Lietuvos energija, AB - Interim information

Consolidated interim financial information of Lietuvos energija for the 12 months of 2011

Elektrenai, Lithuania, 2012-02-29 19:28 CET (GLOBE NEWSWIRE) -- Lietuvos
energija, AB has announced financial results for 2011. Having completed
reorganisation the Company earned LTL 1 367 million revenue and generated a net
profit of LTL 11 million. 

CEO of Lietuvos energija, AB (hereinafter “Company”) Dalius Misiūnas says that
in 2011 the Company managed to implement the set tasks: the merger of AB
Lietuvos energija and AB Lietuvos elektrinė was successfully completed by
forming a national electricity production unit. The separation of maintenance
operations allowed for more flexible planning of maintenance volumes and
schedules. The combination of the administrative functions of all plants
resulted in the optimisation of operations and the reduction of administrative
expenses. Moreover, 2011 saw the completion of the reconstruction of Kaunas
Hydroelectric Power Plant and the further implementation of the project of a
combined cycle unit, with 90 percent of the project done by the end of the
year. The Company-controlled power plants in Elektrėnai, Kruonis and Kaunas
were operating reliably - there were no unplanned halts in 2011. 

The Company's performance results were in large part affected by the ongoing
liberalisation of the electricity market, which led to a drop in sales, a steep
rise in the price of natural gas and a record slump in the market of tradable
pollution permits at the end of 2011. These factors affected the Company's
fourth quarter results and had a negative impact on annual results. 

This report compares the 2011 performance results of Lietuvos energija, AB with
the jointed 2010 performance results of AB „Lietuvos energija“ and AB Lietuvos
elektrinė prior to their merger. (Financial highlights and main indicators of
production and sales are presented at the Appendix No. 1 and Appendix No. 2). 

Revenue

As a result of changes in the electricity market and shrinking production
capacity the Company's revenue fell 20 percent from LTL 1.704 million in 2010
to LTL 1.367 million in 2011. Compared with 2010, the Company's sales to
independent suppliers rose 12 percent in 2011 due to the expanding share of the
free wholesale electricity market. Meanwhile, electricity sales to LESTO AB
declined 38 percent as a result of market liberalisation which led to the
contraction of the regulated market share. 

Electricity production

In 2011, Lithuanian Power Plant (LPP), Kaunas Hydroelectric Power Plant (KHE)
and Kruonis Pumped Storage Power Plant (KHAE) generated a total of 2.018 TWh of
electricity, a decline of 33 percent than in 2010. 

LPP saw the biggest reduction of electricity production, from 1.9 TWh in 2010
to 1.1 TWh in 2011. The amount of electricity generated by LPP depended on the
requirements to maintain Lithuanian energy system reliability and the amount of
other eligible electricity generation. The production of electricity generated
by KHAE shrank because the situation in the wholesale electricity market had
changed - there was a growth in the price of night-time electricity used for
filling reservoirs of KHAE. The performance results of KHE were affected by
natural conditions - in 2011 the average water debit of the Nemunas River was
lower than in 2010. 

The Company is fulfilling its obligations to meet all electricity needs of
regulated consumers of  LESTO AB by supplying them with the total eligible
electricity generated in Lithuania. Therefore, in 2011 the Company increased
the purchase of wind electricity by 75 percent and reduced the purchase of
electricity generated by thermal power plants by 8 percent compared with 2010. 

Import and export

In 2011, the Company imported 1.084 TWh of electricity, down from 1.172 TWh in
2010. The Company increased its exports from 0.186 TWh in 2010 to 0.292 TWh in
2011. 

Expenses

As the volume of electricity sales and production dropped, the Company's
variable expenses in 2011 were 21 percent smaller than in 2010 despite the fact
that the prices of gas went up by 30 percent. 

Meanwhile, the Company's operating expenses (OPEX) fell 12 percent. Wage
expenses were reduced by 29 percent or LTL 15.3 million as a result of the
merger of the plants' administrative activities, the separation of maintenance
services and the optimisation of operations. 

Regulated and non-regulated activity

The Company's revenue from regulated activity (production of eligible
electricity by LPP, heat production, LPP and KHAE services) made up 40 percent
of all the Company's revenue in 2011. Ruling out the impact of the gas price
rise, the Company suffered a net loss of LTL 87 million and EBITDA of minus LTL
52 million. The loss from regulated activity could be in large part attributed
to the share of fixed expenses which by the decision of National Control
Commission of Prices and Energy was not covered by the funds of public interest
services and income from reserve power (LTL 19 million) as well as the cost of
the revaluation of tradable pollution permits (LTL 63 million) due to the drop
of their market value. 

EBITDA from non-regulated activities which consist of electricity production by
KHAE and KHE, and electricity wholesale trading in the free market amounted to
LTL 105 million in 2011, while net profit made up LTL 98 million. 

Considering the consequences that emerged in 2011, the Company made corrections
to the 2010 performance results. In 2010, the Company did not account an
agreement on the purchase of tradable pollution permits signed in 2009, which
became unprofitable due to fluctuations in the market price of tradable
pollution permits and a change in production plans. So, the Company corrected
the 2010 expenses by reducing net profit by LTL 24 million. Besides, the
Company revised the 2010 revenue from public interest services (LTL 50
million), which were not related to the production of eligible electricity and
the amount of which was used to cut the 2012-2015 public interest services by a
decision of the National Control Commission of Prices and Energy. In addition,
corrections to long-term assets were made in the financial statement.
Consequently, net profit of LPP contracted by LTL 2 million. Due to these
corrections the net profit of LPP in 2010 fell by LTL 72 million and resulted
in a net loss of LTL 67 million. 

Profitability indicators

With revenue going down, the Company balanced its expenses and maintained
EBITDA margin at the same level as in 2010 at 4 percent. Due to an increase in
depreciation costs, net profitability dropped by 1 percentage point. In 2011
EBITDA was LTL 53 million, while net profit LTL 11 million. Ruling out the drop
in the value of tradable pollution permits, in 2011 EBITDA was LTL 116 million
(EBITDA margin made up 8.5 percent), while net profit accounted for LTL 74
million (net profitability made up 5.4 percent). 

Investment

In 2011, the investment of Lietuvos energija made up almost LTL 269 million.
The largest share of investment, LTL 240 million, was used to finance the
construction a new combined cycle unit. The Company's investment in this unit
in 2010 reached LTL 550 million. An additional LTL 182 million should be
invested in the unit in 2012. 

2011 saw the completion of the reconstruction of KHE, which increased the
plant's reliability three times and efficiency 4 percent. The reconstruction
extended the plant's life by 25 years and lengthened periods between machinery
overhauls from 5 to 20 years. 

On 29 December 2011, the Company signed an agreement on the acquisition of
newly issued shares of UAB Technologijų ir inovacijų centras. It was a
non-monetary transaction - in exchange the Company gave the shares of its
subsidiary UAB Data Logistics Center. Revenue from the transfer of UAB Data
Logistics Center shares made up LTL 22 million. 

The interim financial results

The interim financial results of AB Lietuvos energija for the period ended
December 31, 2011 announced in Stock Exchange Nasdaq QMX website and are
presented in line with the International Accounting Standards (IAS) No 27
Consolidated and Separate Financial Statements: 

1.     The 2011 information is provided assuming that AB Lietuvos energija and
AB Lietuvos elektrinė were affiliated since the start of the accounting period
(consolidated period - from January 1, 2011); 

2.    The 2010 comparative information is provided assuming that AB Lietuvos
energija and AB Lietuvos elektrinė were affiliated from the moment when AB
Lietuvos energija took control of AB Lietuvos elektrinė, i.e. from August 18,
2010 (consolidated period - from September 1, 2010). 


         Jūratė Kavaliauskaitė
         Head of Communications
         Lietuvos Energija AB
         Tel. +370 528 33691
         E-mail: jurate.kavaliauskaite@le.lt

Attachments:

Appendices_ No1_No2.pdf

LE FA 2011-12-31 EN.pdf