Grigeo Group
Notification on material event

Regarding the changes in the price of AB Grigeo shares

In early 2020, AB Grigeo Klaipėda, a subsidiary of AB Grigeo (hereinafter – the Company), was found to have been negligent in its management of wastewater, when partially treated wastewater would be discharged in the collector of AB Klaipėdos Vanduo to finally end up in the Curonian Lagoon. This situation had received a lot of attention from the public, resulting in the heads of various Lithuanian governmental bodies and public figures making open statements about the incident in disregard of any applicable legal requirements, and the shares of the Company suffering enormous price volatility.

AB Grigeo Klaipėda has stated repeatedly that it will reimburse the damage to the environment if and when the fact and the extent of the damage is determined under the European Union directives and the national regulations implementing them. The Environmental Protection Department (hereinafter – the EPD) has refused to exercise a good-faith regulation of the extent of the reimbursable damage to the environment by approving the environmental remedy measures as recommended by the foreign environmental experts engaged by AB Grigeo Klaipėda, in compliance with Directive 2004/35/EC of the European Parliament and of the Council of 21 April 2004 on Environmental Liability with Regard to the Prevention and Remedying of Environmental Damage and the national regulations that implement it.

Notably, a different interpretation of the extent of the alleged environmental damage caused by AB Grigeo Klaipėda would appear in public domain at different times, affecting the stock price of the Company in a negative way. In its civil claim for the compensation of environmental damage of 26 January 2021, the EPD specified the exact amount of the damage. The Company issued a statement on the non-EU compliant methodology for the estimation of the damage that the EPD followed in its assessment of the reimbursable extent of environmental damages in its notice of 26 January 2021. The publication of the civil claim amount, which is classed as pre-trial investigation details and is therefore subject to non-disclosure, has had a significant negative impact on the stock price of the Company.

In response to this situation and with an aim to provide its investors with the complete information about the situation as it is, the Company is hereby releasing some of the financial data available to it ahead of the scheduled date of publication of interim data.

In 2020, the total non-audited sales turnover of AB Grigeo Group amounted to EUR 130 million, and its EBITDA amounted to EUR 26 million (EUR 140 million and EUR 29 million in 2019). The non-audited sales of AB Grigeo Klaipėda in 2020 was EUR 31 million, EBITDA was EUR 2,1 million (EUR 43 million and EUR 9,5 million in 2019). The cash and cash equivalents of AB Grigeo Group are over twice as high as its current financial liabilities to credit institutions. Therefore, even if we were to apply a multiple of 5 (five), which is a very conservative figure, to determine the enterprise value, the value of AB Grigeo Group is well above EUR 100 million, which is significantly higher than the Company’s current market capitalisation.

The Company intends to publish its interim financial statements for the twelve months of 2020 on the date as it was scheduled, which is 25 February 2021.

The Company’s management maintain that this failure to observe the established guidelines in disclosing information about the course of this ongoing high-profile pre-trial investigation to the public, as well as the various public speculations in respect of the damages and fines, made in disregard of legal requirements and the principles of non-disclosure of pre-trial investigation data and presumption of innocence in criminal proceedings, are having a disproportionately large negative impact on the value of the stock.

Gintautas Pangonis
President
AB Grigeo
+370 5 243 5801