Lietuvos energijos gamyba, AB - Annual information

Lietuvos Energijos Gamyba, AB, Annual Information 2016

Elektrėnai, Lithuania, 2017-03-24 08:55 CET (GLOBE NEWSWIRE) -- Lietuvos
Energijos Gamyba, AB, company code 302648707, registered office at Elektrinės
st. 21, Elektrėnai (hereinafter referred to as the Company). The total number
of registered ordinary shares issued by company is 635 083 615, ISIN code –
LT0000128571. 

On 24 March 2017 the Ordinary General Meeting of Shareholders of the Company
approved the Annual Report of the Company for the year 2016 and the Annual
Financial Statements of the Company for the year 2016, audited by
PricewaterhouseCoopers, UAB, the Company‘s auditor. 



    Information on the operational results of the Company for the year 2016:

      LIETUVOS ENERGIJOS GAMYBA OPERATED MORE PROFITABLY IN 2016; PLANS TO
                   SIGNIFICANTLY EXPAND ITS SERVICE PORTFOLIO

Following the launch of new electricity connections with Sweden and Poland and
the elimination of quotas for electricity generation, all power plants operated
by the Lietuvos Energijos Gamyba had to adapt to the new market conditions in
2016. 

“Changes in business environment and increased competition affected our
results, – says Ms. Eglė Čiužaitė, Chairwoman of the board and chief executive
officer of Lietuvos Energijos Gamyba. – Nevertheless, we managed to
successfully respond to the challenges of 2016 and today we can reap both
better corporate results and a higher level of employee engagement. We
continuously change and improve so that the Company operates more efficiently
in the future and give shareholders a change to earn better returns and create
value for employees.” 

Revenue of the Company decreased, as well as the costs

In 2016 the Company’s revenue totalled Eur 172.9 million and was 19.3 per cent
lower than the revenue in 2015 (Eur 214.4 million). The Company’s sales revenue
decreased 25.3 per cent, mainly due to the decreased electricity production in
Elektrėnai Complex. The cancellation of the supported electricity production
quota halved the output of the Elektrenai complex units (0.491 TWh) when
compared to the year 2015 (0,491 TWh). The decrease of sales revenue was partly
counterbalanced by the revenue received from disposal of part of business in
the beginning of 2016. 

As a result of decreased production, variable costs incurred by the Company
were significantly reduced (-43 per cent) as well. In addition, due to
efficient organisation and performance of repair works and constant improvement
of business processes, the Company managed to significantly reduce operating
costs as well. 

Costs reduction in the Elektrėnai complex, which met public service obligations
(PSO) and provided the tertiary active power reserve service in 2016, amounted
to almost 10 per cent, which grants direct benefits to electricity consumers
because it contributes to the electricity rate reduction. 

Produced competitive electricity by CCGT was sold on the market and over the
year it has allowed to earn nearly EUR 6 million gross profit which will be
given to the PSO tariff reduction for consumers. 

As the market situation changed, hydroelectric power plants managed by the
Company operated more efficiently and flexibly. In 2016, Kaunas Algirdas
Brazauskas' Hydroelectric Power Plant produced 30 per cent (0.363 TWh) more
electricity than in 2015. Production at Kruonis PSHP decreased slightly more
than by 20 per cent (to 0.517 TWh); however, this power plant played a
particularly important role in ensuring the safety of electricity supply when
the operation of the “NordBalt” link was unstable. When the link was
disconnected, particularly in the first half of 2016, Kruonis PSHP was the
first to provide help: the emergency reserve of this power plant was activated
57 times in 2016 (20 times in 2015) 

Profitability has increased

The increased scope of the secondary reserve service in 2016 improved the
EBITDA result of the Company’s regulated activity, while the EBITDA indicator
of commercial activities of the hydroelectric power plants, despite increased
competition, was similar to 2015. However, the change in the Company’s EBITDA
in 2016 in comparison with 2015 was substantially affected by evaluation of the
decisions of the regulator in financial statements. EBITDA increased by Eur 7.8
million (Eur 58.1 million and Eur 50.3 million, accordingly). EBITDA margin was
33.6% in 2016 (23.4% in 2015). 

The net profit of the Company in 2016 exceeded the profit from 2015 due to
higher EBITDA and the impact of one-off factors: the sale of a part of the
business at the beginning of 2016 (the recorded result before tax was EUR 19.8
million) and the reduction of the assets value recorded in 2015 related to the
decision to terminate the operation of units 5 and 6, which caused a reduction
of the net profit by EUR 30 million in 2015. 

Biggest attention – to the implementation of business strategy

In 2016 the Company has updated its business strategy for 2020. Sticking to the
guidelines set out in the strategy, the Company will seek to ensure the
continuity of the Company’s activities, to return to shareholders and to retain
jobs of employees. The Company, therefore, plans to significantly expand its
service portfolio by 2020. It is planned that in four years every employee of
the Company will devote at least 15 per cent of their working time for new
services. The Company will pursue to have main operating expenses for
electricity and heat production and provision of system services reduced by at
least 15 percent by 2020. 

The Company has already made the first steps in offering new services in 2016 –
business was offered territories next to the power plant as well as services of
weighing heavy vehicles and biofuel and other laboratory tests. In the future,
the Company plans to considerably expand the range of services. 

Key goals of the Company include low employee turnover, assurance of
occupational safety and health, and implementation of the LEAN management
system principles-based Operational Excellence programme 

According to E. Čiužaitė, the main requirement for the implementation of all
the actions provided for in the strategy and development of new activities is
engaged employees generating ideas and focused on the achievement of goals. “I
have no doubt that an even deeper fostering of fundamental values of the
company, such as responsibility, cooperation and pursuit for the achievement of
goals, will help successfully implement our vision of becoming a competitive
international energy generation and service centre”, – says the head of
Lietuvos Energijos Gamyba. 


         Valentas Neviera, Head of Communication Division, tel. +370 670 25997,
e-mail. valentas.neviera@le.lt

Attachments:

LEG 2016 audited financial statements and annual report.pdf