Published: 2021-05-31 15:00:00 CEST
Latvenergo
Interim report (Q1 and Q3)

Unaudited results of Latvenergo Group for Q1 2021

Riga, 2021-05-31 15:00 CEST --  

Today, on 31 May, the unaudited interim condensed consolidated financial statements of Latvenergo Group for the first three months of 2021 are published.

Latvenergo Group is one of the largest power suppliers and a leader in green energy generation in the Baltics, and it generated 2% more electricity and 37% more thermal energy than in the respective period a year ago. In the reporting period, the amount of electricity and natural gas sold in retail trade increased by 9% and 120%, respectively. In Q1 2021, operations of the Group were affected by the increase in demand for electricity due to colder weather and also by a general increase in prices of energy sources, this led to a considerable increase in the average electricity price in the entire Nord Pool region. In 2021, Latvenergo experienced growth in all new business directions.

In Q1 2021, Latvenergo Group’s revenue reached EUR 249.9 million, which was 14% more than in the respective period a year ago. Meanwhile, lower electricity output at the Daugava HPPs had a negative impact on the Group's EBITDA1, which amounted to EUR 80.7 million, and that is 18% decrease compared to Q1 2020.

Q1 2021 was characterised by a significant increase in electricity prices. In the first three months of 2021, there was a rapid increase in electricity spot prices both in the Nordic and the Baltic countries. This was related to higher demand for electricity due to colder weather and higher energy resource prices. The Nord Pool system’s average electricity price was almost 3 times higher (+173%) and reached 42.14 EUR/MWh, while in Latvia it was 88% higher than in the respective period last year.

In Q1 2021, Latvenergo Group was the largest electricity generator in the Baltics, generating 36% of the total electricity output in the region or 1,565 gigawatt-hours (GWh), half of which was electricity from renewable energy sources. The operation of the Latvenergo AS CHPPs is adjusted to the conditions of the electricity market and thermal energy demand. In the reporting period, the Latvenergo AS CHPPs generated 2.6 times more electricity than in the respective period a year ago or 787 GWh. The increase can mainly be explained by warm weather conditions and low electricity price in the respective period a year ago.

The electricity output at the Daugava HPPs decreased by 37% compared to the respective period a year ago and amounted to 769 GWh. The output was impacted by a significantly lower water inflow in the Daugava River, which was 576 m3/s in Q1 2021 (in the respective period a year ago: 979 m3/s). Nevertheless the Group is the leader in generation of green energy in the Baltics –775 GWh or 50% of the Group's total electricity output were generated from renewable energy sources.

Due to colder weather, the Group's thermal energy output increased by 37% compared to the respective period a year ago and constituted 1,011 GWh. The data show that in the reporting period the average air temperature in Riga was -1.3 degrees Celsius, whereas in Q1 2020 it was +3.6 degrees Celsius.

In the reporting period, the total amount of electricity sold by Latvenergo Group to retail customers in the Baltics constituted 1,799 GWh, which is 9% more than in Q1 2020. The overall amount of retail electricity trade outside Latvia accounted for about 40% of the total. Since the opening of the Lithuanian household electricity market, almost 20 thousand contracts had been concluded by 31 March 2021. In the reporting period, the volume of natural gas sold increased more than two times, reaching 341 GWh. Robust growth was seen in all of the new business directions – 153 new contracts for installation of solar panels were concluded in the Baltics, and the first solar park of the Group was commissioned in Lithuania. Customers of the Elektrum mobile application made more than 1,700 charges at public charging stations, comprising 100 MWh. The number of Elektrum Apdrošināts (Elektrum Insured) customers and the activity of the e-shop are also increasing.

In Q1 2021, Latvenergo Group’s revenue reached EUR 249.9 million, which was EUR 30.1 million or 14% more than in the respective period a year ago. This was mainly affected by higher electricity market prices and higher sales of electricity and thermal energy. In the reporting period, the Group’s EBITDA decreased by 18% or EUR 17.3 million compared to Q1 2020, reaching EUR 80.7 million. It was negatively affected mainly by lower electricity output at the Daugava HPPs. The Group’s profit for the reporting period reached EUR 35.5 million.

In the first three months of 2021, the total amount of investment of Latvenergo Group comprised EUR 26.6 million, which is by EUR 28.9 million or 52% less than in the respective period a year ago mainly due to the unbundling of transmission system assets. The investments in the distribution network assets represented 73% of the total investment amount or EUR 19.5 million. Contributing to environmentally friendly projects, in Q1 2021, EUR 4.2 million were invested in the Daugava HPPs’ hydropower unit reconstruction.

After the end of the reporting period, on May 17, Latvenergo AS issued 7-year green bonds for a total nominal amount of EUR 50 million, which sparked high interest from investors. The funds received will be used for the implementation of environmentally friendly investment projects.

After the end of the reporting period, on 12 May 2021, at the Shareholder’s Meeting of Latvenergo AS it was decided to pay EUR 98.2 million in dividends to the state. Latvenergo AS dividends are also used as a source of funding for the state budget programme Electricity User Support, thereby decreasing the mandatory procurement component.

The next interim financial statements of Latvenergo Group for 2021 will be published on 31 August and 30 November.

1 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, in comparable results, this segment is classified as discontinuing operations.

Operational figures

  3M 2021 3M 2020
Electricity supply, incl.: GWh 2,639 2,581
Retail* GWh 1,799 1,646
Wholesale* GWh 840 935
Retail natural gas GWh 341 155
Electricity generated GWh 1,565 1,538
Thermal energy generated GWh 1,011 740
Number of employees   3,298 3,394
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                                                                                                                                                                                     

    3M 2021 3M 2020
Revenue**                  249.9                219.8
EBITDA1)**                    80.7                  98.0
Profit                    35.5                  57.9
Assets              3,421.6            3,933.7
Equity              2,156.3            2,325.2
Net debt (adjusted)2)**                  448.3                498.4
Investments   26.6 55.5

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 at the end of the reporting period) 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 3-Month Period Ending 31 March 2021 – see the section “Formulas”.

** Financial figures for 2020 are presented by excluding discontinuing operations (unbundling transmission system asset ownership)

 

Financial ratios*

    3M 2021 3M 2020
EBITDA margin3)   32% 33%
Net debt / EBITDA (adjusted)4)**   1.8 1.8
Net debt / equity (adjusted)5)**   21% 21%
Return on assets (ROA)6)   2.6% 2.9%
Return on equity (ROE)7)   4.2% 4.9%
Return on capital employed (ROCE) (adjusted)8)**   3.4% 4.1%

3) EBITDA margin = EBITDA / revenue (12-months rolling)

4) Net debt / EBITDA (adjusted) = (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 3-Month Period Ending 31 March 2021 – see the section “Formulas”.

**Financial ratios for 2020 are presented by excluding discontinuing operations (unbundling transmission system asset ownership)

   

Consolidated Statement of Profit or Loss*

EUR'000

  3M 2021 3M 2020
     
Revenue 249,888 219,768
Other income 7,127 7,104
Raw materials and consumables (136,609) (87,782)
Personnel expenses (28,189) (28,141)
Other operating expenses (11,531) (12,991)
EBITDA 80,686 97,958
Depreciation. amortisation and impairment of intangible assets. property. plant and equipment and right-of-use assets (158,421) (42,666)
Operating profit 38,020 59,058
Finance income 665 295
Finance costs (2,331) (2,941)
Profit before tax 36,354 56,412
Income tax (812) (1,276)
Profit for the period from continuing operations 35,542 55,136
Profit for the period from discontinued operation 2,763
Profit for the period 35,542 57,899
Profit attributable to:    
  - Equity holder of the Parent Company 34,467 56,648
  - Non–controlling interests 1,075 1,251

* The Latvenergo Consolidated Financial Statements for 2020 are prepared in accordance with the IFRS as adopted by the European Uni

    

Consolidated Statement of Financial Position*

EUR'000

      31/03/2021 31/12/2020
ASSETS        
Non–current assets        
Intangible assets and property, plant and equipment     2,859,616 2,877,354
Right–of–use assets     7,702 8,253
Investment property     2,168 512
Non–current financial investments     40 40
Non-current loans to related parties     86,617 86,620
Other non–current receivables     2,520 429
Derivative financial instruments     246 291
Other financial investments     2,688 2,693
Total non–current assets     2,961,597 2,976,192
Current assets        
Inventories     31,838 68,754
Current intangible assets     3,157
Receivables from contracts with customers     110,047 108,178
Other current receivables     82,278 85,316
Deferred expenses     1,779 1,083
Prepayment for income tax     50 43
Derivative financial instruments     537 1,266
Other financial investments     14,143
Cash and cash equivalents     233,471 100,703
Total current assets     460,000 382,643
TOTAL ASSETS     3,421,597 3,358,835
EQUITY AND LIABILITIES        
EQUITY        
Share capital     790,348 790,348
Reserves     1,152,379 1,154,367
Retained earnings     204,637 165,672
Equity attributable to equity holder of the Parent Company     2,147,364 2,110,387
Non–controlling interests     8,930 7,855
Total equity     2,156,294 2,118,242
LIABILITIES        
Non–current liabilities        
Borrowings     633,105 634,077
Lease liabilities     6,261 6,783
Deferred income tax liabilities     1,691 6,401
Provisions     17,276 17,317
Derivative financial instruments     5,836 9,672
Deferred income from contracts with customers     137,968 139,613
Other deferred income     164,418 170,413
Total non–current liabilities     966,555 984,276
Current liabilities        
Borrowings     135,281 109,122
Lease liabilities     1,522 1,561
Trade and other payables     112,247 100,912
Deferred income from contracts with customers     14,490 15,091
Other deferred income     24,789 24,799
Derivative financial instruments     10,419 4,832
Total current liabilities     298,748 256,317
Total liabilities     1,265,303 1,240,593
TOTAL EQUITY AND LIABILITIES     3,421,597 3,358,835

* The Latvenergo Consolidated Unaudited Condensed Interim Financial Statements for the 3-Month Period Ending 31 March 2021 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_2021_3M_ENG.pdf
02_Latvenergo_Interim_2021_3M_presentation_ENG.pdf