and property, plant and equipment

Movement on Group’s account of intangible assets and property, plant and equipment are presented below:

Group Property, plant and Intangible assets equipment

Net book value at 31 December 2018 106,330 2,091,590 The impact of the first-time adoption of IFRS 16 – reclassification to Right-of-use asset - (35,969) Net book value at 1 January 2019 (recalculated) 106,330 2,055,621 Acquisitions 24,374 267,505 Revaluation - 94 Sales - (418) Write-offs - (3,576) Impairment - (78) Reversal of impairment - 1,297 Revaluation of emission allowances (435) - Emission allowances grants received 4,131 - Emission allowances utilized (987) - Reclassification to/from Property, plant and equipment and Intangible assets 169 (169) Reclassification to/from assets held for sale - (364) Reclassification to/from inventories - 47 Depreciation/amortization (5,296) (76,403) Net book value at 30 September 2019 128,286 2,243,556

*The acquisition of intangible assets for an amount of EUR 24,374 thousand within the first half-year of 2019 mostly comprised of the goodwill arising from the business combination, which amounts to EUR 20,530 thousand (Note 19).

Property, plant and equipment, which amounts to EUR 5,672 thousand, was taken over after the acquisition of indirectly controlled (100%) company Pomerania Invall Sp.z.o.o during period from 1 January to 30 September 2019 (Note 19).

Reversal of revaluation of emission allowances during January – September of 2019 amounts to EUR 435 thousand including deferred taxes and is included in Statements of comprehensive income item “Revaluation of property, plant and equipment”.

Consolidated and Company’s condensed financial information for the 9 month period of 2019 17

NOTES TO THE CONDENSED INTERIM FINANCIAL INFORMATION All amounts in thousands of euro unless otherwise stated

During January – September of 2019 EUR 38,191 thousand of Property, plant and equipment acquisition were paid up utilizing grants received (January – September of 2018 EUR 14,007 thousand). Depreciation/amortization attributable to grants received during January – September of 2019 amounts to EUR 6,579 thousand (January – September of 2018 EUR 7,058 thousand).

The Group has significant acquisition liabilities of property, plant and equipment which will have to be fulfilled during the later years. Group’s acquisition and construction liabilities amounted to EUR 490,432 thousand as at 31 December 2018. Group’s acquisition and construction liabilities did not change significantly as at 30 September 2019.

Movement on Company’s account of intangible assets and property, plant and equipment are presented below:

Property, plant and Company Intangible assets equipment

Net book value at 31 December 2018 1,874 427 Acquisition - 36 Reclassification to share capital increase of subsidiary as non-cash contribution - (364) Depreciation/amortization - (10) Net book value at 30 September 2019 1,874 89

As at 30 September 2019 the Company accounted for EUR 1,874 thousand of intangible assets related to the assets of the Vilnius Thermal Power Plant (TE-3).

5 Right-of-use asset

Movement on Group’s account of right-of-use asset is presented below:

Structures Wind power Other Total Right- Group Land Buildings and plants and their Vehicles PP&E of-use asset machinery installations Net book value at 31 December 2018 ------

The impact of the first-time adoption of IFRS 16 – reclassification to Right-of-use asset - - 8,233 27,290 446 - 35,969 Net book value at 1 January 2019 (recalculated) - - 8,233 27,290 446 - 35,969 Acquisition 5,556 11,731 34 - 13 280 17,614 from which is recognized as Right-of-use asset 2019-01-01 5,556 7,015 34 - - 215 12,820 from which is signed lease agreements 2019-01-02 – 2019-06-30 - 4,716 - - 13 65 4,794 Write-offs - (107) (33) - - - (140) Depreciation/amortization (62) (1,617) (544) (1,686) (54) (58) (4,021)

Net book value at 30 September 2019 5,494 10,007 7,690 25,604 405 222 49,422

Movement on Company’s account of right-of-use asset is presented below:

Group Buildings Motor vehicles Total Right-of-use asset Net book value at 31 December 2018 - - - Acquisition 834 533 1.367 from which is recognized as Right-of-use asset 2019-01-01 778 69 847 from which is signed lease agreements 2019-01-02 – 2019-06-30 56 464 520 Write-offs - (15) (15) Depreciation/amortization (157) (87) (244) Net book value at 30 September 2019 677 431 1.108

6 Investments in subsidiaries and other investments

Movement of the Company’s account of investments in subsidiaries during period from 1 January to 30 September 2019 is presented below:

Company 2019 I-III Q 2018

Net book amount at 1 January 1,206,921 1,148,917

Increase in share capital of subsidiaries 15,960 41,038 Establishment of new subsidiaries 44,700 - Acquisition of companies 21,016 Disposal of investments (39,748) - Coverage of losses - 5,142 Liquidation of subsidiaries (17) Reclassification to assets held for sale (2,359) (Impairment) of investments in subsidiaries - (6,815)

Net book amount at the end of period 1,227,833 1,206,921

On 1 January 2019, the reorganization of the Group companies UAB “Lietuvos Energijos Tiekimas” and UAB “Litgas” was finalised. The companies were reorganised by way of merger – UAB “Litgas”, which ceased its activities after the reorganization, was merged with UAB “Ignitis Tiekimas”, which continues its activities. All assets, rights and obligations of UAB “Litgas” were taken over by UAB “Ignitis Tiekimas” which continues its activities. Company‘s carrying amount of investment to UAB “Ignitis” increased by EUR 8,631 thousand and the investment to UAB “Litgas” was written off by the same carrying amount.

On 1 June 2019, the reorganization of the Group companies UAB “Ignitis” and UAB “Energijos Tiekimas” was finalised. The companies were reorganised by way of merger – UAB “Energijos Tiekimas”, which ceased its activities after the reorganization, was merged with UAB “Ignitis”, which continues its activities. All assets, rights and obligations of UAB “Energijos Tiekimas” were taken over by UAB “Ignitis” which continues its activities. Company‘s carrying amount of investment to UAB “Ignitis“ increased by EUR 26,126 thousand and the investment to UAB “Energijos Tiekimas” was written off by the same carrying amount.

Consolidated and Company’s condensed financial information for the 9 month period of 2019 18

NOTES TO THE CONDENSED INTERIM FINANCIAL INFORMATION All amounts in thousands of euro unless otherwise stated

During period from 1 January to 30 September 2019 the authorized capital of the following Group’s companies was increased:

Nominal Date of Amount of value per Paid Amount Subsidiary Issue date Total issue price articles shares, pcs* share, amount outstanding amendment EUR

UAB “Vilniaus kogeneracinė jėgainė 2019-01-22 54,137,931 0.29 15,700 15,700 - 2019-01-30 UAB “Ignitis grupės paslaugų centras“ 2019-06-13 847,149 0.29 260 260 - 2019-06-28 Total * there is stated amount of shares that belong to the Company

On 14 January 2019, a decision was passed to increase the share capital of the Group’s company UAB „Vilniaus Kogeneracinė Jėgainė“ up to EUR 52,300 thousand. The initial contribution of EUR 4,000 thousand was paid by the Company in cash on 23 January 2019. The Company also made a non-cash contribution amounting to EUR 386 thousand (business consultations relating to engineering and construction preparatory works for Vilnius co-generation power plant). On 30 January 2019, the new version of the Articles of Association of the Group’s company UAB „Vilniaus Kogeneracinė Jėgainė“ related to increase in share capital was registered with the Register of Legal Entities.

On 28 February 2019, a decision was passed to increase the share capital of the Group’s company UAB „Ignitis grupės paslaugų centras“ from EUR 6,439.6 to EUR 6,960 thousand. The right to acquire 897,326 shares par value of EUR 0.29 (total emission value – EUR 260,2 thousand) per share is granted to UAB „Ignitis gamyba“. The right to acquire 897,149 shares par value of EUR 0.29 (total emission value – EUR 260,2 thousand) per share is granted to the Company. On 28 June 2019, the new version of the Articles of Association of the Group’s company UAB „Ignitis grupės paslaugų centras“ related to increase in share capital was registered with the Register of Legal Entities.

On 15 April 2019 the Company decided to reduce the authorized capital of the subsidiary UAB „NT Valdos” from LTL 41,385 thousand. Eur up to 5,000 thousand. Eur, cancelling 1,256,400 shares with the nominal value of each of EUR 28.96, total nominal value of canceled shared is EUR 36,385 thousand. The purpose of the reduction of the authorized capital is to pay out the funds to the shareholders. The subsidiary disbursed the share capital reduction to the Company during July – September of 2019 and the Company accounted for EUR 213 thousand reversal of investments in subsidiaries impairment. On 5 July 2019 a new version of the Articles of Association of the Subsidiary Company related to the reduction of the authorized capital was registered with the Register of Legal Entities.

During period from 1 January to 30 September 2019 authorized capital of the Group’s companies reduced:

Book value Appropriation Book value Subsidiary Authorized capital Reversal of impairment 31 December 2018 of loss 30 September 2018.

UAB „NT valdos“ 36,173 (36,386) - 213 -

Viso: 36,173 (36,386) - 213 -

On 31 December 2018, the Company announced that in developing the green energy activity and aiming to optimize operations of the controlled companies engaged in renewable energy production it approved the establishment of a new company UAB „Ignitis renewables“, which will become a transferee of shares of all already controlled and developed wind power parks. This decision was approved by the holder of the Company’s shares – the Ministry of Finance of the Republic of Lithuania. The Articles of Association of UAB „Ignitis renewables“ were registered with the Register of Legal Entities on 14 January 2019.

During period from 1 January to 30 September 2019 new Group’s companies was established:

Nominal Amount of value Share Date of Total issued Paid Amount Subsidiary Issue date issued per premium articles nominal price amount outstanding shares, pcs* share, amendment EUR

UAB „Ignitis renewables“ 2019-01-14 3,000 1 3 44,697 44,700 - 2019-01-14

Total: 3 44,697 44,700 - -

On 28 March 2019, the share purchase and sale agreements were signed regarding the transfer of 100% of shares of the Company’s subsidiaries developing projects on renewable energy resources to UAB „Ignitis renewables“. Upon the transfer of shares of the renewable energy companies within the Group, the Company’s ownership interest in the companies remains unchanged. The shares of the renewable energy companies are transferred for the carrying amount of investments in shares and the related liabilities, therefore the impact of the transfer of shares on the financial performance of the Company and the Group is neutral.

During period from 1 January to 30 September 2019 disposed the Company’s subsidiaries:

Disposed Amount Subsidiary Investment value Paid amount* Disposal date shares, pcs outstanding

UAB „Eurakras“ 2019-03-28 159,549 18,735 18,735 - UAB „Vėjo vatas“ 2019-03-28 100,000 6,132 6,132 - UAB „Vėjo gūsis“ 2019-03-28 257,000 12,919 12,919 - UAB „VVP Investment“* 2019-03-28 8,640 1,962 1,962 -

Total: 39,748 39,748 - *Company’s liability for unpaid shares of VVP Investment was transferred to UAB „Ignitis renewables“ as at 28 March 2019.

Consolidated and Company’s condensed financial information for the 9 month period of 2019 19

NOTES TO THE CONDENSED INTERIM FINANCIAL INFORMATION All amounts in thousands of euro unless otherwise stated

As at 30 September 2019 the Company‘s investments in subsidiaries comprised:

Contributions against Company’s Group's effective At 30 September 2019 Acquisition cost Impairment Carrying amount losses ownership interest, % ownership interest, % Subsidiaries: AB „Energijos skirstymo operatorius“ 710,921 - - 710,921 94.98 94.98 AB „Ignitis gamyba“ 307,997 - - 307,997 96.82 96.82 UAB „NT Valdos“ 8,823 (8,823) - - 100.00 100.00 UAB „Vilniaus kogeneracinė jėgainė“ 52,300 - - 52,300 100.00 100.00 UAB „Kauno kogeneracinė jėgainė“ 20,400 - - 20,400 51.00 51.00 UAB „Ignitis“ 47,136 (4,010) - 43,126 100.00 100.00 Tuuleenergia OÜ 6,659 - - 6,659 100.00 100.00 UAB „Ignitis grupės paslaugų centras“ 3,479 - - 3,479 50.00 97.94 UAB „Elektroninių mokėjimų agentūra“ 1,428 - - 1,428 100.00 100.00 UAB „Verslo aptarnavimo centras“ 298 - - 298 51.00 98.41 UAB „Energetikos paslaugų ir rangos organizacija“ 10,637 (22,710) 12,073 - 100.00 100.00 Ignitis paramos fondas 3 - - 3 100.00 100.00 UAB „Gamybos optimizavimas“ 350 - - 350 100.00 100.00 UAB „Ignitis renewables“ 44,700 - - 44,700 100.00 100.00

1,215,131 (35,543) 12,073 1,191,661

As at 31 December 2018 the Company‘s investments in subsidiaries comprised:

Contributions against Company’s Group's effective At 31 December 2018 Acquisition cost Impairment Carrying amount losses ownership interest, % ownership interest, % Subsidiaries: AB „Energijos skirstymo operatorius“ 710,921 - - 710,921 94.98 94.98 AB „Ignitis gamyba“ 307,997 - - 307,997 96.82 96.82 UAB „NT Valdos“ 45,209 (9,036) - 36,173 100.00 100.00 UAB „Energijos tiekimas“ 26,126 - - 26,126 100.00 100.00 UAB „Vilniaus kogeneracinė jėgainė“ 36,600 - - 36,600 100.00 100.00 UAB „Kauno kogeneracinė jėgainė“ 20,400 - - 20,400 51.00 51.00 UAB „LITGAS“ 12,641 (4,010) - 8,631 100.00 100.00 UAB „Ignitis“ 8,369 - - 8,369 100.00 100.00 Tuuleenergia OÜ 6,659 - - 6,659 100.00 100.00 UAB „Ignitis grupės paslaugų centras“ 3,219 - - 3,219 50.00 97.91 UAB „Elektroninių mokėjimų agentūra“ 1,428 - - 1,428 100.00 100.00 UAB „Verslo aptarnavimo centras“ 298 - - 298 51.00 98.41 UAB „Energetikos paslaugų ir rangos organizacija“ 10,637 (22,710) 12,073 - 100.00 100.00 Ignitis paramos fondas 3 - - 3 100.00 100.00 UAB „Gamybos optimizavimas“ 350 - - 350 100.00 100.00 UAB „Vėjo vatas“ 12,919 - - 12,919 100.00 100.00 UAB „Vėjo gūsis“ 6,132 - - 6,132 100.00 100.00 UAB „VVP investment“ 1,962 - - 1,962 100.00 100.00 UAB „Eurakras“ 18,734 - - 18,734 100.00 100.00

1,230,604 (35,756) 12,073 1,206,921

Consolidated and Company’s condensed financial information for the 9 month period of 2019 20

NOTES TO THE CONDENSED INTERIM FINANCIAL INFORMATION All amounts in thousands of euro unless otherwise stated

7 Cash and cash equivalents

Group Company

At 30 Sep 2019 At 31 Dec 2018 At 30 Sep 2019 At 31 Dec 2018 Cash at bank 136,504 127,835 1,222 231 136,504 127,835 1,222 231

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

Group Company

At 30 Sep 2019 At 31 Dec 2018 At 30 Sep 2019 At 31 Dec 2018

Cash and cash equivalents 136,504 127,835 1,222 231 Bank overdraft (204,913) (42,260) (204,913) (42,260) Carrying amount (68,409) 85,575 (203,691) (42,029)

8 Non-current assets held for sale

The Group‘s and the Company‘s non-current assets held for sale as at 30 September 2019 and 31 December 2018 consist of as follows:

Group Company

At 30 Sep 2019 At 31 Dec 2018 At 30 Sep 2019 At 31 Dec 2018 Property, plant and equipment and investment property 6,994 35,589 77 77 Disposal group 39,206 30,117 - - Investments in subsidiaries - - 7,064 7,064

43,914 65,706 7,141 7,141

Within the line item of the disposal group the Company recognized investment of subsidiary UAB “Transporto Valdymas” of EUR 2,359 thousand and investment of subsidiary UAB “Duomenų Logistikos Centras of EUR 4,705 thousand.

The Group’s line item of the disposal group also includes assets of subsidiaries UAB “Transporto Valdymas” and UAB “Duomenų Logistikos Centras” amounting to EUR 39,206 thousand, which is intended to be disposed by the Group. Liabilities of EUR 5,522 thousand being disposed along with these assets were reported under the line item ‘Liabilities related to non-current assets held for sale’. Depreciation charge for the twelve-month period ended 30 September 2019 included in the Group’s line item of the disposal group amounted to EUR 3,175 thousand.

9 Share capital

As at 30 September 2019 and 31 December 2018 the Company‘s share capital comprised EUR 1,212,156,294. As at 30 September 2019 and 31 December 2018 the Company‘s share capital was divided in to 4,179,849,289 ordinary shares with par value of EUR 0.29 each.

As at 30 September 2019 and 31 December 2018 share capital was fully paid.

10 Borrowings

Current borrowings of the Group and the Company as at 30 September 2019 and 31 December 2018 consist of as follows:

Group Company 30 Sep 2019 31 Dec 2018 30 Sep 2019 31 Dec 2018

Non-current Bank borrowings 187,776 146,411 55,695 82,246 Bonds issued 589,848 588,999 589,848 588,999 Accrued interest 34 - - - Current Current portion of non-current borrowings 45,453 61,819 40,901 57,401 Bank overdrafts 204,913 42,260 204,913 42,260 Accrued interest 2,524 5,467 2,524 5,461

Total borrowings 1,030,548 844,956 893,881 776,367

All borrowings of the Group bear both fixed and variable interest rates. On 29 January 2019, the Company signed the new credit agreement with AB “SEB bankas”, based on which the Company is able to borrow EUR 100 million. The repayment term is in 2021.

On 16 September 2019 the Company signed a new credit agreement with AB “SEB bankas”, which provides an opportunity to borrow EUR 70 million with a maturity date of 16 September 2021.

As at 30 September 2019 Company‘s and Group‘s used bank overdraft part comprise EUR 204,913 thousand.

Consolidated and Company’s condensed financial information for the 9 month period of 2019 21

NOTES TO THE CONDENSED INTERIM FINANCIAL INFORMATION All amounts in thousands of euro unless otherwise stated

11 Lease liabilities

The Group's and the Company's future lease payments under non-cancellable leases at 30 September 2019 and 31 December 2018:

Group Company

30 Sep 2019 31 Dec 2018 30 Sep 2019 31 Dec 2018 Minimum payments Within one year 7,856 5,421 257 - From one to five years 18,601 5,011 576 - After five years 16,648 9,477 - -

Total 43,105 19,909 833 - Future finance costs Within one year (344) (201) (3) - From one to five years (951) (129) (3) - After five years (10,490) (25) - -

Total (11,785) (355) (6) - Carrying amount 31,320 19,554 827 -

12 Provisions

Provisions of the Group and the Company as at 30 September 2019 and 31 December 2018 consist of as follows:

Group Company 31 Dec 2018 30 Sep 2019 30 Sep 2019 31 Dec 2018 (restated*)

Non-current 33,240 35,446 - - Current 5,444 5,553 806 806 Carrying amount 38,684 40,999 806 806

* Some of the amounts shown do not match the 2018 figures. and 2017 financial statements and reflects the adjustments disclosed in Note 3.

Movement on Group’s account of provisions is presented below:

Emission Provisions for Other allowance employee provisions Total liabilities benefits (restated*)

At 31 December 2017 529 3,862 5,034 9,425

Increase during the period 894 1,222 39,873 41,989

Utilized during the period (908) (2,270) (5,777) (8,955)

Revaluation of utilized emission allowances 380 - - 380

Result of change in actuarial assumptions - 54 (1,894) (1,840)

At 31 December 2018 895 2,868 37,236 40,999

Increase during the period 227 318 1,247 1,792 Utilized during the period (987) (969) (7,132) (9,088)

Revaluation of utilized emission allowances 93 - - 93 Result of change in actuarial assumptions - (32) - (32)

At 30 September 2018 228 2,185 31,351 33,764

*Certain amounts presented above do not correspond to the 2017 and 2018 Financial Statements but reflect corrections, disclosed in Note 3.

Provisions for employee benefits include a statutory retirement benefit payable to the Group’s employees. The balance of provisions at the reporting date is reviewed with reference to actuarial calculations to ensure that estimation of retirement benefit liabilities is as much accurate as possible. The liabilities are recognized at discounted value using the market interest rate.

As at 30 September 2019 and 31 December 2018 the Company’s provisions consist of the guarantee issued to the subsidiary for the loans granted to Energetikos Paslaugų ir Rangos Organizacija, UAB under cash pool agreements. During period from 1 January to 30 September 2019 there were no movement in the Company’s provision account.

Consolidated and Company’s condensed financial information for the 9 month period of 2019 22

NOTES TO THE CONDENSED INTERIM FINANCIAL INFORMATION All amounts in thousands of euro unless otherwise stated

13 Revenue from contracts with customers

The Group‘s sales revenue from contracts with customers during period from 1 January to 30 September of 2019 consist of as follows:

Other segments Strategic Green Commercial 2019 I-III Q Distribution Parent Other Total generation generation organization Company segments

Revenue from sale of electricity and related services 226,025 106,136 2,909 583,561 - 5 918,636 Revenue from sale of gas and related services 9,080 - - 184,960 - - 194,040 Other sales revenue 13,281 2,864 - 14,680 - 3,954 34,779

Total 248,386 109,000 2,909 783,201 - 3,959 1,147,455

The Group‘s sales revenue from contracts with customers during period from 1 January to 30 September of 2019 consist of as follows:

Strategic Other segments Green Commercial Total 2018 I- III Q Distribution generation Parent Other generation organization (restated*) Company segments Revenue from sale of electricity and related services 395,676 100,202 2,471 132,030 - - 630,379 Revenue from sale of gas and related services 10,113 - - 203,849 - - 213,962 Other sales revenue 11,011 2,650 - 5,549 - 4,405 23,615

Total 416,800 102,852 2,471 341,428 - 4,405 867,956

The Company’s sales revenue from contracts with customer during period from 1 January to 30 September of 2019 and 2018 comprise revenue from advisory and management services provided to subsidiaries (Note 16).

14 Other expenses

The Group’s and the Company’s other expenses during period from 1 January to 30 September of 2019 and 2018 comprise:

Group Company 2019 I-III Q 2018 I-III Q 2019 I-III Q 2018 I-III Q

Taxes 4,711 4,348 - 213 Write-offs of property, plant and equipment 3,455 3,501 - - Customer service 3,317 3,104 - - Utilities 1,875 1,867 77 752 Telecommunication and IT services 2,910 2,909 265 258 Motor vehicles 2,967 1,899 92 114 Write-offs of long term and short-term receivables 1,148 1,284 - - Expenses of low-value inventory items 1,287 749 - - Consulting services 997 908 362 504 Personnel development 534 728 95 141 Marketing 897 753 407 182 Business trips 438 345 32 49 Rent 273 1,048 - 143 Write-offs of inventories 63 - - - Inventory write-down/(reversal) 51 - - - Business support services - - 569 212 Audit costs 4 - - - Impairment of inventories (reversal) (4) (279) - - Revaluation and provisions of emission allowances 604 (10,784) - - Provision for guarantees for the fulfilment of obligations of the subsidiaries - - - 2,499 Other expenses 3,735 3,589 118 132

Carrying amount 29,262 15,969 2,017 5,199

15 Dividends

Group‘s companies declared dividends during the period from 1 January to 30 September 2019 (Note 16):

The Dividends Amount of Dividends allocated Announcement Dividends distributed Company‘s Dividends declared by per share, dividends to the non – Date for the period dividend Eur declared controlling interest revenue

5 Mar 2019 UAB “Duomenų logistikos centras“ the year of 2018 0.029 405 324 81 30 Apr 2019 UAB “Ignitis grupės paslaugų centras“ the year of 2018 0.015 327 164 4 30 Apr 2019 UAB “Verslo aptarnavimo centras“ the year of 2018 0.21 123 63 1 30 Apr 2019 Tuuleenergia OÜ the year of 2018 1.80 899 899 - 29 Apr 2019 UAB “EURAKRAS“ the year of 2018 11.72 1,870 - - 12 Apr 2019 AB “Ignitis gamyba“ the 2nd half-year of 2018 0.01 6,480 6,274 206 nd 27 Sep 2019 AB “Ignitis gamyba“ the 1 half-year of 2019 0,0290 18,792 18,194 598

28,896 25,918 890

Consolidated and Company’s condensed financial information for the 9 month period of 2019 23

NOTES TO THE CONDENSED INTERIM FINANCIAL INFORMATION All amounts in thousands of euro unless otherwise stated

Group‘s companies declared dividends during the period from 1 January to 30 September 2018 (Note 16):

The Dividends Amount of Dividends allocated Announcement Dividends distributed Company‘s Dividends declared by per share, dividends to the non – Date for the period dividend Eur declared controlling interest revenue

13 Mar 2018 UAB “EURAKRAS“ the year of 2017 10.59000 1,690 1,690 - 20 Mar 2018 UAB “Energijos tiekimas“ the year of 2017 0.17401 3,000 3,000 - 26 Mar 2018 AB “Ignitis gamyba“ the 2nd half-year of 2017 0.01400 8,891 8,602 283 30 Mar 2018 AB “Energijos skirstymo operatorius“ the 2nd half-year of 2017 0.02535 22,679 21,541 1,138 4 Apr 2018 UAB “Lietuvos dujų tiekimas“ the year of 2017 0.15837 4,571 4,571 - 5 Apr 2018 UAB “Verslo aptarnavimo centras“ the year of 2017 0.00026 268 137 3 11 April 2018 UAB “Ignitis grupės paslaugų centras“ the year of 2017 0.00666 148 74 2 17 Apr 2018 UAB “LITGAS“ the year of 2017 0.02654 1,194 1,194 - 27 Apr 2018 UAB “Duomenų logistikos centras“ the year of 2017 0.02200 306 243 62 nd 28 Sep 2018 AB “Energijos skirstymo operatorius“ the 1 half-year of 2018 0,01400 12,525 11,896 628 nd 27 Sep 2018 AB “Ignitis gamyba“ the 1 half-year of 2018 0,02300 14,904 14,430 474

70,176 67,378 2,590

The Company announced distribution of dividends during period from 1 January to 30 September of 2019 and 2018:

2019, I-III Q 2018, I-III Q Dividends per Dividends (EUR ‘000) (EUR ‘000) share per share

UAB “Ignitis grupė“ 13,000 0.0031 78,265 0.0187

16 Transactions with related parties

As at 30 September 2019 and 31 December 2018 the parent company was the Republic of Lithuania represented by Ministry of Finance. For the purpose of disclosure of related parties, the Republic of Lithuania does not include central and local government authorities. The disclosures comprise transactions and their balances with the parent company, subsidiaries (Company‘s transactions), associates and all entities controlled by or under significant influence of the state (transactions with these entities are disclosed only if they are material), and management.

The Group’s transactions with related parties during the period from 1 January to 30 September 2019 and balances arising on these transactions as at 30 September 2019 are presented below:

Amounts Finance incomes Related party Amount payable Sales Purchases receivable (expenses) UAB “EPSO-G“ 158,661 - 25 - 816 AB “Litgrid“ 10,055 14,560 55,135 95,971 - UAB “BALTPOOL“ 8,998 8,247 26,818 23,564 - UAB “TETAS“ 451 624 443 2,207 5 AB “Amber Grid“ 3,427 5,700 23,456 47,624 - UAB “LITGRID Power Link Service“ - - - - - UAB “GET Baltic“ 327 - 21,082 1,568 - Associates and other related parties of the Group 330 - 40 605 -

Total 182,249 29,131 126,999 171,539 821

The Group’s transactions with related parties during the period from 1 January to 30 September 2018 and balances arising on these transactions as at 31 December 2018 are presented below:

Amounts Finance incomes Related party Amount payable Sales Purchases receivable (expenses) EPSO-G, UAB 158,693 - 26 202 820 Litgrid, AB 7,106 15,049 142,795 96,934 - BALTPOOL, UAB 8,265 15,962 48,924 56,390 - TETAS, UAB 1,381 4,421 954 1,267 32 Amber Grid, UAB 3,730 6,019 19,862 40,417 - LITGRID Power Link Service, UAB 36 - 61 - - GET Baltic 724 12 11,243 5,961 - Associates and other related parties of the Group 279 120 286 240 -

Total 180,214 41,583 224,151 201,411 852

Consolidated and Company’s condensed financial information for the 9 month period of 2019 24

NOTES TO THE CONDENSED INTERIM FINANCIAL INFORMATION All amounts in thousands of euro unless otherwise stated

The Company’s transactions with related parties during the period from 1 January to 30 September 2019 and balances arising on these transactions as at 30 September 2019 are presented below:

Amounts Amounts Finance Finance Related parties Sales Purchases receivable payable income expenses 30 Sep 2019 30 Sep 2019 2019 I-III Q 2019 I-III Q 2019 I-III Q 2019 I-III Q

Subsidiaries AB “Energijos skirstymo operatorius“ 614,511 - 1,079 - 7,021 - AB “Ignitis gamyba“ 18,254 - 360 - - - UAB “Energetikos paslaugų ir rangos organizacija“ 1,545 - 4 - 31 - UAB “Elektroninių mokėjimų agentūra“ 1 - 14 - - - UAB “Energijos tiekimas“ - - 96 - 91 - Ignitis Latvija SIA ------Ignitis Eesti OÜ ------UAB “Duomenų logistikos centras“ - 1 5 - - - UAB “NT valdos“ 1 - 32 - 3 - UAB “Transporto valdymas“ 28,962 161 - 81 272 1 UAB “Ignitis grupės paslaugų centras“ 1,854 38 100 261 7 - UAB “Ignitis“ 99,046 - 293 - 591 - UAB “Verslo aptarnavimo centras“ 33 202 177 747 2 - UAB “Vilniaus kogeneracinė jėgainė“ 5,433 11,314 94 10 375 - UAB “EURAKRAS“ 24,538 - 10 1 530 - Tuuleenergia OÜ 19,256 - 1 - 508 - UAB “Kauno kogeneracinė jėgainė“ 144 - 158 - 150 - Ignitis Polska Sp.z o.o. ------UAB “Vėjo gūsis“ 8 - - - 57 - UAB “Vėjo vatas“ 2,740 - - - 100 - UAB “Gamybos optimizavimas“ 1 - 5 - - - UAB “VVP investment“ 409 - - - 7 - UAB “Ignitis renewables“ 44,136 - 48 - 431 - Pomerania Invall Sp.z.o.o ------AB “Energijos skirstymo operatorius“ 614,511 - 1,079 - 7,021 - AB “Ignitis gamyba“ 18,254 - 360 - - -

Total 860,872 11,716 2,476 1,100 10,176 1

The Company’s transactions with related parties during the period from 1 January to 30 September of 2018 and balances arising on these transactions as at 31 December 2018 are presented below: Amounts Amounts Finance Finance Related parties Sales Purchases receivable payable income expenses

31 Dec 2018 31 Dec 2018 2018 I-III Q 2018 I-III Q 2018 I-III Q 2018 I-III Q Subsidiaries AB “Energijos skirstymo operatorius“ 586,559 - 995 - 4,276 - AB “Ignitis gamyba“ 60 - 375 19 - - UAB “EURAKRAS“ 24,756 - 7 - 530 - UAB “Lietuvos dujų tiekimas“ 14,130 - 135 - 55 - UAB “NT valdos“ 13 - 71 184 183 - UAB “Ignitis grupės paslaugų centras“ 1,684 107 62 249 9 - UAB “Duomenų logistikos centras“ 1 - 13 - - - UAB “Energetikos paslaugų ir rangos organizacija“ 1,250 - 68 6,448 112 - Tuuleenergia OU 21,059 - 4 - 572 - UAB “Energijos tiekimas“ 36,546 - 109 149 66 - UAB “LITGAS“ 10 - 78 - 5 - UAB “Transporto valdymas“ 21,608 8 - 56 157 - UAB “Elektroninių mokėjimų agentūra“ 3 - 19 - - - UAB “Verslo aptarnavimo centras“ 29 109 115 387 1 - UAB “VAE SPB“ - - 3 - - - UAB “Vilniaus kogeneracinė jėgainė“ 29 - 77 255 9 - UAB “Energijos sprendimų centras“ - - 28 - - - UAB “Kauno kogeneracinė jėgainė“ 69 - 103 - - - UAB “Vėjo gūsis“ 29 - - - - - UAB “Vėjo vatas“ 2,693 - - - - - Other related parties UAB “EPSO-G“ 158,658 - - - 820 -

Total 869,186 224 2,262 7,747 6,795 -

Company’s dividend income from the subsidiaries during period from 1 January to 30 September of 2019 and 2018 is disclosed in the Note 15. Management compensation:

Group Company 2019 I-III Q 2018 I-III Q 2019 I-III Q 2018 I-III Q

Salaries and other short-term benefits 3,465 2,788 855 624 Whereof: Termination benefits and benefits to Board Members 348 294 88 92 Number of management staff 55 59 12 12

Management includes heads of administration and their deputies.

Consolidated and Company’s condensed financial information for the 9 month period of 2019 25

NOTES TO THE CONDENSED INTERIM FINANCIAL INFORMATION All amounts in thousands of euro unless otherwise stated

17 Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Board of directors that makes strategic decisions.

In management’s opinion, the Group has four operating segments: – Distribution (carried out by AB “Energijos Skirstymo Operatorius”) – Strategic generation (carried out by UAB “Ignitis Gamyba”); – Green generation (carried out by UAB “Vilniaus Kogeneracinė Jėgainė“, UAB“ Kauno Kogeneracinė Jėgainė“, UAB “Eurakras”, Tuuleenergia OU, UAB “Vėjo Gūsis”, UAB “Vėjo Vatas”, UAB “VVP Investment”, UAB “Ignitis Renewables”, Pomerania Invall Sp.z.o.o) – Commercial organization (carried out by UAB “Ignitis”, UAB “Energijos Tiekimas” (until 31 May 2019), Ignitis Eesti OÜ, Ignitis Latvija SIA, Ignitis Polska Sp.z o.o).

The following services and entities comprise the other segments: – support services (UAB “NT Valdos”, UAB “Ignitis Grupės Paslaugų Centras”, UAB “Verslo Aptarnavimo Centras” and UAB “Transporto Valdymas”); – non-core activities (UAB “Energetikos Paslaugų ir Rangos Organizacija”, UAB “Duomenų Logistikos Centras”); – service entities (UAB “Elektroninių Mokėjimų Agentūra”); – as well as parent company UAB “Ignitis grupė”, which does not constitute a separate operating segment, however it is disclosed separately, as its net profit exceeds 10% of profit of all profit generating segments. The Group’s support service entities and special purpose entities are aggregated to a single segment as none of them individually meet recognition criteria of an operating segment.

The Group has single geographical segment – the Republic of Lithuania, electricity sales in Latvia and Estonia are not significant for the Group. The chief operating decision-maker monitors the results with reference to the financial reports that have been prepared using the same accounting policies as those used for the preparation of the financial statements in accordance with IFRS, i.e. information on profit or loss, including the reported amounts of revenue and expenses. The primary performance measure is adjusted EBIDTA, which is calculated based on data presented in the financial statements prepared in accordance with IFRS as adjusted for selected items which are not recognized under IFRS. The Group’s Board does not analyze assets and liabilities of the segments.

Consolidated and Company’s condensed financial information for the 9 month period of 2019 26

NOTES TO THE CONDENSED INTERIM FINANCIAL INFORMATION All amounts in thousands of euro unless otherwise stated

Group information about operating segments during period from 1 January to 30 September of 2019 is provided below:

Other segments Elimination of intercompany 2019 Strategic Green Commercial General Management’s Distribution Parent Other transactions and Total I-III Q generation generation organization adjustments adjustments Company segments consolidation eliminations

Sales revenue from external customers 340,899 109,838 2,908 722,485 26 7,331 - 1,183,487 (21,643) 1,161,844 Sales revenue from contracts with customers 340,032 102,959 2,909 729,015 - 3,459 - 1,178,374 (30,919) 1,147,455 Other income 867 6,879 (1) (6,530) 26 3,872 - 5,113 9,276 14,389 - from which is dividend income ------Inter-segment revenue 66,444 (9,581) 11,586 21,793 28,348 26,728 (145,318) - - - Sales revenue from contracts with customers 66,110 (9,658) 9,714 20,855 2,430 10,644 (100,095) - - - Other income 334 77 1,872 938 25,918 16,084 (45,223) - - - - from which is dividend income - - 1,870 12 25,918 4 (27,804) - - - Total revenue 407,343 100,257 14,494 744,278 28,374 34,059 (145,318) 1,183,487 (21,643) 1,161,844

Purchases of electricity, gas for trade, and related services, gas and heavy fuel oil (197,833) (42,424) (83) (730,021) - (485) 84,971 (885,875) - (885,875) Wages and salaries and related expenses (32,348) (6,298) (1,205) (3,485) (4,079) (14,393) - (61,808) - (61,808) Repair and maintenance expenses (16,463) (3,774) (1,243) (1) - (662) 76 (22,067) - (22,067) Other expenses (25,457) (4,827) (1,685) (6,694) (2,017) (9,726) 30,188 (20,218) (4,248) (24,466) Adjusted EBITDA* 135,242 42,934 8,408 4,065 (3,640) 8,789 (2,279) 193,519 (25,891) 167,628 from which: Depreciation and amortization (58,422) (13,706) (4,514) (1,017) (201) (5,762) 1,307 (82,315) - (82,315) Impairment and write-offs of property, plant and equipment (3,467) (285) - - - 3 (441) (4,190) - (4,190) Impairment and write-offs of current and non-current amounts receivables, loans, goods and others (375) 1,052 - (5,069) 213 144 (213) (4,248) 4,248 - Revaluation of emission allowances - (604) - - - - - (604) - (604) Operating profit (loss) 72,978 29,391 5,764 (2,009) 22,290 3,178 (29,430) 102,162 (21,643) 80,519

Finance income 19 222 23 433 11,025 89 (10,512) 1,299 - 1,299 Finance costs (6,640) (189) (1,798) (1,145) (12,975) (401) 9,278 (13,870) - (13,870) Profit (loss) before tax 66,357 29,424 3,989 (2,721) 20,340 2,866 (30,664) 89,591 (21,643) 67,948

Income tax expense (3,911) (7,097) (769) 624 527 (773) (10,097) (21,496) 11,226 (10,270)

Net profit (loss) 62,446 22,327 3,220 (2,097) 20,867 2,093 (40,761) 68,095 (10,417) 57,678

Property, plant and equipment, intangible and right-of- use asset 1,565,277 513,844 321,225 43,747 2,790 24,813 (42,585) 2,429,111 - 2,429,111 Investments 140,977 509 153,458 2,088 36 14,661 - 311,671 - 311,671 Net debt 660,760 (48,181) 227,240 109,071 893,486 27,585 (944,597) 925,364 - 925,364

Adjusted EBITDA* 135,242 42,934 8,408 4,065 (3,640) 8,789 (2,279) 193,519 Management adjustments (20,857) 15,317 - (16,103) - - - (21,643) Total EBITDA adjustments (20,857) 15,317 - (16,103) - - - (21,643) EBITDA** 114,385 58,251 8,408 (12,038) (3,640) 8,789 (2,279) 171,876

Consolidated and Company’s condensed financial information for the 9 month period of 2019 27

NOTES TO THE CONDENSED INTERIM FINANCIAL INFORMATION All amounts in thousands of euro unless otherwise stated

Group information about operating segments during period from 1 January to 30 September of 2018 is provided below:

Other segments Elimination of intercompany 2018 Strategic Green Commercial General Management’s Distribution Parent Other transactions and Total I-III Q generation generation organization adjustments adjustments Company segments consolidation eliminations

Sales revenue from external customers 379,479 99,891 2,474 450,291 694 13,668 - 946,497 (45,704) 900,793 Sales revenue from contracts with customers 376,894 98,183 2,471 431,707 - 4,405 - 913,660 (45,704) 867,956 Other income 2,585 1,708 3 18,584 694 9,263 - 32,837 - 32,837 - from which is dividend income ------Inter-segment revenue 36,196 (3,411) 3,511 51,865 69,625 41,838 (199,624) - - - Sales revenue from contracts with customers 35,276 (3,504) 3,511 47,825 2,247 23,887 (109,242) - - - Other income 920 93 - 4,040 67,378 17,951 (90,382) - - - - from which is dividend income - - - 20 67,378 10 (67,408) - - - Total revenue 415,675 96,480 5,985 502,156 70,319 55,506 (199,624) 946,497 (45,704) 900,793

Purchases of electricity, gas for trade, and related services, gas and heavy fuel oil (228,852) (45,292) (72) (486,384) - (10,311) 93,299 (677,612) - (677,612) Wages and salaries and related expenses (31,370) (6,269) (318) (2,483) (3,707) (17,960) 2,774 (59,333) - (59,333) Repair and maintenance expenses (10,575) (2,284) (664) - - (1,462) 873 (14,112) - (14,112) Other expenses (23,472) (4,771) (613) (9,174) (5,198) (15,775) 37,289 (21,714) (1,197) (22,911) Adjusted EBITDA* 121,405 37,864 4,318 4,096 (5,964) 9,988 2,019 173,726 (46,901) 126,825 from which: Depreciation and amortization (41,559) (13,973) (2,202) (840) (5) (4,539) (982) (64,100) - (64,100) Impairment and write-offs of property, plant and equipment (3,280) 2 - (6) - (2,444) - (5,728) - (5,728) Impairment and write-offs of current and non-current amounts receivables, loans, goods and others (334) (494) - (194) (1,570) (82) 1,477 (1,197) 1,197 - Revaluation of emission allowances - 10,784 - - - - - 10,784 - 10,784 Operating profit (loss) 76,232 34,183 2,116 3,076 59,839 2,933 (64,894) 113,485 (45,704) 67,781

Finance income 64 91 5 244 6,820 37 (6,122) 1,139 - 1,139 Finance costs (4,317) (407) (1,117) (612) (7,665) (687) 6,101 (8,704) - (8,704) Revaluation of derivative financial instruments - - - - (572) - - (572) - (572) Profit (loss) before tax 71,979 33,867 1,004 2,708 58,422 2,283 (64,915) 105,348 (45,704) 59,644

Income tax expense (706) (8,952) 81 (457) (592) (1,072) 312 (11,386) (791) (12,177)

Net profit (loss) 71,273 24,915 1,085 2,251 57,830 1,211 (64,603) 93,962 (46,495) 47,467

Property, plant and equipment, intangible and right-of- use asset 1,324,770 525,686 121,937 17,715 2,293 22,062 (12,828) 2,001,635 - 2,001,635 Investments 191,580 3,837 52,020 330 1 4,448 - 252,216 - 252,216 Net debt 523,582 (39,369) 22,479 31,066 710,977 23,634 (673,211) 599,158 - 599,158

Adjusted EBITDA* 121,405 37,864 4,318 4,096 (5,964) 9,988 2,019 173,726 Management adjustments (33,631) 4,669 - (16,741) - - - (45,704) Total EBITDA adjustments (33,631) 4,669 - (16,741) - - - (45,704) EBITDA** 87,774 42,533 4,318 (12,645) (5,964) 9,988 2,019 128,022

Consolidated and Company’s condensed financial information for the 9 month period of 2019 28

NOTES TO THE CONDENSED INTERIM FINANCIAL INFORMATION All amounts in thousands of euro unless otherwise stated

Adjustments made by management and adjusted EBITDA

Adjustments made by management in calculating the adjusted EBITDA are presented below:

Segment / adjustment made by management 2019 I-III Q 2018 I-III Q Distribution Recalculation of regulated activity revenue of AB „Energijos Skirstymo Operatorius” 23,471 60,810 Compensation received for the previous periods (2,613) - Strategic generation Recalculation of regulated activity revenue of AB „Ignitis gamyba“ (6,041) (4,669) Received compensation related to carried out projects in previous periods (9,276) - Commercial organization Recalculation of regulated activity revenue of UAB „LITGAS“ - (2,469) Recalculation of regulated activity revenue of UAB „Ignitis“ 6,729 1,028 Revaluation of derivative financial instruments of UAB „Ignitis“ and UAB „Energijos tiekimas“ (before 2019-05-31 d.) 9,374 (8,997) 21,644 45,703

18 Business combinations

In accordance with Company’s Board of Directors and Company’s subsidiary UAB “Ignitis Renewables” (hereinafter – Renewables) decisions, Renewables entered into share purchase agreement for 100% shares and shareholder’s claim rights in Pomerania Invall Sp. z o. o. on 2 May 2019. Thereafter, the Company acquired indirect 100% shareholding in Pomerania Invall Sp. z o. o. because Company’s subsidiary Renewables owns 100% of shares in Pomerania Invall Sp. z o. o., and the Company owns 100% of shares in Renewables. As at 30 September 2019, the ownership property right was fully owned by the Company’s subsidiary Renewables. The total amount of the investment to Pomerania Invall Sp. z o. o. is EUR 20,737 thousand. The investment was fully paid as at 30 September 2019.

The Group applied the purchase method to account for these business combinations according to the provisions of IFRS 3. Under the latter method, the acquisition cost is measured as the sum of the fair values, at the date of exchange, of assets given, liabilities incurred and equity instruments issued in exchange for control of the business being acquired.

During business combination the Group established that the difference between the acquisition cost of the businesses and the fair value of the net assets acquired represents goodwill and/or one and/or several items of assets have probably been acquired.

The Group’s management had not finalised the assessment of the initial accounting for business combinations as at 30 September 2019 as the period for the assessment of the business combination has not expired yet which will end when the necessary information about facts and circumstances that existed at the acquisition date will be obtained and which cannot be longer than one year after the acquisition date.

As at 30 September 2019, temporary values of assets and liabilities, the assessment of which was not completed, included as follows: fair value of net assets and value of assets and goodwill identified on business combination. During the assessment period the Group will recognize adjustments to the temporary values as if the accounting for business combination was completed at the acquisition date. Accordingly, the Group will review, if appropriate, comparative figures presented in the financial statements and, if appropriate, will perform any changes in the impact of depreciation, amortization or other income that were recognized in nearing the completion of the initial accounting.

On business combination, assets and liabilities of Pomerania Invall Sp. z o. o. were identified with the following fair values at the date of acquisition:

Pomerania Invall Sp.z.o.o

Property, plant and equipment 5,672 Other non-current amounts receivable 1,461 Amount receivable within one year 84 Cash and cash equivalents 6

Borrowings, non-current liabilities (7,202) Current liabilities (81)

Net assets (60)

Goodwill arising on business combination 20,530 Purchase consideration paid 20,470 Expenses related to purchase 292

Net cash outflow on acquisition of subsidiaries: Cash paid to sellers of shares (20,470) Cash paid for expenses related to purchase (292) Cash paid for loans of the sellers of shares (7,209) Cash and cash equivalents at acquired company 6 Net cash flow (27,965)

Consolidated and Company’s condensed financial information for the 9 month period of 2019 29

NOTES TO THE CONDENSED INTERIM FINANCIAL INFORMATION All amounts in thousands of euro unless otherwise stated

19 Events after the reporting period

On 3 of October 2019 the National Energy Regulatory Council has approved the Company's subsidiary AB “Energijos skirstymo operatorius“ 2019 investment projects in the natural gas sector submitted for a commonly agreed list of investments, with a total value of up to EUR 7.200 thousand.

On 17 October 2019 the National Energy Regulatory Council established electricity distribution price caps in respect of services provided by subsidiary AB “Energijos skirstymo operatorius“ for 2020. Electricity distribution price cap in medium-voltage networks is 1,076 EUR ct/kWh (currently 0,862 EUR ct/kWh), in low-voltage networks 2,092 EUR ct/kWh (currently 1,871 EUR ct/kWh).

On 21 October 2019 The Company approved the initiation of reorganization of subsidiaries UAB “Verslo aptarnavimo centras” (hereinafter – VAC) and UAB “Ignitis grupės paslaugų centras” (hereinafter – GSC) by merging VAC to GSC and obligated the boards of both companies to draw up their reorganization terms. The reorganization of the companies is scheduled to be completed by the end of 2019.

On 25 October 2019 The Company terminated a conditional share-sale purchase agreement by mutual consent for 100 percent of shares and the shareholder claim rights of 50 mW wind farm project company in Poland. On 31 December 2018, the Company accounted for a partial payment of EUR 671 thousand for newly acquired shares and the transaction fee of EUR 144 thousand paid under the Polish civil law in the statement of financial position within prepayments for non-current assets. Agreement terminated due to project did not win a guaranteed tariff, therefore it didn’t fulfil one of the main conditions of agreement and the Company terminated a conditional share-sale purchase agreement by mutual consent.

On 11 November 2019 the Company decided to initiate the process of delisting of the shares of the subsidiaries AB “Ignitis Gamyba” and AB “Energijos Skirstymo Operatorius” from the regulated market. On 11 November 2019 the Ministry of Finance of the Republic of Lithuania has approved the said decision.

On 11 November 2019 the Company announced that it plans to initiate voluntary takeover bids of its subsidiaries AB “Ignitis Gamyba” and AB “Energijos Skirstymo Operatorius”, followed by mandatory redemption of minority shares. Decisions on the official proposals will be deemed adopted if they are approved at the general shareholders' meetings of AB “Ignitis Gamyba” and AB “Energijos Skirstymo Operatorius” on 4 December. The Company currently owns 96.82% of AB “Ignitis Gamyba” and 94.98% of AB “Energijos Skirstymo Operatorius” shares.

On 12 November 2019 the Company announced that in order to inform in details small investors about their intention to delist the shares of the Group companies AB “Energijos Skirstymo Operatorius” and AB “Ignitis Gamyba” on Tuesday, November 12, trading in the securities of these companies was suspended for one day. The decision was made to give minority shareholders time to properly evaluate the plans of the Company to initiate voluntary takeover bids of the subsidiaries that would result in minority shares being redeemed.

On 13 November 2019 the Company has received a written notice from the Ministry of Finance of the Republic of Lithuania, the authority implementing the rights of its sole shareholder, informing that the Ministry of Finance is initiating the formation of a working group to assess the alternatives of long-term financing of the Company. The Working group will be composed of high-level representatives of interested institutions, therefore the Ministry of Finance addresses the Company and the Offices of the President and Government of the Republic of Lithuania, the Ministry of Energy also the Ministry of Economy and Innovation of the Republic of Lithuania to delegate their representatives to the Working Group.

On 14 November 2019 NERC issued a ruling under No. O3E-715 (“Dėl elektros energijos kainos, rezervinės galios ir izoliuoto elektros energetikos sistemos darbo užtikrinimo paslaugų kainų nustatymo metodikos patvirtinimo“), under which was determined that companies which do not continue to provide reserve power services must return the difference between forecasted and actual costs incurred to TSO, if the company’s actual costs were lower than the revenue obtained from the TSO. If the company’s actual costs were higher compared to the revenue obtained from the TSO, the difference must be returned by the TSO to the company. The management of the Group is assessing the effect of this legal act change to the recognition of AB “Ignitis gamyba” operating income from the regulated services and liabilities.

*********

Consolidated and Company’s condensed financial information for the 9 month period of 2019 30

IGNITIS GROUP 2019 INTERIM REPORT

CONSOLIDATED INTERIM REPORT OF THE COMPANY AND THE GROUP 01 January 2019 – 30 September 2019

www.ignitisgrupe.lt

UAB „Ignitis grupė“ Žvejų str. 14, 09310 Vilnius, Lietuva E-mail: [email protected] Company code 301844044

CONTENT CONSOLIDATED INTERIM REPORT OF THE COMPANY AND THE GROUP FOR THE I-IIIQ 2019

Foreword by the chairman of the Board 5

About the Company and the Group 6

Most significant events 10

Analysis of the Group’s financial and operating results 14

Review of the Company’s and the Group’s activities 23

Corporate governance 29

Key information about the Company and the Group 40

Information on securities of the Group companies 42

Consolidated interim report of the Company and the Group for the 9 months of 2019 2

KEY FINANCIAL INDICATORS OF THE IGNITIS GROUP

Q1-Q3 2019 Q1-Q3 2018 ∆, million ∆, % Revenue EUR million 1 161,8 900,8 261,1 29,0% Cost of goods sold EUR million 885,9 677,6 208,3 30,7% Operating expenses EUR million 108,2 95,2 13,0 13,7% EBITDA EUR million 167,6 126,8 40,8 32,2% EBITDA margin % 14,4% 14,1% - - Adjusted EBITDA EUR million 193,5 173,7 19,8 11,4% Adjusted EBITDA margin % 16,7% 19,3% - - FFO EUR million 150,9 112,4 38,4 34,2% EBIT EUR million 80,5 67,8 12,7 18,8% Net profit EUR million 57,7 47,5 10,2 21,5% Net profit margin % 5,0% 5,3% - - Adjusted net profit EUR million 68,1 94,0 -25,9 -27,6% Adjusted net profit margin % 5,9% 10,4% - - Investment EUR million 311,7 252,2 59,5 23,6% At 30 Sep 2019 At 31 Dec 2018 ∆, million ∆, % Total assets EUR million 3 070,1 2 854,1 216,0 7,6% Equity EUR million 1 366,1 1 321,7 44,4 3,4% Borrowings EUR million 1 061,9 864,5 197,4 22,8% Net debt EUR million 925,4 736,0 189,3 25,7% Return on equity (ROE) 12-months % 0,7% -0,1% - - Adjusted return on equity (Adjusted ROE) 12-months % 6,9% 8,8% - - Return on assets (ROA) 12-months % 0,3% -0,1% - - Equity ratio % 44,5% 46,3% - - Net debt/EBITDA 12-months times 4,62 4,62 - - Net debt/Adjusted EBITDA 12-months times 3,74 3,24 - - Net debt/Equity % 67,7% 55,7% - - FFO 12 months/Net debt % 19,5% 19,6% - - Assets turnover ratio times 0,50 0,44 - - Current ratio times 0,86 1,16 - - Working capital EUR million 13,4 -17,3 30,7 177,6% Working capital/Revenue 12-months % 0,9% -1,5% - -

Consolidated interim report of the Company and the Group for the 9 months of 2019 3

The increase in net profit was due to smaller difference between the Revenue growth was mainly driven by increased volumes of price of electricity as set by the regulator and included in the tariff electricity wholesale trading in Poland. and the actual market price. This difference had a significant impact ↑29% in 2018. Adjusted ROE (12 months) amounted to 6.9%. ↑22% 8,7%.

1.162 95,6 94,0 89,5 91,3

901 72,5 77,1 68,1 762 804 783 67,4 57,7 47,5

Q1-Q3 2015 Q1-Q3 2016 Q1-Q3 2017 Q1-Q3 2018 Q1-Q3 2019 Q1-Q3 2015 Q1-Q3 2016 Q1-Q3 2017 Q1-Q3 2018 Q1-Q3 2019

Adjusted net profit Net profit

Adjusted EBITDA increased by 11%. The growth was determined ↑11% As construction of co-generation power plants gained by the result of growing investments in network development and momentum as well as investing in wind power plant projects - ↑24% increased portfolio of the Group’s wind power plants. total investments grew by 24%. Operating expenses grew by 14% due to higher network maintenance expenses. 312 193,5 173,7 252 166,0 158,0 166,1

178 152 114 108 99 99 94 95

Q1-Q3 2015 Q1-Q3 2016 Q1-Q3 2017 Q1-Q3 2018 Q1-Q3 2019 Q1-Q3 2015 Q1-Q3 2016 Q1-Q3 2017 Q1-Q3 2018 Q1-Q3 2019

Investments Operating expenses Adjusted EBITDA and adjusted net profit for 2015 are presented before the elimination of the effect of recalculation of regulated revenue of ESO and Ignitis because such data is collected from the beginning of 2016. Financial data is presented in million euros.

Consolidated interim report of the Company and the Group for the 9 months of 2019 4

FOREWORD BY THE CHAIRMAN OF THE BOARD

Dear Customers, Partners, Employees and Shareholders

It gives me great pleasure to provide the results of Ignitis Group of the third quarter of 2019. The report contains the key events for your reference showing to what extent the target objectives of the Group are being implemented.

One of the biggest attention-gaining events of the third quarter was undoubtedly change of the name and rebranding. And since September, we have become an international energy company Ignitis Group. Other principal undertakings within a group also underwent a name change. There are three main reasons for this change. The first is to facilitate more efficient use of funds and consolidate more than 14 group-owned brands and names into one single brand that is easy to understand both on national and international scale. The second reason behind this change is convenience to customers by offering services from a single source, Ignitis, rather than navigating through different companies. And the third reason is a strive to break the image of monopoly and to flourish in competition with market.

Not only have we changed the name, we continue to set ourselves ambitious goals to increase foreign revenue, to expand services overseas and to develop the energy-smart world. We are ready to offer our customers new services, including new energy efficiency and heating solutions, to help raising the environmental awareness.

We are proud to show our concern for the environment not only in words but also in deed: 472 million euros from 600 million euros spent in recent years for green bonds have already been invested in green energy projects. In addition to the economic advantage that the Group's investments in green energy projects will offer to Lithuania, there is also a positive environmental impact.

We will continue to plan investments into smart solutions, we are investing in start-ups with smart energy solutions, and into the resilience and security of the network. We are constantly striving to improve customer experience and, therefore, the approved 10-year investment plan of Energijos skirstymo operatorius includes three investment directions: a reliable and climate-resilient network, a remotely operated network and smart network.

The Group Innovation Center has started to publish open datasets. Any interested market player is free to use four datasets provided by the Energijos skirstymo operatorius which meet the requirements of publicly available data. One of our values is openness, and, therefore, we hope that open data will not only contribute to greater trust and transparency in the company, but will also encourage the development of new services and technologies.

With the aim to deliver value to Lithuania, we are committed to continuously working towards more transparent and effective outcome. We will continue to work to make Lithuanians proud of a modern, international, green energy company.

Darius Maikštėnas Chairman of the Board and the CEO Ignitis Group, UAB

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ABOUT THE GROUP AND THE COMPANY

The Ignitis Group is an international energy company and one of the largest energy groups in the Baltic region. Its’ mission is to make the world more energy smart. Group companies produce, distribute and supply energy, as well as develop smart energy solutions. Ignitis Group gives priority to green energy, aiming to become the region’s main competence center for new energy and a leader in distributed energy solutions in the Baltic Sea region and beyond.

Group companies operate in Lithuania, Latvia, Estonia, Poland and Finland. Group innovation fund invests in energy startups in the UK, Norway and France.

Ignitis Group combines long-term experience, innovations, and open up to the world 0,81 TWh electricity 7,07 TWh of electricity while maintaining energy independence. produced. distributed.

The rights and obligations of the shareholder of Ignitis Group are implemented by the Ministry of Finance of the Republic of Lithuania (hereinafter referred to as the Ministry of Finances).

Ignitis Group implements energy projects of strategic importance for Lithuania, and pursues the objectives set forth in the National Energy Strategy. The Group with more than 3,800 employees manages and operates the key energy generation capacities of Lithuania that ensure the security of energy supply, a distribution network covering the entire territory of the country, including the gas distribution network. The Group provides Over 1.6 million clients services to more than 1.6 million consumers across Lithuania, offers electricity supply 4,70 TWh of natural gas services to consumers overseas, supplies natural gas to 570 thousand consumers. distributed. are being served. During the first three quarters of 2019, 0.81 TWh of electricity was generated and 7.07 TWh distributed to consumers and 4.70 TWh of natural gas was transported via gas distribution pipelines.

The parent company of the Group – Ignitis Group (hereinafter – Ignitis Group or the Company) is responsible for transparent management and coordination of activities of the whole Group, improvement of the efficiency in order to ensure competitive services for consumers, and for socially responsible creation of long-term value for its shareholders. The Company analyses the activities of the Group, represents the Group, implements rights and obligations of the shareholder, establishes operational guidelines and rules, and coordinates activities in the areas of production, commerce, finance, law, strategy and development, human resources, risk management, audit, technology, communication and others.

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STRUCTURE OF THE GROUP

At the end of the reporting period, the Ignitis Group consisted of 24 companies: the parent Company and 23 directly and indirectly controlled companies. The main business activities of the Group are the generation of electricity and heat, electricity trading, distribution and supply, and trade in natural gas and its distribution. Activities of the Group’s companies servicing these main types of business activities comprise information technology and telecommunications (ITT), real estate, transport, repair of energy facilities, public procurement, accounting, administration of employment relationships, and other services.

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BUSINESS ENVIRONMENT

The changes in gross domestic product have the biggest impact on the electricity consumption. The gross domestic product has been growing for several years in the European Union already. With global uncertainties increasing, the growth of the gross domestic product is projected to be more moderate. According to the forecast of the European Commission published in July 2019 , the gross domestic product is forecast to grow by 1.4% in the European Union (EU) in 2019 and 1.2% in the euro area. Meanwhile, the economic growth should be 1.6 and 1.4 percent in 2020, respectively. The European Commission forecasts that the growth of the Lithuanian economy was going to reach 3.1 percent in 2019, 2.4 percent in 2020. A slightly higher growth was previously forecast in the EU, the euro area and Lithuania.

As indicated in the Lithuania’s economic outlook published by the economists of the Lithuanian banks, Lithuania’s economic prospects are considered to be positive. In their economic outlook for Lithuania published in August 2019 Swedbank analysts forecast that the growth of general domestic product is expected to reach 3.7% in 2019, and 2.0% in 2020. According to the forecasts presented by the analysts of SEB bank in June 2019 , the real Lithuanian general domestic product is going to increase by 3.2% in 2019, and by 2.4% in 2020. The projections of the Bank of Lithuania , made in September 2019, showed that the gross domestic product in Lithuania is going to grow by 2.7 percent in 2019, and by 2.6 percent in 2020.

Whereas the energy consumption is closely related to the growth of gross domestic product, the changes in economic growth rates in Lithuania and neighbouring countries may also affect the performance results of companies of the Group. Given the macroeconomic forecasts presented by economists for a year as well as the actual results of operations of ESO, we hold the view that the volume of transmitted electricity will increase at a moderate pace.

Gross Domestic Product Growth Forecasts for the European Union, Euro Zone and Lithuania in 2018–2020, % 3,5 3,7 3,5 3,6 3,5 3,7 3,5 4,0 3,1 2,4 2,5 2,4 3,0 2,0 2,0 1,9 1,6 2018 m. fact 2,0 1,2 1,4 1,4

Proc. 1,0 2019 m. 0,0 2020 m. Lithuanian GDP forecast, Lithuanian GDP forecast, Lithuanian GDP forecast, Lithuanian GDP forecast, Euro zone GDP forecast, EU28 GDP forecast, Swedbank SEB bankas Bank of Lithuania European Commission Europos Komisija European Commission

Situation on the electricity market

During the third quarter of 2019, compared to the corresponding period of 2018, electricity prices were declining overall. The average price on Nord Pool exchange decreased by 31% (from 50.50 EUR/MWh to 34.75 EUR/MWh). In Scandinavian countries the prices decreased by 30% (from 51.53 EUR/MWh to 36.27 EUR/MWh), and throughout the Baltic region the fall in prices was more moderate and amounted merely 13%. (from 56.18 EUR/MWh to 49.02 EUR/MWh).

Electricity prices in Lithuania decreased more at night than during daytime hours, as a result, the ratio between day and night prices increased significantly by 29%. This enabled the Kruonis Pumped Storage Plant to operate steadily with 82% increase in electricity volumes produced at the plant. In a more global perspective, electricity production in the Scandinavian countries did not change significantly (+1.92%), however, in the Baltic region shrank by as much as 23.78%. Estonia was the main contributor to this, as production decreased there by 56.16%. (Production in Lithuania and Latvia increased accordingly 17.24% and 18.97%.) Due to scheduled maintenance of power plants in Estonia, wind power generation dropped by 17%. Meanwhile, analysis of electricity consumption reveals no significant changes (both in Scandinavian and Baltic countries the consumption decreased by 0.58%).

As one of the most significant differences between the third quarter of 2019 and 2018 the availability of NordBalt connection deserve mention. In the third quarter of 2019, the connection was available most of the time, whereas in the third quarter of 2018, only about half of the quarter. This explain the increase of the average transmission capacity between SE4>LT and LT>SE4 by 72% and 126% respectively, where utilisation of the connection SE4>LT was higher than LT>SE4 (average transmission capacity was +163%. and -88% respectively).

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With regard to interconnections with other neighbouring countries, trade with third countries has been divergent – flow of electricity from Belarus increased by 67%, however, the one from the Kaliningrad Region dropped by 41%. Meanwhile, Lithuania exported more to Latvia (+41%) and Poland (+104%), and respectively less imported from these countries (39% and 71% respectively).

Situation on the natural gas market

In the third quarter, the natural gas market showed that prices can fluctuate significantly over a period of several months. Although European underground natural gas storage facilities are relatively full (on 1 October 2019 the filling level was 97%), strong LNG imports in Europe and increasing LNG extraction capacity resulted in decline of natural gas prices in Europe, the market was irritated and short-term price spikes were driven by news from Europe and the Middle East.

Restrictions on the supply of natural gas from the Groningen (Netherlands) extraction site were announced in September, against all expectations, the EU court decide to limit Gazprom’s access to OPAL pipeline capacity in Germany to a maximum of 50 per cent of capacity, the nuclear power plant situation in France and the attacks on oil infrastructure in Saudi Arabia. These factors have led to significant fluctuations in natural gas prices reaching 10% in the short term.

During the third quarter of this year to the Lithuanian natural gas transmission system via Klaipėda LNG terminal 4 times more natural gas was gasified than in the same period last year. There is an oversupply of LNG in the global market – LNG supply is expected to increase by about 6 percent next year, most of which will be US mining capacity. The LNG market is also sluggish in responding to the non-scheduled outages of some liquefaction plants and the annual onslaught of hurricanes. At the end of July, Asia's LNG indices fell to a three-year low, hovering around 11.25 EUR/MWh.

During the next quarter, particular attention will be given to the construction of the NordStream2 pipeline, the agreement on transit through Ukraine and the United Kingdom’s withdrawal from the European Union.

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MOST SIGNIFICANT EVENTS DURING THE FIRST THREE QUARTERS OF 2019 AND AFTER THE REPORTING PERIOD

• 7 January. Ms. Eglė Čiužaitė announced her resignation from the position of the Chairman of the Board and Chief Executive Officer of the Ignitis gamyba AB (former Lietuvos energijos gamyba). 21st of January, 2019 was the last day of her term in the office. • 8 January. Ignitis gamyba AB announced the start of the project aimed at installing a one-megawatt energy storage system in Kaunas A. Brazauskas’ HPP. Operating in synergy with the plant, the new storage system would become the first and the biggest innovation of this kind in the Baltic States. JANUARY • 8 January. Ignitis Group, UAB (former Lietuvos energija) announced its plans to initiate the reorganisation process of Lietuvos Energijos Tiekimas, UAB and Energijos Tiekimas, UAB. 2019 • 18 January. ESO updated its strategy. The main goal of ESO laid down in the new document – reliable, effective and smart grid that enables further market development and the best customer experience. • 31 January. At the solemn ceremony of The Nasdaq Baltic Awards 2019, Ignitis Group, UAB (former Lietuvos energija) received award for the best bond issuer’s relations with investors. The company has received a favourable opinion after evaluating the quality of information disclosure in the annual report and other statements, transparent governance of the company and its presentation to investors as well as other criteria. • 1 February. Mrs. Daiva Kamarauskienė, Director of the Budget Department of the Ministry of Finance of the Republic of Lithuania, took office of a member of the Supervisory Board. She has replaced Ramūnas Dilba, a former representative of the Ministry and member of the Supervisory Board of the Company. • 13 February. Ignitis Group launched international search for a strategic partner to develop offshore wind energy projects in the European Economic Area. The company expects to find an experienced partner with a proven track record who would bring best-practises and expertise in building FEBRUARY offshore wind projects and, later on, could develop joint offshore wind energy projects in the Baltic Sea. • 14 February. In the combined cycle unit, owned by Ignitis gamyba AB (former Lietuvos energijos gamyba), tests have been implemented to assess 2019 the power plant’s readiness to participate in the first stage of the Baltic States energy systems isolated work regime. In January, similar tests carried out in Kruonis PSHP. • 25 February. Ignitis Group (former Lietuvos energija) signed a partnership agreement with the adult coding school Vilnius Coding School. Implementing the Strategy LE 2030 and preparing for the global transformation of the energy sector, the company expects to attract data analysts, data engineers and data analytics project managers with skills in big data and artificial intelligence. • 4 March. In preparation for the implementation of smart energy accounting in Lithuania, ESO launched public procurement procedures for the necessary infrastructure. • 12 March. Taking into account the opinion of the Supervisory Board, the Board of Ignitis Group nominated Rimgaudas Kalvaitis as the CEO of Ignitis MARCH gamyba, who at the time was an independent member of the Supervisory Board of Ignitis gamyba. Aleksandr Spiridonov has been appointed as the head of Ignitis renewables UAB (former Lietuvos energija renewables, UAB). Darius Montvila was elected as the head of the prospective commercial 2019 organization, which will start its activities after the merge of Lietuvos Energijos Tiekimas UAB and Energijos Tiekimas UAB. • 14 March. Geton Energy, operating on the wholesale electricity market of Poland since 2017, has joined Nasdaq Commodities OMX exchange in Scandinavia. • 9 April. Members of the board of Ignitis have been nominated Tadas Adomaitis, Haroldas Nausėda, Andrius Kavaliauskas. APRIL 2019 • 9 April. Ignitis Group resumed the sale of shares of Data Logistics Centre (DLC), one of the most advanced IT and telecommunications companies in the Baltic region, which provides data transmission and data centre services. • 2 May. The process of selection of the Board of Ignitis was finished. Mr. Artūras Bortkevičius was nominated as a member of the Board. • 10 May. After initiating a search for partners in offshore wind project development in February 2019, Ignitis Group announced that it has received MAY 2019 initial interest from 10 potential partners, all of them – European offshore wind market leaders. 7 participants submitted official Expression of Interest (EOI).

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• 15 May. The Smart Energy Fund powered by Ignitis Group, and managed by Contrarian Ventures along with Honda, Japanese car manufacturer, and other partners invested in Moixa, UK-based company developing smart energy storage devices and virtual power plants technologies. UK storage start-up attracted a joint total of EUR10 million in funding. The Smart Energy Fund, as a minor partner, has invested EUR 500 thousand. • 18 and 19 of May. The test of Lithuanian energy system recovery after the total accident and isolated operation of a part of the system was successfully completed in the power plants managed by Ignitis gamyba – in Kruonis Pumped Storage Plant (Kruonis PSP), Kaunas Hydroelectric Power Plant (Kaunas HPP), and in the combined cycle block in Elektrėnai. • On May 27, Group-owed Ignitis renewable has signed the agreement with a Spanish company IGE which is controlled by the Environmental Investment Fund SI Capital, and acquired the 100% shareholding of Pomerania Invall Sp. z o. o., the company which develops a 94 megawatt (MW) installed power wind farm project in Poland. • 31 May. After having carried out the annual review of Ignitis Group credit rating, the international credit rating agency S&P Global Ratings has left BBB+ credit rating valid for the Company. Historically the highest annual investment flow intended for connecting new users of Energijos skirstymo operatorius, AB and for investments in the projects of cogeneration power plants under construction in Vilnius and Kaunas led to a change in credit rating outlook from stable to negative. • Birželio 1 d. pradėjo veikti „Lietuvos energijos tiekimas“, prie kurio buvo prijungtas „Energijos tiekimas“. • Birželio 6-7 d. vykusio inovacijų ir technologijų festivalio LOGIN metu „Ignitis grupė“ organizavo penktąjį hakatoną energetikos inovacijų tema. Speciali komisija „Išmaniosios energetikos“ hakatono nugalėtojais išrinko komandą „EV parity“, kuri pasiūlė sprendimą elektros tinklo balansavimui JULY naudoti elektromobilių baterijas. • Birželio 7 d. „Contrarian Ventures“ valdomas „Ignitis grupės“ Išmaniosios energetikos rizikos kapitalo fondas investavo į Estijos startuolį „Hepta 2019 Airborne“, kurio sukurta bepilotė skraidyklė (dronas) kartu su programine įranga leidžia elektros linijas tikrinti be tiesioginio žmogaus įsikišimo. Išmaniosios energetikos rizikos kapitalo fondas į „Hepta Airborne“ startuolį investavo 300 tūkst. eurų. • Birželio 10 d. „Energijos skirstymo operatorius“ prisijungė prie vienos skaitlingiausių skirstymo sistemų operatorių asociacijų Europoje – EDSO (European distribution system operators). ESO tapo asocijuota organizacijos nare, kartu su skirstymo operatoriumi iš Šiaurės Airijos. • On 1 July, under its Green Bond program, Ignitis Group issued a letter to investors The Company has committed to submit a report to investors once a year on its green bonds, which would be audited by an independent auditor. • On 11 July, the Smart Energy Fund powered by Ignitis Group, which is managed by Contrarian Ventures, invested in Norwegian start-up Choose, which mitigates the effects of climate change. This globally recognised and multi-award winner start-up has created a platform through which individuals and organizations can simply compensate carbon dioxide they have created and thus contribute to reduction of air pollution. The total investments of all investing partners, including Norwegian Wiski, Katapult, and German Vito, amount to EUR 4 million. The investment of the Smart JUNE Energy Fund amounts to EUR 300 thousand. • On 30 July, the Smart Energy Fund invested in Lithuanian start-up LastMile which applies smart energy solutions. The start-up has created a platform 2019 that allows the residents and businesses to simply order goods and receive them within an hour using electric and non-polluting transport. The investments of the Smart Energy Fund in a start-up LastMile amount to EUR 50 thousand. LastMile will use this initial investment to develop its business and platform. • On 31 July, the Supervisory Board of ESO approved the updated ESO 10-year investment plan. It is provided that over the next 10 years (2019-2028) ESO plans to invest EUR 1.83 billion in increasing network resilience and security, deploying smart solutions, improving customer experience, and promoting the market of services providing a level playing field for all market participants. • On 2 August, the National Energy Regulatory Council approved the total investments of EUR 30.486 million which are planned to be implemented by ESO in 2020-2023. 13 transformer sub-stations and 27 electricity distribution points will be renewed through investments. This will increase the reliability of electricity supply for about 182 thousand users. AUGUST • On 5 August, the Ministry of Finance of the Republic of Lithuania implementing the rights of the Company's shareholder approved the amendment of the Articles of Association of Lietuvos Energija UAB by changing the legal name to Ignitis Group UAB. It is also envisaged to change at the level of 2019 the companies owned by Lietuvos Energija, UAB Group of Companies the name of Lietuvos energijos gamyba, AB to the name Ignitis gamyba, AB the name of Lietuvos energija renewables, UAB to the name Ignitis renewables, UAB and the legal name of Lietuvos Energijos Tiekimas, UAB is planned to be changed to Ignitis, UAB.

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• On 9 August, the Innovation Center of Ignitis Group has started to publish open datasets. In the first phase, the data sets provided by Energijos skirstymo operatorius have been made open in accordance with the requirements for publicly available data. The published data includes information about the installed electricity production capacity connected to the distribution network, the amount of electricity obtained from the grid and transferred to the grid by the producing users, and the total electricity consumption. • On 14 August, the Smart Energy Fund powered by Ignitis Group, which is managed by Contrarian Ventures, invested in a start-up Inion which develops a platform for optimizing and monitoring electricity produced by solar power plants. The start-up has developed both hardware and software that allows manufacturing users not only to use electricity more efficiently, but also combines equipment of different manufacturers and allows the owner of the solar power plant to monitor data on a single platform. The investments of the Smart Energy Fund in a start-up Inion amount to EUR 50 thousand. • During the auction on 22 August, NT Valdos, owned by Ignitis Group, sold four real estate objects for a total of EUR 5.2 million, including VAT. • September 6. New wording of the Articles of Association of the Company has been registered with the Register of Legal Entities and entered into force. As of that day, the business name of the Company is Ignitis Group, UAB. The legal name of Lietuvos Energijos Tiekimas was changed to Ignitis, Lietuvos energijos gamyba to Ignitis gamyba, and Lietuvos energija renewables to Ignitis renewables. In international markets, the group will also operate under the Ignitis brand. Meanwhile the business name of the Energijos skirstymo operatorius will not change. • September 13. The Company signed an amendment to the loan agreement with its subsidiary Ignitis renewables UAB to increase the loan amount SEPTEMBER previously granted to EUR 70.3 million with the aim to finance investments in green energy production projects. • September 19. The planned investments of the Energijos skirstymo operatorius (ESO) in the amount of EUR 147 million were coordinated with the 2019 National Energy Regulatory Council (NERC). The Council certified that the cost-benefit analysis carried out by the ESO is positive. This means that the benefits of smart metering to consumers outweighs the costs of its implementation. • September 19. The National Energy Regulatory Council (the Council) made a decision on non-routine inspection of Energijos Skirstymo Operatorius, AB (ESO) regulated activities whereby it approved the report on non-routine inspection of regulated activities of ESO of 23 August 2019 drawn up by the Inspection Commission brought together by the Council, and the conclusions laid down therein. • On October 1, the world's first nationwide platform Saulės Parkai has been launched and is available to residents willing to produce solar energy in their homes. Through this platform, the energy users will be able to order a remote solar power plant. • October 10. Energijos skirstymo operatorius (ESO) has been recognized as one of the most transparent companies in Lithuania by the Transparency International Lithuania (TILS), after conducting the assessment. • October 15. The first 50 Ignitis ON charging stations for electric vehicles were launched in Vilnius. • October 15. The Vilnius Regional Court ruled that the Energijos skirstymo operatorius (ESO) had reasonably rejected the tender of one of Suppliers in the procurement procedure of smart meters, which had been submitted belatedly. Having considered the actual circumstances of the Supplier’s application, the court decided to dismiss the claim, to terminate the case and to cancel the interim measures - suspension of the procurement procedure. OCTOBER • During the auction on October 17, NT Valdos, owned by Ignitis Group, sold two immovable properties in Marijampolė and Trakai, with a total sale price of EUR 446 thousand, including VAT. 2019 • October 18. The Smart Energy Fund powered by Ignitis Group, which is managed by Contrarian Ventures, invested in UK-based electric bike (After the reporting subscription service Bolt Bikes. It is the world's first commercial-grade e-bikes subscription offering providing with a short-term vehicle rental service. period) The Smart Energy Fund invested in partnership with a leading venture capital fund Maniv Mobility. The Smart Energy Fund invested EUR 136 thousand (USD 150 thousand) in Bolt Bikes, while Maniv Mobility investment reached USD 2 million. • October 21. The Extraordinary General Meetings of Shareholders of Verslo aptarnavimo centras, UAB (hereinafter – VAC) and Ignitis grupės paslaugų centras, UAB (hereinafter – GPC), of which the Company is a shareholder, have approved the initiation of reorganisation of VAC and GPC by merging VAC to GPC and obligated the boards of both companies to draw up their reorganisation terms. The reorganisation of the companies is scheduled to be completed by the end of 2019. • October 24. According to the Doing Business 2020 report published by the World Bank, Lithuania has jumped from 26 to 15th place in terms of the getting electricity indicator, i.e. 11 position higher than in 2019 (33rd place in 2017, 55th place in 2016). • October 24. Strategic Energy Company Ignitis gamyba completed a study on the power plant’s piles field and infrastructure of the Kruonis Pumped Storage Hydroelectric Power Plant (PSHP). The aim of this study is to assess whether the current condition of the piles field, on which the new 5th

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hydro-unit would be constructed, meets the requirements established in the design. Studies have confirmed that the geological features of the pile field correspond to design values, indicated in the engineering geological survey report dated back to 1969-1976, and the state of the 320 piles since their installation in 1985 is not degraded. • October 25. Lietuvos Energija, UAB (now Ignitis Group) has withdrawn from the contract by mutual agreement after the Polish company failed to secure a feed-in tariff and one of the essential preconditions of the contract was not met for the developed wind park project in Poland. On 2 November 2018, Lietuvos Energija, UAB (now Ignitis Group) signed a conditional share sale-purchase agreement regarding 100 percent of shares and the shareholder claim rights of the company developing a wind farm project with capacity of 50 MW. • November 11. The board of the Company has decided to initiate the process of delisting of the shares of the subsidiaries AB Ignitis Gamyba and AB Energijos Skirstymo Operatorius (ESO) from the regulated market. On 11 November 2019 the Ministry of Finance of the Republic of Lithuania, implementing the rights of the sole shareholder of the Company, has approved the said decision. NOVEMBER • On 13 November 2019 the Company has received a written notice from the Ministry of Finance of the Republic of Lithuania, the authority 2019 implementing the rights of its sole shareholder, informing that the Ministry of Finance is initiating the formation of a working group to assess the alternatives of long-term financing of the Company . The Working group will be assigned to assess the Company's long-term financing alternatives (After the and their impact to the expectations of the shareholder, implementation of the National Energy Independence Strategy, the Company's long-term reporting period) financial sustainability and strategy 2030, also economic, social, national security and capital market development and to submit recommendations to the Ministry of Finance regarding alternatives for the Company's long-term financing, including raising equity, i.e. Initial Public Offering (IPO), in national and international capital markets.

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ANALYSIS OF THE GROUP’S FINANCIAL AND OPERATING RESULTS

, Q1-Q3 2019 Q1-Q3 2018 ∆, +/- ∆, % Electricity Volume of electricity distributed: TWh 7,07 7,04 0,03 0,45% Distributed to customers of independent suppliers TWh 4,61 4,59 0,03 0,55% Public and guaranteed supply TWh 2,46 2,45 0,01 0,25% Volume of electricity generated (incl. Kruonis PSHP) TWh 0,81 0,76 0,05 6,93% Electricity generated using RES (excl. Kruonis PSHP) TWh 0,38 0,37 0,01 2,90% Electricity generated using RES (excl. Kruonis PSHP) % 95,5% 84,8% - 12,55% Volume of electricity sold: TWh 7,68 4,81 2,87 59,71% Public and guaranteed supply TWh 2,39 2,45 -0,06 -2,38% Sales in retail market TWh 1,82 1,77 0,05 2,90% Sales in wholesale market TWh 3,47 0,59 2,88 485,03% Number of newly connected customers units 29 515 23 060 6 455 27,99% Duration of connection of new customers (average) calendar days 32,17 47,57 -15,40 -32,38% Quality indicators of electricity supply SAIDI (with force majeure) min. 73,58 66,98 6,60 9,85% SAIFI (with force majeure) units 1,05 0,91 0,14 14,79% Technological costs in the distribution network % 5,76% 6,09% - -5,45% Gas Volume of gas distributed TWh 4,70 5,09 -0,39 -7,65% Volume of gas sold TWh 6,56 7,72 -1,16 -15,06% Volume of gas purchased: TWh 8,89 8,23 0,65 7,95% Volume of LNG purchased TWh 4,61 4,76 -0,15 -3,05% Volume of natural gas purchased TWh 4,28 3,48 0,80 23,00% Number of newly connected customers units 9 127 8 753 374 4,27% Duration of connection of new customers (average) calendar days 69,42 85,43 -16,01 -18,74% Quality indicators of gas supply SAIDI (with force majeure) min. 1,02 0,38 0,63 165,16% SAIFI (with force majeure) units 0,007 0,005 0,00 45,30% Technological costs in the distribution network % 2,35% 2,25% - 4,30%

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ANALYSIS OF KEY PERFORMANCE INDICATORS

During first three quarters of 2019, the volume of distributed electricity slightly increased compared to the same Electricity distribution and generation, period in 2018, and totalled 7.07 TWh (0.03 TWh). The distribution of electricity to customers of the independent gas distribution and sale, TWh suppliers moderately increased and amounted to 4.61 TWh (0.03 TWh) and so did the volumes of public and guarantee supply increased by 0.3% and amounted to 2.46 TWh.

Compared to the first three quarters of 2018, the volume of electricity sold in the first three quarters of 2019 increased by 59.7% due to a significant increase in sales volume on the wholesale market. This was due to more 6,29 active wholesale activities in Poland. Sales volume on the wholesale market increased by 485.0% and totalled 6,60 Volume of electricity 3.47 TWh, where in the first three quarters of 2018 it was – 0,59 TWh. Compared to the first three quarters of 6,79 distributed 2018, electricity sales on the retail market slightly increased (2.9%), meanwhile sales of public and guaranteed 7,04 supply slightly decreased (2.4%). 7,07

Compared to the first three quarters of 2018, electricity generation volumes in Kaunas A. Brazauskas HPP during the first three quarters of 2019 decreased by 24.8% due to the lower level of water in the river Nemunas and 3,31 amounted to 0.21 TWh. The output of electricity generation volumes in Kruonis PSHP due to the increasing day 3,49 and night-time electricity price difference, more frequently activated secondary active power reserve has Volume of electricity sold 3,95 increased substantially (27.2%) and amounted to 0.42 TWh. 0.02 TWh of electricity or 72.7% less than in the first 4,81 three quarters of 2018 (0.07 TWh) were produced in Elektrėnai complex during the first three quarters of 2019. 7,68 Due to acquisition of new wind farms and favourable meteorological conditions for the operation of wind power plants the volume of electricity that was generated in the wind farms operated in Estonia and Lithuania was 0.16 TWh, or 0.08 TWh (96.3%) more that during the same period last year. In the first three quarters of 2019, the 1,65 1,06 part of electricity generated using renewable energy sources (excluding Kruonis PSHP) made up 95.5% of the Volume of electricity 0,94 Group's total electricity generation (in the first three quarters of 2018 – 84,8%). generated 0,76 During the first three quarters of 2019, the technological costs in the electricity distribution network declined to 0,81 5.76% (in the first three quarters of 2018 – 6,09%). During the comparative period, SAIDI, with the impact of force majeure, increased to 73.58 min. (in the first three quarters of 2018 – 66.98 min.). In the first three quarters of 2019, SAIFI was 1.05 times (in the first three quarters of 2018 – 0,91 times). Such deterioration of indicators 4,59 was caused by faults in cables resulting from prevailing high air temperatures and frequency of unscheduled long 4,82 interruptions due to external effects. Volume of gas distributed 4,95 5,09 Due to higher average air temperature in the heating season, compared to the same period last year, 7.7% less 4,70 natural gas were transported through gas distribution pipelines during the first three quarters of 2019. The volume of gas sold on the retail market during the first three quarters of 2019 decreased by -15.1% or -1.16 TWh. This 8,64 was mainly influenced by changes in the legal framework. The obligation for regulated energy producers to purchase natural gas supplied through the Klaipėda LNG Terminal from a designated supplier was abolished. 7,56 Volume of gas sold During the first three quarters of 2019, the technological costs in the gas distribution network increased from 8,04 5.76% to 2.35%. During the first three quarters of 2019, SAIDI of gas distribution, with the impact of force majeure, 7,72 increased and was 1.02 min (in the first three quarters of 2018 – 0.38 min.). This deterioration of indicator was 6,56 due to network violations by third parties. SAIFI was ⁓0.007 pcs (in the first three quarters of 2018 ~0,005 pcs). 0 2 4 6 8 10 During the first three quarters of 2019, 29.515 new consumers were connected to the electricity distribution network. Compared to the same period last year, 28.0% more new customers were connected. During the 1st first three quarters of 2019, 9.127 new customers or 4.3% more than during the same period last year were Q1-Q3 2015 Q1-Q3 2016 Q1-Q3 2017 connected to the gas distribution network. Q1-Q3 2018 Q1-Q3 2019

Consolidated interim report of the Company and the Group for the 9 months of 2019 15

Analysis of key financial indicators The Group's revenue structure in Q1-Q3 2019 Financial data are presented in millions of euros, unless otherwise stated. Electricity supply and retail trade Revenue Electricity wholesale trade Gas supply and retail trade

During the first three quarters of 2019, revenue of Ignitis Group increased by 29.0% (EUR Gas wholesale trade 261.0 million) as compared to the first three quarters of 2018 and totalled EUR 1,161.8 17% Electricity distribution million. The main reasons causing revenue changes were as follows: Other electricity distribution 26% 1. Higher commercial organization segment revenue (EUR 272.8 million) The EUR 15% PSO service growth in the segment was mainly driven by the increase of EUR 171.2 million in 1,161.8 Guaranteed supply wholesale turnover of Geton Energy, the subsidiary of Ignitis in Poland, on the 3% New customer connection exchange market. Revenue from public supply of electricity activities also million increased by EUR 27.7 million due to the higher service tariff. 6% 10% Gas distribution 2. Higher revenue of the strategic generation segment (EUR 20.6 million) The 5% 5% Other activities 2% 8% segment revenue increased due to compensation of EUR 9.3 million received from 11% Strategic generation the Ministry of Finance of the Republic of Lithuania in connection with damage Regulated activities possibly caused by Alstom Power Ltd in implementing the project of Lithuania Power Plant in 2005–2009. Revenue also increased due to sales of fuel oil which Commercial activities is no longer used in production and scrap metal sales. The above-mentioned Green generation reasons outweighed the decline in revenues due to lower production volumes in Other Kaunas HPP during the first three quarters of 2019 compared to the same period last year. The production volumes in Kaunas HPP decreased due to hydrological Dynamics of the Group's revenue by operating segment drought. 3. Higher revenue from the green energy segment (EUR 6.6 million) There were 272,8 20,6 8,5 -25,8 1.161,8 two main reasons for this: the increased portfolio of wind farms (EUR 5.5 million) -15,1 and favourable meteorological conditions for the operation of wind farms 900,8 (EUR 1.1 million).

Revenue of Ignitis Group from foreign markets, compared to the first three quarters of 2018 (EUR 75.5 million), increased by two and a half times and totalled EUR 265.8 million during the first three quarters of 2019.

Revenue for Commercial Strategic Green Distribution Other Revenue for 2018 Q1-Q3 organisation generation generation system 2019 Q1-Q3 operator

Consolidated interim report of the Company and the Group for the 9 months of 2019 16

Cost of goods sold ↑47% Cost of goods sold During the first three quarters of 2019, the Group‘s purchasing costs of electricity, gas, fuel and related services (costs of sales) amounted to EUR 885.9 million (during the first three % 685,0 quarters of 2018 – EUR 677,6 million). As compared with the first three quarters of 2018, these costs increased by 30.7%. 467,4 Higher costs of purchasing electricity or related services due to the significant increase in wholesale turnover of Geton Energy, the subsidiary of Ignitis in Poland, on the exchange ↓3% (EUR 169.0 million), is the main reason behind the cost increase, respectively as the growth in revenue. Other components of cost of sales remained in the similar level as during the ↓15% respective period in 2018. 189,8 183,6

20,4 17,3 Purchases of electricity or Purchases of gas and Purchases of gas, bio fuel related services related services for trading and fuel oil for production Q1-Q3 2018 Q1-Q3 2019

↑4% Operating expenses

Operating expenses 61,8 59,3 During the first three quarters of 2019, the operating costs of the Group amounted to EUR 108.2 million. As compared with the first three quarters of 2018, the operating costs ↑12% increased by 13.7% (EUR 13.0 million). The increase was mainly driven by the growth in ↑56% repair costs of EUR 8.0 million (or 56%). The main factors that caused the increase in repair costs were: 22,1 24,3 1. Increased need of Elektros skirstymo operatorius for carrying out repair and 21,7 maintenance works on the power grid and transformer stations (EUR 6.1 million). 14,1 2. The provision that was made by Ignitis gamyba for the costs of Elektrėnai complex dismantling projects (EUR 1.2 million).

Compared to the first three quarters of 2018, wages and other operating costs increased due Remuneration Repair and Other to average salary growth. maintenance Q1-Q3 2018 Q1-Q3 2019

Consolidated interim report of the Company and the Group for the 9 months of 2019 17

EBITDA Dynamics of adjusted EBITDA by operating segment

193,5 13,8 5,1 4,1 173,7 4,1 Other During the first three quarters of 2019, the Group‘s adjusted EBITDA amounted to -0,0 -3,2 8,4 4,1 EUR 193.5 million. This is 11.4% or EUR 19.8 million more than in the first three 4,3 quarters of 2018, where the adjusted EBITDA was equal to EUR 173.7 million. In the 42,9 Commercial first three quarters of 2019, the adjusted EBITDA margin was 16.7% (in the first three 37,9 organisation quarters of 2018 – 19,3%). The main reasons for the change in the Group‘s adjusted EBITDA were as follows: Green energy 1. Higher EBITDA result of the distribution network operator. The Group's 121,4 135,2 adjusted EBITDA growth was driven by a positive change (EUR 13.8 million) in Strategic result of electricity and gas distribution activities. The increase is driven by generation growing regulated asset base and higher revenues from new customer Distribution connection due to the change in application of IFRS. Q1-Q3 2018 Distribution Strategic Green energy Commercial Other Q1-Q3 2019 system 2. Higher EBITDA of strategic generation segment. The extremely favourable system generation organisation operator difference between the electricity prices during the day-time peak and night hours operator resulted in better financial production result of Kruonis PSHP – increase in both

production volumes and generation margin. Good production performance of Kruonis PSHP (EUR 4.1 million) and positive result of sale of fuel oil stocks (EUR Q1–Q3 2019 Q1–Q3 2018 ∆, +/- EBIT (profit from operations) 80.5 67.8 12.7 1.8 million) resulted in increase of adjusted EBITDA of the segment by Adjustments for depreciation and amortisation 64.1 EUR 5.1 million during the first three quarters of 2019, compared to the same 82.3 18.2 expenses period in 2018. Adjustments for impairment expenses and write-offs of 5.7 4.2 -1.5 3. Higher EBITDA of green generation segment. Compared to the corresponding PPE period in 2018, the result of green generation grew by EUR 4.1 million in the first Adjustment for revaluation result of emission allowances 0.6 -10.8 11.4 three quarters of 2019. This was mainly influenced by the increased portfolio EBITDA 167.6 126.8 40.8 (EUR 4.8 million) of the Group‘s wind power plants at the end of 2018, which was Management’s adjustments*, write-offs of inventories and receivables partly offset (EUR 1.0 million) by the increasing operating costs of co-generation Recalculation of regulated revenue of ESO (1) 23,5 60,8 -37,3 power plants as the launch of plants is approaching. Change in open financial derivative instruments market 9,4 -9,0 18,4 value As of 1 January 2019, the IFRS 16 standard defining treatment of operating lease has Recalculation of regulated revenue of Ignitis (2) 6,7 -1,4 8,1 changed: expenses shifted from operating expenses to depreciation. As a result, the Write-offs of inventories and receivables 4,2 1,2 3,0 Group’s consolidated EBITDA increased by EUR 2.5 million compared to the Recalculation of regulated revenue of Ignitis gamyba (3) -6,0 -4,7 -1,3 corresponding period in 2018. This effect is included in the representation of changes Compensations received for past periods (4) -11,9 - -11,9 in each of the operating segments. Total adjustments 25.9 46.9 -21.0 Adjusted EBITDA 193.5 173.7 19.8 (1) Elimination of the effect of the difference between the actual profit earned during the reporting and earlier periods and the allowable return on investments for respective periods as established by the National Energy Regulatory Council (NERC). (2) Elimination of deviation between actual and regulated revenue of the gas supply and electricity public supply, by which the company’s future financial results will be adjusted. (3) Elimination of deviation between actual and regulated revenue of the secondary emergency power reserve, the tertiary active power reserve, the system disaster recovery after the total emergency and the reactive power management services by which the company’s future financial results will be adjusted. *The adjusted EBITDA indicator was estimated based on the management adjustments that are not (4) a) Ignitis gamyba received a remittance from the Ministry of Finance of the Republic of Lithuania as a reparation for the potential presented in financial statements. A more detailed description of the management adjustments is loss that was inflicted trough the actions carried out by Alstom Power Ltd while implementing Lietuvos Elektrinė, AB Fuel Gas presented in consolidated and company‘s condensed interim financial information, Note 17 ‘Operating Desulphurisation (FGD) project, implemented from 2005 to 2009; b) One-off cost adjustment due to compensation received from segments. Litgrid AB for transmission (including systemic) services (for January and February 2016).

Consolidated interim report of the Company and the Group for the 9 months of 2019 18

Net profit During the first three quarters of 2019, the Group’s net profit amounted EUR 57.7 million. This is The Group's net profit and adjusted net profit EUR 10.2 million more than during the first three quarters of 2018 (EUR 47.5 million). The following effects had the biggest impact on the net profit results of the first three quarters of 2019 compared 94,0 to the first three quarters of 2018: 1. Higher reporting EBITDA result. In 2018, the reported Group's reported EBITDA was 68,1 strongly influenced by the growth of electricity prices in the market. Due to the difference 57,7 between the price set by the regulator and included in the tariff for public supply of electricity 47,5 for 2018 and actual market price during the first three quarters of 2018 the Group did not earn revenue in the amount of EUR 26.1 million. The reported EBITDA result for 2019 also improved due to compensations received for previous periods: • The Ministry of Finance of the Republic of Lithuania transferred a compensation of EUR 9.3 million to Ignitis gamyba, AB in connection with damage possibly caused by Alstom Power Ltd in implementing the project of the Lietuvos elektrinė, AB in 2005–2009. • Litgrid, AB compensation of EUR 2.6 million for the higher price of transmission services Net profit Adjusted net profit that was applied in 2016 for Energijos skirstymo operatorius, AB. 2. Increased investments resulted in higher depreciation expenses. The Group's net profit Q1-Q3 2018 Q1-Q3 2019

was reduced by EUR 15.8 million due to increase in depreciation and amortisation expenses 2019 2018 (excluding the increase in depreciation expenses due to the effect of IFRS 16). Net profit adjustments ∆, +/- Q1–Q3 Q1–Q3 3. Result of the revaluation of Ignitis gamyba allowances. The result of the revaluation of Net profit 57.7 47.5 10.2 emission allowances had a negative effect on the result of net profit. Change between years Recalculation of regulated revenue of ESO 19.9 51.7 -31.8 – EUR 11.4 million. Recalculation of regulated revenue of Ignitis 5.7 -1.2 6.9 Following the assessment (elimination) of positive/negative effect of the recalculation of regulated Recalculation of regulated revenue of Ignitis -5.1 -4.0 -1.1 income and one-off items (compensations received for previous periods), the Group’s adjusted net gamyba profit decreased by EUR 25.9 million or -27.5%, and amounted to EUR 68.1 million. The decrease Compensations received for past periods -10.1 - -10.1 in profit was influenced by the aforementioned effects of depreciation and revaluation of emission Adjusted net profit 68.1 94.0 -25.9 allowances as well as the effect of change in the market value of financial derivatives of “Ignitis” due to the movement of electricity prices which equalled EUR 15.6 million net of taxes.

Equity During the first three quarters of 2019, the Group‘s equity increased by 3.4% or EUR 44.4 million, and on 30 September 2019 equalled EUR 1,366.1 million. Change in equity was caused by following factors: 1. During the first three quarters of 2019, the Group‘s reported net profit equalled EUR 57.7 million. 2. During the first three quarters of 2019, the Group paid out EUR 13.3 million of dividends, including the minority part. The Group's equity rate decreased during the reporting period, and on 30 September 2019 it was 44.5% (on 31 December 2018: 46.3%).

Consolidated interim report of the Company and the Group for the 9 months of 2019 19

Investments Group's investments by operating segment

During the first three quarters of 2019, the Group‘s investments amounted to 2019 Q1-Q3 EUR 311.7 million or 23.6% more than during the same period last year. The largest part of Other investments was made for development of Vilnius and Kaunas co-generation power plant 311,7 projects (41%), electricity distribution network development (20%) and gas distribution 14,7 network development (12%). 252,2 Commercial 4,5 organisation Compared to the same period last year, during the first three quarters of 2019, as per project 52,0 153,5 plans, higher investments were made in works of construction of Vilnius and Kaunas co- Strategic generation generation power plants. During the first three quarters of 2019, investments in these projects amounted to EUR 126,6 million. Green energy During the first three quarters of 2019, investments in the development of the electricity 191,6 distribution network increased by EUR 1.5 million and amounted EUR 62.5 million. During 141,0 the first three quarters of 2019, ESO invested EUR 33.8 million in renewal of the electricity Distribution system distribution network. During the first three quarters of 2019, ESO connected 29.5 thousand operator new consumers to the electricity distribution network – 28% more than during the first three 2018 Q1-Q3 2019 Q1-Q3 quarters of 2018 when 23.1 thousand consumers were connected. During the first three quarters of 2019, the permissible power for use of the connected objects of new consumers amounted to 279.1 thousand kW and was 5.6% lower than in the first three quarters of 2018 Dynamics of the Group's 2019 2018 when it was 295.6 thousand kW. ∆, +/- ∆, % investments by sector Q1–Q3 Q1–Q3 During the first three quarters of 2019, the investments of ESO in the development of the gas Co-generation power plants 126.6 52.0 74.6 143% distribution network reached EUR 37.7 million and were 24% higher than in the first three Development of electricity distribution 62.5 61.0 1.5 3% quarters of 2018 (EUR 30.5 million). During the first three quarters of 2019, ESO constructed network 418.1 km of distribution gas pipelines for connecting new customers to the gas network, while 412.0 km of gas pipelines were constructed during the comparable period of 2018. Development of gas distribution network 37.7 30.5 7.2 24% Renewal of electricity distribution 33.8 88.6 -54.8 -62% In May 2019, the Group owned Ignitis renewables has signed contract for the acquisition of 100% shares of Pomerania Invall Sp. z o. o. – the Company that develops a 94 MW installed network capacity wind farm project in Poland and launched the construction of wind farms. Investments in wind farms 26.5 - 26.5 100% On 31 December 2018, the Group‘s assets totalled EUR 2,854.1 million. During the first Transport 11.5 2.5 9.0 370% three quarters of 2019, the Group's assets increased by 7.6% (or EUR 216 million), and on 30 September 2019 totalled to EUR 3,070.1 million. The change in the Group's assets was Renewal of gas distribution network 4.7 6.3 -1.6 -25% mainly influenced by the increase in tangible non-current assets due to investments made. ITT 4.2 5.8 -1.6 -27%

Electricity generation capacities 0.9 3.8 -2.9 -77% Other investments 3.1 1.7 1.4 -79% Gross investments: 311.7 252.2 59.5 24% Subsidies 38.2 14.0 24.2 173% Net investments: 273.5 238.2 35.3 15%

Consolidated interim report of the Company and the Group for the 9 months of 2019 20

Financing The Group's borrowings and net debt

On 30 September 2019, the Group‘s net debt amounted to EUR 925.4 million. Compared to 1.061,9 the net debt at the end of 2018, the rate increased by 25.7% or EUR 189.3 million. The 189,3 8,0 increase in the net debt was driven by investments made. 864,5 136,5 128,5 During the first three quarters of 2019, the level of borrowings of the Group increased by 22.8% (Or EUR 197.4 million), and on 30 September 2019 amounted to EUR 1,061.9 million (at the end of 2018 – EUR 864.5 million). On 30 September 2019, amount of borrowings of 925,4 EUR 649.8 million was subject to a fixed interest rate (61.2% of the total borrowings), the 736,0 remaining part of borrowings was subject to a variable interest rate.

On 30 September 2019, the average repayment period of borrowings was 7,8 years (on 31 December 2018 – 7.6 years). Borrowings at 31 Net debt Cash and short-term Borrowings at 30 Dec 2018 investments Sep 2019 The Group‘s net debt to the Group‘s equity ratio increased from 55.7% at the end of 2018 to Net debt Cash and short-term investments 67.7% on 30 June 2019. On 30 September 2019, the Group‘s current liquidity ratio was 0.86 (on 31 December 2018 – 1.16). To manage liquidity The Group has entered into the credit The Group's net debt ratios line agreements with banks. The Group’s unwithdrawn credit line facilities amounted to EUR 95.1 million as at 30 September 2019. All the credit lines are committed, i.e. funds shall 19,6% 19,5% be paid by the bank upon demand. 3,74 In May 2019, the International Credit Rating Agency “S&P Global Ratings“, after having 3,24 carried out the annual credit rating review of Ignitis group, extended the BBB+ credit rating for the Company. Last year, when implementing strategic projects, the Group entered the intensive investment stage when the historically highest annual investment flow for connecting new consumers of Energijos skirstymo operatorius, AB and for investments in the projects of Vilnius and Kaunas co-generation power plants under construction was achieved. These circumstances led to a change in the credit rating outlook from stable to 31 Dec 2018 30 Sep 2019 negative. Net debt / adjusted EBITDA FFO / Net debt (RHS) Repayment schedule of the Group's borrowings

174,8 300,0 99,6 300,0 68,4 33,7 22,9 17,4 17,1 14,3 13,3 6,4 4,2

2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029+ Loans Bonds

Consolidated interim report of the Company and the Group for the 9 months of 2019 21

DEFINITIONS RES Renewable energy sources Working capital Current assets (excluding non-current assets held for sale) - cash and cash equivalents - short-term investments and term deposits - current liabilities (excluding current portion of financial liabilities) EA Emission allowances Current liquidity Current assets at the end of the period / current liabilities at the end of the period EBIT Profit (loss) before tax – finance income + finance costs EBITDA Operating profit (loss) + depreciation and amortisation expenses + expenses on revaluation and provisions for emission allowances + impairment expenses of non-current assets + write-off expenses of non-current assets EBITDA margin EBITDA / Revenue FFO EBITDA + interest received - interest paid - income tax paid Guaranteed supply Supply of electricity in order to meet electricity demand of customers who have not selected an independent supplier under the established procedure or an independent supplier selected by them does not fulfil its obligations, terminates activities or the agreement on the purchase and sale of electricity Net debt Borrowings - cash and cash equivalents - short-term investments and term deposits - a portion of other non-current financial assets representing investments in debt securities Net profit margin Net profit / Revenue Investments Acquisition of tangible and intangible non-current assets, acquisition of shares in companies Adjusted net profit Net profit + effect of the gas price discount to consumers +/- recalculation of regulated revenue from liquefied natural gas +/- recalculation of regulated revenue from electricity and gas transmission/distribution Adjusted net profit margin Adjusted net profit / Revenue Adjusted EBITDA EBITDA + management’s adjustments Adjusted EBITDA margin Adjusted EBITDA / Revenue Adjusted return on equity (ROE) Adjusted net profit (loss) for last 12-months / the average amount of equity during the reporting period Customers of independent suppliers Electricity users who have selected an independent electricity supplier as their supplier Return on equity (ROE) Net profit (loss) for last 12-months / the average amount of equity during the reporting period Equity ratio Equity at the end of the period / total assets at the end of the period Cash flow from operating activities Net profit (loss) + adjustments for non-cash items + changes in working capital SAIDI Average duration of unplanned interruptions in electricity or gas transmission SAIFI Average number of unplanned long interruptions per customer LNG Liquefied natural gas IFRS International financial reporting standards Assets turnover ratio Revenue for last 12-months / total assets at the end of the period Return on assets (ROA) Net profit (loss) for last 12-months / the average amount of total assets during the reporting period Operating expenses Expenses, excluding purchase expenses of electricity and related services, gas and fuel oil for production, depreciation and amortisation, impairment expenses (non-current assets, construction in progress, amounts receivable, etc.), expenses of revaluation of property, plant and equipment, write-offs of non-current assets, inventories and amounts receivable and EA revaluation expenses Public supply Electricity supply activity performed in accordance with the procedure and terms established by legal acts by an entity holding a public supply licence

Consolidated interim report of the Company and the Group for the 9 months of 2019 22

REVIEW OF THE COMPANY’S AND THE GROUP’S ACTIVITIES

The activity review of Ignitis Group covers a period from 1 January 2019 until the date of this report.

Strategic generation

A battery energy storage system in the Kaunas A. Brazauskas Hydropower Plant

In January, Ignitis gamyba AB announced the start of the project aimed at installing a one-megawatt energy storage system in Kaunas A. Brazauskas’ HPP. Operating in synergy with the plant, the new storage system would become the first and the biggest innovation of this kind in the Baltic States. Using a unique algorithm, the storage system would allow to provide a high-quality frequency containment reserve (FCR) service, compensating the asymmetries in hydro-unit operations. As for today, the service in the Baltics is mainly provided by the Russian power plants, operating in the post-soviet BRELL energy ring. The energy storage system innovation will allow Lithuania to strengthen its ability to provide an autonomous domestic FCR service, which will be crucial for the country after the year 2025, with the Baltic countries disconnecting from the BRELL ring and joining continental European networks. Moreover, successful implementation of the hydro-unit and storage system synergy project could become an important source of primary reserve, allowing to provide high-quality services to the electricity transmission system operator. Although the installation of 1 megawatt energy storage system would become a pilot project in the region, high capacity (20 megawatts or more) lithium-ion batteries already gained popularity in the USA, Australia, and part of the Western Europe. Due to the growing demand for autonomous FCR services in the Baltics, the innovative energy storage system may be later adopted for the much larger hydro-units in the Kruonis PSHP. The Company launched a public procurement tender for the purchase of special equipment for the energy storage system at the start of 2019.

Testing of the Baltic States’ Electrical Systems Operating in the Island Mode

Tests were carried out in February in the combined cycle block of Elektrėnai Complex that is managed by Ignitis gamyba, and in Kruonis PSHP to assess the readiness of the plant to participate in the initial phase of the operation of the Baltic States‘ electrical systems in the island mode. Later, similar tests were carried out in Kaunas A. Brazauskas HPP. In the course of the active preparation of the three Baltic States’ energy systems to operate in the "island" mode, tests in the most important objects of the energy infrastructure of the country were initiated by the Litgrid, transmission system operator, together with the Lithuanian Energy Institute. The tests are carried out in accordance with the requirements of ENTSO- E, the European Network of Transmission System Operators.

Funding of the Pilot project of Floating Solar Power Plant in Kruonis PSHP

In February, experimental floating photovoltaic solar power plant project in the upper pool of the Kruonis PSHP, implemented by Ignitis gamyba, has received additional funding from the Lithuanian Business Support Agency (LBSA). The total amount of EUR 235 thousand have been. granted. The decision was adopted following consideration of 139 applications by LBSA together with the Ministry of the Economy and Innovation, 91 of which received grants. The pilot floating solar power plant project has been rated among the best applications. The pilot project is implemented by the Ignitis gamyba in partnership with Kaunas University of Technology (KTU). During the primary stage of the project, a pilot low-power (60 kW) power plant will be installed in the upper pool of KHAE and the algorithm for managing the power plant and energy storage system will be developed. The algorithm will take into account constantly registered network and other physical parameters of the Kruonis PSHP. Later, the expansion of the solar power plant's size and its capacity would allow to provide a reliable primary reserve service, the need of which becomes particularly critical for Lithuania in preparation for synchronization with the continental European grid and operation in island mode. The primary stage of the project is scheduled to be completed by the end of 2021.

Preparation for possible development of Kruonis PSHP: a study of the pile field and infrastructure completed

Ignitis gamyba completed a study on the power plant’s piles field and infrastructure of the Kruonis Pumped Storage Hydroelectric Power Plant (PSHP). The aim of this study is to assess whether the current condition of the poles field, on which the new 5th hydro-unit would be constructed, meets the requirements established in the design. Studies have confirmed that the geological features of the pile field correspond to design values, indicated in the engineering geological survey report dated back to 1969-1976, and the state of the 320 piles since their installation in 1985 is not degraded. At the beginning of 2018, the European Commission granted part-financing from the Connecting Europe Facility (CEF) in the amount of EUR 39,000 for the implementation of the study (project No 4.7-0016-LT-S-M-17). The rest of the study was funded by Ignitis gamyba at its own expense. The pile field on which the pipeline for the new 5th hydro-unit would be constructed was installed in the early 1990s. During the implementation of the study, the following research was carried out: pile integrity testing, assessment of piles characteristics, evaluation of the geology of pile field in Kruonis PSHP, soil strength and concrete structures condition of the main building, where the

Consolidated interim report of the Company and the Group for the 9 months of 2019 23

new generator turbine will be placed. Far more efficient the 5th hydro-unit would provide an opportunity to more flexibly address power shortages or surpluses in the market in real-time and to provide other quality system services. The need for additional flexibility in pumped storage plants in the market increases alongside increased volatility in electricity generation resulting from the renewable energy production. Another current study looks into the technological alternatives and socio-economic analysis of 5th hydro-unit. The completion of these studies is scheduled for the beginning of 2020.

Green generation

Ignitis Renewables started its operations

Seeking to develop further its renewable generation portfolio as well as optimize the activities its wind energy generation companies, Ignitis Group has established a new company. The shares of its existing subsidiaries engaged in wind power generation and renewable power generation development have been transferred to a new company with the name Ignitis Renewables. The Group investments in renewable energy production will be developed through this company. Ignitis Group owns 100 % of the shares of Ignitis Renewables. Ignitis renewable has signed the agreement with a Spanish company IGE which is controlled by the Environmental Investment Fund SI Capital, and acquired the 100% shareholding of Pomerania Invall Sp. z o. o., the company which develops a 94 megawatt (MW) installed power wind farm project in Poland.

Ignitis Group Calls for Strategic Partners to Develop Offshore Wind Energy Projects

In February, Ignitis Group launched international search for a strategic partner to develop offshore wind energy projects in the European Economic Area. The company expects to find an experienced partner with a proven track record who would bring best-practises and expertise in building offshore wind projects and, later on, could develop joint offshore wind energy projects in the Baltic Sea. More than ten companies were interested in the call for partnership, whereas, 7 participants submitted official Expression of Interests. Ignitis Group plans to decide on potential partnership by the end of 2019. After conducting a market survey and in case of a successful cooperation agreement, the potential partnership will be implemented through a two-stage process. During the first phase, Ignitis Group aims to gain relevant expertise related to the offshore wind energy projects by acquiring a minority stake in a project within European Economic Area. Once the Lithuanian authorities have completed all necessary preparatory work and finalized the feasibility of developing wind farms in the Baltic Sea, the Ignitis Group, together with its partner, would start the second phase and plan to participate in auctions for the development of specific projects in the Baltic Sea. The development of wind farms in the Baltic Sea is expected to contribute significantly to Lithuania's ambition to generate the majority of its electricity from renewable energy sources.

Ignitis Group won't acquire wind farm project from Poland's Wento

As was previously announced, Lietuvos Energija, UAB (now Ignitis Group) signed a conditional share sale-purchase agreement on 2 November 2018 regarding 100% of shares and the shareholder claim rights of the company developing a wind farm project with capacity of 50 MW. Lietuvos Energija, UAB (now Ignitis Group) has withdrawn from the contract by mutual agreement after the Polish company failed to secure a feed-in tariff and one of the essential preconditions of the contract was not met for the developed wind park project in Poland. Although the contract was ended based on the mutual agreement, negotiations on the implementation of this project continued for some time. Nevertheless, the parties failed to reach a common agreement. The company notes that despite the failure to implement this deal, the Ignitis Group strategy to develop renewable energy projects in Lithuania and abroad is being implemented as planned.

Energy distribution

ESO Announced the Strategy 2030

In January, Energijos Skirstymo Operatorius (ESO) updated its strategy. The approved ESO strategy covers the period until 2030. During this time, ESO plans to significantly increase grid resistance to atmospheric factors, to implement technological, smart solutions that include remote, automated grid control and maintenance, and to develop a customer experience management model across the ESO value chain. All this will ensure a stable return and maintain the optimal value-to-price ratio for customers. The main focus in the implementation of the new ESO strategy will be placed on increasing the reliability of the network, the deployment of intelligent solutions for real-time operations, the empowerment of the development of the electricity market through open and neutral platform solutions, and the promotion of the creation of a service market, which provides the same operating conditions for all market participants. The set of actions provided for in the ESO strategy will ensure the best value to customers both in terms of reliability and intelligence of infrastructure as well as of variety and price of services. Accordingly, the empowering infrastructure will allow market participants/energy suppliers to develop and provide services that meet individual needs of each customer. Strategic directions of ESO 2030 correspond to the goals laid down in the ESO’s 10-year investment plan and the National Energy Independence Strategy.

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Electricity Communications Can Be Introduced More Quickly

The residents and businesses can already install electricity systems in their property or to enhance electric power faster, simpler and without leaving home. After having improved its procedures and systems, from February ESO gives its customers the opportunity to receive electricity services in one sitting. After logging in to the website www.manogile.lt and selecting the service of installation of electric systems or power enhancement, the customer must do the following: specify the type of object and select the power demand accordingly, specify in the map the location where the system must be installed, get the contract generated by the system and the estimated price, proceed with payment and wait for the selected service to be provided. The ESO systems instantly generate an order with the possibility to pay, rather than application that had to be dealt with earlier by the ESO staff. Therefore, the customer no longer has to wait for several days to get a response on the price and terms of the service – the customers instantly learns everything on his computer screen and can immediately proceed with payment.

ESO became an associate member of the European distribution system operators

In the course of preparation for introduction of smart metering systems in Lithuania, in March ESO launched the public procurement procedures for the necessary infrastructure - suppliers will not only have to supply more than 1.2 million smart electricity meters, but will also need to provide an IT solution for electricity meter data collection and management, and to ensure the communication infrastructure. There are several basic criteria that must be met by the prospective system: the system installed will have to support communication with meters and ensure the monitoring and management of the entire smart metering infrastructure; in line with the highest cyber security requirements, the system will need to collect securely encrypted metering data needed to manage the power grid and energy consumption metering; the system will have to process, verify and validate the data collected and to transfer data to other ESO business systems through interlinking. After introduction of smart metering infrastructure, and especially remote metering, with the possibility of seeing a very detailed use of electricity, electricity consumption is expected to decrease because the customers will be able to better understand their energy consumption habits, make rational energy-saving decisions. Network losses will also decrease, the innovations will allow for more accurate network investment planning, the system will allow for the conditions for deregulation of the electricity market to be created for private customers. On 6 June of this year, ESO has announced the supplier prequalification procedure of smart metering infrastructure procurement. The procurement volume and related qualification requirements have been updated in the terms of procurement. Therefore, the suppliers can participate in the procurement procedure with even clearer and already final terms. Under a more consistent implementation scenario selected that is broken down by consumption, in this stage, the participants in the procurement procedure will need to meet the demand for about 1.2 million pcs of smart meters.

ESO became an associate member of the European distribution system operators

Energijos skirstymo operatorius has joined EDSO (European distribution system operators), one of the most numerous associations of distribution system operators in Europe. ESO became an associate member of the organization along with the distribution operator from Northern Ireland. By participating in the activities of the association, will undoubtedly help ESO to gain experience in projects of major importance. One of the major recent issues of EDSO is the development and implementation of smart grids, the connection of producing users and charging stations to the distribution network, cybersecurity, cooperation with electricity transmission system operators, participation in the legislative process of the future power system. Every member of the organization shares the latest achievements, inventions, innovations. ESO involvement in EDSO technical, project or legislative committees, expert groups, and by visiting other distribution operators will provide invalUABle experience in acquiring new skills and practice opportunities.

Green protocol agreement became the Intelligent Energy Club

The Green Protocol Agreement became the Intelligent Energy Club founded by Energijos skirstymo operatorius. After launching its activity, all events and other initiatives take place on behalf of the Intelligent Energy Club, and members of the Green Protocol who declare energy savings become members of the Intelligent Energy Club. Club members include companies and organizations that have taken two steps forward more efficient consumption. The first step was made with introduction of energy efficiency measures. The second – with the energy savings achieved, enjoyed, and, most significantly, declared, thus contributing to Lithuania's ambitious target to save almost 11.7 TWh of electricity in 2014-2020. The greatest value for club members comes from the active sharing of experience. By joining the Intelligent Energy Club, its members take part in the club events, explore the best Lithuanian and foreign examples published on the club's website, as well as comprehensive information on efficient use of energy, and contribute to the dissemination of this knowledge in the media.

Updated ESO’s 10-year investment plan – reliable, smart and innovative distribution network for Lithuania

In the next decade, ESO investments will be targeted towards enhancing the reliability, intelligence of the electricity and gas network services and improving customer satisfaction with the services provided by ESO. The investment plan for 2019-2028 published by the company summarises the planned investments in detail.

Consolidated interim report of the Company and the Group for the 9 months of 2019 25

The planned investments will increase the security and reliability of the network, reduce outage frequency and duration, and improve the remote control of the network. The planned deployment of smart meters will create the preconditions for efficient energy consumption, more targeted investments and improvement of other network quality parameters. And all this leads to added value to customers and better customer experiences. In addition, the energy infrastructure of the distribution network will become more attractive to local businesses and foreign investors. ESO’s investments in 2019–2028 will be targeted in three directions: network reliability, network smartification, and customer experiences and market facilitation. During the period 2019–2028, EUR 1.83 billion will be earmarked for investments planned under these directions and for connection of new customers. These investments will significantly improve the resilience of networks to natural influences, create conditions for obtaining accurate real-time information and improve network security. The ESO investment plan is expected to be updated annually.

Energijos skirstymo operatorius (ESO) has been recognized as one of the most transparent companies in Lithuania

Energijos skirstymo operatorius (ESO) has been recognized as one of the most transparent companies in Lithuania by the (TILS), after conducting the assessment. Transparency International assessed three key criteria - anti-corruption measures of the company, its organizational transparency and financial disclosure. Data were assessed by comparing domestic companies both nationally and in the context of international standards. According to TILS, ESO received the maximum score of 100%, and compared to similar evaluations carried out in previous years, it improved the indicator by more than 20%.

Vilnius Combined Heat and Power Plant launched the first public tendering procedure for waste acceptance

In April, Vilnius Combined Heat and Power Plant, that will start operate in 2020, launched the public tendering procedure for waste acceptance and called all municipal waste managers to participate in the procedure. This is the first public tendering procedure that was launched by Vilnius Combined Heat and Power Plant. Municipal, non-recyclable but energy-rich waste will be used for energy production during the procedure. There are plans to offer the tenderers during the competition to handle up to 80 thousand tons of non-recyclable waste that in Vilnius Combined Heat and Power Plant will be turned into heat and electricity. A public tendering procedure was selected to accept waste for energy production because it creates a level playing field for all market players to properly handle waste that would otherwise be disposed in a much more polluting and expensive way in landfills. The installed electricity generation capacity of Vilnius Combined Heat and Power Plant that burns waste and biofuel will reach 92 MW (of which the capacity of a part of waste will be about 19 MW), while the heat production capacity – about 229 MW (of which the capacity of a part of waste will be about 60 MW). The total municipal waste management capacity is about 160 thousand tonnes per year. The total electricity produced by the Combined Heat and Power Plant will suffice to meet the needs of about 230,000 households, and the total heat produced – about 50% of the amount of heat supplied in Vilnius by district heating. It is estimated that once the power plant is operational, heat consumers will save on average EUR 13 million euros per year. In addition, residents of the Vilnius region could save on average EUR 10 million per year by avoiding waste disposal in landfills. As soon as it becomes operational, the plant will contribute to environmental sustainability by reducing landfill space needs by approximately 95% due to the use of non-recyclable municipal waste for energy production. A functioning power plant will also contribute to the National Energy Independence Strategy of Lithuania.

Commercial activities

Ignitis offered its customers a way to reduce their electricity bills

With keen interest in its customers, the electricity and gas supply company Ignitis (former Lietuvos Energijos Tiekimas (LET)) urged its customers to check how much they could save on electricity if they had chosen the right tariff plan. The company's analysis has shown that more than a tenth of electricity consumers could pay less. An analysis of energy consumption and selected tariff plans conducted by LET has shown that the consumers have chosen their plans without taking into account their energy consumption habits and quantities. The 12-month analysis has shown that nearly 200,000 LET customers who have opted for the less favourable tariff plan could pay less for electricity. The customers having selected the most favourable plan could save EUR 150 on average per year.

Geton Energy joined Nasdaq Commodities OMX in Scandinavia

Geton Energy, operating on the wholesale electricity market of Poland since 2017, has joined Nasdaq Commodities OMX exchange in Scandinavia. This way, the Company is expanding the wholesale electricity trading portfolio in the region. This will help diversify the company's wholesale electricity portfolio and broaden its operational geography. Experience of trading in electricity and derivative instruments gained in Poland will also contribute to the enhancement of competences of the Group companies operating in Lithuania.

An Online Platform Saulės Parkai has Been Launched

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Ignitis Group (former Lietuvos energija) introduced a platform Ignitis Saulės Parkai, making it possible for all residents of flats in apartment buildings to use a part of an already installed solar power plant to "generate" electricity. A web page has been launched in October, where they can calculate solar power requirements and make a supply order. Amendments to the Law on Energy from Renewable Sources and the Law on Electricity laws have entered into force, introducing a new small green energy development model that allows the production of electricity from renewable energy sources and its use in geographically different locations. This means that the consumer will be able to use the energy generated by the solar power plant regardless of its location. Residents willing to become electricity generating consumers will not necessarily have to build their own power plants. Residents of private houses or blocks of flats will be able to buy electricity capacity satisfying their needs for electricity from solar farms.

50 Ignitis ON charging stations for electric vehicles were launched in Vilnius

The first 50 Ignitis ON charging stations for electric vehicles were launched in Vilnius. In terms of number, this network is the largest in Lithuania. It will take as little as 30 minutes to fully charge an electric car at most of these charging stations. The modern electric vehicle infrastructure in the capital is the first step in the development of the Ignitis ON platform. With the Ignitis ON mobile application, users will be provided with all the relevant information, including the nearest location of charging stations on the map, routes to the nearest charging station, rates applicable, its availability, and the types of connectors available. Other charging station developers are expected to join the platform in the future. A total of 59 high-capacity electric vehicles charging stations of Ignitis ON are planned to be installed in Vilnius with a total investment of EUR 1.8 million. The network of stations will cover the entire territory of the capital, including areas further away from the city centre.

Transparency and innovations

Ignitis Group (former Lietuvos energija) on the Nasdaq Award for Investor Relations

During the solemn ceremony of the Nasdaq Baltic Market Awards 2019, Ignitis Group received an award for the best bond issuer relations with investors. The award was given to the company after evaluating the quality of information disclosure in annual and other statements, transparent governance of the company and its presentation to investors, and other criteria.

Ignitis Group Transfers Its Experience in the Fight Against Corruption to Other Companies

In May, Ignitis Group, seeking to ensure the highest requirements of transparency and anti-corruption, invited companies and state institutions to share their experiences in preventing possible corruption and ensuring transparent operation. The conference "Good Practices and Challenges for the Application of the Law on Protection of Whist-blowers“, organized together with the State Tax Inspectorate (STI), is the second such event for anti-corruption professionals. The representatives of Lietuvos Energija, the Prosecutor General's Office, the State Tax Inspectorate, the Special Investigation Service, other institutions and state-owned companies take part in the conference. On Friday, the representatives of more than 30 companies and institutions participated in the discussion organised by the group about the Law on Protection of Whist-blowers that was held on Friday. This year, the Law that enshrines the protection of whist-blowers came into force. The law that prevents the whistle-blower from being dismissed, demoted or otherwise prosecuted. Lietuvos Energija Group has accumulated long experience in preventing corruption and allows for anonymous reporting of violations. The Group aims to implement one of the most advanced corruption prevention management systems and to certify itself according to the international ISO 37001 standard.

Cooperation Agreements with the Programming School were Signed

Implementing the Strategy LE 2030 and preparing for the global transformation of the energy sector, Ignitis Group expects to attract data analysts, data engineers and data analytics project managers with skills in big data and artificial intelligence signed a partnership agreement with the adult coding school Vilnius Coding School and programming academy CodeAcademy. Under the signed cooperation agreement, the schools will give Ignitis Group the opportunity to attract its graduates, while LE, in turn, will be able to offer them work or traineeship opportunities. Furthermore, the agreement will open up opportunities for cooperation in the development of Ignitis Group employees. This way, advanced analytics, robotization, artificial intelligence and other competencies will be further developed in Ignitis Group.

Investments in Start-ups

The Smart Energy Fund powered by Ignitis Group, and managed by Contrarian Ventures along with Honda, Japanese car manufacturer, and other partners invested in Moixa, UK-based company developing smart energy storage devices and virtual power plants technologies. UK storage start-up attracted a joint total of EUR10 million in funding. The Smart Energy Fund, as a minor partner, has invested EUR 500 thousand. The investors in the funding round also include Japanese investment house ITOCHU Corporation and venture capital investor First Imagine! Ventures. Moixa has developed GridShare technology allowing to combine all home and electric car batteries into one virtual power plant.

Consolidated interim report of the Company and the Group for the 9 months of 2019 27

In June, the Smart Energy Fund powered by Ignitis Group, which is managed by Contrarian Ventures, invested in Estonian start-up Hepta Airborne. The drone created by the start-up company and equipped with software, allows power lines to be inspected without direct human intervention. The investments of the Smart Energy Fund in a start-up Hepta Airborne amount to EUR 300 thousand.

In July, the Smart Energy Fund powered by Ignitis Group, which is managed by Contrarian Ventures, invested in Norwegian start-up Choose, which mitigates the effects of climate change. This globally recognised and multi-award winner start-up has created a platform through which individuals and organizations can simply compensate carbon dioxide they have created and thus contribute to reduction of air pollution. The total investments of all investing partners, including Norwegian Wiski, Katapult, and German Vito, amount to EUR 4 million. The investment of the Smart Energy Fund amounts to EUR 300 thousand. In July, the Smart Energy Fund powered by Ignitis Group, which is managed by Contrarian Ventures, invested in Lithuanian start-up LastMile which applies smart energy solutions. The start-up has created a platform that allows the residents and businesses to simply order goods and receive them within an hour using electric and non-polluting transport. The investments of the Smart Energy Fund in a start-up LastMile amount to EUR 50 thousand. LastMile will use this initial investment to develop its business and platform.

In August, the Smart Energy Fund powered by Ignitis Group, which is managed by Contrarian Ventures, invested in a start-up Inion which develops a platform for optimizing and monitoring electricity produced by solar power plants. The start-up has developed both hardware and software that allows manufacturing users not only to use electricity more efficiently, but also combines equipment of different manufacturers and allows the owner of the solar power plant to monitor data on a single platform. The investments of the Smart Energy Fund in a start-up Inion amount to EUR 50 thousand. Inion will use this investment to develop trading platform and to expand local market. In October, the Smart Energy Fund powered by Ignitis Group, which is managed by Contrarian Ventures, invested in UK-based electric bike subscription service Bolt Bikes. It is the world's first commercial-grade e-bikes subscription offering providing with a short-term vehicle rental service. The Smart Energy Fund invested in partnership with a leading venture capital fund Maniv Mobility. The latter manages the money of investors, such as BMW, Hyundai, LG Electronics, Shell ir Deutsche Bahn. The Smart Energy Fund invested EUR 136 thousand (USD 150 thousand) in Bolt Bikes, while Maniv Mobility investment reached USD 2 million. With this financing, Bolt Bikes is looking to increase its fleet, keep on adding talent to their team and rolling out new features for users. In October, the Smart Energy Fund powered by Ignitis Group, which is managed by Contrarian Ventures, invested in Israel-based company H2Pro which develops innovative and green hydrogen production technology that produces 30% more hydrogen than traditional electrolysis per kWh. Smart Energy Fund invested more than EUR 252 thousand in H2Pro. Investors in Israel-based start-up also include Hyundai and a few other companies. The high-tech start-up H2Pro is founded and led by Talmon Marco, the founder of Viber, a famous instant messaging app.

Smart Energy Fund powered by Ignitis Group and managed by Contrarian Ventures invests in start-ups that are developing new technologies in the energy technology field. The Fund also manages AcceleratorOne Program which together with Ignitis Group invests in early stage start-ups and helps them grow. The program tests pilot products and services in the local market, providing further opportunity to grow internationally.

Purification of activities

Continuing the sale of Data Logistics Center and Transporto valdymas

Ignitis group continues divestment of its non-core activities and resumes the sale of shares of Data Logistics Centre (DLC) and Transporto valdymas (TPV). DLC is one of the most advanced IT and telecommunications companies in the Baltic region, which provides data transmission and data centre services. Ignitis group resumes a sale of 79.64% of DLC shares it owns. Co-owner of DLC - Litgrid, also offers its 20.36% of DLC shares for sale. TPV is one of the biggest vehicles lease and fleet management services provider in Lithuania. Ignitis group sells 100% TPV shares

Unused real estates for sale

NT Valdos, a company belonging to Ignitis Group, offered real estate objects to the market in August at already eighteenth auction. The company sells the property that is not in use in the main activities of the energy group, therefore, buyers are invited to take interest in and advantage of this opportunity. Since 2016, NT Valdos has sold real estate for EUR 99 million, including VAT, in public auctions and tenders.

Delisting of Ignitis Group's subsidiaries shares and the potential IPO

Ignitis group is considering the most efficient capital raising alternatives, and as of now see the entire group Initial Public Offering (IPO) as the most attractive. Ignitis Group can expect to maximize the value from a possible (IPO) only once its subsidiaries Energijos Skirstymo Operatorius (ESO) and Ignitis Gamyba are delisted.

The Company’s and the Group’s social responsibility activities, risk management and other issues are detailed in annual report.

Consolidated interim report of the Company and the Group for the 9 months of 2019 28

CORPORATE GOVERNANCE

The aim of the Ignitis Group, with the State of Lithuania as its shareholder, is to ensure effective and transparent operations. In order to achieve this aim, the reorganisation was carried out in 2013, during which the corporate governance of the Group was reorganised and improved.

The new governance structure and model of the Group have been developed on the basis of the most advanced international and national practices, following the recommendations published by the Organisation for Economic Cooperation and Development (OECD), having regard to the Corporate Governance Code of companies listed on the NASDAQ Vilnius exchange, Guidelines on the Governance for State- owned Enterprises recommended by the Baltic Institute of Corporate Governance (BICG). The corporate governance model of the power generation companies’ group was implemented in observance of the Corporate Governance Guidelines approved by the Ministry of Finance of the Republic of Lithuania on 7 June 2013 and renewed on 1 June 2017 (the Guidelines are available at www.le.lt).

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

The rights and obligations of the shareholder are implemented by the Ministry of Finance of the Republic of Lithuania, which adopts the main decisions relating to the implementation of the ownership rights and obligations.

For many years Ignitis Group, UAB has been recognised as the best managed state- owned company. The company received the highest possible “A+” rating. The analysis was made by the Governance Coordination Centre which assesses state-owned companies by different criteria and establishes the good governance index.

Consolidated interim report of the Company and the Group for the 9 months of 2019 29

SUPERVISORY BODIES

Supervisory Board

Under the Corporate Management Guidelines, the Supervisory Board is a collegial supervisory body provided in the Statute of the Company. The Supervisory Board is elected by the General Meeting of Shareholders for the period of four years. The Supervisory Board of Lietuvos Energija consists of 5 members – 2 members representing the Ministry of Finance and 3 independent members. The Supervisory Board elects its Chairman from its members. Such a method for the formation of the Supervisory Board is in line with the corporate management principles. No members of the Supervisory Board have any participation in the capital of the company or group enterprises. At the date of publication of the report, the Supervisory Board of Lietuvos Energija consisted of the following members (the term office from 30/08/2017 to 30/08/2021):

Darius Daubaras Daiva Lubinskaitė-Trainauskienė Andrius Pranckevičius Aušra Vičkačkienė Daiva Kamarauskienė (born 1973) (born 1970) (born 1976) (born 1974) (born 1963)

Chairman, independent member Independent member Independent member Member Member (since 1/2/2019 (since 22/12/2017)

Education University of Cambridge, Master’s ISM University of Management and Kaunas University of Technology, Vilnius University, Vilnius University Faculty of Economics, degree in International Relations; Economics, Master’s Degree; Bachelor’s degree in Business Master’s degree in Management and master’s degree. University of Pennsylvania, USA, Public Relations Professional Studies at Administration and Master’s degree in Business Administration; Business Administration Master’s Vilnius University; Marketing Management; Vilnius University, Bachelor’s degree in Degree in the field of finance and Vilnius University, Diploma of a Harvard Business School, Leadership Management and Business business management; Specialist in Philology Development; Administration; University of Denver, USA, Bachelor’s Degree in Business Administration with a major in finance and management; Place of SAUDI ARAMCO Senior Adviser; Thermo Fisher Scientific Baltics, UAB Linas Agro Group, AB Deputy Chief Assets Management Department of the Budget Department of the Ministry of employment, Member of the Supervisory Board of Director of Personnel; Executive Officer, Member of the Board; Ministry of Finance, Director; Finance, Director position “Smart Energy Fund powered by Association of Personnel Management Kekava PF, Chief Executive Officer and Būsto paskolų draudimas, UAB Board Lietuvos Energija” (until 01/7/2019) Professionals (PVOA), Board Member Chairman of the Board; member. Linas Agro, AB (Lithuania,) Member of the Board; Lielzeltini, SIA (Latvia), Chairman of the Board; Broileks, SIA (Latvia), Chairman of the Board; Cerova, SIA (Latvia), Chairman of the Board.

Changes in the composition of the Company’s Supervisory Board during the reporting period: On the 1st of February, 2019, the Ministry of Finance of the Republic of Lithuania submitted to the Company a shareholder's decision to appoint Daiva Kamarauskienė the member of the Supervisory Board of the Company.

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The main functions and responsibilities of the Supervisory Board are as follows Members of the Risk Management and Business Ethics Supervision consideration and approval of the Company and Group companies’ business strategy, Committee (during the reporting period): analysis and evaluation of the information on the implementation of the Company’s activities strategy, provision of this information to the annual General Meeting, election and removal of the Board Members, supervision of activities of the Board and the CEO, Number of shares Committee held at the Company Employment provision of comments to the General Meeting of Shareholders on a set of financial member statements, appropriation of profit or loss, and annual report. The Supervisory Board and the Group also addresses other matters within its competence. Andrius Linas Agro Group, AB Deputy Chief Executive The Supervisory Board is functioning at the Group level, i.e., where appropriate, it Pranckevičius Officer, Member of the Board; addresses the issues related not only to the activities of the Company, but also to the Chairman, Kekava PF, Chief Executive Officer and Chairman of activities of its subsidiaries or the activities of their management and supervisory bodies. independent the Board; member - Linas Agro, AB (Lithuania,) Member of the Board; Committees of the Supervisory Board Lielzeltini, SIA (Latvia), Chairman of the Board; Broileks, SIA (Latvia), Chairman of the Board; Cerova, SIA (Latvia), Chairman of the Board. The committees are formed by the Supervisory Board to perform their functions and duties effectively. They have the competence to submit conclusions, opinions and suggestions to the Supervisory Board. The committee must have at least three Darius SAUDI ARAMCO Senior Adviser members, where at least one member has to be a member of the Supervisory Board Daubaras Chairman of the Supervisory Board of Ignitis Group, and at least one member has to be independent. The members of the committees are Independent independent member member - Member of the Supervisory Board of “Smart Energy elected for the period of four years. Fund powered by Lietuvos Energija” (until 01/7/2019)

The following committees of the Supervisory Board are operating in Ignitis Group, UAB: • The Risk management and business ethics supervision committee is Šarūnas R. Mištauto ir T. Milickio Law Firm “Konsus”, Lawyer responsible for submission of conclusions and suggestions regarding Rameikis management and control system in the group of companies and/or status of Independent member - implementation of the main risk factors and risk management tools to the Supervisory Board; for compliance with business ethics, maintenance of bribery and corruption risk system and submission of recommendations to the

Supervisory Board; The term of office of the incumbent Risk Management and Business Ethics Supervision • The Audit committee is responsible for submission of objective and impartial Committee will last until 19 April 2022. conclusions and suggestions regarding audit, related party transactions, as Main functions of the committee: provided in the Law on Companies of the Republic of Lithuania, and functioning of internal control system in the group of companies to the Supervisory Board; • To monitor the way the risks relevant for the achievement of the targets set for • The Nomination and remuneration committee is responsible for submission the Company and its group entities are identified, assessed and managed; of conclusions and suggestions about appointment, revocation of the • To assess the adequacy of internal control procedures and risk management management and supervisory bodies of the group of companies, and about measures in view of the risks identified; incentive issues to the Supervisory Board, as well as for the evaluation of • To assess the progress achieved in the implementation of risk management performance of the Board and its members and submission of appropriate measures; opinion. The committee’s functions also cover formation of common • To monitor the process of risk management; remuneration policy in the group of companies, determination of the size and • To analyse the financial possibilities for the implementation of risk management composition of remuneration, incentive principles, etc. measures; • To assess the risks and the risk management plan for the Company and its If necessary, other committees may be formed according to the ad hoc principle (e.g., group entities; to solve special issues, to prepare, supervise or coordinate strategic projects, etc.). • To assess the periodic cycle of risk identification and assessment; On the date of publication of the report, the committees of Risk management and • To monitor availability of risk registers, analyse their data, provide business ethics supervision, Audit and Nomination and remuneration were operating in recommendations; Ignitis Group. • To monitor the availability of internal documentation pertaining to risk management;

Consolidated interim report of the Company and the Group for the 9 months of 2019 31

• To assess the tolerance and adequacy of internal documents that regulate fight Main functions of the committee: of the group of companies against bribery and corruption, and to monitor • To monitor the preparation process of financial statements of the Company and periodically their implementation/ compliance; the group of companies paying particular attention to assessment of suitability • To monitor periodically information related to the controlling actions of and consistency of applied accounting methods; assurance of business ethics, events and unsolved incidents (security of • To monitor effectiveness of internal control and risk management systems of transparency, prevention of bribery, management/prevention of corruption risk, the Company and the group of companies of Lietuvos Energija that affect etc.); financial accountability of the audited company; • To perform other functions assigned to the Committee based on the decision • To monitor independence and objectivity of auditors and audit companies, and of the Supervisory Board. to submit recommendations regarding selected audit company; • To supervise audit processes of the Company and the group of companies, to Members of the Audit Committee (during the reporting period): verify audit’s effectiveness and reaction of the administration to the recommendations submitted in the management letter by the audit company; • To monitor effectiveness of internal audit function of the Company and the Number of shares group of companies, to submit recommendations to the Supervisory Board held at the Committee member Employment regarding selection, appointment and dismissal of a manager of the Company’s Company and the Internal Audit Service, to coordinate and evaluate periodically the work of the Group Company’s Internal Audit Service, to discuss verification results, removal of Irena The Authority of Audit, Accounting, Property Valuation defects and implementation of internal audit plans; Petruškevičienė and Insolvency Management under the Ministry of • to approve regulations of the Company’s Internal Audit Service and plan of Chairman, Finances of the Republic of Lithuania, Member of Audit internal audit; independent Oversight Committee; • To monitor whether the activities of Lietuvos Energija and the group of member - Member of Audit Supervision Committee European companies of Lietuvos Energija are in compliance with the laws of the Republic Stability Mechanism (ESM), Member of Auditors Board; of Lithuania, other legal acts, Articles of Association and business strategy; Lietuvos geležinkeliai, AB Member of Audit Committee; • To submit opinion to the Company’s enterprises, whose shares may be sold in MAXIMA GRUPĖ, UAB Chairman of Audit Committee. the regulated market, regarding transactions with the related party, as provided in paragraph 5 of article 372 of the Law on Companies of the Republic of Danielius Merkinas NNT Termo, UAB CEO, Chairman of the Board; Independent NNT LT, UAB CEO, Chairman of the Board; Lithuania; 5. member Nordnet, UAB Head of Commerce, Chairman of the • To assess and analyse other issues assigned to the Committee by the Board; Supervisory Board; - Mercado prekyba, UAB CEO; • To perform other functions related to the committee’s functions and provided Litcargo, UAB Chairman of the Board; in the legal acts of the Republic of Lithuania and the Corporate Governance Lietuvos paštas AB Member of the Board. Code for the Companies listed on Nasdaq Vilnius.

Aušra Vičkačkienė Member of the Supervisory Board of Ignitis Group; Member Lithuanian Ministry of Finance, Asset Management - Department, Director; Būsto paskolų draudimas, UAB Member of the Board. Ingrida Muckutė The Ministry of Finance of the Republic of Lithuania,

Member - Head of Accountability, Audit, Property Valuation and (From 18/05/2018) Insolvency.

Šarūnas Rodl & Partner, UAB CEO (until August 2019) Radavičius Independent - member (from 10/05/2018)

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

Consolidated interim report of the Company and the Group for the 9 months of 2019 32

Members of the Nomination and Remuneration Committee (during the reporting The term of office of the incumbent Nomination and Remuneration Committee will last period): until 21 September 2021.

Main functions of the committee: Number of Committee shares held at • To provide suggestions in relation to the long-term remuneration policy of the Employment member the Company Company and its group entities (fixed pay, performance-based pay, pension and the Group insurance, other guarantees and remuneration forms, compensations, severance pay, other items of the remuneration package), and the principles Daiva - Thermo Fisher Scientific Baltics, UAB of compensation for expenses related to the person’s activities; Lubinskaitė- Director of Personnel; Trainauskienė Association of Personnel Management • To make assessments and provide suggestions in relation to the bonus Chairman, Professionals, Board Member (tantieme) policy of the Company and its group entities; independent • To monitor compliance of the remuneration and bonus (tantieme) policies of member the Company and its group entities with international practice and good governance practice guidelines, and provide suggestions for their Aušra Vičkačkienė - Member of the Supervisory Board of Ignitis improvement; Member Group; • To provide suggestions in relation to bonuses (tantiemes) upon distributable Assets Management Department of the Ministry of Finance, Director; profit (loss) for the financial year of the Company and its group entities; Būsto paskolų draudimas, UAB Board • To assess the terms and conditions of inter-company agreements between the member. Company and its group entities and the members of the management bodies of the Company and its group entities; Lėda Turai – - L-CON Global UAB leadership training • To assess the procedures for recruitment and hiring of candidates to the Petrauskienė partner, shareholder positions of management bodies and top management of the Company and its Member group entities, and establishment of qualification requirements for them; (Since 19/04/2018) • To assess on a continuous basis the structure, size, composition and activities of management and supervisory bodies of the Company and its group entities; • To oversee and assess the implementation of measures ensuring business Daiva - Member of the Supervisory Board of Ignitis continuity of management and supervisory bodies of the Company and its Kamarauskienė Group; group entities; Member Budget Department of the Ministry of (Since 22/03/2019) Finance, Director • To perform other functions falling within the scope of competence of the Committee as decided by the Supervisory Board.

Consolidated interim report of the Company and the Group for the 9 months of 2019 33

MANAGEMENT BODIES

Board The Board is a collegial management body provided for in the Articles of Association of the Company. Board members are elected by the proposal of the Committee of the Appointment and Remuneration for the term of office of four years and removed from office by the Supervisory Board. The Board consists of 5 members and elects the Chairman, the CEO of the Company, from among its members Board members have to ensure the appropriate performance of Company activities/mentoring of the respective areas at Group level in the field of its competences. No members of the Board have any participation in the capital of the company or group enterprises. Remuneration for the activities in the Board is paid in accordance with the guidelines established by the shareholder of the Company. At the date of publication of the report, the Board of Lietuvos Energija consisted of the following members (the term office from 01 February 2018 to 31 January 2022):

Darius Maikštėnas Vidmantas Salietis Darius Kašauskas Dominykas Tučkus Živilė Skibarkienė (born 1970) (born 1987) (born 1972) (born 1982) (born 1976)

Chairman of the Board, CEO Member of the Board, Commerce and Member of the Board, Finance and Member of the Board, Infrastructure Member of the Board, Organisational Services Director Treasury Director and Development director Development Director Education Harvard Business School, General Stockholm School of Economics in Riga ISM University of Management and L. Bocconi University (Italy), Master’s degree Mykolas Romeris University, Management Program; (SSE Riga), Economics, Doctoral studies of Social in Finance; Faculty of Law, Baltic Management Institute, Executive MBA Bachelor’s degree in Economics and Sciences in the field of Economics; L. Bocconi University (Italy), Bachelor’s Doctoral degree in Social Sciences Field of degree; Business ISM University of management and degree in Business Management and Law; Kaunas University of Technology, Bachelor‘s Economics, BI Norwegian Business School, Administration Vilnius University, Faculty of Law, Master’s degree in Business Administration Master’s degree in Management; degree in Law Vilnius University, Master’s degree in Economics

Darbovietės, Former CEO of Wider Communications, an Ignitis Latvija SIA, Member of the Board; Duomenų logistikos centras UAB Chairman Ignitis gamyba, AB Chairman of the Verslo aptarnavimo centras, UAB Member pareigos international Silicon Valley based company Ignitis Eesti OU, Chairman of the Board; of the Board; Supervisory Board; of the Board (from 18/06/2019), Chairman that offers innovative telecommunications Energijos Tiekimas UAB Chairman of the Lithuanian Energy Support Foundation, Ignitis, UAB Member of the Board (until of the Board (from 31/07/2019); solutions, which operates under the WiderFi Board (until 01/06/2019); Member of the Board; 01/06/2019); Technologijų ir inovacijų centras, UAB brand name in the US and UK. Former Ignitis, UAB Chairman of the Board (until 288th DNSB Vingis, Member of the Revision Ignitis, UAB Member of the Supervisory Member of the Board (from 28/06/2019), advisor of venture capital fund Nextury 01/06/2019); Commission; Board (from 01/06/2019); Chairman of the Board (from 31/07/2019); Ventures; former vice-president of Omnitel; Ignitis tiekimas, UAB Member of the Energetikos paslaugų ir rangos organizacija Eurakras UAB Member of the Board Elektroninių mokėjimų agentūra, UAB former independent member and Chairman Supervisory Board (from 01/06/2019), UAB Chairman of the Board; Tuulueenergia, OU Chairman of the Board member of the Board; of the Board of LESTO. Chairman of the Supervisory Board (from Energijos skirstymo operatorius, AB (until 28/1/2019); Ignitis gamyba, AB Member of the 22/08/2019) Member of the Supervisory Board. Vilnius kogeneracinė jėgainė, UAB Supervisory Board; Elektroninių mokėjimų agentūra, UAB Chairman of the Board; member of the Board; Ignitis Renewables, UAB Member of the NT Valdos, UAB chairman of the board; Board (since 3/1/ 2019); Gamybos optimizavimas, UAB member of Smart Energy Fund, KŪB powered by Ignitis the Board Group, Member of the Advisory Committee. There were no changes in the composition of the Company’s Board during the reporting period.

Consolidated interim report of the Company and the Group for the 9 months of 2019 34

Information about the payments to the members of supervisory and management bodies of the Company during the reporting period

Calculated 1/12 share of Average amounts for the annual variable remuneration Fixed monthly activities remuneration for the Other payments remuneration (January-June Position, full name for the results activities as the (before taxes, (before taxes, 2019) in the of previous member of the EUR) EUR) Supervisory year (before Board (before Board* (before taxes, EUR) taxes, EUR) taxes, EUR) Members of the supervisory bodies* Darius Daubaras, chairman of the Supervisory Board, member of the Risk - - 12 400 - - management and business ethics supervision committee (independent member)

Andrius Pranckevičius, member of the Supervisory Board, chairman of the Risk - - 5 288 - - management and business ethics supervision committee (independent member)

Daiva Liubinskaitė-Trainauskienė, member of the Supervisory Board, chairwoman of the Nomination and remuneration committee (independent - - 870 - - member) Šarūnas Rameikis, member of the Risk management and business ethics - - 1 425 - - supervision committee (independent member) Irena Petruškevičienė, chairwoman of the Audit committee (independent - - 9 413 - - member)

Danielius Merkinas, member of the Audit committee (independent member) - - 7 966 - -

Šarūnas Radavičius, member of the Audit committee (independent member) - - 6 308 - -

Lėda Turai-Petrauskienė, member of the Nomination and remuneration - - - - - committee (independent member) Members of the management bodies Darius Maikštėnas, CEO 7 866 2 508 Darius Maikštėnas, chairman of the Board - - - 2 550 - Živilė Skibarkienė, member of the Board - - - 1 815 - Darius Kašauskas, member of the Board - - - 1 815 - Dominykas Tučkus, member of the Board - - - 1 815 - Vidmantas Salietis, member of the Board - - - 1 815 -

* Members of the supervisory bodies can only be paid if they are independent members of the Supervisory Board and/or independent members of the committees of the Supervisory Board. Data on actual payments made in accordance with deeds submitted by independent members during the reporting period is provided.

Consolidated interim report of the Company and the Group for the 9 months of 2019 35

ORGANISATIONAL CULTURE AND EMPLOYEES Company Total number of employees Our work at Ignitis Group is based on our core values: responsibility, openness, Energijos skirstymo operatorius, AB 2,409 partnership, and development. We strive to continually maintain a value-based Verslo aptarnavimo centras, UAB 506 organisational culture which encourages the employees to continuously improve themselves, helping colleagues and the organisation as a whole. Ignitis gamyba, AB 354 Ignitis grupės paslaugų centras, UAB 183 In response to the shareholder‘s expectation, we carry out sustainable, socially responsible development by creating a modern, globally competitive company. Through Ignitis, UAB 117 the implementation of strategy LE 2030 of Ignitis Group of Companies, whose core Ignitis Group, UAB 109 vision is to become a globally competitive energy company which creates value for Transporto valdymas, UAB 51 Lithuania, we strive to attract and retain competent, fast-learning, technologically advanced, globally-minded and innovative staff. We build a long-term partnership with Vilniaus kogeneracinė jėgainė, UAB 38 our employees and a shared successful future with the employees by ensuring a mutual Kauno kogeneracinė jėgainė, UAB 35 benefit. Energetikos paslaugų ir rangos organizacija, UAB 21

On 30 June 2019, 3,875 employees worked in the Group (see table). The average length NT Valdos, UAB 19 of service of the employees in the Group is 13 years. The majority of the employees of Duomenų logistikos centras, UAB 13 the Group were men - 70%, whereas women – 30%. Distribution by gender of the employees who hold executive positions is very similar: 70% of executives were men, Gamybos optimizavimas, UAB 7 and 30% were women. Lietuvos energijos renewables, UAB 7 Elektroninių mokėjimų agentūra, UAB 3

Eurakras, UAB 1 VĖJO GŪSIS, UAB 1 VĖJO VATAS, UAB 1

In total 3 875

Consolidated interim report of the Company and the Group for the 9 months of 2019 36

Average salary Structure of the Companys employees' by 1,988

education, % Development of the Organisation 68 13 19 To achieve the goals set in the LE 2030 strategy, the Group invests in the development of the competencies of its people, as well as in attracting talents not only in Lithuania 0 20 40 60 80 100 but also in the surrounding countries. Higher Advanced vocational Secondary The strategic directions of development of the Group‘s organisation include a systematic approach to reorientation of existing competences to new areas of activity, gaining new Structure of the Companys employees' by competencies, flexible teamwork, employee experience, and operational efficiency. education, % Staff development 97 12 Promoting employee development through innovative self-learning pathways that make up the learning eco-system represents the goal of staff development. 0 20 40 60 80 100 Higher Advanced vocational Secondary The group applies the 70/20/10 educational model where 70% comprise development in the workplace, 20% - learning from others, and 10% - formal learning. We strive for the education process to be based on business needs, strategic competence Salary of the Company‘s employees during the first three quarters of 2019 development, independence oriented, attractive, fast, not too demanding, and (before taxes): innovative. The employees choose educational activities that are best suited to their position, job type, level of competence, knowledge and skills. Category Average salary, EUR Practical training possibilities Head of the company 9,330 Top level executives 7,253 The Companies of the Group create conditions for high school and vocational students to adapt theoretical knowledge and acquire practical skills. During the period from 1 Mid-level managers 5,288 January 2019 to 30 September 2019, 16 trainees completed the traineeship in the Experts, specialists 3,392 Group, 1 of them became the employee of the Group.

Average salary 4,240 Opinion of every employee matters

Salary of the Group‘s employees during the first three quarters of 2019 In 2019, the Group asks for the employee opinion about their experience in the (before taxes): organisation, organisational culture, process and working conditions using “Employee Net Promoted Score“ – eNPS survey. Every quarter, the employees are invited to participate in an anonymous survey of their experience in areas such as employee Category Average salary, EUR selection and recruitment, adaptation, motivation, training, performance evaluation, and farewell process. Later, when the results of survey are available, they are analysed by Head of the company 7,196 the employees who are responsible for the People and Culture area, and by the Heads Top level executives 6,632 of the units of the Companies of the Group, who provide steps to improve specific operational processes. Mid-level managers 3,317 The improving result of eNPS survey, showing the improving employee experience in Experts, specialists 1,890 the organisation, represents the goal of the Group. Workers 1,398

Consolidated interim report of the Company and the Group for the 9 months of 2019 37

SUPERVISORY AND MANAGEMENT BODIES OF THE LISTED COMPANIES OF THE GROUP

As at 30 September 2019, the Supervisory Board of Energijos Skirstymo Operatorius consisted of the following members (term of office till 29 March 2022):

Participation in the capital of the Company and Group Full name Term of office Employment companies, % Darius Maikštėnas 30/03/2018– - Ignitis Group, UAB CEO Chairman 29/03/2022 Darius Kašauskas 30/03/2018– - Ignitis Group, UAB Finance and Treasury Director Member 29/03/2022 Kęstutis Betingis 28/05/2018– - Betingio ir Ragaišio Lawyer Firm, lawyer Independent member 29/03/2022

During the reporting period, there were no changes in the composition of the Supervisory Board of Energijos Skirstymo Operatorius, AB. On the 6th of August, 2019, the Company received a letter from Ignitis Group, UAB (former Lietuvos Energija, UAB) informing that after the approval of the Supervisory Board of Ignitis Group, UAB Dalia Jakutavice and Žaneta Kovaliova have been nominated for the positions of the member of Supervisory Board of ESO.

As at 30 September 2019, the Board of Energijos Skirstymo Operatorius consisted of the following members (term of office till 26 December 2022):

Participation in the capital of the Company and Group Full name Term of office Employment companies, % Mindaugas Keizeris 27/12/2018– - Energijos skirstymo operatorius, AB CEO Chairman 26/12/2022 Augustas Dragūnas 27/12/2018– - Energijos Skirstymo Operatorius, AB Director of Finance and Administration Member 26/12/2022 Virgilijus Žukauskas 27/12/2018– - Energijos Skirstymo Operatorius, AB Director of Network Operations Member 26/12/2022 Ovidijus Martinonis 27/12/2018– - Energijos Skirstymo Operatorius, AB Director of Network Development Member 26/12/2022 Renaldas Radvila 27/12/2018– - Energijos Skirstymo Operatorius, AB Director of the Services Member 26/12/2022

During the reporting period, there were no changes in the composition of the Board of Energijos Skirstymo Operatorius, AB.

As at 30 September 2019, the Supervisory Board of Ignitis gamyba, AB consisted of the following members (term of office until 25 March 2022):

Participation in the capital of the Company and Group Name, surname Term of office Employment companies, % Dominykas Tučkus - 26/03/2018– Ignitis Group, UAB Infrastructure and Development Director Chairman 25/03/2022 Živilė Skibarkienė - 26/03/2018– Ignitis Group, UAB Organisational Development Director Member 25/03/2022

On 12 March, 2019, Ignitis gamyba, AB (former Lietuvos energijos gamyba, AB) received a letter from Ignitis Group, AB (former Lietuvos Energija, UAB) informing that after the approval of the Supervisory Board of Ignitis Group, AB Rimgaudas Kalvaitis has been nominated for the position of the member of the Board of the company and CEO. Accordingly, on the same day R. Kalvaitis submitted his request to resign from his current position as a member of the Supervisory Board of the Company. He is out of these duties from 27 March, 2019. During the reporting period, no new member of the Supervisory Board was elected. After the reporting period, on 26 July 2019 Mr. Edvardas Jatautas has been elected as an independent member of the Supervisory board of Ignitis gamyba, AB until the end of the term of office.

Consolidated interim report of the Company and the Group for the 9 months of 2019 38

As at 30 September 2019, the Board of Ignitis gamyba, AB consisted of the following members (term of office until 2 April 2022):

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

The Board and the Supervisory Board of Ignitis gamyba, AB (former Lietuvos energijos gamyba, AB) received the notice of Eglė Čiužaitė regarding her resignation from the office of CEO and thus on 7 January 2019 decided to remove E. Čiužaitė from the office of the company’s CEO from 21 January 2019. E. Čiužaitė also resigned from the office of the company’s Board member and chairwoman of the Board from 21 January 2019. The Production Director Darius Kucinas has been acting as a temporary CEO of the Company from 22 January 2019. On 27 March, 2019 the Board of the Company has elected Rimgaudas Kalvaitis as Chief Executive Officer of the Company.

Consolidated interim report of the Company and the Group for the 9 months of 2019 39

KEY INFORMATION ABOUT THE COMPANY AND THE GROUP

The interim report of Ignitis Group, UAB and its subsidiaries is prepared in As of 30 June 2019, the authorised share capital was divided into ordinary registered compliance with Resolution No 1052 of the Government of the Republic of Lithuania shares with the nominal value of EUR 0.29 each. All the shares are fully paid. of 14 July 2010 On the Approval of the Guidelines for Ensuring the Transparency of The control of the implementation of the budgets of the Group companies and the Activities of the State- owned Enterprises and Appointment of the Coordinating consolidated budget of the entire Group is performed on a monthly basis. If needed, Authority (27 March 2019 version, No 284) version and published on the Company’s the actual results of the components of the budget are presented to responsible website www.ignitisgrupe.lt. persons on a daily basis. Each month employees responsible for the budgetary implementation prepare explanations and submit substantiations and reasons for deviations of actual results under the separate line items of the budget to the Finance Company name Ignitis Group, UAB and Treasury Management Service. Each month the Finance and Treasury Service Company code 301844044 prepares the presentation on the companies‘ performance which includes the analysis of the budgetary implementation by the companies and the Group, and Authorised share capital EUR 1,212,156 thousand presents it at regularly held meetings of the companies‘ management. The Finance and Treasury Service is also responsible for drawing up consolidated annual and Paid-up share capital EUR 1,212,156 thousand interim financial statements. The assessment of the performance report includes the assessment of occurred deviations from the budgets and their causes. Employees Address Žvejų st. 14, LT-09310, Vilnius, Lithuania responsible for the budgetary implementation can make proposals on budgetary changes in case of significant deviations from income/expenses plans/the Telephone (+370 5) 278 2998 components of the budget.

Fax (+370 5) 278 2115 Information on the opinion of the auditor that carried out an independent audit: E-mail [email protected]

Website www.ignitisgrupe.lt Year Auditor Opinion

Legal form Private Limited Liability Company 2018 PricewaterhouseCoopers, UAB Unqualified 2017 PricewaterhouseCoopers, UAB Unqualified Date and place of registration 28 August 2008, Register of Legal Entities 2016 PricewaterhouseCoopers, UAB Unqualified

Register accumulating and Register of Legal Entities, State storing data about the Company Enterprise the Centre of Registers

Share capital The Company’s shareholders % (EUR ‘000)

The Republic of Lithuania represented by 1,212,156 100 the Ministry of Finance of the Republic of Lithuania

On 13 February 2013, the Company’s shares were transferred to the Ministry of Finance by the right of trust. With effect from 30 August 2013, the Company's name Visagino Atominė Elektrinė UAB was changed to Lietuvos Energija, UAB.

Consolidated interim report of the Company and the Group for the 9 months of 2019 40

INFORMATION ON CONTROLLED COMPANIESINFORMACIJA

Companies directly or indirectly controlled by Lietuvos Energija UAB are as follows (at the day of reporting):

Effective Share capital Company Registered office address ownership Main activities (EUR ‘000) interest (%) Ignitis gamyba, AB Elektrinės st. 21, Elektrėnai 96.82 187,921 Production and supply of electricity and trading Energijos skirstymo operatorius, AB Aguonų st. 24, Vilnius 94.98 259,443 Supply and distribution of electricity to the consumers; distribution of natural gas NT Valdos, UAB Geologų st. 16, Vilnius 100 37,295 Disposal of real estate, other related activities and provision of services A. Juozapavičiaus st. 13, Duomenų logistikos centras, UAB 79.64 4,033 Information technology and telecommunication services Vilnius Construction, repair and maintenance of electricity networks and related Energetikos paslaugų ir rangos Motorų st. 2, Vilnius 100 1,100 equipment, connection of customers to electricity networks, repair of energy organizacija, UAB equipment and production of metal structures Elektroninių mokėjimų agentūra, UAB Žvejų st. 14, Vilnius 100 1,370 Provision of collection services Ignitis Eesti, OÜ Narva st. 5, 10117 Tallinn 100 35 Elektros Energijos Tiekimas Darzciema st. 60, LV-1048, Ignitis Latvija SIA 100 500 Elektros Energijos Tiekimas Riga Puławska 2-B, PL-02-566, Ignitis Polska sp. z o.o. 100 PLN 10 million Elektros Energijos Tiekimas Warshaw Ignitis grupės paslaugų centras, UAB A. Juozapavičius st. 13, Vilnius 100 6,960 Provision of information technology and telecommunications and other services Public procurement organization and execution, accounting and personnel Verslo aptarnavimo centras, UAB P. Lukšio st. 5 b, Vilnius 100 580 administration services Ignitis, UAB Žvejų st. 14, Vilnius 100 40,140 Supply of electricity and gas and trade Lietuvos energijos paramos fondas Žvejų st. 14, Vilnius 100 3 Provision of support to projects, initiatives and activities, relevant to the society Vilniaus kogeneracinė jėgainė, UAB Žvejų st. 14, Vilnius 100 21,003 Modernization of the provision of centralized supply of heat in Vilnius city Kauno kogeneracinė jėgainė, UAB Žvejų st. 14, Vilnius 51 24,000 Modernization of the provision of centralized supply of heat in Kaunas city Tuuleenergia osaühing Keskus, Parnu (Estonia) 100 499 Production of renewable electricity EURAKRAS, UAB Žvejų st. 14, Vilnius 100 4,621 Production of renewable electricity VĖJO GŪSIS, UAB Žvejų st. 14, Vilnius 100 7,443 Production of renewable electricity VĖJO VATAS, UAB Žvejų st. 14, Vilnius 100 2,896 Production of renewable electricity VVP Investment, UAB Žvejų st. 14, Vilnius 100 250 Development of a renewable energy (wind) power plant project. Analysis and coordination of the activities of legal entities belonging to the Ignitis renewables, UAB P. Lukšio st. 5B, Vilnius 100 3 Company. Al. Grunwaldzka 82/368, 80- Pomerania Wind Farm sp. z o. o. 100 PLN 5 million Development of a renewable energy (wind) power plant project. 244 Gdańsk Transporto valdymas, UAB Smolensko st. 5, Vilnius 100 2,359 Vehicle rental, leasing, repair, maintenance, renewal and service Planning, optimization, forecasting, trading, brokering of electricity and other Gamybos optimizavimas, UAB Žvejų st. 14, Vilnius 100 350 energy production regime

Consolidated interim report of the Company and the Group for the 9 months of 2019 41

INFORMATION ON SECURITIES OF THE GROUP COMPANIES

The shares of Energijos Skirstymo Operatorius AB and Ignitis gamyba have been listed on the Official Listing of NASDAQ Vilnius Stock Exchange. The trading in shares of the companies was started on 11 January 2016 and 1 September 2011, respectively. The shares of the companies are traded only at NASDAQ Vilnius Stock Exchange.

Ignitis gamyba, AB as at 30 June 2019, had issued 648,002,629 ordinary registered shares with the nominal value of EUR 0.29. Shares of Ignitis gamyba have been listed on the main list of NASDAQ OMX Vilnius stock exchange. ISIN code of the issue is LT0000128571. Ignitis gamyba has concluded the securities accounting agreement on the accounting of securities issued and management of personal securities accounts with SEB Bankas AB.

Energijos skirstymo operatorius, AB as at 30 September 2019, had issued 894,630,333 ordinary registered shares with the nominal value of EUR 0.29. Shares of Energijos Skirstymo Operatorius AB have been listed on the main list of NASDAQ OMX Vilnius Stock Exchange. ISIN code of the issue is LT0000130023. Energijos Skirstymo Operatorius, AB has concluded the agreement on the accounting of securities issued by the company and management of personal securities accounts with SEB Bankas AB.

Structure of the authorised share capital and shareholders owning more than 5 per cent of the issuer’s authorised share capital as at 30 September 2019:

Full name of the Total nominal value of Securities' Percentage of voting rights Company ISIN code Trading list shareholder (name of shares (in EUR) abbreviation conferred by shares owned the company) Ignitis Group, UAB BALTIC MAIN Ignitis gamyba, AB 187,920,762.41 LT0000128571 LNR1L (former Lietuvos 96.82% LIST Energija, UAB) Ignitis Group, UAB Energijos skirstymo BALTIC MAIN 796.57/ 442/ 259 LT0000130023 ESO1L (former Lietuvos 94.98% operatorius, AB LIST Energija, UAB)

On 30 September 2019, Ignitis Group, UAB has issued two issues of green bonds listed in the Stock Exchanges of Luxemburg and NASDAQ Vilnius. The total nominal value of bonds issued by the Company is EUR 600 million. The amount of Bond Programme is EUR 1.5 billion. EUR.

Company Total nominal values of the issue, EUR ISIN code Buy-out date

Ignitis Group, UAB 300,000,000.00 XS1646530565 14/07/2027

Ignitis Group, UAB 300,000,000.00 XS1853999313 10/07/2028

Consolidated interim report of the Company and the Group for the 9 months of 2019 42

KEY EVENTS OF THE COMPANY DURING THE FIRST THREE QUARTERS OF 2019

18/01/2019 Reorganisation of Lietuvos Energijos Tiekimas, UAB and Energijos Tiekimas, UAB is planned to be launched 31/01/2019 Preliminary financial data of Lietuvos Energija for 12 months of 2018 01/02/2019 Regarding a New Member of Supervisory Board of Lietuvos Energija Interim information of Lietuvos Energija UAB for the twelve-month period of 2018: higher prices in international markets affected the results of Lietuvos 28/02/2019 Energija 28/02/2019 Preliminary financial data of Lietuvos Energija for 1 month of 2019 12/03/2019 Regarding the Loan Agreement with Lietuvos Energijos Tiekimas, UAB 25/03/2019 Regarding the sale of 100% shares of VĖJO VATAS, UAB, VĖJO GŪSIS, UAB, EURAKRAS, UAB, VVP Investment, UAB 29/03/2019 Preliminary financial data of Lietuvos Energija for 2 months of 2019 02/04/2019 Regarding the decision of Energijos Skirstymo Operatorius, AB to refuse the appeal in court 08/04/2019 Correction: Reporting dates of Lietuvos Energija in 2019 12/04/2019 Lietuvos Energija Group will hold an Investor Conference Webinar to introduce the financial results for the year 2018 and guidance for 2019 17/04/2019 Regarding Lietuvos Energija Board decisions 17/04/2019 Lietuvos Energija Group will hold an Investor Conference Webinar to introduce the financial results for the year 2018 and guidance for 2019 24/04/2019 Regarding the new trademark applications 02/05/2019 Regarding the resolutions of the Ordinary General Meeting of the Shareholders of Lietuvos Energija, UAB 02/05/2019 Lietuvos Energija, UAB annual information for the year 2018 06/05/2019 Correction: Reporting dates of Lietuvos Energija in 2019 17/05/2019 Results of Lietuvos Energija Group in Q1 2019: adjusted EBITDA increased of due to the consequent investments in to the network and green generation 21/05/2019 Regarding the approval of the terms and conditions for the reorganisation of Lietuvos Energijos Tiekimas, UAB and Energijos Tiekimas, UAB 28/05/2019 Regarding the Acquisition of 100% of Pomerania Invall Sp. z o. o. shares and shareholder claim rights 31/05/2019 Preliminary financial data of Lietuvos Energija for 4 months of 2019 31/05/2019 Lietuvos Energija retained BBB+ credit rating 31/05/2019 Correction: Lietuvos Energija UAB annual information for the year 2018 28/06/2019 Preliminary financial data of Lietuvos Energija for 5 months of 2019 01/07/2019 Regarding the Investor’s Letter of Lietuvos Energija 31/07/2019 Preliminary financial data of Lietuvos Energija for 6 months of 2019 05/08/2019 Regarding change of the name of Lietuvos Energija, UAB 29/08/2019 Correction: Reporting dates of Lietuvos Energija in 2019 04/09/2019 Correction: Reporting dates of Lietuvos Energija in 2019 05/09/2019 Results of Lietuvos Energija Group in 1st half of 2019: adjusted EBIDTA increased by 9.8%, Group revenues abroad quadrupled to EUR 175.7 million. 06/09/2019 Preliminary financial data of Lietuvos Energija for 7 months of 2019 06/09/2019 Regarding the registration of the amended Articles of Association of Lietuvos Energija, UAB 13/09/2019 Regarding increase of the loan amount for Ignitis renewables, UAB 30/09/2019 Preliminary financial data of Ignitis Group for 8 months of 2019

KEY EVENTS AFTER THE REPORTING PERIOD

21/10/2019 Regarding the initiation of reorganisation of Verslo aptarnavimo centras, AB and Ignitis grupės paslaugų centras, UAB 25/10/2019 Regarding withdrawal of a conditional share sale-purchase agreement and end of negotiations

Consolidated interim report of the Company and the Group for the 9 months of 2019 43

Regarding the initiation of the process of delisting of shares of UAB Ignitis grupė subsidiaries AB Ignitis Gamyba and AB Energijos skirstymo operatorius 11/11/2019 from trading on the regulated market Regarding the formation of a working group, initiated by the Ministry of Finance of the Republic of Lithuania, the authority implementing the rights of the sole 13/11/2019 shareholder of UAB Ignitis grupė 19/11/2019 Further explanation regarding the delisting of Ignitis Group's subsidiaries shares and the potential IPO

No agreements between the Issuer and the members of the bodies or employees that provide for compensation in case of their resignation or dismissal without a sound reason or in case of termination of their employment as a result of the change in control of the Issuer have been concluded.

No significant agreements were concluded between the Issuer and which would enter into force, change or break as a result of the changed control of the Issuer, as well as their effect, except where the nature of the agreements would have caused significant disclosure to the Issuer.

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

Ignitis Group, UAB Darius Maikštėnas CEO

Consolidated interim report of the Company and the Group for the 9 months of 2019 44