Published: 2021-08-31 08:23:25 CEST
Latvenergo
Half Year financial report

Unaudited results of Latvenergo Group for the first six months of 2021

Riga, 2021-08-31 08:23 CEST -- Today, on 31 August, the unaudited consolidated interim condensed financial statements of Latvenergo Group for the first six months of 2021 are published.

In 2021, prices of energy resources continued to increase all over the world affecting also the electricity prices in the Nord Pool region and therefore in Latvia, where the electricity spot price in the first six months of 2021 was almost twice or 91% higher than in the respective period a year ago. In most European countries the electricity prices have been the highest of the last 10 years. The rapid increase in electricity prices is caused by the global economic recovery from COVID-19, the increase in prices of energy resources and CO2 allowances. In the reporting period, GASPOOL and TTF natural gas (Front Month) prices were almost three times higher than in the first half of 2020 reaching 21.5 EUR/MWh. In the first half of 2021, the average price of carbon emission allowances (EUA DEC.21) increased by 91% and reached 47.0 EUR/t.

In the reporting period, Latvenergo Group’s revenue reached EUR 448.1 million, which was 14% more than in the respective period a year ago. Higher prices of purchased energy resources negatively affected the Group’s EBITDA1, which was 10% lower than in the first half of 2020 and reached 145.1 million euro.

In the first half of 2021, Latvenergo Group was the largest electricity generator in the Baltics, generating 36% of the total electricity output in the Baltics or 2,827 gigawatt-hours (GWh), 67% of which were from renewable energy sources. Our leadership in the generation of green electricity in the Baltics is ensured by the Daugava HPP cascade, which has generated about the same level as in the respective period a year ago, reaching 1,882 GWh. In the reporting period, the amount generated at the Latvenergo AS CHPPs reached 930 GWh, which was 29% more than in the respective period a year ago. The thermal energy output also increased by 29% and constituted 1,259 GWh. The increase was mainly due to the untypically low generation in the respective period of 2020, when the weather was warmer during the heating season and electricity prices were low.

In the first six months of 2021, Latvenergo Group’s revenue reached EUR 448.1 million, which was 14% more than in the respective period a year ago. This was mainly affected by higher electricity market prices and increase in retail sales volume. In the reporting period, the Group’s EBITDA decreased by 10% compared to the first six months of 2020, and constituted EUR 145.1 million. The Group’s profit for the reporting period reached EUR 57.1 million, which is 34% lower compared to the first six months of last year. Profit and EBITDA were negatively affected by the significant increase in price of purchased energy resources.

In the reporting period, Latvenergo considerably increased its presence in the electricity and natural gas markets, as well as solar energy and electric mobility business segments in the Baltic countries. In June 2021, Elektrum Eesti, a Latvenergo subsidiary, signed an agreement for purchasing capital shares of three micro-network service companies in Estonia and on the takeover of a portfolio of 20,000 customers from Imatra Elekter, thus considerably increasing competitiveness of Latvenergo in the Estonian market of electricity, and related products and services. In April, the first solar energy park of Latvenergo Group was commissioned in Lithuania, Klaipeda, with the total capacity of 1.5 MW. A solar park in Estonia is planned to be launched this year.

In the first six months of 2021, the number of contracts for sale of solar panels and shares of solar parks in the Baltics increased significantly – more than 370 new contracts were concluded, which is 59% more than in the respective period a year ago. The total installed solar panel capacity provided to Latvenergo Group’s retail customers in the Baltics reached more than 8 MW; thus, Latvenergo is one of the leading providers of this service in the Baltics. The leadership position in electric mobility has strengthened by rapidly developing a network of charging stations. In the reporting period, customers of the Elektrum mobile app made approximately 3,100 charging cycles at public charging stations charging for more than 50 MWh.

In the first half of 2021, Latvenergo Group supplied 3,384 GWh of electricity to its retail customers in the Baltics, which is 10% more than in the respective period a year ago. 40% of electricity was sold to retail customers outside Latvia. It was impacted by an increase in sales in the segments of large business customers and households in Lithuania. The volume of natural gas sold in the reporting period increased more than two times and constituted 506 GWh.

On 17 May 2021, Latvenergo AS issued seven-year green bonds with a total nominal value of EUR 50 million, and the demand of investors reached 229.8 million euro. The green bond revenue will be invested in environmentally friendly investment projects. The independent research centre CICERO Shades of Green has rated the updated Latvenergo AS green bonds as Dark Green, which is the highest possible category.

The total investments of Latvenergo Group amounted to EUR 58.1 million in the first six months of 2021, which is EUR 35.1 million or 38% less than in the respective period a year ago, mainly affected by the unbundling of transmission system assets on 10 June 2020. The investments in the distribution network assets comprised 73% of the total investment amount or EUR 42.2 million. As part of the Group's investments in environmentally friendly projects, during the reporting period, EUR 7.7 million have been invested in the Daugava HPPs’ hydropower reconstruction.

The next interim financial statement of Latvenergo Group for 2021 will be published on 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 PERFORMANCE INDICATORS

As the transmission assets were separated from Latvenergo Group on 10 June 2020, in comparable results, this segment is classified as discontinued operations.

Operational figures

  1H 2021 1H 2020
Electricity supply, incl.: GWh 4,935 4,615
Retail* GWh 3,384 3,083
Wholesale* GWh 1,551 1,532
Retail natural gas GWh 506 227
Electricity generation GWh 2,827 2,550
Thermal energy generation GWh 1,259 978
Number of employees   3,303 3,374
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                                                                                                                                                                                     

    1H 2021 1H 2020
Revenue**   448.1 393.3
EBITDA1)**   145.1 161.9
Profit   57.1 86.8
Assets   3,299.7 3,248.0
Equity   2,068.6 2,004.4
Net debt (adjusted)2)**   587.2 596.1
Investments   58.1 93.2

1) EBITDA – earnings before interest, income tax, share of result of associates, depreciation and amortisation, and impairment of intangible assets, property, plant and equipment and right-of-use assets

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 6-Month Period Ending 30 June 2021 – see the section “Formulas”.

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

 

Financial ratios*

    1H 2021 1H 2020
Net debt / EBITDA (adjusted)3)   2.3 2.1
EBITDA margin4)   32% 35%
Return on equity (ROE)5)   4.3% 6.0%
Return on assets (ROA)6)   2.6% 3.6%
Return on capital employed (ROCE) (adjusted)7)**   3.7% 4.7%
Net debt / equity (adjusted)8)   28% 30%

3) 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

4) EBITDA margin = EBITDA / revenue

5) 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)

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)

7) 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))

8) Net debt / equity = net debt at the end of the reporting period / equity 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 6-Month Period Ending 30 June 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

  01/01-30/06/2021 01/01-30/06/2020
     
Revenue 448,052 393,338
Other income 13,600 14,071
Raw materials and consumables (237,486) (163,309)
Personnel expenses (56,915) (56,373)
Other operating expenses (22,130) (25,862)
EBITDA 145,121 161,865
Depreciation. amortisation and impairment of intangible assets. property. plant and equipment and right-of-use assets (83,448) (79,206)
Operating profit 61,673 82,659
Finance income 1,403 797
Finance costs (4,695) (5,672)
Profit before tax 58,381 77,784
Income tax (1,268) (800)
Profit for the period from continuing operations 57,113 76,984
Profit for the period from discontinued operation 9,843
Profit for the period 57,113 86,827
Profit attributable to:    
  - Equity holder of the Parent Company 56,012 85,367
  - Non–controlling interests 1,101 1,460

* The Latvenergo Consolidated Unaudited Condensed Interim Financial Statements for the 6-Month Period Ending 30 June 2021 are prepared in accordance with the IFRS as adopted by the European Union

 

Consolidated Statement of Financial Position*

EUR'000

      30/06/2021 31/12/2020
ASSETS        
Non–current assets        
Intangible assets and property, plant and equipment     2,849,194 2,877,354
Right–of–use assets     7,348 8,253
Investment property     2,037 512
Non–current financial investments     40 40
Non-current loans to related parties     39,974 86,620
Other non–current receivables     2,520 429
Derivative financial instruments     507 291
Other financial investments     2,683 2,693
Total non–current assets     2,904,303 2,976,192
Current assets        
Inventories     68,363 68,754
Current intangible assets     12,215 3,157
Receivables from contracts with customers     97,559 108,178
Other current receivables     89,861 85,316
Deferred expenses     2,711 1,083
Prepayment for income tax     43
Derivative financial instruments     1,549 1,266
Other financial investments     14,143
Cash and cash equivalents     123,095 100,703
Total current assets     395,353 382,643
TOTAL ASSETS     3,299,656 3,358,835
EQUITY AND LIABILITIES        
EQUITY        
Share capital     790,368 790,348
Reserves     1,141,543 1,154,367
Retained earnings     130,194 165,672
Equity attributable to equity holder of the Parent Company     2,062,105 2,110,387
Non–controlling interests     6,448 7,855
Total equity     2,068,553 2,118,242
LIABILITIES        
Non–current liabilities        
Borrowings     560,011 634,077
Lease liabilities     5,921 6,783
Deferred income tax liabilities     739 6,401
Provisions     17,029 17,317
Derivative financial instruments     4,423 9,672
Deferred income from contracts with customers     137,037 139,613
Other deferred income     158,060 170,413
Total non–current liabilities     883,220 984,276
Current liabilities        
Borrowings     190,280 109,122
Lease liabilities     1,516 1,561
Trade and other payables     93,240 100,912
Deferred income from contracts with customers     14,585 15,091
Other deferred income     25,121 24,799
Derivative financial instruments     23,141 4,832
Total current liabilities     347,883 256,317
Total liabilities     1,231,103 1,240,593
TOTAL EQUITY AND LIABILITIES     3,299,656 3,358,835

* The Latvenergo Consolidated Unaudited Condensed Interim Financial Statements for the 6-Month Period Ending 30 June 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_6M_ENG.pdf
02_Latvenergo_Interim_2021_6M_presentation_ENG.pdf