Riga, 2018-08-31 14:15 CEST (GLOBE NEWSWIRE) -- In the first half of 2018, Latvenergo Group responded effectively to the electricity market situation and demonstrated the importance of its generation facilities not only in Latvia but also in the Baltic states. In the first six months of 2018, the Group generated 3,139 GWh of electricity, substantially (by 29%) increasing the output at the Riga CHPPs and reaching 1,135 GWh. Thus, the Riga CHPPs have secured the necessary electricity for the region in conditions where a decreased hydropower output was observed on the market as a result of dry and warm weather. Climatic conditions have also adversely affected the output at Daugava HPPs: due to smaller water inflow, it has decreased by 12% compared to last year and is 1,977 GWh. However, despite the reduction of the output at Daugava HPPs, electricity from renewable sources accounts for 63% of the total generation.
The amount of thermal energy generated in the first six months of 2018 is 8% less compared to the first half of the previous year and is equal to 1,442 GWh. The decrease was influenced by the increased competition with the arrival of four new heat generators in the Riga thermal energy market.
In the reporting period, a total of 3.3 TWh of electricity have been sold to Baltic customers. The total number of customers outside Latvia reaches almost 35 thousand, and the amount of retail electricity trade to these customers accounts for approximately 1/3 of the total. The natural gas sales of Latvenergo Group and the number of customers have continued to grow in the reporting period. A significant fact to emphasise is 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. The amount of gas consumed by the Group and sold to customers in the first half of 2018 is 3.2 TWh.
Latvenergo Group’s revenue in the first half of 2018 has decreased by 6% and amounts to EUR 450.2 million. EBITDA of the Group is 12% less than the previous year, reaching EUR 187.5 million. The Group’s profit was EUR 97.4 million, which is approximately the same as in the respective period a year ago.
The Strategic development and efficiency program initiated in 2017 has left a positive impact on the results of the Group. The Program includes revision, centralization and digitalization of the processes in the Group. The forecasted benefits of the planned efficiency program is assessed to reach EUR 30 million. The implementation of the efficiency program has been more successful than initially planned. The number of employees of Latvenergo Group has been reduced by 14% or almost 600 employees since the beginning of 2017. Sadales tīkls AS has an important role in the implementation of the efficiency program. The main activities carried out by Sadales tīkls AS in the implementation of the efficiency program is digitalization, process review, installation of smart meters for more than half a million households, decrease of the number of transportation units, as well as the optimization of the number of distribution bases. In total, the number of employees of Sadales tīkls AS has been reduced by 500 employees.
In the first half of 2018, the total amount of Latvenergo Group’s investments has increased by 4% compared to the first six months of the last year and reaches EUR 96.6 million. 80% of overall investments have been made in the modernisation of the power networks with a view to ensuring a higher level of quality and security of the services. EUR 11 million has been invested in the reconstruction of hydropower units of Daugava HPPs, which will ensure their operation for the next 40 years, while the total amount of investments made by 30 June 2018 is EUR 139.4 million. The total investments in the third stage of 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, amount to EUR 71.7 million. The Third Estonia–Latvia power transmission network interconnection project continues as well. This project bears major significance for the future electricity transmission infrastructure of the whole Baltic region. During the reporting period, a contract was concluded with the general contractor, and the development of the construction project and design started.
On 14 June 2018, Latvenergo AS received the Platinum category from the Sustainability Index and the highest overall assessment in the history of its operations: 97.2%. The high ranking of the company’s sustainability in all aspects of corporate social responsibility, based on international requirements, was contributed by considerate investment in the modernisation of energy generation facilities, care for the environment, employees and customers, good governance and other sustainable solutions in regard to energy generation and trade.
On 15 June 2018, Moody’s affirmed the assessment of Latvenergo AS green bonds – GB1 (excellent), indicating to a well-defined organisational structure and efficient decision making process for selecting eligible projects, as well as the comprehensive description of the projects included in the green bond report 2017.
The next interim statement of Latvenergo Group for 2018 will be published on 30 November.
Latvenergo Group Key Figures
Operational figures
| 6 months 2018 | 6 months 2017 | ||
| Electricity supply | GWh | 5,254 | 5,465 |
| Retail* | GWh | 3,320 | 3,541 |
| Wholesale** | GWh | 1,934 | 1,924 |
| Electricity generated | GWh | 3,139 | 3,147 |
| Thermal energy generated | GWh | 1,442 | 1,574 |
| Number of employees | 3,539 | 4,112 | |
| 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
EUR’000
| 6 months 2018 | 6 months 2017 | |
| Revenue | 450.2 | 478.9 |
| EBITDA 1) | 187.5 | 213.1 |
| Profit | 97.4 | 97.9 |
| Assets | 3,834.2 | 3,842.2 |
| Total equity | 2,342.4 | 2,425.9 |
| Net debt 2) | 611.6 | 566.8 |
| Investments | 96.6 | 92.8 |
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 period
Financial ratios
| 6 months 2018 | 6 months 2017 | ||
| Net debt / EBITDA 1) | 1.1 | 1.5 | |
| EBITDA margin 2) | 58% | 43% | |
| Return on equity (ROE) 3) | 13.5% | 6.8% | |
| Return on assets (ROA) 4) | 8.4% | 4.2% | |
| Return on capital employed (ROCE) 5) | 6.9% | 6.2% | |
| Net debt / equity 6) | 26% | 23% |
1) Net debt / EBITDA – average value of net debt / EBITDA (12-months rolling)
2) EBITDA margin – EBITDA (12-months rolling) / revenue (12-months rolling)
3) Return on equity (ROE) – net profit (12-months rolling) / average value of equity
4) Return on assets (ROA) – net profit (12-months rolling) / average value of assets
5) Return on capital employed (ROCE) – operating profit (12-months 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
| 01/01-30/06/2018 | 01/01-30/06/2017 | |
| Revenue | 450,235 | 478,902 |
| Other income | 22,911 | 3,535 |
| Raw materials and consumables used | (201,991) | (182,185) |
| Personnel expenses | (56,579) | (51,363) |
| Depreciation, amortisation and impairment of intangible assets and property, plant and equipment | (86,139) | (94,122) |
| Other operating expenses | (27,109) | (35,739) |
| Operating profit | 101,328 | 119,028 |
| Finance income | 577 | 627 |
| Finance costs | (4,401) | (5,930) |
| Profit before tax | 97,504 | 113,725 |
| Income tax | (101) | (15,854) |
| Profit for the reporting period | 97,403 | 97,871 |
| Profit attributable to: | ||
| - equity holder of the Parent Company | 95,723 | 96,628 |
| - non–controlling interests | 1,680 | 1,243 |
* Unaudited condensed consolidated interim financial statements prepared in accordance with the International Financial Reporting Standards as adopted for use in the European Union
Consolidated Statement of Financial Position*
EUR'000
| 30/06/2018 | 31/12/2017 | |
| ASSETS | ||
| Non–current assets | ||
| Intangible assets and property, plant and equipment | 3,330,222 | 3,322,398 |
| Investment property | 464 | 753 |
| Non–current financial investments | 40 | 40 |
| Investments in held–to–maturity financial assets | 16,960 | 16,984 |
| Other non–current receivables | 3,227 | 3,229 |
| Total non–current assets | 3,350,913 | 3,343,404 |
| Current assets | ||
| Inventories | 37,709 | 76,328 |
| Receivables from contracts with customers | 87,900 | 105,369 |
| Other current receivables | 119,663 | 646,761 |
| Prepayment for income tax | 11,770 | – |
| Deferred expenses | 4,519 | 3,241 |
| Derivative financial instruments | 14,438 | 4,619 |
| Current financial investments | 20,000 | – |
| Cash and cash equivalents | 187,294 | 236,003 |
| Total current assets | 483,293 | 1,072,321 |
| TOTAL ASSETS | 3,834,206 | 4,415,725 |
| EQUITY AND LIABILITIES | ||
| Equity | ||
| Share capital | 834,791 | 1,288,715 |
| Reserves | 1,134,300 | 1,126,521 |
| Retained earnings | 365,722 | 423,613 |
| Equity attributable to equity holder of the Parent Company | 2,334,813 | 2,838,849 |
| Non–controlling interests | 7,606 | 8,042 |
| Total equity | 2,342,419 | 2,846,891 |
| Liabilities | ||
| Non–current liabilities | ||
| Borrowings | 664,462 | 718,674 |
| Provisions | 22,676 | 21,910 |
| Derivative financial instruments | 4,018 | 4,914 |
| Deferred income on contracts from customers | 142,306 | 142,132 |
| Other liabilities and deferred income | 349,318 | 350,926 |
| Total non–current liabilities | 1,182,780 | 1,238,556 |
| Current liabilities | ||
| Borrowings | 134,391 | 108,083 |
| Trade and other payables | 126,566 | 147,072 |
| Income tax payable | – | 27,725 |
| Deferred income on contracts from customers | 12,874 | 12,500 |
| Other deferred income | 31,723 | 31,728 |
| Derivative financial instruments | 3,453 | 3,170 |
| Total current liabilities | 309,007 | 330,278 |
| Total liabilities | 1,491,787 | 1,568,834 |
| TOTAL EQUITY AND LIABILITIES | 3,834,206 | 4,415,725 |
* Unaudited condensed consolidated interim financial statements prepared in accordance with the International Financial Reporting Standards as adopted for use in 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.
