Lietuvos energijos gamyba, AB - Interim information

Operating results of Lietuvos Energijos Gamyba, AB Group for the nine-month period ended 30 September2014

Elektrėnai, Lithuania, 2014-11-28 08:48 CET (GLOBE NEWSWIRE) -- DURING FIRST
NINE MONTHS OF THIS YEAR, THE DEMAND OF LIETUVOS ENERGIJOS GAMYBA FOR PSO FUNDS
WAS LTL 39,1 MILLION SMALLER THAN LAST YEAR 

Lietuvos Energijos Gamyba - electricity generation and trade company - together
with its affiliate companies during January-September 2014 earned LTL 169,5
million profits before tax, interest, depreciation and amortisation (EBITDA).
Despite slightly smaller quantities of electricity generated during the period
in question if compared with the last year, but its generation was much more
efficient: funds from the PSO budget needed to support generation in Elektrėnai
amounted to LTL 206,1 million in the period of nine months, which is 16% or LTL
39,1 million less than during the same period in 2013. 

The electricity market stayed stable in January-September 2014. During the
first months of the year, the prices in the Lithuanian zone of the Nord Pool
Spot market were quite low and stayed that way until the supply of cheap
electricity started decreasing towards the middle of the year. Similar trend is
observed every year: electricity prices jump in summer in both Lithuania and
Latvia, when the amount of water in the hydro power plants significantly drop,
majority of combined heat and power plants are out of operation, electricity
grids are under maintenance, and ventilation systems are switched on during the
periods of heat. Thus, the electricity prices in January-September are similar
to the last year's prices. The average electricity price in January-September
2014 in the Lithuanian price zone of the Nord Pool Spot was only
insignificantly (about 2.3%) higher than in the same period in 2013: 171.71
LTL/MWh (49.77 EUR/MWh) and 167.88 LTL/MWh (48.66 EUR/MWh), respectively. 

Quiet beginning of the year, with the electricity demand fully satisfied by the
import and combined heat and power plants, and the summer without any major
surprises determined 13.1% smaller electricity generation in January-September
2014, in Elektrėnai than during the same period in 2013: in total, 0.768 TWh or
85% of the total supported electricity generation quota assigned for 2014. The
combined cycle unit controlled by the Company was switched on for the first
time this April according to the plan agreed with the transmission system
operator Litgrid. The unit stayed in operation nearly for the whole period,
from the beginning of June till mid-October and generated 80% of the total
electricity produced during nine months in Elektrėnai complex. "The new unit first put into operation two years ago has already proven its
important role in securing stable electricity supply during warm seasons and
reducing production costs.  During nine months, it generated nearly half more
electricity than during the same period last year and at the same time helped
to save several tens of millions PSO funds, which would have had to be
additionally spent if using the old less effective units of Elektrėnai", said
Juozas Bartlingas, CEO of Lietuvos Energijos Gamyba. 

During January-September 2014, all three power plants under the Company's
control generated 1,463 TWh electricity in total (during the same period in
2013, the generated electricity amount was 5.7 bigger, i.e. 1,547 TWh
electricity). Bigger production volumes than last year were observed only in
Kruonis Pumped Storage Hydroelectric Power Plant, which in first nine months of
2014 generated 27.4% more electricity than during the same period last year
(0,442 TWh and 0,347 TWh, respectively). Because of dry weather, Kaunas
Algirdas Brazauskas' Hydroelectric Power Plant generated one fifth less
electricity during nine months of 2014 than in the same period in 2013. 

Smaller electricity generation volumes in Elektrėnai and Kaunas were among
other reasons that determined smaller incomes earned by the group of companies
of Lietuvos Energijos Gamyba (hereinafter referred to as the Group) in
January-September 2014, amounting to LTL 672,6 million, or 23.9% smaller than
the earnings in January-September 2013 (LTL 883,6 million). 

Electricity sale to LESTO decreased by 2.4 times because of the changed trading
principle from the beginning of the year made even stronger impact on decrease
of incomes (from 1,791 TWh in January-September 2013 down to 0,745 TWh in the
same period in 2014). 

Nevertheless, the Group continued successfully trading on the free market,
making in particular effective use of Kruonis Pumped Storage Hydroelectric
Power Plant, resulting in the growth of the Group's trading on the free market
by 26.7%, up to 1,173 TWh (the trade on the free market in January-September
last year amounted0,926 TWh). During first nine months of 2014, the Group's
sold 1,918 TWh electricity on the domestic market. It is 29.4% less than during
the same period in 2013, when the sold amount was 2,716 TWh. 

The Group's EBITDA margin of nine months 2014 was 25.2%. If compared with the
same period in 2013, the EBITDA margin increased by 3.7% (from 21.5 %).
However, dropping volumes of electricity generation and trade resulted in the
EBITDA decreasing from LTL 189,6 million down to LTL 169,5 million in absolute
value. The net profitability of the Group increased by 3.8 %: The net
profitability rate in January-September 2013 was 10.0%, while during the same
period this year it was 13.8%. During January-September 2014, the Group's net
profit was LTL 92,8 million or 4.9% bigger than during the same period in 2013,
when the net profit was LTL 88,5 million. "During all nine months were managed to secure reliable operation, by
compensating the decreased electricity generation volumes caused by the market
and weather conditions by good trading performance, using the opportunities to
buy and sell electricity on favourable terms. Professional performance of the
generation and trade staff in the third quarter allowed to shift lots of
attention to other important projects", said Mr. Bartlingas. 

According to him, both staff and contractors of Lietuvos Energijos Gamyba are
working closely together to ensure that starting from this heating season
Elektrėnai town would be supplied with heating generated in the new biofuel
power plant. And from the new year, the Company will decommission two small
units of the standby power plant (150 MW capacity). This significant event is
planned to boost the process that has been taking place in the Company for
several years by now, i.e. saving public service obligations (PSO) funds
assigned for generation in Elektrėnai. 

Optimisation of servicing activities (i.e. centralisation and procurement and
accounting functions in the newly-established company), preparation works for
which were in particular intense in the third quarter of 2014, will also
contribute to the achievement of the strategic goals - operating efficiency and
value increase - set by the Company and the entire group of Lietuvos Energija. 

Further information on the regulated and commercial activities

During January-September 2014, the Group's incomes from the regulated
activities were experiencing slightly bigger than one fifth decline, and
slightly over one fourth from the regulated activities. Incomes from the
commercial activities in the period of nine months of 2013 accounted for 45.8%
of the total incomes, while during the same period this year it dropped down to
43.6%. 

The regulated activities of the Group include electricity and heat generation
in Elektrėnai complex and power reservation services provided by Kruonis PPS
and Elektrėnai complex. The incomes from these activities have been decreasing
from LTL 478,6 million during nine months of 2013 down to LTL 379,1 million
during nine months of this year. The cause of the decrease in the incomes from
the regulated activities, as it was already mentioned, was smaller-volume and
much more efficient generation in Elektrėnai complex. During two years the
combined cycle unit has been in operation, the total amount of LTL 168 million
of the PSO funds has already been saved in total. 

The incomes from the commercial activities, which embrace electricity
generation in Kruonis PPS and Kaunas HPP, and wholesale and retail trading in
electricity on the free market and other commercial services, have decreased by
27.5%. The change of the principle of electricity sale to LESTO determined the
decrease of electricity sale to LESTO by 58.4% (starting from the beginning of
2014, from Lietuvos Energijos Gamyba, LESTO has been buying exclusively
subsidised electricity generated in Elektrėnai plant), the decrease of the
incomes from commercial activities from LTL 404,9 million during
January-September 2013 down to LTL 293,6 million during the same period in
2014. 

To enhance its commercial activities and to pursue its aspiration of active
contribution to the integration of the Nordic European and Baltic electricity
markets, in August 2014 the Company was the first Lithuanian company to join
the NASDAQ OMX Commodities. 

Furthermore, in the third quarter of this year the Company attracted the
attention of the investors and other interested parties to the decision of the
National Commission for Energy Control and Prices recognising the Company being
a highly influential player on the electricity generation market, which the
Company considered to be unreasonable. 

The Company noted that the generation market research, on which the latter
decision was based, was conducted under inadequate prerequisites. Because of
that, the Company believes that the decision of the National Commission for
Energy Control and Prices to recognise the Company being a highly influential
player on the electricity generation market and related obligations should not
apply to the Company. The Company lodged an appeal to the court against the
latter decision. 

Lietuvos Energijos Gamyba, AB is listed on NASDAQ OMX Vilnius  Stock Exchange.
96.13% of its shares belong to the state-controlled Lietuvos energija, UAB. 

 Lietuvos Energijos Gamyba Group consists of the controlling company, i.e.
Lietuvos Energijos Gamyba, AB controlling the standby power plant and combined
cycle unit in Elektrėnai, Kruonis Pumped Storage Plant and Kaunas Hydroelectric
Power Plant, as well as Energijos Tiekimas, UAB, Kauno energetikos remontas,
UAB. 


         Valentas Neviera, Head of Corporative Communication Division of
Lietuvos Energijos Gamyba, AB, phone +370 619 62019, email:
valentas.neviera@le.lt

Attachments:

LEG_consolidated interim report for the nine-month period ended 30 september 2014.pdf

LEG condenced and companys condensed interim financial information for 9 month period of 2014.pdf