Riga, 2016-08-31 15:05 CEST (GLOBE NEWSWIRE) -- In the first six months of 2016, there was a drop in prices in the bidding areas of Latvia and Lithuania, which was mainly enhanced by the operation of NordBalt interconnection between Sweden and Lithuania, reducing the price difference between the Baltic States and the Nordic countries. Further convergence of electricity price with the Nordic countries is expected upon completion of the Estonian-Latvian electricity transmission interconnection in 2020. In the first six months of 2016, the risk of increase of electricity price in the region was also precluded by the efficient and competitive operation of Riga CHPPs.
Latvenergo is a constant leader of electricity supply in the Baltic States in the first six months of 2016. The total amount of retail electricity supply in the first six months of 2016 constitutes 3,922 GWh, which is approximately equal to the amount in the previous year, one third or 1,218 GWh of this amount is supplied to the neighbouring countries – Lithuania and Estonia. Compared to the respective period in the previous year, the number of business segment clients in the neighbouring countries has increased by more than 1,000 new customers. The total number of customers of Latvenergo Group outside Latvia exceeds 34.5 thousand.
Compared to the first six months of the previous year, the amount of electricity generated by Latvenergo Group has increased by 26%, constituting 2,431 GWh, whereas the amount of generated thermal energy has increased by 10% and constitutes 1,527 GWh. The increase in the amount of generated electricity is ensured by the amount generated by Riga CHPPs – in the first six months of this year it is 958 GWh, which is twice as much as in the previous year. Higher amount of electricity generated by Riga CHPPs was facilitated by the decrease of the average price of natural gas by 28%, compared to the first six months of 2015. Riga CHPPs operated in market conjuncture effectively planning operating modes and fuel consumption. Compared to the respective period in the previous year, the amount generated by Daugava HPPs has not changed significantly, reaching 1,445 GWh.
In the first six months of 2016, Latvenergo Group revenue constitutes 476.0 million euros, which is equal to the respective period of the previous year. Latvenergo Group EBITDA has increased by 14% in the reporting period and constitutes 203.3 million euros. In the first six months of 2016, Latvenergo Group profit constitutes 74.6 million euros. The results were positively influenced mainly by prices of natural gas and electricity in Latvia, which were respectively by 28% and 6% lower than in the first six months of 2015. In the first six months of 2016, the EBITDA margin has improved to 36%, whereas in the respective period of the previous year it constituted 29%.
The total amount of investment in the first six months of 2016 has not changed significantly, compared to the respective period in the previous year, constituting 79.6 million euros, the majority of which – 68% – is invested in network assets, modernizing the network and increasing its safety and quality. Compared to the first six months of the previous year, the investment in the distribution system assets has increased by 11%, reaching 47.2 million euros in the reporting period. A substantial part of investment was made in environmentally friendly and environmental development projects, for example, 14.6 million euros were invested in the reconstruction of Daugava HHPs hydropower units. Also the projects of Kurzeme Ring and Estonia-Latvia third power transmission network interconnection are implemented.
In April 2016, Latvenergo AS successfully completed the green bond offering programme in the amount of 100 million euros. The total demand for green bonds at the end of the placement period was record-high, exceeding the offer 5.8 times. By issuing bonds, Latvenergo Group has diversified its borrowing sources in a targeted way. The total amount of bonds represents approximately 1/4 of the total amount of Group’s borrowings.
In February 2016, the international rating agency Moody’s Investors Service reconfirmed the credit rating of Latvenergo AS - Baa2 with a stable future outlook.
The next interim financial statement of Latvenergo Group for 2016 will be published on 30 November.
[1] EBITDA – earnings before interest, corporate income tax, share of profit or loss of associated companies, depreciation and amortization, and impairment of intangible and fixed assets.
Key Performance Indicators
Operational Figures
| 1H 2016 | 1H 2015 | ||
| Retail electricity supply | GWh | 3,922 | 3,934 |
| Electricity generation | GWh | 2,431 | 1,931 |
| Thermal energy supply | GWh | 1,465 | 1,348 |
| Number of employees | 4,187 | 4,163 | |
| Moody's credit rating | Baa2 (stable) | Baa2 (stable) |
Financial Figures
| 1H 2016 | 1H 2015 | ||
| Revenue | MEUR | 476.0 | 474.1 |
| EBITDA 1) | MEUR | 203.3 | 177.8 |
| Profit | MEUR | 74.6 | 61.7 |
| Assets | MEUR | 3,545.5 | 3,527.5 |
| Equity | MEUR | 2,091.5 | 2,054.0 |
| Net debt 2) | MEUR | 648.4 | 703.6 |
| Investments | MEUR | 79.6 | 79.3 |
Financial Ratios
| 1H 2016 | 1H 2015 | ||
| Net debt/EBITDA 3) | 2.0 | 2.6 | |
| EBITDA margin 4) | 36% | 29% | |
| Return on equity 5) | 4.7% | 2.4% | |
| Return on assets 6) | 2.8% | 1.4% | |
| Net debt/equity 7) | 31% | 34% |
1) EBITDA: earnings before interest, corporate income tax, share of profit or loss of associates, depreciation and amortization, and impairment of intangible and fixed assets
2) Net debt: borrowings at the end of the period minus cash and cash equivalents at the end of the period
3) Net debt/EBITDA: ((net debt at the beginning of 12 months period + net debt at the end of 12 months period) * 0.5) / EBITDA (12-months rolling)
4) EBITDA margin: EBITDA (12-months rolling) / revenue (12-months rolling) * 100%
5) Return on equity: net profit (12-months rolling) / average value of equity * 100%
6) Return on assets: net profit (12-months rolling) / average value of assets * 100%
7) Net debt/equity: net debt at the end of the reporting period / equity at the end of the reporting period * 100%
Consolidated Statement of Profit or Loss*
for the 6 months ended 30 June 2016
| 01/01–30/06/2016 | 01/01–30/06/2015 | ||
| EUR'000 | EUR'000 | ||
| Revenue | 475,998 | 474,136 | |
| Other income | 3,372 | 2,230 | |
| Raw materials and consumables used | (195,800) | (219,037) | |
| Personnel expenses | (48,731) | (47,917) | |
| Depreciation, amortisation and impairment of intangible assets and property, plant and equipment | (111,542) | (98,782) | |
| Other operating expenses | (31,586) | (31,575) | |
| Operating profit | 91,711 | 79,055 | |
| Finance income | 1,211 | 1,443 | |
| Finance costs | (7,386) | (9,853) | |
| Profit before tax | 85,536 | 70,645 | |
| Income tax | (10,905) | (8,947) | |
| Profit for the period | 74,631 | 61,698 | |
Consolidated Statement of Financial Position*
| 30/06/2016 | 31/12/2015 | |
| EUR'000 | EUR'000 | |
| ASSETS | ||
| Non–current assets | ||
| Intangible assets and property, plant and equipment | 3,057,048 | 3,090,661 |
| Investment property | 764 | 696 |
| Non–current financial investments | 41 | 41 |
| Investments in held–to–maturity financial assets | 17,059 | 20,609 |
| Other non–current receivables | 1,283 | 1,712 |
| Total non–current assets | 3,076,195 | 3,113,719 |
| Current assets | ||
| Inventories | 32,549 | 24,791 |
| Trade receivables and other receivables | 239,321 | 266,460 |
| Investments in held-to-maturity financial assets | 11,379 | 7,859 |
| Derivative financial instruments | 2,190 | – |
| Cash and cash equivalents | 183,866 | 104,543 |
| Total current assets | 469,305 | 403,653 |
| TOTAL ASSETS | 3,545,500 | 3,517,372 |
| EQUITY | ||
| Share capital | 1,288,531 | 1,288,531 |
| Reserves | 666,839 | 669,596 |
| Retained earnings | 128,261 | 131,662 |
| Equity attributable to equity holders of the Parent Company | 2,083,631 | 2,089,789 |
| Non–controlling interests | 7,858 | 6,913 |
| Total equity | 2,091,489 | 2,096,702 |
| LIABILITIES | ||
| Non–current liabilities | ||
| Borrowings | 759,092 | 714,291 |
| Deferred income tax liabilities | 270,544 | 273,987 |
| Provisions | 16,409 | 15,984 |
| Derivative financial instruments | 10,953 | 8,291 |
| Other liabilities and deferred income | 194,602 | 196,386 |
| Total non–current liabilities | 1,251,600 | 1,208,939 |
| Current liabilities | ||
| Trade and other payables | 124,373 | 121,256 |
| Borrowings | 73,134 | 83,192 |
| Derivative financial instruments | 4,904 | 7,283 |
| Total current liabilities | 202,411 | 211,731 |
| Total liabilities | 1,454,011 | 1,420,670 |
| TOTAL EQUITY AND LIABILITIES | 3,545,500 | 3,517,372 |
* Unaudited Interim Condensed Consolidated Financial Statements. Prepared in accordance with the IFRS as adopted by the EU
Additional information: Jānis Irbe Group Treasurer Phone: +371 67 728 239 E-mail: investor.relations@latvenergo.lv
About Latvenergo
Latvenergo Group is a pan-Baltic energy company, engaging in electricity and thermal energy generation and supply, electricity distribution services and lease of transmission system assets. Latvenergo Group holds one-third of the entire Baltic electricity market, thus ensuring its leadership in the Baltic electricity supply. Latvenergo AS has been acknowledged as the most valuable company in Latvia for several years in a row. International credit rating agency Moody’s has assigned Latvenergo AS an investment-grade credit rating of Baa2/stable.
Latvenergo Group includes the parent company Latvenergo AS (electricity and thermal energy generation and supply) and its subsidiaries Latvijas elektriskie tīkli AS (lease of transmission system assets), Sadales tīkls AS (electricity distribution), Elektrum Eesti OÜ (electricity supply in Estonia), Elektrum Lietuva UAB (electricity supply in Lithuania), Enerģijas publiskais tirgotājs AS (administration of electricity mandatory procurement process) and Liepājas enerģija SIA (electricity and thermal energy generation and supply).
