Today, 30 November, the unaudited condensed consolidated interim financial statements of Latvenergo Group for the nine months of 2018 are published. In the nine months of 2018, Latvenergo Group's revenue amounts to EUR 642.0 million, which is 5% less than in the same period last year. EBITDA of the Group is EUR 270.2 million, which is 10% less than in the previous year. The amount of electricity generated by the Group has remained at the prior year's level and reached 4,052 GWh (gigawatt hours). The Riga CHPPs have played an indispensable role in the reporting period, as generation at the Riga CHPPs was able to make up for the demand for electricity during the prolonged downtime of the Nordbalt cable. In October 2018, the Group started natural gas trade in Lithuania, which means that Latvenergo operates in all market segments in Latvia, Lithuania and Estonia.

The 9 months of 2018 are characterised by a significant and unexpected increase in electricity prices across Europe, particularly in the Nordic countries. The price of electricity at the electricity exchange NordPool increased by 47% on average, and in the Baltics prices increased by almost 40% (38% in Latvia), compared to the corresponding period last year. This was mainly due to the dry and warm weather throughout Europe, lower water levels at the Scandinavian hydropower reservoirs, smaller output at wind farms as well as rising prices of CO2 emission allowances and raw materials. In these circumstances, the role of the Riga CHPPs in the market was particularly important. If the Riga CHPPs were not available for generation in Latvia, we would have to use higher-cost electricity generation sources to satisfy the demand, such as a lower-efficiency gas plant in Lithuania, coal plants in Poland or other capacities designed to ensure the stability of the power system.

Due to an efficient response to the situation in the electricity market, the electricity output by the Riga CHPPs in the reporting period is 71% higher than last year and amounts to 1,844 GWh. In turn, the amount of electricity generated by the Daugava HPPs decreased by 27% compared to the same period last year and amounts to 2,170 GWh. The reduction of the output at the Daugava HPPs was affected by lower water inflow in the river Daugava compared to last year. More than half of the Group's total electricity output of 4,052 GWh was generated from renewable energy sources.

The amount of thermal energy generated in the nine months of 2018 is 14% less compared to the same period last year reaching 1,545 GWh. The decrease was influenced by increasing competition with new heat generators in the Riga thermal energy market.

In the reporting period, a total of 5 TWh of electricity was sold to Baltic retail customers. Approximately 1/3 of the total retail electricity trade or 1.8 TWh was sold to customers outside Latvia. In October, we also started natural gas trade in Lithuania, thus we are already operating in all segments of the market in Latvia, Lithuania and Estonia. The natural gas sales of Latvenergo Group and the number of customers continued to grow in the reporting period. As of the end of the reporting period, the total number of natural gas customers exceeds 300. In the reporting period, the amount of natural gas used for both operating consumption and trade reached 4.8 TWh.

In line with the strategic goals of the Group to offer new products and services, retail sales activities involving additional products continued in the Baltic states during the reporting period. In Q3 2018, the trade of Elektrum Solārais (Elektrum Solar) was launched in Estonia. In the reporting period, solar panels were installed for about 50 customers in the Baltics. The number of Elektrum Apdrošināts (Elektrum Insured) customers also continues to grow and by the end of the reporting period it reached more than 36 thousand.

Latvenergo Group’s revenue in the nine months of 2018 decreased by 5% and amounts to EUR 642.0 million. EBITDA decreased by 10%, reaching EUR 270.2 million. The Group’s profit amounts to EUR 83.1 million. The results were negatively impacted by smaller electricity generation at the Daugava HPPs and higher prices of electricity and CO2 emission allowances.

In the nine months of 2018, the total amount of Latvenergo Group’s investments decreased by 5% compared to the corresponding period last year and reached EUR 158.5 million. 80% of overall investments was made in the modernisation of the power networks in order to ensure a higher level of quality and security of the services. EUR 16.9 million was invested in the reconstruction of hydropower units of Daugava HPPs, which will ensure their operation for the next 40 years. The investments in the Kurzeme Ring project, which significantly increases the security of energy supply in Kurzeme region and Latvia as a whole, amounted to EUR 184.6 million by the end of the reporting period, while the reconstruction of substations and construction works continued in several 330 kV transmission lines. The Third Estonia–Latvia power transmission network interconnection project continues as well. This project is of major significance for the future electricity transmission infrastructure of the whole Baltic region.

Shortly after the end of the reporting period, on 10 October, Latvenergo AS received the most valuable Latvian company award within TOP 101 Most Valuable Companies of Latvia, jointly created by Prudentia and Nasdaq Riga, for the 11^th time in total and for the 10^th time in a row. The Group also maintained its leading position among the Baltic states, ranking third on the list of TOP 10 Baltic Most Valuable Enterprises, ahead of the energy companies from Estonia and Lithuania.

The unaudited condensed consolidated interim financial statements of Latvenergo Group for 2018 will be published on 28 February 2019. 

Latvenergo Group’s Key Performance Indicators

Operational Figures

*   Including operating consumption

** Including sale of energy purchased within the mandatory procurement on the Nord Pool

Financial Figures

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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 

2)     Net debt – borrowings at the end of the reporting period minus cash and cash equivalents at the end of the reporting period

Financial Ratios

1)     Net debt / EBITDA – average value of net debt / EBITDA (12-month rolling)

2)     EBITDA margin – EBITDA (12-month rolling) / revenue (12-month rolling)

3)     Return on equity (ROE) – net profit (12-month rolling) / average value of equity

4)     Return on assets (ROA) – net profit (12-month rolling) / average value of assets

5)     Return on capital employed (ROCE) – operating profit (12-month rolling) / average value of equity + average value of borrowings

6)     Net debt at the end of the reporting period / equity at the end of the reporting period

Consolidated Statement of Profit or Loss*

EUR’000

 *   Consolidated Unaudited Condensed Financial Interim Statements have been prepared in accordance with the IFRS as adopted by the European Union.

Consolidated Statement of Financial Position*

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*   Consolidated Unaudited Condensed Financial Interim Statements have been 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.