2017 was a year of changes and transition for the JSC "Latvijas Gaze" (further - the Company): -- At the beginning of the year in line with the amendments to the Energy Law adopted by the Saeima of the Republic of Latvia on 11 February 2016 the Company's natural gas storage and transmission business was spun-off into the newly founded and fully independent company the JSC "Conexus Baltic Grid"; -- On 3 April 2017 the Latvian natural gas market was opened to competition bringing to an end the former monopoly position of the JSC "Latvijas Gaze"; -- On 1 December 2017, the Company spun-off its distribution business into a 100 % subsidiary with the name JSC "Gaso". The JSC "Gaso" is a legally, structurally and operationally separate company with an own and independent Board of Management and Council. Together the JSC "Latvijas Gaze" and the JSC "Gaso" form Latvijas Gaze group. Since 3 April 2017 several new players have entered the Latvian natural gas market actively competing with the former incumbent the JSC "Latvijas Gaze" for market share. At the end of 2017 in total 37 companies were officially registered as gas trading companies in Latvia. Despite the advent of competition in the Latvian natural gas market the total natural gas sales volumes of the JSC "Latvijas Gaze" still reached 13 859 GWh in 2017, which is a decrease of 12.7% in comparison to 2016. Latvijas Gaze group's overall revenue decreased by 6.5% year-on-year amounting to 321 million EUR in 2017. As a consequence of market opening the JSC "Latvijas Gaze" not only delivers natural gas directly to its customers but also sells natural gas at the Virtual Trading Point and at the Incukalns Underground Gas Storage Facility. At the same time the Company actively prepared entering into the neighbouring natural gas markets in Lithuania and Estonia. Subsequently, on 17 August 2017 the JSC "Latvijas Gaze" received a license for natural gas trading in Lithuania and on 23 August 2017 the Company was granted a natural gas trading license for Estonia. Investments of Latvijas Gaze group in 2017 reached 9 million EUR. More than 70% of total investments was spent on the maintenance of the distribution system. Taking into account the significant changes in the market and operating environment of the company as well as the costs associated with the unbundling of the company, Latvijas Gaze group with a net profit of 26 million EUR overall achieved a solid financial result. For the future Latvijas Gaze group remains fully committed to retaining its position as the most reliable natural gas supplier for market customers and households alike and to expand its sales activities in the Baltic region. Audited financial statement of Latvijas Gaze group will be published on 27 April 2018. Madara Pundure Head of Finance and Accounting Division Tel. +371 67369281, IR@lg.lv Attachment: https://cns.omxgroup.com/cds/DisclosureAttachmentServlet?messageAttachmentId=666681