Energijos Skirstymo Operatorius AB - Notification on material event

Preliminary ESO results for three months of 2017: revenue decreased due to lowered prices of services

Energijos Skirstymo Operatorius AB (hereinafter – the Company or ESO), identification code 304151376, registered office placed at Aguonu str. 24, Vilnius, Republic of Lithuania. The total number of registered ordinary shares issued by company is 894 630 333; ISIN code LT0000130023.

Electricity and natural gas distribution company ESO during the three months of 2017 earned EUR 28.5 million net profit – 7.5% less compared to January-March of 2016. Net profit decreased due to lower revenue.

ESO revenue during January-March of 2017 amounted to EUR 168.5 million and, compared to the same period of 2016, decreased by 7.6%, when it totalled EUR 182.5 million. Revenue decreased due to lower electricity and natural gas distribution service prices to the customers.

During January-March of 2017 ESO EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) amounted to EUR 45.1 million – 7.8% less compared to the same period of 2016, when EBITDA was equal to EUR 48.9 million. Adjusted EBITDA* on a comparable time increased by 9.7% to EUR 46.9 million due to implemented investments of the Company.

"Since 2017 we have reduced the prices of services to our customers - since January electricity prices for residents decreased 5% on average. This year we are continue to seek further measures to increase efficiency and ensure favourable prices to our customers. To that end, we started Operational Excellence Program, and to improve the quality of customer service we launched a Unified customer service standard. During the first quarter we have continued  our consistent invested in upgrading the electricity network and developed our services cart," –  said Chief Executive Officer of ESO Mrs. Dalia Andrulionienė.

ESO interim report for the three months of 2017 is due to be published on 15 May.

*The Company adjusted EBITDA due to:

• The National commission for Energy Control and Prices (hereinafter - the Commission) recounting on the return of investment during the reporting period which is related to the Company's profit, which excessed Commission's allowable return on investment during previous periods;
• Profit earned during reporting period which excess the Commission's allowable return on investment.

The Company does not evaluate the Commission’s established incentive mechanism to influence adjusted EBITDA, according which return on investment for 2016 and 2017 can be increased due to operational efficiency, which the Company will have to justify to the Commission.