OREANDA-NEWS. In 2015, Latvenergo Group has continued targeted activities for strengthening the market position and has ensured 1/3 of the total electricity market in the Baltics. As a result of targeted sales activities outside Latvia the number of business customers in Lithuania and Estonia has increased by 1/3 compared to the previous year. The total number of customers in neighbouring countries has increased by 4%, exceeding 35 thousand. In total we have supplied to retail customers in the Baltics 7 880 GWh (gigawatt-hours) of electricity, one third or 2 539 GWh of which is supplied to customers in Lithuania and Estonia. The amount of electricity supplied to neighbouring markets is by more than 40% higher than the amount supplied in Latvia by the competing electricity suppliers.

In 2015, Latvenergo Group has generated 3 882 GWh of electricity and 2 408 GWh of thermal energy. The total amount of generated electricity is by 7% larger than in 2014. The amount of electricity generated by Riga combined heat and power plants (Riga CHPPs) has increased by 23%, reaching 2 025 GWh in 2015. Due to efficient operation of the Riga CHPPs the electricity price was stabilized in Latvian and Lithuanian bidding areas and the risk of increased electricity price was limited. Due to unusually low water inflow in Daugava River the amount of electricity generated in Daugava hydropower plants (Daugava HPPs) has decreased by 6%, generating 1 805 GWh in 2015.

Latvenergo Group revenue in 2015 constitutes 929.1 million euros, which is by 8% less than in 2014. The decrease of Latvenergo Group revenue was determined by changes in financial result accounting principles along with the entrance into operation of Ener?ijas publiskais tirgot?js AS as of 1 April 2014, by which, mandatory procurement payments are not recognized in the statement of profit or loss. In turn EBITDA of the Group has increased by 30% reaching 306.9 million euros. The results were positively influenced mainly by the opening of electricity market to households in Latvia as of 1 January 2015. Until then, Latvenergo AS supplied electricity to households at regulated tariffs, which were below the market price. The unaudited profit of the Group constitutes 85.0 million euros. According to the Law ”On the State Budget for 2016”, the estimated amount of dividends payable by Latvenergo AS for 2015 is 77.4 million euros (for 2014 – 31.5 million euros), which after the decision of the Shareholder will also be allocated for supporting provision of electricity service to poor and low-income inhabitants, large families, as well as to persons with group I disability and families with a disabled child, as well as for partial reimbursement of the mandatory procurement component costs, ensuring that the mandatory procurement component remains at the current level (26.79 EUR/MWh).

Latvenergo Group investments in 2015 constitute 190.5 million euros, which is by 7 % more than in 2014. We have invested 62% of total investments in network assets and their modernization, increasing the quality, technical indicators and safety of operation of network services. Whereas 31.9 million euros are invested in the ambitious reconstruction of Daugava HPPs, which provides overhaul of 11 yet unreconstructed hydropower units. Once the reconstruction of hydropower units is over, the amount of electricity generated in these units will increase and their operation will be ensured for another 40 years.

Latvenergo Group finances its investment projects from its own resources, as well as from externally borrowed long-term funds, which is regularly and timely sourced in financial and capital markets. In June 2015, Latvenergo Group issued green bonds in the amount of 75 million euros. By issuing bonds funding sources have been diversified. Bonds constitute more than 20% of the total borrowings of the Group.

The audited financial statements of Latvenergo Group for 2015 and the Corporate governance report for 2015 will be published on 20 April 2016.

[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

    2015 2014
Retail electricity supply GWh 7,880 8,688
Electricity generation GWh 3,882 3,625
Thermal energy supply GWh 2,318 2,442
Number of employees   4,177 4,563
Moody's credit rating   Baa2 (stable) Baa3 (stable)

 

Financial Figures

    2015 2014
Revenue MEUR 929.1 1,010.8
EBITDA 1) MEUR 306.9 236.8
Net profit MEUR 85.0 29.8
Assets MEUR 3,517.3 3,486.6
Equity MEUR 2,096.6 2,020.8
Net debt2) MEUR 692.9 706.2
Investments MEUR 190.5 177.6

 

Financial Ratios

    2015 2014
Net debt /EBITDA 3)   2.3 3.0
EBITDA margin 4)   33% 23%
Capital ratio 5)   60% 58%

1) EBITDA: earnings before interest, corporate income tax, share of profit or loss of associates, depreciation and amortisation, and impairment of intangible and fixed assets

2) Net debt: borrowings at the end of the year minus cash and cash equivalents at the end of the year

3) Net debt / EBITDA: net debt to EBITDA ratio

4) EBITDA margin: EBITDA / revenue

5) Capital ratio: total equity / total assets

 

Consolidated Statement of Profit or Loss*

    2015 2014
    EUR'000 EUR'000
       
Revenue   929,128 1,010,757
Other income   4,880 5,273
Raw materials and consumables used   (470,532) (621,285)
Personnel expenses   (94,609) (97,954)
Depreciation, amortisation and impairment of property, plant and equipment   (198,828) (187,595)
Other operating expenses   (61,978) (59,953)
Operating profit   108,061 49,243
Finance income   2,925 3,004
Finance costs   (18,579) (20,380)
Share of profit / (loss) of associates   1 (357)
Profit before tax   92,408 31,510
Income tax   (7,443) (1,720)
Profit for the period   84,965 29,790

 

Consolidated Statement of Financial Position*  

    31/12/2015 31/12/2014
    EUR'000 EUR'000
ASSETS      
Non?current assets      
Intangible assets and property, plant and equipment   3,090,660 3,079,327
Investment property   696 1,343
Non–current financial investments   41 41
Investments in held–to–maturity financial assets   20,609 28,528
Other non–current receivables   6 14
Total non–current assets   3,112,012 3,109,253
       
Current assets      
Inventories   24,791 22,560
Trade receivables and other receivables   268,128 233,752
Investments in held–to–maturity financial assets   7,859 –
Cash and cash equivalents   104,543 121,011
Total current assets   405,321 377,323
TOTAL ASSETS   3,517,333 3,486,576
       
EQUITY      
Share capital   1,288,531 1,288,446
Reserves   669,596 645,829
Retained earnings   131,588 79,995
Equity attributable to equity holders of the Parent Company   2,089,715 2,014,270
Non–controlling interests   6,913 6,531
Total equity   2,096,628 2,020,801
       
LIABILITIES      
Non–current liabilities      
Borrowings   714,291 688,297
Deferred income tax liabilities   273,980 268,026
Provisions   15,984 15,588
Derivative financial instruments   8,291 11,698
Other liabilities and deferred income   196,386 194,474
Total non–current liabilities   1,208,932 1,178,083
       
Current liabilities      
Trade and other payables   121,211 139,912
Borrowings   83,192 138,925
Derivative financial instruments   7,370 8,855
Total current liabilities   211,773 287,692
TOTAL EQUITY AND LIABILITIES   3,517,333 3,486,576

* - unaudited condensed consolidated financial reports. Prepared in accordance with the International Financial Reporting Standards approved by the European Union.

About Latvenergo

Latvenergo Group is a pan-Baltic energy company, engaging in electricity and thermal energy generation and supply, electricity distribution services and management 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 t?kli AS (management of transmission system assets), Sadales t?kls AS (electricity distribution), Elektrum Eesti O? (electricity  supply in Estonia), Elektrum Lietuva UAB (electricity supply in Lithuania), Ener?ijas publiskais tirgot?js AS (administration of electricity mandatory procurement process) and Liep?jas ener?ija SIA (electricity and thermal energy generation and supply), as well as Elektrum Latvija SIA (electricity supply), a subsidiary of Elektrum Eesti O?.