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Unaudited results of Latvenergo Group for the first six months of 2017

30.08.2017.

In the first six months of 2017, revenue of Latvenergo Group has remained at the level of the previous year and constitutes 478.9 million euros. Meanwhile, the Group’s EBITDA [1] has increased by 5% and constitutes 213.2 million euros. Compared to the respective period in the previous year, the amount of electricity generated by the Group has increased by 29%, reaching 3,147 GWh (gigawatt-hours). After opening of the natural gas market on 3 April, Latvenergo commenced natural gas trade to business customers in Latvia.

Latvenergo Group has diversified its trade portfolio commencing natural gas trade to business customers in Latvia under the Elektrum brand. This step was made along with the opening of the natural gas market in Latvia on 3 April and according to the objectives defined in the Group’s strategy. Latvenergo AS continues to be the largest consumer of natural gas in Latvia, consuming annually approximately 40% of the entire amount consumed in the country. The free market of natural gas is an opportunity for the largest energy company in Latvia with historically accumulated user and supplier competence to extend its commercial activity, offering individual contracts for natural gas supply also to other consumers.

In the first six months of 2017, Latvenergo Group has generated 3,147 GWh of electricity in its power plants, which is 29% more than a year ago. It was mainly facilitated by the increase of the electricity output generated at the Daugava HPPs, which has increased by 55%. The amount of electricity generated by Latvenergo corresponds to 89% of the total amount of electricity sold to retail customers (in the first six months of 2016: 61% of the amount sold). Flexibility of the generation assets of the Group, combined with import opportunities in the region, and price risk management, attracting electricity financial instruments, facilitates electricity price convergence in the Baltics to the Nordic level and long-term stability of the price.

Latvenergo is traditionally the largest thermal energy generator in Latvia. In the first six months of 2017, the amount of thermal energy generated is higher and comprises 1,574 GWh. Relatively colder weather and longer heating season have fostered the increase of the amount generated at the Riga CHPPs by 3% (1,420 GWh), as well as in power plants in Liepaja, which use mainly wood chips as fuel. In the small plants, the amount generated has increased by 5% and comprises 154 GWh.

In the reporting period, the total amount of retail electricity supply in the Balticsconstitutes3,541 GWh: in Latvia – 2,359 GWh, in Lithuania – 695 GWh, and in Estonia – 487 GWh. The total number of foreign customers is stable and exceeds 35 thousand. The overall amount of retail electricity trade outside Latvia accounts for 1/3 of the total amount. Latvenergo has maintained its position of leading electricity supplier in the Baltics. It should be noted that this is achieved in a situation where the overall intensity of the energy market and the price competition in the business customers segment increases.

The revenue of Latvenergo Group in the first six months of 2017 has not changed significantly, compared to the respective period a year ago and is 478.9 million euros. Latvenergo Group’s EBITDA has increased by 5% in the reporting period and constitutes 213.2 million euros. At the same time, the EBITDA margin has improved, increasing to 43% (in the first six months of 2016: 36%). Meanwhile, the profit of Latvenergo Group in the first six months of 2017 is 97.9 million euros. The results were positively affected mainly by the higher electricity output at the Daugava HPPs compared to the first half of the previous year, as well as higher revenue from distribution service.

The overall amount of investment in the first six months of 2017 has increased by 13.2 million euros or 17%, compared to the respective period a year ago, and it constitutes 92.8 million euros. The increase has resulted mainly from the greater investment in generation and transmission segments. Approximately 2/3 of the total investment are made in the network assets. Major investment projects of Latvenergo Group are: 1) reconstruction of hydropower units of the Daugava HPPs, which will ensure their functionality for the next 40 years; 2) Kurzeme Ring, which will significantly increase power supply safety in the Kurzeme region and in Latvia as a whole, and will integrate the Baltic states even more in the Nordic electricity market; 3) Third Latvian-Estonian transmission network interconnection, which is of major significance for the future electricity transmission infrastructure of the whole Baltic region.

After the end of the reporting period, on 14 August, representatives of Latvenergo AS rang the opening bell of the Nasdaq exchange trading session in New York. This tradition is entrusted to companies which have demonstrated outstanding achievements in their operation. Latvenergo is the first company in the Baltics which has received the Nasdaq exchange award for the best investor relations among bond issuers.

The next interim financial statements of Latvenergo Group for 2017 will be published on 30 November. The Latvenergo Consolidated and Latvenergo AS Unaudited Condensed Interim Financial Statements for the 6-Month Period are available in the section Investors/ Reports.
 

[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.

Ivita Bidere

Latvenergo AS
Press Secretary
Tel.: 67728809; 29279158
ivita.bidere@latvenergo.lv

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