Riga, 2015-04-15 15:27 CEST (GLOBE NEWSWIRE) -- Along with the Latvenergo Group Annual Report 2014, the Sustainability Report and the Latvenergo AS Corporate Governance Report 2014 were published. The Sustainability Report is prepared in accordance to the requirements of the Global Reporting Initiative (GRI). By implementing the good corporate governance practice, the scope of information provided in the Report was developed and supplemented.
The successful performance of Latvenergo Group in 2014 is characterised by the following:
- Electricity supply in Lithuania and Estonia increased by almost 50% compared to the previous year;
- The second stage of the project Kurzeme Ring was completed – the new Grobiņa–Ventspils 330 kV transmission line connection of the project Kurzeme Ring was commissioned;
- Total investments in 2014 amounted to EUR 177.6 million and the profit was EUR 29.8 million.
In 2014, Latvenergo Group has successfully retained its leadership in the electricity supply in the Baltics – the market share of the Latvenergo Group was 35% of the total electricity market of the Baltic countries. The total amount of electricity sold to retail customers in the Baltic countries equals 8,688 GWh, which is by 9% more than a year ago.
The most significant increase of electricity supply was outside Latvia, i.e. in Lithuania and Estonia where it was increased almost by a half compared to the previous year. The number of customers in the neighbouring countries increased by more than one fifth and reached approximately 34 thousand at the end of 2014. The total amount of electricity supplied in Lithuania and Estonia reached 3,053 GWh, which is almost twice as much as the supply volume by competing electricity suppliers in Latvia.
Since mid-2014, Latvenergo Group trades all of the generated electricity on the Nord Pool Spot exchange, multiple times increasing electricity supply and turnover in the Latvian bidding area, thus ensuring greater liquidity on the market.
In 2014 Latvenergo Group power plants generated 3,625 GWh of electricity and produced 2,488 GWh of heat. The Daugava HPPs generated 1,925 GWh of electricity of this amount and Riga Heat Power Plants (Riga CHPP) generated 1,648 GWh of electricity and 2,236 GWh of thermal energy. The total electricity generation decreased by 25% compared to 2013. Electricity generation at Daugava hydropower plants (Daugava HPPs) decreased by 926 GWh or 32% compared to the previous year. This was determined by the uncommonly low water inflow in the Daugava River – the lowest since 1976.
Taking into account the change in support mechanism for large combined heat and power plants, not providing the compensation for natural gas as well as considerable reduction of the support for cogeneration along with the introduction of the Subsidised Energy Tax as from the beginning of this year, Riga CHPPs operated in the market conjuncture effectively planning operating modes and fuel consumption. Thus, the output of Riga CHPP was by 309 GWh or 16% lower than the previous year.
The revenue of the Latvenergo Group in 2014 amounted to EUR 1,010.8 million and the profit was EUR 29.8 million (2013: EUR 1,099.9 million and EUR 46.1 million respectively). The decrease of the revenue of Latvenergo Group was determined by the change in the accounting principles along with the entrance into operation of Enerģijas publiskais tirgotājs AS from 1 April 2014. Thus the Profit or Loss Statement of the Group no longer includes settlements for the mandatory procurement. The decrease of the profit indicators was determined by the considerably lower generation at Daugava HPPs, besides, in 2014, the lost revenues of Latvenergo Group due to electricity supply at the regulated tariff in Latvia in 2014 were estimated at EUR 48.2 million.
The Audited Financial Statements 2014 of the Group have no significant discrepancies from the Latvenergo Unaudited Condensed Consolidated Financial Statements 2014 published on 27 February 2015.
In order to improve the transparency of the administration of the electricity mandatory procurement, a new subsidiary Enerģijas publiskais tirgotājs AS was established on 25 February 2014 and took over the functions of the administration of the mandatory procurement from Latvenergo AS as of 1 April 2014. According to the legislation, the company is obliged to procure electricity from generators who have been granted right to supply the generated electricity within the framework of the mandatory procurement at electricity procurement tariffs set by legislation, and to pay guaranteed fee for the capacity installed at combined heat and power plants. In the calculation of the new mandatory procurement public service obligation (PSO) fee for 2014, Enerģijas publiskais tirgotājs AS has taken into account the allocation from the State Budget for the reduction of the PSO fee, thus the total PSO fee has not changed as of 1 April 2015 and is 2.679 cents/kWh.
The second stage of the Kurzeme Ring was completed in August 2014 by commissioning the new 330 kV power transmission line connection Grobiņa – Ventspils of the Kurzeme Ring project. The construction of the final stage of the project Ventspils–Tume–Rīga was included in the indicative funding allocation list of the European Commission assigning 45% co-funding. As a result of the implementation of the Kurzeme Ring project, the safety of the power supply in Kurzeme region and Latvia will be considerably increased, enabling the future use of the Sweden-Lithuania NordBalt interconnection and allowing further integration of the Baltics into the Nordic electricity market.
In 2014, the total investments reached EUR 177.6 million. Considerable investments were made in the modernisation of the network for ensuring high quality of services, technical parameters and safety of operations. In 2014, the amount invested in the network represents 74% of the total investments. Likewise, we continuously invest in environmentally friendly and environmental development projects – in 2014, almost EUR 10 million were invested in Daugava HPPs hydropower unit reconstruction.
By securing the timely attraction of borrowed capital for funding of the investment programme during the following years and the re-financing of the existing borrowings, at the end of 2014, funding from banks in the amount of EUR 150 million was attracted and a loan agreement for EUR 100 million was signed with the European Investment Bank.
Latvenergo Group Sustainability Report 2014, which is published at the same time as the Latvenergo Group Annual Report 2014, provides information about the Group, its strategy, governance, management and operating segments, as well as the aspects related to the environment, employees and the working environment, society, products and economic responsibility. In 2014, preliminary actions to prepare for Latvenergo Group Sustainability Report conversion to the latest GRI G4 guidelines were initiated by extending the stakeholder engagement in the identification of material aspects. Along with the Sustainability and Annual Report 2014, also the Latvenergo AS Corporate Governance Report 2014 is available. This Report is prepared according to the Article 562 of the Financial Instruments Market Law and the “Corporate Governance Principles and Guidelines” issued by NASDAQ OMX Riga AS in 2010.
Latvenergo Group interim reports of 2015 will be published on 29 May, 31 August and 30 November.
* The EBITDA – earnings before interest, corporate income tax, share of profit or loss of associates, depreciation and amortisation, and impairment of intangible and fixed assets.
KEY FIGURES
|
|
2014 | 2013 |
| EUR’000 | EUR’000 | |
| Revenue | 1,010,757 | 1,099,893 |
| EBITDA 1) | 236,838 | 248,694 |
| Operating profit 2) | 49,243 | 61,091 |
| Profit before tax 3) | 31,510 | 48,841 |
| Profit | 29,790 | 46,149 |
| Dividends | 31,479 | 23,605 |
| Total assets | 3,486,576 | 3,575,358 |
| Non-current assets | 3,109,253 | 3,128,064 |
| Total equity | 2,020,801 | 2,021,714 |
| Borrowings | 827,222 | 944,675 |
| Net debt 4) | 706,211 | 689,252 |
| Net cash flows from operating activities | 135,329 | 146,540 |
| Capital expenditure | 177,607 | 224,868 |
|
|
2014 | 2013 | |
| Net debt / EBITDA ratio | 3.0 | 2.8 | |
| EBITDA margin 5) | 23.4 % | 22.6 % | |
| Operating profit margin 6) | 4.9 % | 5.6 % | |
| Profit before tax margin 7) | 3.1 % | 4.4 % | |
| Profit margin 8) | 2.9 % | 4.2 % | |
| Capital ratio 9) | 58 % | 57 % | |
| Return on assets (ROA) 10) | 0.8 % | 1.3 % | |
| Return on equity (ROE) 11) | 1.5 % | 2.3 % | |
| Retail electricity supply | GWh | 8,688 | 7,954 |
| Electricity generated in power plants | GWh | 3,625 | 4,854 |
| Aggregate heat supply | GWh | 2,442 | 2,517 |
| Number of employees at the end of the year | 4,563 | 4,512 | |
| Moody’s credit rating of the Parent Company | Baa2 (stable)* |
Baa3 (stable) |
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) Operating profit – earnings before income tax, finance income and costs
3) Profit before tax – earnings before income tax
4) Net debt – borrowings at the end of the year minus cash and cash equivalents at the end of the year
5) EBITDA margin – EBITDA / revenue
6) Operating profit margin – operating profit / revenue
7) Profit before tax margin – profit before tax / revenue
8) Profit margin – profit / revenue
9) Capital ratio – total equity / total assets
10) Return on assets (ROA) – profit / average value of assets (assets at the beginning of the year + assets at the end of the year / 2)
11) Return on equity (ROE) – profit / average value of equity (equity at the beginning of the year + equity at the end of the year / 2)
* Credit rating upgraded on 16 February 2015
Consolidated Statement of Profit or Loss
| 2014 | 2013 | |
| EUR’000 | EUR’000 | |
| Revenue | 1,010,757 | 1,099,893 |
| Other income | 5,273 | 4,050 |
| Raw materials and consumables used | (621,285) | (701,453) |
| Personnel expenses | (97,954) | (95,074) |
| Depreciation, amortisation and impairment of property, plant and equipment | (187,595) | (187,603) |
| Other operating expenses | (59,953) | (58,722) |
| Operating profit | 49,243 | 61,091 |
| Finance income | 3,004 | 4,529 |
| Finance costs | (20,380) | (17,840) |
| Share of profit / (loss) of associates | (357) | 1,061 |
| Profit before tax | 31,510 | 48,841 |
| Income tax | (1,720) | (2,692) |
| Profit for the year | 29,790 | 46,149 |
Consolidated Statement of Financial Position
| 31/12/2014 | 31/12/2013 | |
| EUR’000 | EUR’000 | |
| ASSETS | ||
| Non–current assets | ||
| Intangible assets | 13,011 | 11,130 |
| Property, plant and equipment | 3,066,316 | 3,086,775 |
| Investment property | 1,343 | 1,473 |
| Non-current financial investments | 41 | 41 |
| Other non-current receivables | 14 | 57 |
| Investments in held–to–maturity financial assets | 28,528 | 28,588 |
| Total non-current assets | 3,109,253 | 3,128,064 |
| Current assets | ||
| Inventories | 22,560 | 21,634 |
| Trade receivables and other receivables | 233,752 | 161,560 |
| Current financial investments | - | 8,060 |
| Derivative financial instruments | - | 617 |
| Cash and cash equivalents | 121,011 | 255,423 |
| Total current assets | 377,323 | 447,294 |
| TOTAL ASSETS | 3,486,576 | 3,575,358 |
| EQUITY | ||
| Share capital | 1,288,446 | 1,288,011 |
| Reserves | 645,829 | 652,418 |
| Retained earnings | 79,995 | 74,832 |
| Equity attributable to equity holders of the Parent Company | 2,014,270 | 2,015,261 |
| Non–controlling interests | 6,531 | 6,453 |
| Total equity | 2,020,801 | 2,021,714 |
| LIABILITIES | ||
| Non–current liabilities | ||
| Borrowings | 688,297 | 805,192 |
| Deferred income tax liabilities | 268,026 | 269,116 |
| Provisions | 15,588 | 15,597 |
| Derivative financial instruments | 11,698 | 6,238 |
| Other liabilities and deferred income | 194,474 | 170,152 |
| Total non-current liabilities | 1,178,083 | 1,266,295 |
| Current liabilities | ||
| Trade and other payables | 139,909 | 130,667 |
| Income tax payable | 3 | 3 |
| Borrowings | 138,925 | 139,483 |
| Derivative financial instruments | 8,855 | 17,196 |
| Total current liabilities | 287,692 | 287,349 |
| Total liabilities | 1,465,775 | 1,553,644 |
| TOTAL EQUITY AND LIABILITIES | 3,486,576 | 3,575,358 |
Additional information:
Jānis Irbe
Group Treasurer
Phone: +371 67 728 239
E-mail: investor.relations@latvenergo.lv
About Latvenergo
Latvenergo Group is a pan-Baltic energy company, engaging in electricity and thermal energy generation and supply, electricity distribution services and management of transmission system assets. Latvenergo Group holds one-third of the entire Baltic electricity market, thus ensuring its leadership in the Baltic electricity supply. Latvenergo AS has been acknowledged as the most valuable company in Latvia for several years in a row. International credit rating agency Moody’s has assigned Latvenergo AS an investment-grade credit rating of Baa2/stable.
Latvenergo Group includes the parent company Latvenergo AS (electricity and thermal energy generation and supply) and its subsidiaries Latvijas elektriskie tīkli AS (management of transmission system assets), Sadales tīkls AS (electricity distribution), Elektrum Eesti OÜ (electricity supply in Estonia), Elektrum Lietuva UAB (electricity supply in Lithuania), Enerģijas publiskais tirgotājs AS (administration of electricity mandatory procurement process) and Liepājas enerģija SIA (electricity and thermal energy generation and supply), as well as Elektrum Latvija SIA (electricity supply), a subsidiary of Elektrum Eesti OÜ.
