2014 iq_consolidated and company's condensed interim financial information (unaudited)

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Condensed interim statement of financial position

Condensed interim statement of comprehensive income

Condensed interim statement of cash flows

Condensed interim statement of changes in equity

Notes to the condensed interim financial information

CONTENTS

3CONSOLIDATED AND COMPANY’S CONDENSED INTERIM FINANCIAL INFORMATION (unaudited)For the three month period ended 31 march 2014.

Group Company

31/03/2014 31/12/2013 31/03/2014 31/12/2013

ASSETS

Non-current assets

Intangible assets 4 334,507 336,017 - -

Property, plant, and equipment 5 7,243,934 7,318,650 29 33

Prepayments for non-current assets 118 132 - -

Investment property 122,600 121,626 - -

Investments in subsidiaries and other investments 6 - - 2,823,796 2,763,355

Investments in associates 22,157 28,800 - -

Amounts receivable after one year and grants/subsidies receivable 715,696 712,888 690,000 690,000

Other financial assets 7 169,130 57,302 169,130 57,302

Other non-current assets 16,786 17,850 - -

Deferred income tax assets 1,493 1,160 74 71

Total non-current assets 8,626,421 8,594,425 3,683,029 3,510,761

Current assets

Inventories 33,830 34,614 - -

Prepayments 27,725 16,292 90 8

Trade receivables 265,159 304,437 2 2

Other receivables 112,080 85,641 41,045 38,537

Other current assets 142 227 3,000 -

Prepaid income tax 9,143 10,190 - -

Short-term investments and other financial assets 7 101,533 122,385 101,533 122,385

Cash and cash equivalents 8 651,279 558,396 326,595 309,974

1,200,891 1,132,182 472,265 470,906

Non-current assets held for sale 618 618 266 266

Total current assets 1,201,509 1,132,800 472,531 471,172

TOTAL ASSETS 9,827,930 9,727,225 4,155,560 3,981,933

Condensed interim statement of financial position (unaudited)For the three - month period ended 31 March 2014.All amounts in LTL thousands unless otherwise stated

Continued on next page


EQUITY AND LIABILITIES

Equity

Share capital 4,179,849 4,067,164 4,179,849 4,067,164

Reserves 1,437,874 1,456,119 - -

Retained earnings (deficit) 105,679 30,194 (86,914) (87,060)

Equity attributable to owners of the parent 5,723,402 5,553,477 4,092,935 3,980,104

Non-controlling interest 708,235 699,228 - -

Total equity 6,431,637 6,252,705 4,092,935 3,980,104

Amounts payable and liabilities

Amounts payable after one year and liabilities

Non-current borrowings 11 1,069,565 805,826 - -

Finance lease liabilities 87 36 - -

Grants and subsidies 1,091,575 1,091,511 - -

Deferred income tax liability 406,729 409,339 - -

Provisions 10 4,583 4,588 - -

Deferred income 187,395 189,523 - -

Other non-current amounts payable and liabilities 67,403 77,559 - -

Total amounts payable after one year and non-current liabilities 2,827,337 2,578,382 - -

Amounts payable within one year and liabilities

Current portion of non- current borrowings 11 113,052 302,656 - -

Current borrowings 11 9,956 71,562 - -

Current portion of finance lease liabilities 43 8 - -

Trade payables 197,725 268,561 432 409

Advance amounts received 80,953 69,470 - -

Current income tax liabilities 15,211 7,765 - -

Provisions 10 11,490 12,437 - -

Other current amounts payable and liabilities 140,526 163,679 62,193 1,420

Total amounts payable within one year and liabilities 568,956 896,138 62,625 1,829

Total amounts payable and liabilities 3,396,293 3,474,520 62,625 1,829

TOTAL EQUITY AND LIABILITIES 9,827,930 9,727,225 4,155,560 3,981,933

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

Group Company

31/03/2014 31/12/2013 31/03/2014 31/12/2013


Group Company

31/03/2014 31/12/2013 31/03/2014 31/12/2013

RevenueSales revenue 692,633 731,778 - -

Other operating income 28,783 24,219 2 2

Total revenue 721,416 755,997 2 2

Operating expensesPurchase of electricity or related services (406,997) (440,964) - -

Purchase of gas and fuel oil (16,588) (42,867) - -

Depreciation and amortisation (108,485) (125,274) (4) (4)

Salaries and related expenses (58,439) (58,334) (2,101) (1,830)

Repair and maintenance expenses (16,673) (15,645) - -

Other expenses 12 (32,211) (49,289) (885) (646)

Total operating expenses (639,393) (732,373) (2,990) (2,480)Operating profit/(loss) 82,023 23,624 (2,988) (2,478)

Financing activitiesFinance income 13 3,231 4,964 3,139 3,665

Finance costs 14 (7,191) (5,528) (8) -

Finance income/(costs), net (3,960) (564) 3,131 3,665

Profit (loss) before tax 78,063 23,060 143 1,187Current year income tax expense (14,758) (10,517) - -

Deferred income tax (expense)/income 2,942 5,175 3 -

Net profit (loss) for the year 66,247 17,718 146 1,187

Attributable to:

Owners of the parent 58,171 14,895 146 1,187

Non-controlling interests 8,076 2,823 - -

Other comprehensive income (loss)Items that will not be reclassified to profit or loss

Gain (loss) on revaluation of non-current assets - (65) - -

Total other comprehensive income (loss) for the year - (65) - -Total comprehensive income (loss) for the year 66,247 17,653 146 1,187

Attributable to:

Owners of the parent 58,171 14,833 146 1,187

Non-controlling interests 8,076 2,820 - -




Group Company

31/03/2014 31/12/2013 31/03/2014 31/12/2013

Cash flows from operating activitiesNet profit (loss) 66,247 17,718 146 1,187

Adjustments for non-monetary items:Depreciation and amortisation 118,599 135,437 4 4Revaluation of property, plant and equipment - (20) - -Income tax expense 11,816 5,342 (3) -(Depreciation) of grants (9,124) (10,162) - -Gain/(loss) on disposal/write-off of property, plant and equipment 2,261 3,329 - -Elimination of results of financing and investing activities:Interest income (3,193) (3,795) (3,139) (3,665)Interest expense 7,176 7,345 2 -Other finance (income)/costs (23) (2,986) 6 -

Changes in working capital:(Increase) decrease in trade receivables and other amounts receivable 12,839 (15,744) (255) 66(Increase) decrease in inventories, prepayments and other current assets (10,564) 15,485 (82) 69Increase (decrease) in amounts payable, deferred income and advance amounts received (17,293) (16,056) 357 (72)Income tax (paid) (6,252) (86) - -

Net cash flows from/(used in) operating activities 172,489 135,807 (2,964) (2,411)Cash flows from investing activities

(Purchase) of property, plant and equipment and intangible assets (108,477) (113,256) - (5,642)Proceeds from sale of property, plant and equipment and intangible assets 1,111 4,223 - -Loans repaid, loan repayments received 16 49 (3,000) -Change in time deposits 993 7,970 993 5,000Acquisition of subsidiaries/associates - - (10) -Bonds acquired - (14,396) - (14,396)Bonds disposed 20,717 11,758 20,717 10,816Interest received 1,016 395 885 218

Net cash from investing activities (84,624) (103,257) 19,585 (4,004)Cash flows from financing activities

Proceeds from borrowings 93,453 77,901 - -Repayments of borrowings (19,318) (24,727) - -Lease payments (2) (88) - -Interest paid (4,712) (4,346) - -Dividends paid (44) (9) - -Other cash flows from financing activities (39) (17) - -

Net cash flows from/(used in) financing activities 69,338 48,714 - -

(Decrease) increase in cash and cash equivalents (including overdraft) 157,203 81,264 16,621 (6,415)Cash and cash equivalents (including overdraft) at the beginning of the period 487,688 (3,215) 309,974 57,765

Cash and cash equivalents (including overdraft) at the end of the period 644,891 78,049 326,595 51,350




GroupEquity attributable to owners of the Group

Non-controlling interest TotalShare

capitalLegal

reserveRevaluation

reserveOther

reservesRetained earnings Subtotal

Balance at 1 January 2013 (Restated) 4,067,164 75,467 802,934 689,922 (207,569) 5,427,918 711,864 6,139,782Revaluation of property, plant and equipment, net of deferred income tax - - (62) - - (62) (3) (65)

Total other comprehensive income/(loss) for the period - - (62) - - (62) (3) (65)Net profit (loss) for the reporting period (Restated) - - - - 14,895 14,895 2,823 17,718

Total comprehensive income/(loss) for the period - - (62) - 14,895 14,833 2,820 17,653Transfer of revaluation reserve to retained earnings (depreciation transfer, net of deferred income tax) - - (18,749) - 18,749 - - -

Changes in non-controlling interests on the reorganisation of group structure - 12 164 - (2,162) (1,986) (6,036) (8,022)

Balance at 31 March 2013 (restated) 4,067,164 75,479 784,287 689,922 (176,087) 5,440,765 708,648 6,149,413

Balance at 1 January 2014 4,067,164 77,074 727,576 651,469 30,194 5,553,477 699,228 6,252,705Revaluation of property, plant and equipment, net of deferred income tax - - - - - - - -

Total other comprehensive income (loss) for the period - - - - - - - -Net profit (loss) for the reporting period - - - - 58,171 58,171 8,076 66,247

Total comprehensive income/(loss) for the period - - - - 58,171 58,171 8,076 66,247Transfer of revaluation reserve to retained earnings (depreciation transfer, net of deferred income tax) - - (18,238) - 18,238 - - -

Increase in share capital 112,685 - - - - 112,685 - 112,685

Changes in non-controlling interests on the reorganisation of group structure - - - (7) (924) (931) 931 -

Balance at 31 March 2014 4,179,849 77,074 709,338 651,462 105,679 5,723,402 708,235 6,431,637




Company Share capital

Legal reserve

Revaluation reserve

Other reserves

Retained earnings Subtotal Non-controlling

interest Total

Balance at 1 January 2013 (Restated) 4,067,164 - - - (200,328) 3,866,836 - 3,866,836Net profit (loss) for the reporting period 1,187 1,187 - 1,187

Balance at 31 March 2013 (restated) 4,067,164 - - - (199,141) 3,868,023 - 3,868,023

Balance at 1 January 2014 4,067,164 - - - (87,060) 3,980,104 - 3,980,104Increase in share capital 112,685 - - - - 112,685 - 112,685

Net profit (loss) for the reporting period - - - - 146 146 - 146

Balance at 31 March 2014 4,179,849 - - - (86,914) 4,092,935 - 4,092,935



This financial information for the three-month period en-ded 31 March 2014 contains unaudited condensed inte-rim financial information of Lietuvos Energija UAB (former Visagino Atominė Elektrinė UAB) (“the Company”) and its subsidiaries (“the Group”) for the aforementioned repor-ting period (“the financial information” or “the interim fi-nancial information”).

As of 30 August 2013, Visagino Atominė Elektrinė UAB is officially known as Lietuvos Energija UAB. The same com-pany name and new articles of association are registered with the Register of Legal Entities.

Lietuvos Energija UAB is a private limited liability compa-ny registered in the Republic of Lithuania. The address of the Company’s registered office is Žvejų g. 14, LT-09310, Vilnius, Lithuania. The Company is a limited liability profit-seeking entity registered on 28 August 2008 with the Register of Legal Entities managed by the public insti-tution the Centre of Registers. Company code 301844044, VAT payer’s code LT100004278519. The Company has been established for an unlimited period.

Lietuvos Energija UAB is a parent company in charge of management and coordination of activities of group companies engaged in electricity and heat generation, supply, import and export, distribution and trade in elec-tricity, maintenance and development of electricity sec-tor.

The Company analyses the activities of the Group, repre-sents the Group, exercises rights and duties of sharehol-der, sets operating guidelines and rules, and coordinates the activities in the fields of finance, law, strategy and development, human resources, risk management, audit, technologies, communication etc.

Lietuvos Energija UAB seeks to ensure effective activities of the Group, to accomplish objectives included in the National Energy Independence Strategy and other re-gulations, where related to the group activities, thereby ensuring socially responsible enhancement of long-term value.

The Company‘s shares are owned by the Lithuanian Go-vernment.

1 General information

Company’s shareholder31/03/2014 31/12/2013

Share capital % Share capital %

Republic of Lithuania represented by the Lithuanian Ministry of Finance 4,179,849 100 4,067,164 100


The Group includes Lietuvos Energija UAB and subsidiaries directly or indirectly controlled by the Company.

Companies Registered office address

Effective ow-nership interest 31/03/2014, %

Share capital (LTL thousands)

31/03/2014Core activities

Lietuvos Energijos Gamyba AB

Elektrinės str. 21 LT-26108, Elektrėnai 96.1 635,084 Generation, supply, import, export

and trade in electricity

LESTO AB Žvejų str. 14, Vilnius 82.6 603,945 Electricity supply and distribution to customers

NT Valdos UAB Geologų str. 16, LT-02190 Vilnius 88.0 314,001 Operation of real estate, other related

activities and service provision

Duomenų Logistikos Centras UAB

A.Juozapavičiaus str. 13, Vilnius 79.6 58,907 Maintenance of information techno-

logies and telecommunications

ELEKTROS TINKLO PASLAUGOS UAB Motorų str. 2, Vilnius 82.6 18,904

Construction, repair and mainte-nance of power network and related equipment, and customer connection to the grid

Kauno Energetikos Remontas UAB

Chemijos str. 17, Kaunas 96.1 14,245 Repair of energy equipment, produc-

tion of metal structures

LITGAS UAB Gedimino str. 33-2, LT-01104 Vilnius 66,7 3,000

Supply of natural gas through liqu-efied natural gas terminal and the natural gas trading

Gotlitas UAB R.Kalantos str. 119, Kaunas 96.1 1,450 Accommodation services, trade

Energijos Tiekimas UAB Jeruzalės str. 21, Vilnius 96.1 750 Electricity supply

Respublikinis Energetikų Mokymo Centras VšĮ Jeruzalės str. 21, Vilnius 79.6 294 Professional development and

further training of energy specialists

Geton Energy OÜ Narva mnt 5, 10117 Talinas 96.1 121 Electricity supply

Geton Energy SIA Bezdelingu 12, LV-1048, Ryga 96.1 99 Electricity supply

UAB Technologijų ir inovacijų centras

A. Juozapavičiaus str. 13, Vilnius 85,8 10 Maintenance of information techno-

logies and telecommunications

VAE SPB UAB Žvejų str. 14, Vilnius 100.0 10 Consultation activities

As of 31 March 2014, the Group had 4,339 employees (31 December 2013 had 4,378), and the Company had 58 employees (31 December 2013: 53).

This financial information was approved by the manage-ment of Lietuvos Energija UAB on 30 May 2014.


2

3

Summary of significant accounting policies

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

This interim financial information for the period ended 30 March 2014 has been prepared in accordance with the International Accounting Standard (“IAS”) No 34, “Interim financial reporting”.

For a better understanding of data contained in this con-densed interim financial information, this financial infor-mation should be read in conjunction with the consoli-dated and stand-alone financial statements of Lietuvos Energija UAB (former Visagino Atominė Elektrinė UAB) for the year ended 31 December 2013 prepared in accordan-ce with International Financial Reporting Standards as adopted by the European Union.

The accounting policies adopted in the preparation of the condensed interim financial information are consistent

Estimates and judgments are continually evaluated and are based on historical experience and other factors, in-cluding expectations of future events that are believed to be reasonable under the circumstances.

The preparation of financial information according to In-ternational Financial Reporting Standards as adopted by the EU requires management to make estimates and as-sumptions that affect the reported amounts of assets, lia-bilities, income and costs and contingencies. Changes in the underlying assumptions, estimates and judgements may have a material effect on this financial information. The accounting estimates applied in preparing the con-densed interim financial information are consistent with those used in preparing the annual financial statements

Revaluation and impairment of assets

The Group accounts for property, plant and equipment, except for the assets of Kaunas Hydro Power Plant, Kruo-nis Pumped Storage Power Plant and the Stand- by Po-wer Plant, at revaluated amount in accordance with In-ternational Accounting Standard No16 ‘Property, plant and equipment’. The fair value of most items of fixed tangible assets due to its specific nature was measured using a depreciated replacement cost approach as at 31 December 2008.

If the value of assets is measured based on a depreciated replacement cost method, International Valuation Stan-dards require that an adequate profitability test is per-formed. Accounting standards require a periodical re-

with those applied during the preparation of the annual financial statements for the year 2013.

Income tax

Income tax for the interim reporting periods is estimated using the tax rate which would be applied in calculation of taxes on the probable total profit for the year.

New standards, amendments and interpretations

There are no new standards, amendments and interpreta-tions that are mandatory for the Company and the Group in 2014 and that have a significant impact on the Compa-ny’s and the Group‘s financial information.

view of value of property, plant and equipment . When the carrying amount of property, plant and equipment stated in the balance sheet is higher than its value in use or fair value, less selling expenses, the value of property, plant and equipment shall be reduced. In other words, the value of property, plant and equipment recorded in the balance sheet should be written down to a higher of the two indicators: the value of future benefits of as-sets expected by the Group from their use or the value of proceeds expected to be received from immediate write-off and disposal of assets.

The previous version of the Law on Electricity of the Re-public of Lithuania effective as at 31 December 2008 sti-pulated that the price caps for electricity transmission, distribution and public supply services were determined based on the value of assets used in licensed activities of the service provider, with the value of such assets es-tablished with reference to data reported in the service provider’s financial statements (Regulated Assets Base).

According to the amendment to the above-mentioned Law effective from 1 June 2009, the price caps for elec-tricity transmission, distribution and public supply ser-vices are to be determined based on the value of assets used in licensed activities of the service provider, with the value of such assets being estimated and approved by the National Control Commission for Prices and Ener-gy (“the Commission”) in accordance with the principles for determination of the value of assets used in licensed activities of the service provider that had been drafted by the Commission and approved by the Government.


According to the Government’s Resolution No. 1142 of 9 September 2009 “On the methodology for determinati-on of the value of assets used in licensed activities of the electricity service provider”, the determination of the pri-ce caps for electricity transmission, distribution and pu-blic supply services is to include the value of assets used in licensed activities of the service provider, which is equ-al to the book value (carrying amount) of fixed tangible assets as at 31 December 2002 increased by the amount of capital expenditures implemented and agreed with the Commission and reduced by the depreciation amo-unt calculated pursuant to the procedure stipulated in the Lithuanian Law on Corporate Income Tax.

For the above-mentioned reasons, the values of property, plant and equipment reported in the above financial in-formation may significantly differ from those that would have been determined if the valuation of assets had been performed by independent appraisers as required by In-ternational Valuation and Accounting Standards. It is pro-bable that such valuation would have a negative impact on the Group’s result of operation and on the sharehol-ders’ equity reported in the financial information as of 30 March 2014.

Revaluation of assets

As at 31 December 2013, independent valuation of as-sets was performed at the Group with respect to Lie-tuvos Energijos Gamyba AB (assets carried at revalued amount), ELEKTROS TINKLO PASLAUGOS UAB and NT Valdos UAB (buildings and structures). The valuation was carried out by independent valuation companies.

As decided by the management, independent apprai-sers did not carry out assessment of the fair value of the other property, plant and equipment of 31 March 2014 due to remaining uncertainties, related to the change in the above regulations.

Impairment of investment value in subsidiaries

Although the subsidiaries LESTO AB and Lietuvos Energi-jos Gamyba AB are listed on Vilnius stock exchange, the Group management believes the market is not sufficiently active to treat the listed price of shares as a fair value of in-vestment into subsidiaries at the balance sheet date. As of 31 March 2014 and 31 December 2013, due to signifi-cant uncertainties, as described in Note 3 Revaluation and impairment of assets, related to effect of amendments to legal acts regulating the cap prices for electricity trans-mission, distribution and public supply on the future cash flows of the Group, the Company did not carry out impai-rment tests for investment value in subsidiaries LESTO AB.

Impairment of goodwill and intangible assets not su-bject to amortisation

The consolidated financial information include goodwill

and licences with indefinite useful life that arose as a re-sult of acquisition of VST AB in 2008. As of 31 March 2014 and 31 December 2013, due to significant uncertainties, as described in Note 3 Revaluation and impairment of assets, related to inability to assess reliably the impact on the Group’s future cash flows of amendments to legal acts regulating the prices for electricity distribution and supply services, the Group did not carry out impairment tests for goodwill and licences with indefinite useful life. The Group’s management believe the value of these as-sets of the Group could not be measured reliably as of 31 March 2014 and 31 December 2013.

Useful lives of property, plant and equipment

The estimation of the useful lives of property, plant and equipment is a matter of judgment based on the experien-ce with similar assets. The economic benefits embodied in the assets are obtained through use. However, other fac-tors, such as technical or commercial obsolescence often result in the diminution of the economic benefits embo-died in the assets. The remaining useful lives are assessed in accordance with the current technical conditions of the assets and estimated period during which the assets are expected to earn benefits for the Group. The following key factors are considered: (a) expected usage of the as-sets; (b) expected physical wear and tear, which depends on operational method; and (c) technical or commercial obsolescence arising from changes in market conditions.

Accrued income

Revenue received from private customers is recognised based on the payments received. Therefore at the end of each reporting period the amount of the revenue earned but not yet paid by private customers is estimated and accrued by the management of the Group. Accrued sales income are assessed as 1/3 of the payments for electricity received in the last month of the reporting period. The accrual is based on historic experience and average pe-riod of payment by customers for electricity. The Group‘s management has estimated that the majority of private customers declare and make payment for the electricity consumed on approx. the 20 th day of the month, while electricity is supplied for a full month (30 or 31 days). Con-sequently, the volume of electricity used over the remai-ning 10 days is proportionally estimated based on total volume of electricity supplied to the grid (factually kno-wn variable) and the volume of electricity used by private customers during the last month of the reporting period and multiplied by the average rate per 1 kWh.

Accounting for customer connection fees

Before 1 July 2009, the Group used to defer income re-ceived from new customer connections to the grid. This was recognised as deferred income over the period of 31 years, which is the average useful life of electricity equip-ment constructed by the Group upon connection of new


customers. Management of the Group believe that the period of provision of services to customers is indefinite, therefore, the average useful life of electricity equipment constructed by the Group upon connection of new cus-tomers was used as the best estimate of the period over which connection fees paid customers were recognised as income.

With effect from 1 July 2009 and based on IFRIC 18 inter-pretation, the newly connected customers to the grid do not obtain any additional future benefits as compared to all the remaining customers, consequently, the provision of connection service is treated as completed and income from connection is recognised upon the connection of a new customer.

Impairment of amounts receivable

Impairment losses were determined in respect of amo-unts receivable based on the management’s estimates on recoverability and timing relating to the amounts that will not be collectable according to the original terms of receivables. This determination requires significant jud-gement. Judgement is exercised based on significant fi-nancial difficulties of the debtor, probability that the deb-tor will enter bankruptcy or financial reorganisation, and default or delinquency in payments. Current assessment by the management could change significantly due to change in the market environment or national economy. Indicator of recoverability is also significantly related to the success indicator and steps taken in order to recover seriously delayed receivables.

In order to determine the value and decrease in it, recei-vables are assessed either individually or collectively in a group of comparable receivables. In respect of individu-ally assessed receivable, each amount receivable is asses-sed in view of both current or available data in the exter-nal information sources on market trends and forecasts, possible collateral of the amount receivable, as well as events demonstrating that the value of amounts recei-vable has decreased, e.g. compliance with conditions of contract, facts on the activities of debtor etc. In case of impairment of the amounts receivable in general, in view of historic statistics, verification is carried out yearly, whe-ther the deferral rules applied to the general assessment correspond to historic data of impairment of amounts re-ceivable; it also includes setting of deferral rules applica-ble to generally assessed amounts receivable for the next year.

Tax audits

The Tax Inspectorate may at any time inspect the books and records within 5 years subsequent to the reporting tax year, and may impose additional tax assessments and penalties. The Group’s management is not aware of any circumstances that might result in a potential material li-ability in this respect.

Amortisation rates of licences

Indefinite useful lives were established for the licences of distribution system operator and public supply services that were acquired on a business combination in 2008 be-cause the validity term of these licences can be extended at no significant efforts or costs.

Held-to-maturity financial assets

The Group follows the requirements of IAS 39, based on which non-derivative financial assets with fixed or other-wise determinable payments and fixed maturity terms are classified as held-to-maturity. For the purpose of such classification, the Group assesses its intentions and abi-lities to hold these investments to maturity. If the Group were not able to hold these investments to maturity due to other than specific circumstances, for instance, sells an insignificant part of securities close to maturity, the Group would have to reclassify the entire group as avai-lable-for-sale financial assets and measure investment at fair value rather than at amortised cost. If all held-to-ma-turity investments were reclassified to another category of assets, the carrying amount would not change signi-ficantly.

Provision for utilisation of emission allowances

The Group estimates provision for utilisation of emission allowances based on actual emissions over the reporting period multiplied by the market price for one unit of emis-sion allowances. Actual emissions are approved by the re-levant regulating State over the period of 4 months after the year end. Based on its past experience, the Group’s management does not expect any significant differen-ces between the estimated provisions as of 31 December 2013 and emissions that will be approved in 2014.

Accrual of public service obligation fees

The variable part of public service obligation (“PSO”) fees is estimated with reference to variable costs incurred du-ring the reporting period. The producers ensuring the security of electric power supply and reserves of energy system, submit their PSO fee estimates to the National Commission for Control of Prices and Energy which in-clude breakdown of variable electric power production costs – natural gas, fuel oil, and emission allowance costs, costs for desulphurisation of reagents. The variable part of PSO fees for the next calendar year is estimated with reference to expected variable costs to be incurred in the production of the approved quota of electricity subject to compensation.


4 Intangible assets

GroupPatents

and licences

Computer software

Emission allowances

Other intangi-ble assets Goodwill Total

Net book amount at 1 January 2013 118,873 6,587 55,413 2,677 178,103 361,653Acquisitions 16 726 1,221 333 - 2,296

Reclassified from/to property, plant and equipment - - - (30) - (30)

Disposals - - (4,041) - - (4,041)

Revaluation of emission allowances - - (13,923) - - (13,923)

Amortisation (160) (1,136) - (13) - (1,309)

Net book amount at 31 March 2013 118,729 6 177 38,670 2,967 178,103 344,646

Net book amount at 1 January 2014 118,781 6,205 28,704 4,224 178,103 336,017Acquisitions 70 61 - 97 - 228

Reclassified from/to property, plant and equipment - 621 - (621) - -

Grants received - - 1,358 - - 1,358

Revaluation of emission allowances - - (2,052) - - (2,052)

Amortisation (163) (868) - (13) - (1,044)

Net book amount at 31 March 2014 118,688 6,019 28,010 3,687 178,103 334,507


5 Property, plant and equipment

Group Land Buil-dings

Structures and ma-chinery

Assets of Hydro

Power Plant*

Motor vehicles

Other pro-perty, plant and equip-

ment

Cons-truction in pro-gress

Total

Net book amount at 1 January 2013 6,190 383,536 4,228,702 2,664,957 50,268 102,222 73,361 7,509,236Acquisitions - 7 378 385 248 1,501 39,547 42,066

Revaluation - (77) - - - - - (77)

Disposals - - (91) (135) (14) (1) - (241)

Write-offs - (10) (3,274) - - (1) (4) (3,289)

Impairment - - (25) - - - - (25)

Reversal of impairment - - 20 - - - 25 45

Reclassifications between groups - 1,173 52,405 99 - 763 (54,440) -

Reclassified to assets, intangible assets - - - - - - 30 30

Reclassified to investment property - (1,229) (6) - - - - (1,235)

Reclassified from/to inventories - - (3) - - (25) - (28)

Depreciation - (4,946) (92,716) (31,045) (1,856) (6,023) - (136,586)

Net book amount at 31 March 2013 6,190 378,454 4,185,390 2,634,261 48,646 98,436 58,519 7,409,896

Net book amount at 1 January 2014 6,943 361,555 4,164,382 2,567,102 54,059 90,780 73,829 7,318,650Acquisitions - 89 416 172 - 331 46,889 47,897

Disposals - (9) (82) - (203) (8) - (302)

Write-offs - (9) (3,044) (2) - (10) (6) (3,071)

Reclassifications between groups - 1,207 46,110 184 - 528 (48,029) -

Reclassified to assets, intangible assets - (68) (42) - - - - (110)

Reclassified to investment property - (1,586) - - - - - (1,586)

Reclassified from/to inventories - - - 12 - - - 12

Depreciation - (4,917) (76,524) (28,712) (1,852) (5,551) - (117,556)

Net book amount at 31 March 2014 6,943 356,262 4,131,216 2,538,756 52,004 86,070 72,683 7,243,934

Company Other fixed tangible assets

Construction in progress Total

Net book amount at 1 January 2013 48 24,334 24,382Depreciation (4) - (4)

Net book amount at 31 March 2013 44 24,334 24,378

Net book amount at 1 January 2014 33 - 33Depreciation (4) - (4)

Net book amount at 31 March 2014 29 - 29

*Assets of Hydro Power Plant, Pumped Storage Power Plant and Stand-by Power Plant.


6 Investment

Group company Acquisition cost

Contributions for loss

Carrying amount

Ownership interest, %

Subsidiaries:

Lietuvos energijos gamyba, AB 1,017,998 - 1,017,998 96.13

AB LESTO 1,742,737 - 1,742,737 82.63

UAB Duomenų logistikos centras 60,931 - 60,931 79.64

UAB LITGAS 2,000 - 2,000 66.67

UAB Technologijų ir inovacijų centras 5 - 5 50.00

UAB „VAE SPB“ 10 15 25 100.00

2,823,681 15 2,823,696 Investments:

NT Valdos, UAB 100 - 100 0.03

100 - 100 2,823,781 15 2,823,796

Group company Acquisition cos Contributions for loss

Carrying amount

Ownership interest, %

Subsidiaries:

Lietuvos energijos gamyba, AB 1,017,998 - 1,017,998 96.13

AB LESTO 1,742,737 - 1,742,737 82.63

UAB LITGAS 2,000 - 2,000 66.67

UAB Technologijų ir inovacijų centras 5 - 5 50.00

UAB „VAE SPB“ 10 5 15 100.00

2,762,750 5 2,762,755Investments:

UAB Duomenų logistikos centras 500 - 500 0.65

NT Valdos, UAB 100 - 100 0.03

600 - 6002,763,350 5 2,763,355

As of 31 March 2014, the Company had ownership interests in the following Group companies:

As of 31 December 2013, the Company had ownership interests in the following Group companies:


7

8

Investments and other financial assets

Cash and cash equivalents

Long-term investments and other financial assets comprised as follows:

Cash and cash equivalents and bank overdraft include the following for the purpose of the cash flow statement:

Short-term investments comprised as follows:

Group Company

31/03/2014 31/12/2013 31/03/2014 31/12/2013

Held-to-maturity financial assets:

Lithuanian Government bonds 56,444 57,302 56,444 57,302

Other financial assets 112,686 - 112,686 -

Carrying amount 169,130 57,302 169,130 57,302

Group Company

31/03/2014 31/12/2013 31/03/2014 31/12/2013

Cash and cash equivalents 651,279 558,396 326,595 309,974

Bank overdraft (6,388) (70,708) - -

Carrying amount 644,891 487,688 326,595 309,974

Group Company

31/03/2014 31/12/2013 31/03/2014 31/12/2013

Held-to-maturity financial assets:

Lithuanian Government bonds 40,131 40,131 40,131 40,131

Loans and receivables:

Bank bonds 60,717 81,433 60,717 81,433

Interest receivable 685 821 685 821

Carrying amount 101,533 122,385 101,533 122,385

9 Share capital

On 13 February 2013, the shares of the Company were transferred to the Ministry of Finance of the Republic of Lithuania.

As at 31 March 2014 the Company’s authorised share

capital totalled LTL 4,179,849,289 ( 4,067,163,632 LTL- on 31 December 2013). As at 31 December 2013 and 31 March 2014, the authorised share capital was divided into ordinary registered shares with a nominal value of LTL 1 each. All the shares are fully paid.


Group Company

31/03/2014 31/12/2013 31/03/2014 31/12/2013

Non-current 4,583 4,588 - -

Current 11,490 12,437 - -

Carrying amount 16,073 17,025 - -

Group Company

31/03/2014 31/12/2013 31/03/2014 31/12/2013

Non-currentBank borrowings 1,069,565 805,826 - -

CurrentCurrent portion of non- current borrowings 113,052 302,656 - -

Bank overdraft 6,389 70,708

Interest payable 3,567 854 - -

Total loans 1,192,573 1,180,044 - -

10

11

Provisions

Borrowings

Group Provisions for emissions

Provisions for employee benefits

Other provisions Total

At 1 January 2013 13,895 3,227 305 17,427Increase over the period 1,419 3,318 - 4,737

Used over the period - (6) - (6)

Revaluation for the changing of assumption (3,441) - - (3,441)

At 31 March 2013 11,873 6,539 305 18,717

At 1 January 2014 9,745 6,894 386 17,025Increase over the period 370 - - 370

Used over the period - (660) (106) (766)

Revaluation for the changing of assumption (556) - - (556)

At 31 March 2014 9,559 6,234 280 16,073

Non-current loans analysed by maturity

The loan agreements contain certain financial and non-financial covenants that the individual Group companies are obliged to comply with. In the opinion of the management, as of 31 December 2013 and 31 March 2014, the Group complied with all the covenants.

Group Company

31/03/2014 31/12/2013 31/03/2014 31/12/2013

1 to 2 years 312,064 113,352 - -

2 to 5 years 634,927 590,329 - -

Over 5 years 122,574 102,145 - -

Total 1,069,565 805,826 - -


Group Company

31/03/2014 31/12/2013 31/03/2014 31/12/2013

Utility services 2,283 2,607 86 49

Telecommunications and IT services 2,761 3,127 193 126

Business trips 274 312 25 62

Consultation services 713 870 126 12

HR development 339 388 33 31

Expenses of small-value inventory items 513 543 - -

Public relation and marketing services 330 416 28 22

Lease 2,243 2,034 141 115

Transport 3,725 3,400 118 134

Services to customers 2,064 2,226 - -

Taxes 4,245 5,060 23 26

Subcontractor works and materials 5,249 4,536 - -

Impairment of other non-current assets (820) 1,042 - -

Impairment of property, plant and equipment 3,063 3,289 - -

Revaluation of emission allowances, related provisions and grants 2,881 16,429 - -

Revaluation of assets and fair value gains and losses 6 1,359 - -

Allowances for inventories 218 461 - -

Other expenses 2,124 1,190 112 69

32,211 49,289 885 646

Group Company

31/03/2014 31/12/2013 31/03/2014 31/12/2013

Interest income 3,193 3,795 3,139 3,665

Foreign exchange net gain 2 - - -

Other finance income 36 1,169 - -

3,231 4,964 3,139 3,665

Group Company

31/03/2014 31/12/2013 31/03/2014 31/12/2013

Interest expenses 7,176 7,345 2 -

Foreign exchange net loss 4 6 - -

Other finance costs 11 (1,823) 6 -

7,191 5,528 8 -

12

13

14

Other expenses

Finance income

Finance costs


15

16

17

Income tax expenses

Dividends

Related-party transactions

Income tax expenses over the period comprise income tax of the reporting period and deferred income tax.

In 2013 and during the first quater, 2014 the Company paid out no dividends.

On 30 April 2013, the general meeting of LESTO AB de-clared the payment of dividends of LTL 102,670 thousand from the profit for appropriation. Dividends received by to the Company amounted to LTL 84,834 thousand.

As at 31 December 2013 and 31 March 2014, the sole shareholder of Lietuvos Energija UAB was the Republic of Lithuania represented by the Lithuanian Ministry of Finance. For the purpose of disclosure of related parties, the Republic of Lithuania does not include central and

Income tax at a rate of 15% was payable on profit for 2014 (the same as in 2013) in accordance with the Lithu-anian regulatory legislation on taxation.

On 30 April 2013, the general meeting of Lietuvos Ener-gijos Gamyba AB declared the payment of dividends of LTL 25,403 thousand from the profit for appropriation. Dividends received by to the Company amounted to LTL 24,421 thousand.

local government authorities. The disclosures compri-se transactions and balances of these transactions with the shareholder, subsidiarines, associates and manage-ment.

The following transactions were conducted with related parties:

Purchases of goods and services

Group Company

31/03/2014 31/12/2013 31/03/2014 31/12/2013

AB LESTO - - 2 36

UAB Technologijų ir inovacijų centras - - 8 -

UAB "EPSO-G" 2,390 2,748 2,390 2,748

The Group‘s associates and joint ventures 151 - - -

2,541 2,748 2,400 2,784

Group Company

31/03/2014 31/12/2013 31/03/2014 31/12/2013

AB LESTO - - 1 1

„Lietuvos energijos gamyba“, AB - - 1 -

NT Valdos, UAB - - 318 237

UAB Technologijų ir inovacijų centras - - 196 134

The Group‘s associates and joint ventures - 500 - -

- 500 516 372

Sales of goods and services


Amounts receivable from related paties

Amounts payable to related paties

The following payments were made to key management personnel:

Key management personnel includes heads of administration and their deputies.

Group Company

31/03/2014 31/12/2013 31/03/2014 31/12/2013

AB LESTO - - 2 2

UAB Technologijų ir inovacijų centras - - 3,003 -

UAB "EPSO-G" 729,859 727,469 729,859 727,469

The Group‘s associates and joint ventures 64 77 - -

729,923 727,546 732,864 727,471

Group Company

31/03/2014 31/12/2013 31/03/2014 31/12/2013

AB LESTO - - 19,082 -

„Lietuvos energijos gamyba“, AB - - 41,352 -

NT Valdos, UAB - - 158 194

UAB Technologijų ir inovacijų centras - - 68 124

- - 60,660 318

Group Company

31/03/2014 31/12/2013 31/03/2014 31/12/2013

Salaries and other short-term benefits to key management personnel 2,122 2,113 508 201

Including: termination benefits 231 1 87 -

Number of key management personnel 58 53 10 4

18 Events after the end of the reporting period

AB LESTO and „Lietuvos energijos gamyba“, AB divi-dends for 2013.

As a result of appropriation of profit during the Gene-ral Meeting of Shareholders of LESTO AB held on 4 April 2014, LTL 114,749 thousand was allocated for the pay-ment of dividends. The Company received dividends of LTL 94,815 thousand.

As a result of appropriation of profit during the General Meeting of Shareholders of Lietuvos Energijos Gamyba AB held on 4 April 2014, LTL 150,000 thousand was allo-

cated for the payment of dividends. The Company recei-ved dividends of LTL 144,197 thousand.

Acquiring shares of AB LESTO and AB „Lietuvos dujos“

On May 21, Lietuvos Energija, UAB signed contracts with German concern E.ON Ruhrgas International, in accordan-ce with which it will take over 38.9 per cent of shares of na-tural gas supplier and distributor Lietuvos Dujos and 11.76 per cent of shares of electricity distribution network opera-tor LESTO. The total price of the share package is EUR 97.57 million (LTL 336.9 million).

Lietuvos Energija UAB Žvejų str. 14, Vilnius

www.le.lt

2014 iq_consolidated and company's condensed interim financial information (unaudited)

Documents

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