Riga, 2016-11-30 15:05 CET (GLOBE NEWSWIRE) -- The operation of NordBalt interconnection has great significance for the operation of Latvenergo Group in the electricity supply area in this period, reducing the price difference between the Baltic and the Nordic countries. Also, the operation of Riga CHPPs has a significant role for the Baltic electricity market, precluding electricity price increase risk in the region during interruption periods in interconnection operation, as well as, at times when there were fluctuations in generation supply and demand in the neighbouring countries.
In the first nine months of this year, Latvenergo Group has generated by 14% more electricity (3,053 GWh) and by 9% more thermal energy (1,725 GWh) than in the previous year. Electricity output generated at Riga CHPPs in the first nine months of 2016 has increased by 15% reaching 1,210 GWh. Increase of electricity output at Riga CHPPs was fostered by the decrease of the average price of natural gas by 26%, compared to the respective period in the previous year. Also, electricity generation in Daugava HPPs cascade has increased by 13%, constituting 1,804 GWh, which was facilitated by higher water inflow in the Daugava River.
Also in the first nine months of 2016, Latvenergo Group has maintained the leading electricity supplier position in the Baltics. The total amount of retail electricity supply in the Baltic States constitutes 5,639 GWh. Approximately 1/3 or 1,786 GWh of this amount is supplied to the neighbouring countries – Lithuania and Estonia. The customer portfolio of Latvenergo Group in the Baltic States has remained stable, the total number of foreign clients exceeds 34 thousand.
Latvenergo Group revenue in the first nine months of 2016 constitutes 678.2 million euros and profit – 94.3 million euros (in 2015: 685.9 million euros and 68.6 million euros respectively). The improvement of profit indicators was mainly influenced by lower natural gas and electricity market prices, as well as higher generation output at Daugava HPPs.
The total amount of investment in the first nine months of 2016 has not changed significantly, compared to the respective period in the previous year, constituting 136.5 million euros, the majority of which or 2/3 is invested in network assets. Modernisation of distribution system network assets, increasing their safety and quality, is significant for all users of electricity. Investment in network assets reaches 73.8 million euros in the first nine months of 2016. Also, the major investment projects are continued: Kurzeme Ring , Daugava HPPs hydropower unit reconstruction and the Estonia–Latvia third power transmission network interconnection.
Latvenergo Group external funding sources in the long run are purposefully diversified, thus creating a balanced portion of lender categories in the total loan portfolio. Approximately 1/4 of the loans of Latvenergo Group or 205 million euros are bonds, including green bonds in the amount of 100 million euros, which were issued in 2015 and 2016. After the end of the reporting period, on 12 October 2016, the international rating agency Moody’s assigned the highest Green Bond Assessment grade of GB1 (excellent). This marks the first time when Moody’s assesses green bonds and even assigns excellent grade for green bonds issued in Eastern Europe . Latvenergo AS credit rating is Baa2 with stable outlook.
After the end of the reporting period, on 19 October 2016, a medium-term strategy of Latvenergo Group for the period from year 2017 to 2022 was approved. Considering the expected challenges in the industry and business environment, three main operational goals are defined in the strategy: strengthening of sustainable and economically sound market position in local markets (in the Baltics), meanwhile considering a geographic and / or product / service expansion; development of generation portfolio that fosters synergy with trade and that promotes value increase of the Group; development of a customer-driven, functional, safe and efficient network.
The unaudited interim condensed financial statements of Latvenergo Group for 2016 will be published on 28 February 2017. Unaudited interim condensed consolidated financial statements of Latvenergo for the period of nine months, which ends on 30 September 2016, are available in www.latvenergo.lv section Investors/ Reports .
[1] EBITDA – earnings before interest, corporate income tax, share of profit or loss of associated companies, depreciation and amortisation, and impairment of intangible and fixed assets.
Key Performance Indicators
Operational Figures
| 9M 2016 | 9M 2015 | ||
| Retail electricity supply | GWh | 5,639 | 5,797 |
| Electricity generation | GWh | 3,052 | 2,676 |
| Thermal energy supply | GWh | 1,646 | 1,525 |
| Number of employees | 4,184 | 4,180 | |
| Moody's credit rating | Baa2 (stable) | Baa2 (stable) |
Financial Figures
| 9M 2016 | 9M 2015 | ||
| Revenue | MEUR | 678.2 | 685.9 |
| EBITDA 1) | MEUR | 288.1 | 236.2 |
| Profit | MEUR | 94.3 | 68.6 |
| Assets | MEUR | 3,564.6 | 3,530.5 |
| Equity | MEUR | 2,110.5 | 2,060.3 |
| Net debt 2) | MEUR | 623.0 | 682.5 |
| Investments | MEUR | 136.5 | 136.7 |
Financial Ratios
| 9M 2016 | 9M 2015 | ||
| Net debt/EBITDA 3) | 1.8 | 2.4 | |
| EBITDA margin 4) | 39% | 31% | |
| Return on equity 5) | 5.3% | 3.4% | |
| Return on assets 6) | 3.1% | 1.9% | |
| Net debt/equity 7) | 30% | 33% |
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 9 months period ended 30 September 2016
| 01/01–30/09/2016 | 01/01–30/09/2015 | ||
| EUR'000 | EUR'000 | ||
| Revenue | 678,203 | 685,945 | |
| Other income | 4,904 | 3,630 | |
| Raw materials and consumables used | (274,874) | (336,343) | |
| Personnel expenses | (72,754) | (71,151) | |
| Depreciation, amortisation and impairment of intangible assets and property, plant and equipment | (171,370) | (149,040) | |
| Other operating expenses | (47,338) | (45,873) | |
| Operating profit | 116,771 | 87,168 | |
| Finance income | 1,788 | 2,192 | |
| Finance costs | (10,935) | (14,557) | |
| Profit before tax | 107,624 | 74,803 | |
| Income tax | (13,308) | (6,208) | |
| Profit for the period | 94,316 | 68,595 | |
Consolidated Statement of Financial Position*
| 30/09/2016 | 31/12/2015 | |
| EUR'000 | EUR'000 | |
| ASSETS | ||
| Non–current assets | ||
| Intangible assets and property, plant and equipment | 3,052,743 | 3,090,661 |
| Investment property | 731 | 696 |
| Non–current financial investments | 41 | 41 |
| Investments in held–to–maturity financial assets | 17,046 | 20,609 |
| Other non–current receivables | 1,281 | 1,712 |
| Total non–current assets | 3,071,842 | 3,113,719 |
| Current assets | ||
| Inventories | 32,264 | 24,791 |
| Trade receivables and other receivables | 245,550 | 266,460 |
| Investments in held-to-maturity financial assets | 3,521 | 7,859 |
| Derivative financial instruments | 5,123 | – |
| Cash and cash equivalents | 206,291 | 104,543 |
| Total current assets | 492,749 | 403,653 |
| TOTAL ASSETS | 3,564,591 | 3,517,372 |
| EQUITY | ||
| Share capital | 1,288,531 | 1,288,531 |
| Reserves | 667,340 | 669,596 |
| Retained earnings | 148,393 | 131,662 |
| Equity attributable to equity holder of the Parent Company | 2,104,264 | 2,089,789 |
| Non–controlling interests | 6,248 | 6,913 |
| Total equity | 2,110,512 | 2,096,702 |
| LIABILITIES | ||
| Non–current liabilities | ||
| Borrowings | 752,549 | 714,291 |
| Deferred income tax liabilities | 268,937 | 273,987 |
| Provisions | 16,541 | 15,984 |
| Derivative financial instruments | 10,224 | 8,291 |
| Other liabilities and deferred income | 194,475 | 196,386 |
| Total non–current liabilities | 1,242,726 | 1,208,939 |
| Current liabilities | ||
| Trade and other payables | 130,464 | 121,256 |
| Borrowings | 76,739 | 83,192 |
| Derivative financial instruments | 4,150 | 7,283 |
| Total current liabilities | 211,353 | 211,731 |
| Total liabilities | 1,454,079 | 1,420,670 |
| TOTAL EQUITY AND LIABILITIES | 3,564,591 | 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).
