Published: 2020-08-28 08:40:00 CEST
Latvenergo
Half Year financial report

Unaudited results of Latvenergo Group for the first six months of 2020

Today, on 28 August, the unaudited interim condensed consolidated financial statements of Latvenergo Group for the first six months of 2020 were published. In the first six month of 2020 the Daugava HPPs of Latvenergo generated 58% more electricity than in the respective period a year ago, and Latvenergo Group was the largest electricity producer in the Baltics. However, electricity consumption reduced under the effects of COVID-19. Revenue of Latvenergo Group in the first six month of 2020 was EUR 393.3 million or 9% less than in the respective period a year ago mainly affected by lower electricity and thermal energy demand. The Group's EBITDA*, reaching EUR 161.9 million, which is 27% more than in the first six months of 2019.

Riga, 2020-08-28 08:40 CEST -- An emergency situation was declared in Latvia from 11 March to 9 June 2020 to restrict spreading of COVID-19. During and also after the emergency situation Latvenergo Group has been constantly evaluating the impact of spreading of COVID-19 and implemented measures for safety of customers and employees and secured proper operating mode in strategically important facilities. Therefore, spreading of the virus did not have a significant effect on the provision of services by Latvenergo Group. However, the virus affected economic activity also reducing electricity consumption – electricity consumption in Latvia reduced by 3.7% in the first six months of 2020 compared to the respective period a year ago.

Although the drop in electricity prices and demand reduced electricity generation in the Baltics by 14% reaching 7.4 TWh, electricity generation in Latvia was 4% higher. In the first six months of 2020, Latvenergo Group was the largest electricity generator in the Baltics, whose output accounted for 35% of the total electricity output in the Baltic States. Latvenergo Group generated 2,550 GWh of electricity and 978 GWh of thermal energy at its power plants.

The electricity output at the Daugava HPPs was 58% higher than a year ago and amounted to 1,804 GWh. The average water inflow in the Daugava River in the first six months of 2020 was 726 m3/s, whereas in the respective period a year ago it was only 447 m3/s. The electricity of the Group generated from renewable energy sources in the first six months of 2020 accounted for 71% (49% in the respective period in 2019).

The electricity output at the CHPPs of Latvenergo AS comprised 720 GWh in the reporting period, which is 40% less than in the respective period a year ago. The thermal energy output decreased by 14% due to the significantly warmer weather during the heating season. 

In the reporting period, the volume of electricity supplied by Latvenergo Group in the Baltics was 3,083 GWh, and 1/3 of this volume was supplied to customers outside Latvia. 238 contracts on installation of solar panels were concluded in the Baltics, which is 82% more compared to the first six months of 2019. By the end of the reporting period the total capacity of the solar panels installed for retail customers of Latvenergo Group in Baltics reached 4.1 MW, of which 76% were installed for customer outside Latvia, thus making Latvenergo one of the leading providers of this service in the Baltics. The volume of natural gas supplied in the reporting period increased by 58% compared to the first six months of 2019, and it reached 227 GWh.

Revenue of Latvenergo Group in the first six months of 2020 comprised EUR 393.3 million, and it is 9% less than in the respective period a year ago. This was mainly affected by lower electricity and thermal energy demand. Meanwhile, the Group’s EBITDA increased by 27% compared to the respective period a year ago, reaching EUR 161.9 million. This indicator was mainly affected by higher electricity generation at the Daugava HPPs and lower electricity procurement price. The Group’s profit increased by EUR 32.8 million, compared to the respective period a year ago, reaching EUR 86.8 million.

Total investments of Latvenergo Group in the first six months of 2020 comprised EUR 93.2 million. As part of the Group’s investments in environmentally friendly projects, EUR 12.3 million was invested in the reconstruction of hydropower units at the Daugava HPPs in the first six months of 2020. The investments in the network assets represented 76% of the total investment amount. EUR 42.2 million was invested in distribution system assets, and EUR 28.9 million – in transmission system assets.

On 10 June, transmission assets amounting to EUR 694.3 million were unbundled from Latvenergo Group in accordance with the decision of the Cabinet of Ministers of 8 October 2019 by transferring the shares of Latvijas elektriskie tīkli AS amounting to EUR 222.7 million to the Ministry of Economics. Along with the unbundling of the transmission assets, all the liabilities of Latvijas elektriskie tīkli AS were also transferred to Augstsprieguma tīkls AS.

On 10 June, a new Supervisory Board of Latvenergo AS was appointed, which includes Ivars Golsts, Toms Siliņš, Aigars Laizāns, Gundars Ruža and Kaspars Rokens. Ivars Golsts was elected the Chairman of the Supervisory Board and Kaspars Rokens – the Deputy Chairman of the Supervisory Board.

The next interim financial statement of Latvenergo Group for 2020 will be published on 27 November.

* 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. This therefore affects the profit and loss positions previously published; for more information, see Note 18 to the Unaudited Condensed Interim Financial Statements.

Operational figures

    1H 2020 1H 2019
Electricity supply, incl.: GWh   4,615 4,743
Retail electricity* GWh   3,083 3,365
Wholesale electricity** GWh   1,532 1,378
Retail natural gas GWh   227 143
Electricity generation GWh   2,550 2,373
Thermal energy generation GWh   978 1,139
Number of employees     3,374 3,478
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                                                                                                                                                                                     

    1H 2020 1H 2019
Revenue**   393.3 432.5
EBITDA1)**   161.9 127.8
Profit   86.8 54.0
Assets   3,248.0 3,731.7
Equity   2,004.4 2,202.6
Net debt (adjusted)2)**   596.1 574.9
Investments   93.2 99.6

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 reporting period minus loans to Augstsprieguma tīkls AS minus cash and cash equivalents at the end of the reporting 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 Interim Financial Statements for the 6-Month Period Ending 30 June 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 Interim Financial Statements for the 6-Month Period Ending 30 June 2020.

 

Financial ratios*

    1H 2020 1H 2019
EBITDA margin3)   35% 29%
Net debt / EBITDA (adjusted)4)   2.1 2.1
Net debt / equity (adjusted)5)   30% 26%
Return on assets (ROA)6)   3.6% 0.9%
Return on equity (ROE)7)   6.0% 1.4%
Return on capital employed (ROCE) (adjusted)8)**   4.7% 1.5%

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 the Latvenergo Group's consolidated and Latvenergo AS Unaudited Condensed Interim Financial Statements for the 6-Month Period Ending 30 June 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 Interim Financial Statements for the 6-Month Period Ending 30 June 2020.

 

Consolidated Statement of Profit or Loss*

EUR'000

  1H 2020 1H 2019
     
Revenue 393,338 432,549
Other income 14,071 14,583
Raw materials and consumables used (163,309) (243,659)
Personnel expenses (56,373) (53,116)
Other operating expenses (25,862) (22,582)
EBITDA 161,865 127,775
Depreciation, amortisation and impairment of intangible assets, and property, plant and equipment and right-of-use assets (79,206) (72,873)
Operating profit 82,659 54,902
Finance income 797 563
Finance costs (5,672) (4,697)
Profit before tax 77,784 50,768
Income tax (800) (2,661)
Profit for the period from continuing operations 76,984 48,107
Profit for the period from discontinued operation 9,843 5,917
Profit for the period 86,827 54,024
Profit attributable to:    
  - Equity holder of the Parent Company 85,367 52,320
  - Non–controlling interests 1,460 1,704

* The Latvenergo Consolidated Unaudited Condensed Interim Financial Statements for the 6-Month Period Ending 30 June 2020 are prepared in accordance with the IFRS as adopted by the European Union

 

Consolidated Statement of Financial Position*                                                                                                                         

EUR'000

      30/06/2020 31/12/2019
ASSETS        
Non–current assets        
Intangible assets and property, plant and equipment     2,790,467 2,775,532
Right–of–use assets     5,065 5,522
Investment property     300 301
Non–current financial investments     40 39
Non-current loans to related parties     86,620
Other non–current receivables     433 433
Other financial investments     2,702 16,885
Total non–current assets     2,885,627 2,798,712
Current assets        
Inventories     81,220 104,927
Receivables from contracts with customers     90,549 111,530
Other current receivables     95,894 77,085
Deferred expenses     2,326 3,015
Prepayment for income tax     140 140
Derivative financial instruments     11,075 6,717
Other non-current receivables     14,159
Cash and cash equivalents     66,992 122,422
Current assets excluding assets held for distribution     362,355 425,836
Assets held for distribution     640,393
Total current assets     362,355 1,066,229
TOTAL ASSETS     3,247,982 3,864,941
EQUITY AND LIABILITIES        
EQUITY        
Share capital     612,205 834,883
Reserves     1,073,137 1,075,235
Retained earnings     311,578 318,555
Reserves of disposal group classified as held for distribution     28,936
Equity attributable to equity holder of the Parent Company     1,996,920 2,257,609
Non–controlling interests     7,519 7,878
Total equity     2,004,439 2,265,487
LIABILITIES        
Non–current liabilities        
Borrowings     662,353 702,129
Lease liabilities     4,079 4,349
Deferred income tax liabilities     947 8,327
Provisions     19,255 18,491
Derivative financial instruments     7,493 6,149
Deferred income from contracts with customers     141,283 143,330
Other deferred income     182,048 194,033
Total non–current liabilities     1,017,458 1,076,808
Current liabilities        
Borrowings     87,355 180,542
Lease liabilities     1,054 1,216
Trade and other payables     92,947 115,708
Deferred income from contracts with customers     13,974 13,764
Other deferred income     25,153 24,857
Derivative financial instruments     5,602 6,983
Current liabilities excluding liabilities held for distribution     226,085 343,070
Liabilities directly associated with the assets held for distribution     179,576
Total current liabilities     226,085 522,646
Total liabilities     1,243,543 1,599,454
TOTAL EQUITY AND LIABILITIES     3,247,982 3,864,941

* The Latvenergo Consolidated Unaudited Condensed Interim Financial Statements for the 6-Month Period Ending 30 June 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_Interim_2020_6M_presentation_ENG.pdf
01_Latvenergo_Interim_2020_6M_ENG.pdf