Lietuvos energijos gamyba, AB - Interim information

CORRECTION: “Lietuvos energijos gamyba” was increasing the operating efficiency and the value of the company in 2014

The proofreading mistake has been corrected in the header of the Condensed
interim statements of comprehensive income of the unaudited Consolidated and
Company's condensed interim financial information for the year 2014 in
Lithuanian and English. 
Minor inaccuracies of translation into English have been corrected in the
Consolidated Interim Report in English. 
Neither the data in the Consolidated and Company's condensed interim financial
information nor the overview of business development and operations in the
Consolidated interim report have been modified. 

Elektrėnai, Lithuania, 2015-03-02 15:05 CET (GLOBE NEWSWIRE) -- Electricity
generation and trade company “Lietuvos Energijos Gamyba” (hereinafter referred
to as the Company) carried out successful operations in pursuit of its
long-term strategy's goals. According to the unaudited data, the consistent
increase of commercial profitability and reduction of operating costs resulted
in the company's earnings before interest, taxes, depreciation and amortisation
(EBITDA) amounting to LTL 221,1 million in 2014. The unaudited result of the
“Lietuvos Energijos Gamyba” Group (hereinafter referred to as the Group) was
LTL 219,2 million. "In the beginning of the last year, when discussing the strategic directions of
the company until 2020, we emphasised the importance of increasing the value
and operating efficiency of the company, of ensuring provision of high-quality
services, and of building values-based corporate culture. Today, I can firmly
say to the company's shareholders, partners, customers and the general public
that the very first year of the implementation of the updated strategy has
already justified the major expectations concerning staff's professionalism and
determination to work responsibly in pursuit of the set goals", said CEO and
Chair of the Board of “Lietuvos Energijos Gamyba” Juozas Bartlingas. 

The Company's sale earnings in 2014, according to the unaudited data, decreased
by 26%, i.e. from LTL 1079,6 million down to LTL 797,9 million, if compared to
2013. There were two main reasons of the decrease. First of all, the change in
the trading principle in 2014 resulted in almost 2.9 times smaller sales of the
Company to LESTO (from 2,393 TWh in 2013, down to 0,832 TWh in 2014). Second
reason, which had major impact on the Company's earnings reduction, was
decrease in electricity generation by nearly one fifth in Elektrėnai Complex
and Kaunas Algirdas Brazauskas' Hydroelectric Power Plant. 

The situation on the electricity market in 2014 was stable, thus differently
from 2013, when over-quota electricity was generated in Elektrėnai in order to
ensure power supply in autumn, last year electricity production in Elektrėnai
was according to the schedule agreed with the transmission system operator -
mainly in the efficient new combined-cycle unit, during the warm season and
without exceeding the quota established by the Government. The quota of 0,9 TWh
was established for 2014, while the actual production was 0,857 TWh
electricity. In 2013, Elektrėnai generated 25.7% more electricity, i.e. 1,077
TWh, though the quota remained unchanged. While, Kaunas A. Brazauskas'
Hydroelectric Power Plant, producing purely green Lithuanian energy, generated
smaller volumes in 2014 because of dry weather and consequently decreased
inflow of the River Nemunas. Production rates of the plant varied from 0,409
TWh in 2013 down to 0,317 TWh in 2014 (22.5% decrease). "Decrease in Company's earnings caused by the shrinking electricity generation
in Elektrėnai  and growing competition on the exchange is projected by us also
in the long-term strategy of the “Lietuvos Energijos Gamyba”. At the same time
it stipulates growing value and profitability of the Company through
strengthening of the competition in the commercial activities, better use of
the capacities that may produce competitive electricity", added Mr. Bartlingas.
According to him, Kruonis Pumped Storage Hydroelectric Plant showed very
effective operation in this respect in 2014, with the increase in its
production volumes by 39.3% if compared with 2013.  The plant produced 0,661
TWh electricity, which is 0,187 TWh more than in 2013. 

Thus, despite all three power plants producing 6.4% less electricity together
in 2014 if compared with 2013 (1,960 TWh and 1,835 TWh, respectively), good
results were achieved. The Company's sale volumes on the free market were
growing by 21.7% (from 1,328 TWh in 2013 up to 1,616 TWh in 2014), while
effective generation in Eletrėnai and professional trading activities resulted
in 31.8% decrease in costs (from LTL 981,4 million in 2013 down to LTL 669,3
million in 2014), the value of the tradable pollution allowances available was
growing (the price changed from EUR 4,91 in the end of 2013 up to EUR 7,2 by
the end of 2014). All these factors determined good profitability rates of the
Company and the entire “Lietuvos Energijos Gamyba” Group (hereinafter referred
to as the Group). 

The unaudited EBITDA of the Company in 2014 amounted to LTL 221,1 million,
which was 6.4% higher than in 2013 (LTL 207,9 million), while the net profit
from sustained activities was growing by 13.8% (from LTL 94,4 million in 2013
up to LTL 107,4 million in 2014). The increase of the value of the tradable
pollution allowances that started in the second half of 2014 made positive
impact on the Company's yearly profitability rates, which according to the
unaudited data amounted to LTL 19,7 million (the decrease in TPA's value in
2013 resulted in LTL 15,9 million loss). 

The total earnings of the Group in 2014 reached LTL 866,2 million and were
27.8% smaller than in 2013 (LTL 1,199,4 million), its expenses dropped down by
31.6% (from LTL 1,076,7 million in 2013 down to LTL 736,8 million in 2013). In
2014, the Group's EBITDA margin was 25.3%. If compared with the same period in
2013, the EBITDA margin increased by 5.4% (from 19.9 %). The Group's EBITDA in
absolute value decreased from LTL 239,3 million down to LTL 219,2 million. The
net profitability of the Group increased by 2.2%: the net profitability rate in
2013 was 9.1%, while in 2014 - 11.3%. During 2014, the Group's net profit from
the sustained activities was LTL 98,1 million or 9.7% smaller than during the
same period in 2013, when the net profit was LTL 108,6 million. 

The year 2014 was the year of challenges for the Company and the whole Group in
terms of both making adaptations to the changing market conditions and
implementing the important development project of new heat generation
facilities in Elektrėnai. Staff's involvement and responsible work together in
pursuit of the best result contributed to the timely completion of
decommissioning of the units 3 and 4 of the reserve power plant, while 2015
witnessed taking of the units 1 and 2 out of operation and starting their
decommissioning", said J. Bartlingas. 

Bigger volumes of electricity generation have been planned in Elektrėnai for
this year, following approval of bigger supported electricity generation quota
(1,1 TWh), the production cost price in the combined cycle unit will drop even
further. Thus, through using the most efficient capacities, refusing the ones
that are no longer in operation and investing into refurbishment of the other
capacities, the Company is planning to achieve the set goals and to ensure the
return to its shareholders. At the same time, the Company will be further
aspiring to make successful contributions to the reduction in the budget of the
public interest services (PIS), thus creating a possibility of cheaper
electricity for consumers. 

The Head of “Lietuvos Energijos Gamyba” noted that the Company will remain
being one of the main links guaranteeing national energy security and will
firmly aspire just assessment of the Company's activities, taking into
consideration actual market conditions, clauses of all effective legal acts and
previously adopted regulatory decisions. 

Further information on the regulated and commercial activities

During 2014, the Group's incomes from the regulated activities decreased by
11.9%, from commercial - by 39.8%. Incomes from the commercial activities in
2013 accounted for 57% of the total incomes, while in 2014 it dropped down to
47.4%. 

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. Incomes from these activities were decreasing by LTL
516,2 million in the course of 2013, down to LTL 455 million in 2014. As it was
mentioned before, the decrease in the regulated activity incomes was caused by
smaller and more effective production in Elektrėnai complex. The Company has
already announced saving of LTL 168 million of the PIS funds in the period of
two years, since the combined-cycle unit has been launched, i.e. that is the
amount that would have been needed if the old units in Elektrėnai stayed in
operation. 

Incomes from commercial activities, comprising of electricity generation in
Kruonis PSHP and Kaunas HPP as well as electricity wholesale and retail on the
free market and other commercial services, dropped down from LTL 683,2 million
in 2013 to LTL 411,2 million in 2014. The main cause of such decrease was the
change in the principle of electricity sale to LESTO, which resulted in 65.2%
less electricity sold to LESTO. (from the beginning of 2014, LESTO buys
exclusively subsidised electricity generated in Elektrėnai complex from
“Lietuvos Energijos Gamyba”). While electricity sales by the Group on the free
market, as it was mentioned before, have been growing by more than one fifth. 


“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
Algirdas Brazauskas' Hydroelectric Power Plant, as well as Energijos Tiekimas
UAB, UAB “Kauno energetikos remontas”. 


         Valentas Neviera, Head of Corporative Communication Division of
Lietuvos Energijos Gamyba, AB, phone 8 619 62019, email: valentas.neviera@le.lt

Attachments:

LEG Consolidated and Companys condensed interim financial information and consolidated interim report for the year 2014_cor 2015-03-02.pdf