Published: 2019-11-29 08:04:21 CET
Latvenergo
Interim report (Q1 and Q3)

Unaudited results of the Latvenergo Group for the nine-month period of 2019

Today, 29 November, the unaudited consolidated condensed interim financial statements of the Latvenergo Group for the nine-month period of 2019 are published. In the nine-month period of 2019, Latvenergo Group's revenue constitutes 649.7 million euros, which is 7.6 million euros more than in the respective period a year ago. Meanwhile EBITDA decreased by 68.7 million EUR and constitutes 201.0 million euros. The results were mainly influenced by 37% or 803 GWh lower electricity generation at the Daugava HPPs. During the reporting period, Latvenergo Group under Elektrum brand started operation in the electric mobility sector.

Riga, 2019-11-29 08:04 CET -- In the nine-month period of 2019, Latvenergo Group successfully continued operation on new markets and actively offered new services under Elektrum brand in compliance with the operational strategy. On 29 August, the first public Elektrum electric vehicle fast and medium charging stations started their operation, and approximately 250 charging operations have been done. A new payment method - for consumed kilowatt-hours (kWh), instead of time spent - can be used at Elektrum electric vehicle charging stations in Latvia. It is a more convenient and precise method, so that the customer could assess the battery charging volume.

The increase of the number of concluded Elektrum Solar contracts has been particularly successful (at the end of the reporting period – approximately 230), with significant increase on the Lithuanian market, thus positioning our solar panel service as a successful export product. A significant number of e-shop visits has been achieved since the shop opening in May – more than 250 thousand views. The assortment of Elektrumveikals.lv is developed, ensuring products for efficient and convenient use of electricity - LED bulbs, electric scooters, smart house products etc.

At the end of the reporting period, the number of natural gas business customers in the Baltics comprises 729 companies, meanwhile the customer portfolio in the household segment is formed by 3.8 thousand customers. In the reporting period, the volume of supplied natural gas has increased more than 2.5 times and it constitutes 193 GWh. In the reporting period, the amount of natural gas used for both operating consumption and trade reached 5,326 GWh, which is 11% more than in the respective period in 2018.

In the nine-month period of 2019, Latvenergo Group generated 3,565 GWh of electricity and 1,216 GWh of thermal energy.The volume of electricity generated at the Daugava HPPs decreased by 37% compared to the respective period a year ago, and constitutes 1,367 GWh. The output of the Daugava HPPs was influenced by lower water inflow in the Daugava River, compared to the respective period a year ago– this year it was on average only 357 m3/s, while in the respective period a year ago– 594 m3/s. Meanwhile, the role of Latvenergo AS combined heat and power plants (CHPPs) in the Baltics has grown significantly due to the substantial decrease of electricity output at the oil shale power plants in Estonia. In the nine-month period of this year, Latvenergo AS CHPPs have generated 2,159 GWh of electricity, which is 17% more than in the respective period a year ago. The upgraded CHPPs of the Latvenergo AS can ensure generation of the most environmentally friendly electricity from fossil energy resources, at the same time efficiently adjusting the generation volumes to the market situation and restricting the risk of increase in the electricity price in situations, when alternative electricity supplies are more expensive. The volume of generated thermal energy decreased by 21%, compared to the respective period a year ago, which was influenced by the competition and warmer weather conditions during the heating season.

In the reporting period, in total 4,868 GWh of electricity was supplied to customers in the Baltics. The total number of customers outside Latvia comprises more than 35 thousand, to whom 1,745 GWh of electricity was supplied. Every third kilowatt-hour of electricity is supplied outside Latvia, positioning Latvenergo Group as one of the largest electricity companies in the Baltics.

In the nine-month period of 2019, Latvenergo Group revenue constitutes 649.7 million euros, which is 7.6 million euros more than in the respective period a year ago. Meanwhile, EBITDA  decreased by 25% and constitutes 201.0 million euros, while the Group profit is 62.0 million euros (in the previous year – 82.6 million euros). The results were mainly influenced by lower electricity generation at Daugava HPPs and lower compensation for the Latvenergo AS CHPPs’ capacity payments recognised in the statement of profit or loss.

In the nine-month period of 2019, the total investment of Latvenergo Group remained at the same level as a year earlier and reached 158.9 million euros. 82% of the total investment was made in modernization of networks in order to ensure higher quality services and safety. In the reporting period, 13.8 million euros were invested in the reconstruction of hydropower units of the Daugava HPPs, which will ensure their operation for the next 40 years, and the total estimated investment will exceed 200 million euros over the period until 2022. In September, the Kurzeme Ring project was completed, and the total construction costs comprised almost 230 million euros, approximately one half of which were covered by the European Commission co-financing. The completion of construction of the Third Estonia–Latvia power transmission network interconnection is planned by the end of 2020, where the investment will reach almost 100 million euros.

On 27 November, the Public Utilities Commission approved the changes in the electricity distribution service tariffs for a period of 5 years starting from 1 January 2020. According to the changes, the average tariff will decrease by 5.5%. Lower distribution tariffs are possible due to the ambitious operational efficiency improvement programme of Sadales tīkls AS, which includes process improvement and reduction of personnel and the number of vehicles and real estate bases.

The unaudited condensed financial statements of Latvenergo Group for 2019 will be published on 28 February 2020.

 

LATVENERGO GROUP KEY FIGURES

Operational figures

    9M 2019 9M 2018
Electricity supply, incl.: GWh   6,855 7,476
Retail electricity* GWh   4,868 5,029
Wholesale electricity** GWh   1,987 2,447
Retail natural gas GWh   193 74
Electricity generated GWh   3,565 4,052
Thermal energy generated GWh   1,216 1,545
Number of employees     3,474 3,521
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                                                                                                                                                                                      

    9M 2019 9M 2018
Revenue   649.7 642.0
EBITDA1)   201.0 269.7
Profit   62.0 82.6
Total assets   3,786.1 3,820.3
Total equity   2,232.5 2,324.4
Borrowings   839.7 801.1
Net debt2)   755.4 708.9
Investments   158.9 158.5

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 year minus cash and cash equivalents at the end of the year

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

 

Financial ratios*

    9M 2019 9M 2018
EBITDA margin3)   29% 58%
Net debt / EBITDA4)   2.9 1.3
Net debt / equity5)   34% 30%
Return on assets (ROA)6)   1.5% 7.3%
Return on equity (ROE)7)   2.4% 11.7%
Return on capital employed (ROCE)8)   2.7% 5.3%

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)

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)

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))

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

 

Consolidated Statement of Profit or Loss*

                                                            EUR'000

  01/01–30/09/2019 01/01–30/09/2018
     
Revenue 649,654 642,007
Other income 22,808 84,603
Raw materials and consumables used (361,675) (339,076)
Personnel expenses (76,768) (81,047)
Other operating expenses (33,000) (36,803)
EBITDA 201,019 269,684
Depreciation, amortisation and impairment of intangible assets and property, plant and equipment (126,115) (181,406)
Operating profit 74,904 88,278
Finance income 885 884
Finance costs (7,056) (6,394)
Profit before tax 68,733 82,768
Income tax (6,703) (134)
Profit for the period 62,030 82,634
Profit attributable to:    
  - Equity holder of the Parent Company 60,626 81,260
  - Non–controlling interests 1,404 1,374

* The Latvenergo Consolidated and Latvenergo AS Unaudited Condensed Interim Financial Statements for the 9-Month Period Ending 30 September 2019 are prepared in accordance with the IFRS as adopted by the European Union

 

Consolidated Statement of Financial Position*

                                                                                                                           EUR'000

    30/09/2019 31/12/2018
ASSETS        
Non–current assets        
Intangible assets and property, plant and equipment     3,348,307 3,316,172
Right–of–use assets     6,851
Investment property     314 467
Non–current financial investments     40 40
Investments in other financial assets     16,898 16,935
Other non–current receivables     9,492 30,920
Total non–current assets     3,381,902 3,364,534
Current assets        
Inventories     106,406 71,975
Receivables from contracts with customers     98,989 117,955
Other current receivables     106,107 84,830
Prepayment for income tax     157 11,619
Deferred expenses     1,872 2,598
Derivative financial instruments     6,320 15,853
Cash and cash equivalents     84,304 129,455
Total current assets     404,155 434,285
TOTAL ASSETS     3,786,057 3,798,819
EQUITY AND LIABILITIES        
Equity        
Share capital     834,883 834,791
Reserves     1,105,028 1,125,466
Retained earnings     284,962 351,350
Equity attributable to equity holder of the Parent Company     2,224,873 2,311,607
Non–controlling interests     7,583 8,458
Total equity     2,232,456 2,320,065
Liabilities        
Non–current liabilities        
Borrowings     644,733 700,028
Non–current lease liabilities     5,665
Provisions     18,807 20,178
Deferred income tax liabilities     7,102 12,297
Derivative financial instruments     9,563 3,923
Deferred income on contracts with customers     141,669 143,494
Other deferred income     311,790 303,519
Total non–current liabilities     1,139,329 1,183,439
Current liabilities        
Borrowings     194,967 114,315
Current lease liabilities     1,224
Trade and other payables     174,316 135,008
Income tax payable     3 2
Deferred income on contracts with customers     13,520 13,271
Other deferred income     26,730 26,438
Derivative financial instruments     3,512 6,281
Total current liabilities     414,272 295,315
Total liabilities     1,553,601 1,478,754
TOTAL EQUITY AND LIABILITIES     3,786,057 3,798,819

* The Latvenergo Consolidated and Latvenergo AS Unaudited Condensed Interim Financial Statements for the 9-Month Period Ending 30 September 2019 are 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

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, 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.


02_Latvenergo_Interim_2019_9M_presentation_ENG.pdf
01_Latvenergo_Interim_2019_9M_ENG.pdf