OREANDA-NEWS. On 15 April 2014, the Management Board of Latvenergo AS approved the audited Latvenergo Group Sustainability and Annual Report 2013. It is scheduled for approval by the Shareholders' Meeting of Latvenergo AS on 15 May 2014. The report presents the key financial performance indicators of Latvenergo Group and provides a management report on the most significant events in 2013.

Latvenergo Group is the largest electricity supplier in the Baltics, supplying 7,954 gigawatt hours (GWh) of electricity to retail customers in 2013 - 4% less than in the previous year. The decrease was determined by lower electricity consumption in the industrial sector of Latvia. Whereas, as a result of focused electricity trade activities, in 2013, electricity supply volume in Estonia and Lithuania increased by 32% and exceeds Ёщ of the total retail electricity supply. Besides, the number of retail customers in neighbouring countries exceeds 20 thousand.

In 2013, 4,854 GWh of electricity (2012: 5,077 GWh) and 2,566 GWh of thermal energy (2012: 2,712 GWh) were generated by the power plants of Latvenergo Group. Compared to 2012, the electricity output at Riga CHPPs increased by 39%, while a lower water inflow in the Daugava River resulted in a decrease of the Daugava HPPs output by 775 GWh. The electricity output at the Riga CHPPs allowed reducing the electricity market price during the periods of cross-border transmission capacity limitations. The volume of electricity procured from other generators within the mandatory procurement reached 1,247 GWh (+22%). Along with the increase in the amount of mandatory procurement from other generators, the proportion of Latvenergo AS in the eligible costs of mandatory procurement decreased from 42% in 2012 to 38% in 2013.

The revenue of Latvenergo Group grew by 3% reaching EUR 1.1 billion in 2013, while EBITDA* increased by 2% reaching EUR 249 million. The results of the Group were positively impacted by increase of revenues from mandatory procurement public service obligation fee and by recognition of balanced mandatory procurement revenues and costs. While factors such as unearned income due to electricity supply at the regulated tariff in Latvia (EUR 44 million), lower water inflow at the Daugava HPPs, increase of electricity purchase costs, as well as decrease of electricity consumption in the industrial sector of Latvia had a negative impact.

The profit of Latvenergo Group was EUR 46 million, which is 9% less than in 2012. The profit in 2013 was negatively affected by a EUR 18 million one-off impairment loss of Riga combined heat and power plant assets. The necessity of impairment loss recognition was determined by application of the Subsidised Energy Tax (as of 1 January 2014), which provides a 15% reduction of the receivable amount of mandatory procurement guaranteed payments for the installed electrical capacity at Riga CHPPs.

In 2013, the total amount of investments was EUR 225 million. In autumn 2013, the Riga TEC-2 second power unit (installed electrical capacity - 420 MWel, thermal capacity - 270 MWth) was commissioned, thus completing the reconstruction project of Riga TEC-2 - a state-of-art and the most efficient combined-cycle power plant in the Baltics. Meanwhile, in order to improve the quality and technical parameters of the network services, investments in the network assets were significantly increased, reaching nearly EUR 160 million, which represents 70% of the total investments. In 2013, EUR 51 million were invested in the transmission network project Kurzeme Ring.

We have diversified our borrowing sources by issuing bonds, - the total amount of bonds issued reaches EUR 105 million. In 2013, we have issued bonds in the amount of EUR 50 million with 5-year maturity and in the amount of EUR 35 million with 7-year maturity.

Along with the bond issuance and following the best practices in investor relations, Latvenergo Group releases quarterly interim financial reports, thus providing the investors and also the society with accessible and transparent information regarding the key financial and performance results and indicators of the Group operating segments: generation and supply, distribution, and management of transmission system assets.

Following the corporate governance best practices, the Sustainability Report broadly discloses information on Latvenergo Group, its strategy, governance, management and operating segments, as well as on the aspects related to the environment, employees and work environment, society, product and economic responsibility. Latvenergo Group Sustainability Report 2013 has been prepared in accordance with the B+ level requirements of the Global Reporting Initiative Guidelines G3.1 and has been independently audited.

The interim reports of Latvenergo Group 2014 will be published on 30 May, 29 August, and 28 November.