Published: 2021-02-26 08:28:25 CET
Latvenergo

Unaudited results of the Latvenergo Group for 2020

Riga, 2021-02-26 08:28 CET -- Today, on 26 February, the unaudited consolidated condensed financial statements of Latvenergo Group for 2020 are published.

In 2020, energy sector, like the rest of the world economy, was affected by the COVID-19 pandemic. Nevertheless, Latvenergo Group’s timely and purposeful action to provide safe working conditions ensured stable and continuous energy production, trade and electricity distribution. During this time, the Group started operating in the Lithuanian household electricity market.

In 2020, the electricity price in the Baltics and Nordics decreased, in Latvia it was 26% lower than in 2019. One of the reasons was the normalization of the Nordic hydro balance. In Latvia, due to the higher inflow, the amount of electricity generated at the Daugava HPPs was 23% higher compared to the previous year.

In 2020, according to TOP 101 Most Valuable Companies in Latvia, Latvenergo Group was the most valuable company in Latvia for the 13th time, as well as it was recognised as the most valuable energy company in the Baltics. In 2020, the revenue of the Group comprised EUR 774.1 million. EBITDA[1] increased by 14% to EUR 278.8 million. The profit of the Group comprised EUR 115.8 million. The Group generated 4,249 gigawatt-hours (GWh) of electricity, and sold 6,394 GWh of electricity and 516 GWh of natural gas.

Latvenergo Group’s operations in 2020 have been affected by a number of regional and global events. The electricity price in the Nord Pool region decreased, mainly affected by both higher share of renewable energy generation and lower demand due to warmer weather and COVID-19. Due to these factors, in 2020, the electricity consumption in the Baltic States decreased by 2.4% compared to the year 2019. Accordingly, due to low electricity prices and falling demand, electricity generation in the Baltics decreased by 6%; it amounted to 5.4 TWh in Latvia.

On 10 June 2020, transmission system assets were separated from Latvenergo Group by transferring the shares of Latvijas elektriskie tīkli AS in the amount of EUR 222.7 million to the Ministry of Economics. Accordingly, the share capital of Latvenergo AS was decreased by this amount - to EUR 612.2 million. In order to partially compensate the decrease of the share capital, the shareholders’ meeting of Latvenergo AS decided to increase the share capital to EUR 790.3 million by investing in Latvenergo AS retained earnings from previous years in the amount of EUR 178.1 million. In 2020, there were also changes in the management of the Group – a new company Supervisory Board was appointed, as well as the Chairman of the Management Board Āris Žīgurs and Member of the Management Board Uldis Bariss ceased to work for Latvenergo AS. Guntars Baļčūns, Member of the Management Board and Chief Financial Officer, was appointed as acting Chairman of the Management Board until the establishment of the permanent composition of the Management Board.

In the reporting year, Latvenergo Group was the largest electricity generator in the Baltics, generating 29% of the total electricity output in the Baltics. The share of electricity generated from renewable energy sources comprised 60%, which was 18 percentage points more than in 2019. The total amount generated by Latvenergo Group’s power plants comprised 4,249 GWh of electricity and 1,702 GWh of thermal energy. The amount of power generated at the Daugava HPPs was 23% higher compared to the year 2019, reaching 2,528 GWh. The relatively larger amount of power generated at the Daugava HPPs was impacted by higher water inflow in the Daugava River. In 2020, the average water inflow in the Daugava River was 500 m3/s, while in year 2019 it was only 401 m3/s. It is important to emphasise that the Daugava HPP cascade operatively ensured the energy supply of Latvia and neighbouring countries in June 2020, when the accident in the transmission network temporarily left a large part of Riga and the city surroundings without electricity.

In the reporting year, the amount generated at the Latvenergo AS CHPPs reached 1,685 GWh, which was 39% less than in 2019. The operation of the CHPPs is adjusted to the conditions of the electricity market and thermal energy demand. The amount of thermal energy generated in 2020 decreased by 8% compared to the year 2019, which was mainly impacted by warmer weather conditions.

In 2020, Latvenergo operated in all energy trade segments in Latvia, Lithuania and Estonia, also continuing to actively expand into new business segments by launching operations in the Lithuanian household electricity market. In the reporting year, Latvenergo Group supplied a total of 6.4 TWh of electricity to its customers in the Baltics, of which 4.2 TWh in Latvia, 1.2 TWh in Lithuania and 0.9 TWh in Estonia. The total number of Latvenergo customers comprises 740 thousand, of which 49 thousand customers are located outside Latvia. Since the opening of the Lithuanian household electricity market, more than 13 thousand contracts have been concluded by the end of 2020. In the reporting year, Latvenergo Group's natural gas sales to retail customers were 70% higher than in the previous year, reaching 516 GWh. The number of natural gas customers in the Baltics is 13.5 thousand, of which 12.1 thousand are households.

The year was particularly successful in the sale of solar panels – more than 600 contracts were concluded for the installation of solar panels in the Baltics; thus, the number of concluded contracts almost doubled compared to the year 2019. To extend this segment, Elektrum started construction projects for two solar panel parks in Lithuania and Estonia with total planned installed capacity of 1.75 MW.

In the electric mobility market segment launched in 2019, the network of electric vehicle charging stations expanded to 36 charging points by the end of 2020. Elektrum mobile app customers made more than 8,000 charges at Elektrum public charging stations. At the same time, other electric mobility services and products are being developed – both for legal entities by setting up charging stations and for households by selling home chargers.

In the reporting period, Latvenergo Group revenue reached EUR 774.1 million, which was by EUR 67.5 million or 8% less than in 2019. This was mainly impacted by lower revenues from electricity trade segment due to lower electricity prices and generated electricity, lower revenues from the distribution segment due to lower volumes of distributed electricity and lower distribution system service tariff, and lower revenues from thermal energy sales due to warmer weather conditions. EBITDA reached EUR 278.8 million, which was by 14% or EUR 35.3 million more than in 2019, which was positively influenced mainly by lower energy purchase prices and higher electricity output at the Daugava HPPs. In the reporting year, the profit of the Group reached EUR 115.8 million.

In 2020, the total amount of investment of Latvenergo Group comprised EUR 168.9 million which was EUR 60.6 million or 26% less than in 2019. It was mainly determined by lower investments in transmission system assets. EUR 18.5 million was invested in the Daugava HPPs’ hydropower unit reconstruction. The reconstruction programme is scheduled for completion by 2023, with estimated total reconstruction costs exceeding EUR 200 million. By increasing the use of renewable resources, the reconstruction will ensure functionality of the hydropower units for another 40 years. A significant amount was invested in the modernization of the power networks – 69% of total investment, which make it possible to ensure high-quality power network service, technical parameters and operational safety.

According to the Law on the Medium-Term Budgetary Framework for 2021, 2022 and 2023, Latvenergo AS dividend payout in the year 2021 (for the reporting year 2020) is not less than EUR 98.2 million (incl. corporate income tax). Latvenergo Group's capital structure ratios are sufficient to proceed with the dividend payout. As of 31 December 2020, the Group’s asset value reached EUR 3.4 billion and its equity exceeds EUR 2.1 billion.

Latvenergo AS dividends are used to finance the decrease of the mandatory procurement public service obligation fee (as of 1 January 2021 it decreased by 23% – 17.51 EUR/MWh), and as a source of funding for the state budget program Electricity User Support.

After the end of the reporting year on 11 February 2021, Moody's performed a periodic review of the credit rating of Latvenergo AS. The Baa2 rating has been consistently stable for the sixth year in a row, confirming Latvenergo Group’s stability and financial reliability.

The audited results of Latvenergo Group for 2020 will be published on 14 April 2021.

[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

 

LATVENERGO GROUP KEY FIGURES

As the transmission assets were separated from Latvenergo Group on 10 June 2020, the comparative results were prepared in such a way that the operations of the transmission segment are reported as discontinuing operations. See Note 18 to the Unaudited Condensed Financial Statements for 2020.

Operational figures

  2020 2019
Electricity supply, incl.: GWh 8,854 9,259
Retail electricity* GWh 6,394 6,505
Wholesale electricity** GWh 2,460 2,754
Retail natural gas GWh 516 303
Electricity generation GWh 4,249 4,880
Thermal energy generation GWh 1,702 1,842
Number of employees   3,295 3,423
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*

       million EUR                                                                                                                                                                                     

    2020 2019
Revenue**   774.1 841.6
EBITDA1)**   278.8 243.5
Profit   115.8 94.4
Assets   3,366.9 3,864.9
Equity   2,127.5 2,265.5
Net debt (adjusted)2)**   555.9 570.7
Investments   168.9 229.4

1) EBITDA – earnings before interest, income tax, share of result of associates, depreciation and amortisation, and impairment of intangible assets and property, plant and equipment

2) Net debt = borrowings at the end of the period - loans to AST - cash and cash equivalents at the end of the period

* Information about the financial indicators and coefficients used by the Latvenergo Group is available in the Latvenergo Group's consolidated and Latvenergo AS Unaudited Condensed Financial Statements for 2020 – see the section “Formulas”.

**Excluding discontinuing operations (unbundling transmission system asset ownership) – see Note 18 to the Latvenergo Group's consolidated and Latvenergo AS Unaudited Condensed Financial Statements for 2020.

  

Financial ratios*

    2020 2019
EBITDA margin3)   36% 29%
Net debt / EBITDA (adjusted)4)   2.0 2.2
Net debt / equity (adjusted)5)   26% 25%
Return on assets (ROA)6)   3.2% 2.5%
Return on equity (ROE)7)   5.3% 4.1%
Return on capital employed (ROCE) (adjusted)8)**   4.2% 3.4%

3) EBITDA margin = EBITDA / revenue

4) Net debt / EBITDA = (net debt at the beginning of the reporting period + net debt at the end of the reporting period) * 0.5 / EBITDA (12-months rolling)

5) Net debt / equity = net debt at the end of the reporting period / equity at the end of the reporting period

6) Return on assets (ROA) = profit / average value of assets ((assets at the beginning of the reporting period + assets at the end of the reporting period) / 2) (12-months rolling)

7) Return on equity (ROE) = profit / average value of equity ((equity at the beginning of the reporting period + equity at the end of the reporting period) / 2) (12-months rolling)

8) Return on capital employed (ROCE) = operating profit / (average value of equity ((equity at the beginning of the reporting period + equity at the end of the reporting period) / 2) + average value of borrowings ((borrowings at the beginning of the reporting period+ borrowings at the end of the reporting period) / 2)) (12-months rolling)

* Information about the financial indicators and coefficients used by the Latvenergo Group is available in the Latvenergo Group's consolidated and Latvenergo AS Unaudited Condensed Financial Statements for 2020 – see the section “Formulas”.

**Excluding discontinuing operations (unbundling transmission system asset ownership) – see Note 18 to the Latvenergo Group's consolidated and Latvenergo AS Unaudited Condensed Financial Statements for 2020.

 

Consolidated Statement of Profit or Loss*

                                                                            EUR'000

  2020 2019
     
Revenue 774,139 841,636
Other income 28,732 25,863
Raw materials and consumables used (369,261) (477,660)
Personnel expenses (105,971) (101,349)
Other operating expenses (48,809) (44,964)
EBITDA 278,830 243,526
Depreciation, amortisation and impairment of intangible assets, property, plant and equipment and right-of-use assets (158,421) (143,161)
Operating profit 120,409 100,365
Finance income 2,125 1,187
Finance costs (10,776) (9,480)
Profit before tax 111,758 92,072
Income tax (5,812) (7,945)
Profit for the year from continuing operations 105,946 84,127
Profit for the year from discontinued operation 9,844 10,232
Profit for the year 115,790 94,359
Profit attributable to:    
  - Equity holder of the Parent Company 113,994 92,660
  - Non–controlling interests 1,796 1,699

* The Latvenergo Consolidated Unaudited Condensed Financial Statements for 2020 are prepared in accordance with the IFRS as adopted by the European Union

 

Consolidated Statement of Financial Position*

EUR'000

      31/12/2020 31/12/2019
ASSETS        
Non–current assets        
Intangible assets and property, plant and equipment     2,885,396 2,764,507
Right–of–use assets     8,253 5,522
Investment property     512 301
Non–current financial investments     40 39
Non-current loans to related parties     86,620
Other non–current receivables     429 433
Derivative financial instruments     291
Other financial investments     2,693 16,885
Total non–current assets     2,984,234 2,787,687
Current assets        
Inventories     68,754 104,927
Current intangible assets     3,157 11,024
Receivables from contracts with customers     108,648 111,530
Other current receivables     84,846 83,843
Deferred expenses     1,083 3,015
Prepayment for income tax     43 140
Derivative financial instruments     1,266 6,717
Other non-current receivables     14,143
Cash and cash equivalents     100,703 115,665
Current assets excluding assets held for distribution     382,643 436,861
Assets held for distribution     640,393
Total current assets     382,643 1,077,254
TOTAL ASSETS     3,366,877 3,864,941
EQUITY AND LIABILITIES        
EQUITY        
Share capital     790,348 834,883
Reserves     1,164,104 1,075,235
Retained earnings     165,153 318,555
Reserves of disposal group classified as held for distribution      28,936
Equity attributable to equity holder of the Parent Company     2,119,605 2,257,609
Non–controlling interests     7,855 7,878
Total equity     2,127,460 2,265,487
LIABILITIES        
Non–current liabilities        
Borrowings     634,077 702,129
Lease liabilities     6,783 4,349
Deferred income tax liabilities     5,980 8,327
Provisions     17,317 18,491
Derivative financial instruments     9,672 6,149
Deferred income from contracts with customers     139,613 143,330
Other deferred income     170,413 194,033
Total non–current liabilities     983,855 1,076,808
Current liabilities        
Borrowings     109,122 180,542
Lease liabilities     1,561 1,216
Trade and other payables     100,912 115,708
Deferred income from contracts with customers     14,343 13,764
Other deferred income     24,799 24,857
Derivative financial instruments     4,825 6,983
Current liabilities excluding liabilities held for distribution     255,562 343,070
Liabilities directly associated with the assets held for distribution     179,576
Total current liabilities     255,562 522,646
Total liabilities     1,239,417 1,599,454
TOTAL EQUITY AND LIABILITIES     3,366,877 3,864,941

* The Latvenergo Consolidated Unaudited Condensed Financial Statements for 2020 are prepared in accordance with the IFRS as adopted by the European Union

 

Additional information:
Jānis Irbe
Group Treasurer
Phone: +371 29 453 897
E-mail: 
investor.relations@latvenergo.lv

www.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 and electricity distribution services. 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 subsidiaries - 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.


02_Latvenergo 12M 2020_presentation_ENG.pdf
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