Lietuvos energijos gamyba, AB - Notification on material event

Preliminary unaudited results of Lietuvos Energijos Gamyba, AB for January–September 2016

Elektrėnai, Lithuania, 2016-11-15 16:08 CET (GLOBE NEWSWIRE) -- Lietuvos
Energijos Gamyba, AB (legal entity code 302648707, registered at Elektrinės g.
21, Elektrėnai, hereinafter – the Company) announces its preliminary unaudited
financial indicators for the period of January–September 2016: 

  -- According to preliminary unaudited data, in January–September 2016 the
     Company’s sales revenue was EUR 100.88 million, which is 40.0% smaller than
     in January–September 2015 (EUR 168.06 million).
  -- Preliminary unaudited profit before interest, tax, depreciation and
     amortisation (EBITDA) of the Company for January–September 2016 was EUR
     31.60 million (the one-off effect of sale of a part of business activities
     is not evaluated), which is 19.4% less than for the period of
     January–September 2015 (EUR 39.19 million). According to preliminary data,
     EBITDA margin for the period of January–September 2016 is 31%, which is 8.2
     p. p. higher than for the period of January–September 2015.
  -- Preliminary unaudited net profit of the Company earned in January–September
     2016 was EUR 22.01 million, which is 16.8% less than for the period of
     January–September 2015. Net profit in January–September 2015 was EUR 26.46
     million.

Electrical energy production capacity operated by the Company in Elektrėnai
this year operates without the quotas of the electrical energy production.
Under these circumstances, in January-September 2016 in Elektrėnai there was
produced three times less electrical energy than in  January-September 2015
(respectively 0.308 TWh and 0.953 TWh), the Company received less regulated
operating income, but the combined cycle unit played a crucial role in the
whole system – it was activated when the market price of electricity was the
highest, the Unite was able to contribute to ensuring the stability of the
electricity prices. Therefore, in contrast to 2015, when the Unit was operating
almost continuously from the middle of April until October, in 2016 this
facility was often turned on in the morning and turned off in the evening.
During January-September 2016, the Unit was turned on even 45 times (in 2015,
throughout the year - only 14 times). Despite such frequent turning on, the
Unit operated reliably, and during January-September 2016, the Company was able
to quite significantly reduce the electrical energy production costs. 

Kruonis Pumped Storage Hydroelectric Plant produced 0.411 TWh of electrical
energy in January-September 2016 – this is 15.5 percent less than in
January-September 2015, when this power plant produced  0.487 TWh of electrical
energy, but it operated more profitable. At that time, Kaunas Algirdas
Brazauskas' Hydroelectric Power Plant produced one-fifth (21.6 percent) more
electrical energy in January-September 2016 than in January-September 2015
(respectively 0.257 TWh and 0.212 TWh) due to the higher freshwater discharge
by Nemunas than last year. 

In total 0.977 TWh of the electrical energy was produced by the power plants
operated by the Company during January-September 2016. In January-September
2015, in all power plants of the Company the total electrical energy amounted
to 1.652 TWh. 

In January-September 2016, the Company was able to significantly reduce
operating costs: optimizing operations and eliminating the old inefficient
equipment reduce repair and maintenance costs. Also in January-September 2016,
the relatively bigger part of dismantling work on the old electrical energy
production equipment was carried out by the Company’s employees who were
specifically brought together into the clearing-up work group. In 2015, the
contractors were often invoked for this purpose. 

The Company's preliminary profit variables show a significant influence which
still is made by the decisions of the National Commission for Energy Control
and Prices (NCC). On 17 October 2016, the Supreme Administrative Court of
Lithuania, by the order not subject to appeal, overturned the NCC‘s decision by
which the Company was recognised as having a significant impact on the Company
in the electrical energy production market, but the court decision has not yet
started. In the results of January-September 2016 the influence of the NCC
decision is still significantly reflected. By this decision, Kruonis PSHP and
Kaunas HPP commercial activity profit share (according to preliminary estimates
in January-September 2016 it was EUR 10.2 million) was directed to covering the
Company's fixed costs incurred by carrying out the regulated activities in
providing the services that meet the public interests. In total, excluding the
verification of the impact of this and other decision made by the NCC regarding
the Company‘s activity in 2010-2012, the Company's EBITDA in January-September
2016, according to the preliminary estimates, would be EUR 13.0 million higher
(the influence of these factors in January-September 2015 amounted to EUR 10.7
million). 

The factor that had a favorable impact on the Company‘s net result in
January-September 2016 – the sale of the part of the wholesale electricity
trading business, for which, if all the conditions provided in the contract are
implemented, the Company may receive EUR 21.1 million until 2019. In addition,
as a result of a significant decrease in the market price of greenhouse gas
emission allowances during January–September 2016, the Company recognised the
loss amounting EUR 6.8 million incurred due to the change in the value of
emission allowances and the right to receive emission allowances as accounted
for. 

The Company’s interim consolidated financial statements and interim report for
January–September 2016 will be published on 30 November 2016. 


         Valentas Neviera, Head of Corporate Communication Division of Lietuvos
Energijos Gamyba, AB, phone +370 670 25997, email: valentas.neviera@le.lt