Published: 2020-11-27 08:01:00 CET
Latvenergo
Interim report (Q1 and Q3)

Unaudited results of Latvenergo Group for the nine-month period of 2020

Riga, 2020-11-27 08:01 CET -- Today, on 27 November, the unaudited interim condensed consolidated financial statements of Latvenergo Group for the nine-month period of 2020 were published.

In the nine-month period of 2020, Latvenergo Group was the largest electricity generator in the Baltics, generating 3,298 GWh of electricity. The amount of power generated at the Daugava HPPs was 54% higher than in the respective period a year ago. Revenue of Latvenergo Group in the nine-month period of 2020 was EUR 564.4 million or 9% less than in the respective period a year ago affected by lower electricity and thermal energy demand, lower electricity prices and lower distribution segment revenues. The Group’s EBITDA* reached EUR 212.1 million, which was 23% more than in the nine-month period of 2019.

Latvenergo Group’s operations and performance are affected by various global and regional factors. In the nine-month period of 2020, electricity prices in the Baltic and Nordic countries were significantly lower than in the respective period a year ago. This was related to the improvement of the hydrobalance in the Nordic countries and lower demand due to warmer weather and COVID-19. In Latvia, the electricity market price in the reporting period decreased by 33% compared to the last year.  

After the reporting period, for the 12th time in a row and for the 13th time altogether Latvenergo received the award as the most valuable Latvian company in TOP 101 Most Valuable Companies of Latvia.

In the nine-month period of 2020, Latvenergo Group services were not significantly affected by the spread of COVID-19. Latvenergo Group continuously evaluates the impact of the spread of COVID-19, implements measures for customer and employee safety, and ensures appropriate shift arrangements in the facilities of strategic importance. However, the virus has affected economic activity in all Baltic countries, reducing electricity consumption. In the nine-month period of 2020, electricity consumption in Latvia decreased by 2.9% compared to the respective period a year ago. At the same time, it should be noted that the decrease in electricity consumption was also underpinned by warmer weather at the beginning of the year.

The fall in electricity prices and demand reduced electricity generation in the Baltics by 8% in the nine-month period of 2020 compared to the respective period a year ago. Despite that Latvenergo Group was the largest electricity generator in the Baltics, whose output accounted for 30% of the total electricity output in the Baltic countries. The total amount generated by Latvenergo Group’s power plants comprised 3,298 GWh of electricity and 1,101 GWh of thermal energy.

In the nine-month period of 2020, the amount of power generated at the Daugava HPPs reached 2,100 GWh, which was 54% higher compared to the respective period a year ago. The average water inflow in the Daugava River was 559 m3/s, while in the respective period a year ago it was 357 m3/s. In the nine-month period of 2020, the share of electricity generated from renewable energy sources at Latvenergo Group was 64% (in the respective period of 2019 it was 39%).

In the reporting period, the electricity amount generated at the Latvenergo AS CHPPs reached 1,168 GWh, which was 46% less than in the respective period a year ago. The thermal energy output decreased by 9% due to warmer weather conditions during the heating season. In the reporting period, Latvenergo Group supplied 4,650 GWh of electricity in the Baltics. The Group maintains a stable position in the Baltic electricity market and strengthens it even further by launching operations in the Lithuanian household electricity market.

The Group also continues to actively expand into new business segments – trading of solar panels, electric mobility and natural gas trading. 460 contracts were signed for the installation of solar panels in the Baltics, thus the number of concluded contracts has doubled compared to the respective period a year ago. The total installed solar panel capacity in the Baltics reached 4.7 MW, of which 76% were installed for customers outside Latvia. During the reporting period, Elektrum has started construction projects for two solar panel parks in Lithuania and Estonia. The planned installed capacity of the Lithuanian solar park will be 1.5 MW, while for Estonia it will be 0.25 MW.

In the reporting period, more than 4,500 charges amounting to 122 MWh were made at Elektrum electric vehicle charging stations. The number of electric vehicle charging sites has reached 27 charging ports at 9 stations. As a confirmation of furthering electric mobility as one of the strategic development segments is the memorandum on promotion of electric mobility in Latvia by developing data-based infrastructure signed by Latvenergo AS, Ceļu satiksmes drošības direkcija VAS and the shared services companies Fiqsy, Carguru, CityBee on October 1.

Furthermore, Latvenergo Group's natural gas sales to retail customers were 65% higher than in the nine-month period of 2019, reaching 318 GWh. The increase in natural gas sales can be observed in all three Baltic countries, due to the positive dynamics of the number of customers. At the end of September, the natural gas portfolio in the Baltics consisted of 11.7 thousand customers, of which 10.4 thousand were households.

In the nine-month period of 2020, Latvenergo Group’s revenue reached EUR 564.4 million, which was 9% less than in the respective period a year ago. This was affected by lower electricity and thermal energy demand, lower electricity price and lower distribution segment income. Meanwhile, the Group’s EBITDA increased by 23% compared to the respective period a year ago reaching EUR 212.1 million. This was mainly affected by higher electricity output at the Daugava HPPs and lower electricity purchase prices. The Group’s profit in the nine-month period of 2020 reached EUR 94.7 million (EUR 62.0 million in the respective period a year ago). In the reporting period, the total amount of investment comprised EUR 130.4 million. Contributing to environmentally friendly projects, in the nine-month period of 2020, EUR 15.7 million were invested in the Daugava HPPs’ hydropower unit reconstruction. The investments in the network assets represented 70% of the total investment amount. EUR 28.9 million of those were invested in transmission system assets.

On 10 June, transmission assets were separated from Latvenergo Group in accordance with the decision of the Cabinet of Ministers by transferring the shares of Latvijas elektriskie tīkli AS 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.

After the end of the reporting period, on 30 October 2020, the Chairman of the Management Board of Latvenergo AS Āris Žīgurs, ceased to work for Latvenergo AS, and the Member of the Management Board and Chief Commercial Officer of Latvenergo AS Uldis Bariss also does not continue working for the Latvenergo Group after 11 November 2020. As of October 31, the Member of the Management Board and Chief Financial Officer Guntars Baļčūns is appointed as acting Chairman of the Management Board; the Chief Technology and Support Officer Kaspars Cikmačs continues to work in the Management Board, and Arnis Kurgs was appointed as a Member of the temporary Management Board. New members of the Management Board of Latvenergo AS will be selected through a competition.

After the end of the reporting period, on November 25, for the 12th time in a row and for the 13th time altogether Latvenergo Group received the award as the most valuable Latvian company in the TOP 101 Most Valuable Companies of Latvia created by Prudentia and Nasdaq Riga. As it was emphasised by Guntars Baļčūns, the world is becoming increasingly aware of the need for clean air and green environment, which will be the prevailing arguments in the next 10-30 years in progression of Europe and, hopefully, the world towards the climate-neutral economy.

The unaudited condensed financial statements of Latvenergo Group for 2020 will be published on 26 February 2021. 

*  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

    9M 2020 9M 2019
Electricity supply, incl.: GWh   6,590 6,855
Retail electricity* GWh   4,650 4,868
Wholesale electricity** GWh   1,940 1,987
Retail natural gas GWh   318 193
Electricity generation GWh   3,298 3,565
Thermal energy generation GWh   1,101 1,216
Number of employees     3,347 3,474
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                                                                                                                                                                                     

    9M 2020 9M 2019
Revenue**   564.4 621.1
EBITDA1)**   212.1 172.0
Profit   94.7 62.0
Assets   3,265.4 3,786.1
Equity   2,012.5 2,232.5
Net debt (adjusted)2)**   584.3 590.9
Investments   130.4 158.9

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 Interim Financial Statements for the 9-Month Period Ending 30 September 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 9-Month Period Ending 30 September 2020

 

Financial ratios*

    9M 2020 9M 2019
EBITDA margin3)   36% 25%
Net debt / EBITDA (adjusted)4)   2.1 2.7
Net debt / equity (adjusted)5)   29% 26%
Return on assets (ROA)6)   3.6% 1.5%
Return on equity (ROE)7)   6.0% 2.4%
Return on capital employed (ROCE) (adjusted)8)**   4.6% 2.3%

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) (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 Interim Financial Statements for the 9-Month Period Ending 30 September 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 9-Month Period Ending 30 September 2020

    

Consolidated Statement of Profit or Loss*

                                                                                 EUR'000

  01/01-30/09/2020 01/01-30/09/2019
     
Revenue 564,359 621,090
Other income 21,382 21,887
Raw materials and consumables used (254,739) (361,654)
Personnel expenses (82,014) (76,401)
Other operating expenses (36,906) (32,873)
EBITDA 212,082 172,049
Depreciation, amortisation and impairment of intangible assets, and property, plant and equipment and right-of-use assets (79 206) (119,103)
Operating profit 92,979 64,461
Finance income 1,453 885
Finance costs (8,330) (7,042)
Profit before tax 86,102 58,304
Income tax (1,280) (4,917)
Profit for the period from continuing operations 84,822 53,387
Profit for the period from discontinued operation 9,843 8,643
Profit for the period 94,665 62,030
Profit attributable to:    
  - Equity holder of the Parent Company 93,416 60,626
  - Non–controlling interests 1,249 1,404

 

* The Latvenergo Consolidated Unaudited Condensed Interim Financial Statements for the 9-Month Period Ending 30 September 2020 are prepared in accordance with the IFRS as adopted by the European Union

 

Consolidated Statement of Financial Position*

                                                                                                                                                    EUR'000

      30/09/2020 31/12/2019
ASSETS        
Non–current assets        
Intangible assets and property, plant and equipment     2,789,772 2,775,532
Right–of–use assets     7,354 5,522
Investment property     281 301
Non–current financial investments     40 39
Non-current loans to related parties     86,620
Other non–current receivables     433 433
Other financial investments     2,697 16,885
Total non–current assets     2,887,197 2,798,712
Current assets        
Inventories     88,212 104,927
Receivables from contracts with customers     93,670 111,530
Other current receivables     89,513 77,085
Deferred expenses     1,741 3,015
Prepayment for income tax     140 140
Derivative financial instruments     10,192 6,717
Other non-current receivables     14,151
Cash and cash equivalents     80,605 122,422
Current assets excluding assets held for distribution     378,224 425,836
Assets held for distribution     640,393
Total current assets     378,224 1,066,229
TOTAL ASSETS     3,265,421 3,864,941
EQUITY AND LIABILITIES        
EQUITY        
Share capital     790,348 834,883
Reserves     1,072,245 1,075,235
Retained earnings     142,623 318,555
Reserves of disposal group classified as held for distribution     28,936
Equity attributable to equity holder of the Parent Company     2,005,216 2,257,609
Non–controlling interests     7,308 7,878
Total equity     2,012,524 2,265,487
LIABILITIES        
Non–current liabilities        
Borrowings     662,380 702,129
Lease liabilities     6,180 4,349
Deferred income tax liabilities     1,408 8,327
Provisions     19,471 18,491
Derivative financial instruments     8,128 6,149
Deferred income from contracts with customers     140,382 143,330
Other deferred income     176,156 194,033
Total non–current liabilities     1,014,105 1,076,808
Current liabilities        
Borrowings     89,108 180,542
Lease liabilities     1,265 1,216
Trade and other payables     107,032 115,708
Deferred income from contracts with customers     14,120 13,764
Other deferred income     25,506 24,857
Derivative financial instruments     1,761 6,983
Current liabilities excluding liabilities held for distribution     238,792 343,070
Liabilities directly associated with the assets held for distribution     179,576
Total current liabilities     238,792 522,646
Total liabilities     1,252,897 1,599,454
TOTAL EQUITY AND LIABILITIES     3,265,421 3,864,941

* The Latvenergo Consolidated Unaudited Condensed Interim Financial Statements for the 9-Month Period Ending 30 September 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.


01_Latvenergo_Interim_2020_9M_ENG.pdf
02_Latvenergo_Interim_2020_9M_presentation_ENG.pdf