LITGRID AB The Company’s financial statements, annual report and independent auditor’s report for the year ended 31 December 2020 CONFIRMATION OF RESPONSIBLE PERSONS 15 March 2021, Vilnius Following the Law on Securities of the Republic of Lithuania and the Rules on Information Disclosure approved by the Bank of Lithuania, we, Rokas Masiulis, Chief Executive Officer of LITGRID AB, Vytautas Tauras, Director of the Finance Department of LITGRID AB and Jurgita Kerpė, Head of the Accounting Division of LITGRID AB, hereby confirm that, to the best of our knowledge, the attached financial statements of LITGRID AB for the year 2020 prepared in accordance with the International Financial Reporting Standards adopted by the European Union give a true and fair view of the Company’s assets, liabilities, financial position, profit and cash flows; the annual report for the year 2020 presents a fair overview of the business development and performance, the Company’s financial position together with the description of its exposure to key risks and contingencies. Rokas Masiulis Chief Executive Officer Vytautas Tauras Director of the Finance Department Jurgita Kerpė Head of the Accounting Division CONTENTS Translation note: This version of the accompanying documents is a translation from the original, which was prepared in Lithuanian. All possible care has been taken to ensure that the translation is an accurate representation of the original. However, in all matters of interpretation of information, views or opinions, the original language version of the accompanying documents takes precedence over this translation. Independent auditor’s report 4 Annual report 10 The Company’s statement of financial position 101 The Company’s statement of comprehensive income 102 The Company’s statement of changes in equity 103 The Company’s statement of cash flows 104 Notes to the Company’s financial statements 105 The financial statements were approved on 15 March 2021. Rokas Masiulis Chief Executive Officer Vytautas Tauras Director of the Finance Department Jurgita Kerpė Head of the Accounting Division 3 Independent auditor’s report To the shareholders of LITGRID AB Report on the audit of the financial statements Our opinion In our opinion, the financial statements give a true and fair view of the financial position of LITGRID AB (the “Company”) as at 31 December 2020 and the Company’s financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards as adopted by the European Union. Our opinion is consistent with our additional report to the Audit Committee dated 15 March 2021. What we have audited The Company’s financial statements comprise: ● the statement of financial position as at 31 December 2020; ● the statement of comprehensive income for the year then ended; ● the statement of changes in equity for the year then ended; ● the statement of cash flows for the year then ended; and ● the notes to the financial statements, which include significant accounting policies and other explanatory information. Basis for opinion We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Independence We are independent of the Company in accordance with the International Code of Ethics for Professional Accountants (including International Independence Standards) issued by the International Ethics Standards Board for Accountants (IESBA Code) and the Law of the Republic of Lithuania on the Audit of Financial Statements that are relevant to our audit of the financial statements in the Republic of Lithuania. We have fulfilled our other ethical responsibilities in accordance with the IESBA Code and the Law of the Republic of Lithuania on the Audit of Financial Statements. To the best of our knowledge and belief, we declare that non-audit services that we have provided to the Company are in accordance with the applicable law and regulations in the Republic of Lithuania and that we have not provided non-audit services that are prohibited under Article 5(1) of Regulation (EU) No 537/2014 considering the exemptions of Regulation (EU) No 537/2014 endorsed in the Law of the Republic of Lithuania on the Audit of Financial Statements. The non-audit services that we have provided to the Company, in the period from 1 January 2020 to 31 December 2020, are disclosed in note 39 to the financial statements. PricewaterhouseCoopers UAB, J. Jasinskio str. 16B, 03163 Vilnius, Lithuania +370 (5) 239 2300, [email protected], www.pwc.lt Company code 111473315, registered with the Legal Entities’ Register of the Republic of Lithuania Our audit approach Overview Materiality ● Overall materiality: Euro 2,070 thousand Key audit matters ● Value of Property, plant and equipment As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial statements. In particular, we considered where management made subjective judgements; for example, in respect of significant accounting estimates that involved making assumptions and considering future events that are inherently uncertain. As in all of our audits, we also addressed the risk of management override of internal controls, including, among other matters, consideration of whether there was evidence of bias that represented a risk of material misstatement due to fraud. We tailored the scope of our audit in order to perform sufficient work to enable us to provide an opinion on the financial statements as a whole, taking into account the structure of the Company, the accounting processes and controls, and the industry in which the Company operates. Materiality The scope of our audit was influenced by our application of materiality. An audit is designed to obtain reasonable assurance whether the financial statements are free from material misstatement. Misstatements may arise due to fraud or error. They are considered material if individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements. Based on our professional judgement, we determined certain quantitative thresholds for materiality, including the overall Company materiality for the financial statements as a whole as set out in the table below. These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements, if any, both individually and in aggregate on the financial statements as a whole. Overall Company materiality EUR 2,070 thousand How we determined it 1% of total revenue Rationale for the materiality We chose revenue as the benchmark for the Company benchmark applied because it is the measure against which the performance of the Company is assessed by the regulatory bodies as well as external creditors and other stakeholders. The Company’s results depend on approved tariffs for regulated activities, therefore the Company‘s profit before tax fluctuate widely year over year, whereas its revenue is more stable and growth-oriented indicator which can be compared to other market participants. We chose 1%, which is within the range of acceptable quantitative materiality thresholds. We agreed with the Audit Committee that we would report to them misstatements identified during our audit above EUR 145 thousand, as well as misstatements below that amount that, in our view, warranted reporting for qualitative reasons. Key audit matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Key audit matter How our audit addressed the key audit matter We understood and evaluated management’s Value of Property, plant and equipment policies, processes and controls in determination (refer note 2.4 and 6) of fair value of PPE. The Company applies the revaluation model We have examined management’s valuation for subsequent recognition of property, plant methodology and their assessment of expected and equipment (‘PPE’). As at 31 December changes in tariff setting regulations. 2020 the carrying value of PPE amounted to EUR 331,709 thousand, being its fair value at We obtained the cash flow models used by the the date of the revaluation less subsequent management to assess the value of assets. We accumulated depreciation and less subsequent checked the models and tested that they are accumulated impairment losses. mathematically accurate and that the results are accurately compared to the carrying values of The management has assessed whether the assets. We examined the management’s carrying value of PPE does not materially differ assumptions which have material impacts on from that which would be determined using fair valuation results: rate of return on regulated value at the end of the reporting period. The assets and discount rate, expected capital Company used the income approach using the expenditures, values of regulated assets and discounted cash flows