Riga, 2018-05-31 15:00 CEST (GLOBE NEWSWIRE) -- The amount of electricity generated by Latvenergo Group in Q1 2018 has reached 1,929 GWh, which is 4% more than in the respective period of the previous year. Due to efficient use of the diversified generation portfolio, the amount of electricity generated by the Group exceeds the amount sold to retail users (1,766 GWh) by 9%.
Electricity generation at the Riga CHPPs has increased by 31%, reaching 904 GWh. This growth has been determined by the ability to respond effectively to the market situation in the region, planning operational modes and use of fuel in an efficient manner and offering competitive electricity and thermal energy on the market. Whereas Q1 of the previous year was characterised by intense spring flooding, which contributed to increased generation at the Daugava HPPs (hydropower plants), the amount of electricity generated at the HPPs this year has decreased by 12%, amounting to 1,010 GWh due to lower water inflow in the Daugava River. The amount of thermal energy generated in Q1 2018 has grown by 6% compared to Q1 last year due to colder weather conditions and is equal to 1,204 GWh. Under intensifying competition, the Group has sold significantly more thermal energy than was planned. Thus, Latvenergo Group has been the largest thermal energy generator in Latvia, demonstrating high competitiveness in a changing market environment.
In the reporting period, a total of 1, 766 GWh of electricity have been sold to Baltic customers. The total number of customers outside Latvia exceeds 35 thousand, and retail electricity trade to these customers accounts for approximately 1/3 of the total amount. In 2017, the Group commenced natural gas trade in Latvia and Estonia. It should be emphasised that the opening of the natural gas market has made it possible to diversify natural gas supplies, thus ensuring the most competitive price, which is especially important for Latvenergo as the second largest natural gas consumer in the Baltic states. In Q1, the Group's auxiliary gas consumption and the amount sold to customers was 2.5 TWh.
Latvenergo Group’s revenue in Q1 2018 has decreased by 2% and amounts to EUR 259.7 million. EBITDA of the Group is 4% less than the previous year, reaching EUR 109.7 million, while the Group’s profit is EUR 64.8 million. The Group’s results have been negatively impacted by 75% lower revenue from the installed electrical capacity at the Riga CHPPs.
In Q1 2018, the total amount of Latvenergo Group’s investment has not changed significantly compared to the respective period last year; it amounts to EUR 33 million. The majority or 85% of overall investments were made in network assets with a view to ensuring a high level of quality and safety of their services. The most important investment projects of Latvenergo Group are: reconstruction of hydropower units of the Daugava HPPs, which will ensure their operation for the next 40 years; the Kurzeme Ring project, which significantly increases the security of energy supply in Kurzeme region and Latvia as a whole, allowing further integration of the Baltics into the Nordic electricity market; as well as the Third Estonia-Latvia power transmission network interconnection, a project of major significance for the future electricity transmission infrastructure of the whole Baltic region.
On 20 March 2018, Latvenergo AS registered changes in its capital; it was reduced by EUR 454.4 million. The capital of Latvenergo AS now amounts to EUR 834.3 million. The capital release was carried out taking into account the order of 21 November 2017 by the Cabinet of Ministers of the Republic of Latvia, which supported repurchasing of future liabilities of the state to Latvenergo AS on the electrical capacity payments for Riga CHPP-1 and Riga CHPP-2. Thereby, Latvenergo AS has contributed to the reduction of the average mandatory procurement component starting from 1 January 2018.
To acknowledge that Latvenergo Group has managed to maintain sufficient financial flexibility and good financial performance, on 14 March 2018, Moody’s maintained the credit rating for Latvenergo AS: Baa2 with a stable outlook. In their assessment, Moody’s took into account the recent changes in the support intensity for the Riga CHPPs and the related capital release of Latvenergo AS.
The next interim financial statements of Latvenergo Group for 2018 will be published on 31 August and 30 November.
Latvenergo Group’s Key Performance Indicators
Operational Figures
| 3M 2018 | 3M 2017 | ||
| Electricity supply | GWh | 2,904 | 3,029 |
| Retail* | GWh | 1,766 | 1,882 |
| Wholesale** | GWh | 1,138 | 1,147 |
| Electricity generated | GWh | 1,929 | 1,855 |
| Thermal energy generated | GWh | 1,204 | 1,137 |
| Number of employees | 3,736 | 4,133 | |
| Moody's credit rating | Baa2 (stable) | Baa2 (stable) |
* including operating consumption
** including sale of energy purchased within the mandatory procurement on the Nord Pool
Financial Figures
MEUR
| 3M 2018 | 3M 2017 | |
| Revenue | 259.7 | 265.8 |
| EBITDA 1) | 109.7 | 113.8 |
| Profit | 64.8 | 55.1 |
| Assets | 4,001.4 | 3,956.2 |
| Equity | 2,460.1 | 2,471.6 |
| Net debt 2) | 515.0 | 530.6 |
| Investments | 33.0 | 32.1 |
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
2) Net debt – borrowings at the end of the reporting period minus cash and cash equivalents at the end of the reporting period
Financial Ratios
| 3M 2018 | 3M 2017 | ||
| Net debt / EBITDA 1) | 1.0 | 1.5 | |
| EBITDA margin 2) | 58% | 44% | |
| Return on equity (ROE) 3) | 13.5% | 6.4% | |
| Return on assets (ROA) 4) | 8.3% | 3.9% | |
| Return on capital employed (ROCE) 5) | 7.1% | 5.8% | |
| Net debt / equity 6) | 21% | 21% |
1) Net debt / EBITDA – average value of net debt / EBITDA (12-month rolling)
2) EBITDA margin – EBITDA (12-month rolling) / revenue (12-month rolling)
3) Return on equity (ROE) – net profit (12-month rolling) / average value of equity
4) Return on assets (ROA) – net profit (12-month rolling) / average value of assets
5) Return on capital employed (ROCE) – operating profit (12-month rolling) / average value of equity + average value of borrowings
6) Net debt at the end of the reporting period / equity at the end of the reporting period
Consolidated Statement of Profit or Loss*
EUR’000
| 01/01-31/03/2018 | 01/01-31/03/2017 | |
| Revenue | 259,675 | 265,816 |
| Other income | 13,460 | 1,638 |
| Raw materials and consumables used | (120,247) | (109,682) |
| Personnel expenses | (28,877) | (25,926) |
| Depreciation, amortisation and impairment of intangible assets and property, plant and equipment | (42,938) | (47,012) |
| Other operating expenses | (14,274) | (18,059) |
| Operating profit | 66,799 | 66,775 |
| Finance income | 281 | 310 |
| Finance costs | (2,244) | (3,058) |
| Profit before tax | 64,836 | 64,027 |
| Current income tax | (6) | (8,940) |
| Profit for the reporting period | 64,830 | 55,087 |
| Profit attributable to: | ||
| – Equity holder of the Parent Company | 63,077 | 53,979 |
| – Non–controlling interests | 1,753 | 1,108 |
* Consolidated Unaudited Condensed Financial Interim Statements have been prepared in accordance with the IFRS as adopted by the European Union.
Consolidated Statement of Financial Position*
EUR'000
| 31/03/2018 | 31/12/2017 | |
| ASSETS | ||
| Non–current assets | ||
| Intangible assets and property, plant and equipment | 3,311,216 | 3,322,398 |
| Investment property | 439 | 753 |
| Non–current financial investments | 40 | 40 |
| Investments in held–to–maturity financial assets | 16,972 | 16,984 |
| Other non–current receivables | 3,227 | 3,229 |
| Total non–current assets | 3,331,894 | 3,343,404 |
| Current assets | ||
| Inventories | 32,032 | 76,328 |
| Receivables from contracts with customers | 109,704 | 105,369 |
| Other current receivables | 198,138 | 646,761 |
| Prepayment for income tax | 5,938 | – |
| Deferred expenses | 4,207 | 3,241 |
| Derivative financial instruments | 6,505 | 4,619 |
| Cash and cash equivalents | 313,015 | 236,003 |
| Total current assets | 669,539 | 1,072,321 |
| TOTAL ASSETS | 4,001,433 | 4,415,725 |
| EQUITY AND LIABILITIES | ||
| EQUITY | ||
| Share capital | 834,302 | 1,288,715 |
| Reserves | 1,128,465 | 1,126,521 |
| Retained earnings | 487,511 | 423,613 |
| Equity attributable to equity holder of the Parent Company | 2,450,278 | 2,838,849 |
| Non–controlling interests | 9,795 | 8,042 |
| Total equity | 2,460,073 | 2,846,891 |
| LIABILITIES | ||
| Non–current liabilities | ||
| Borrowings | 718,186 | 718,674 |
| Provisions | 22,123 | 21,910 |
| Derivative financial instruments | 4,312 | 4,914 |
| Deferred income on contracts from customers | 143,085 | 142,132 |
| Other liabilities and deferred income | 347,196 | 350,926 |
| Total non–current liabilities | 1,234,902 | 1,238,556 |
| Current liabilities | ||
| Borrowings | 109,831 | 108,083 |
| Trade and other payables | 121,311 | 147,072 |
| Income tax payable | 27,747 | 27,725 |
| Deferred income on contracts from customers | 12,738 | 12,500 |
| Other deferred income | 31,721 | 31,728 |
| Derivative financial instruments | 3,110 | 3,170 |
| Total current liabilities | 306,458 | 330,278 |
| Total liabilities | 1,541,360 | 1,568,834 |
| TOTAL EQUITY AND LIABILITIES | 4,001,433 | 4,415,725 |
* Consolidated Unaudited Condensed Financial Interim Statements have been prepared in accordance with the IFRS as adopted by the European Union.
Additional information: Jānis Irbe Group Treasurer Phone: +371 67 728 239 E-mail: investor.relations@latvenergo.lv
About Latvenergo
Latvenergo Group is one of the leading energy suppliers in the Baltics operating in electricity and thermal energy generation and trade, natural gas trade, electricity distribution services and lease of transmission system assets. Latvenergo AS has been acknowledged as the most valuable company in Latvia for several times. International credit rating agency Moody’s has assigned Latvenergo AS an investment-grade credit rating of Baa2/stable.
Latvenergo Group is comprised of the parent company Latvenergo AS (generation and trade of electricity and thermal energy, trade of natural gas) and seven subsidiaries - Latvijas elektriskie tīkli AS (lease of transmission system assets), Sadales tīkls AS (electricity distribution), Elektrum Eesti OÜ (trade of electricity and natural gas in Estonia), Elektrum Lietuva UAB (trade of electricity and natural gas in Lithuania), Enerģijas publiskais tirgotājs AS (administration of mandatory electricity procurement process) and Liepājas enerģija SIA (generation and trade of thermal energy in Liepaja, electricity generation). All shares of Latvenergo AS are owned by the state and held by the Ministry of Economics of the Republic of Latvia.
