Energijos Skirstymo Operatorius AB - Interim information

ESO 2017 Q1 results: operational efficiency continues to grow as prices of services decline

Energijos Skirstymo Operatorius AB, identification code 304151376, registered
office placed at Aguonu str. 24, Vilnius, Republic of Lithuania. The total
number of registered ordinary shares issued by company is 894 630 333; ISIN
code LT0000130023. 

Electricity and gas distribution company Energijos Skirstymo Operatorius, AB
(hereinafter – ESO or the Company), which is a part of the largest Lithuania’s
energy group Lietuvos Energija, UAB (hereinafter – Lietuvos Energija), the year
of 2017 started with reduced prices of services for customers. Since January
2017 the price of electricity for residents fell by an average 5%. Meanwhile
the price of natural gas distribution service dropped for the first time since
the 2012. 

Further increasing operational efficiency of ESO helped to ensure favourable
prices for customers. The company’s operating expenses during the first quarter
of 2016 amounted EUR 21.7 million - 12.6% less compared to January-March of
2016, when it amounted EUR 24.9 million. 

"We began the year of 2017 with reduced prices of services. We continue to look
for measures to increase efficiency and save operational costs. It has a direct
impact on the cost of services and create additional value for customers," -
says Chairman of the Board and CEO Dalia Andrulionienė. 

During January-March of 2017 the net profit of ESO amounted to EUR 28.5 million
– 7.5% lower than during the same period of 2016 when it amounted to EUR 30.8
million. Net profit decreased due to lower revenue. 

ESO revenue during January-March of 2017 amounted to EUR 168.5 million – 7.6%
lower compared to the same period of 2016, when it amounted to EUR 182.5
million. Revenue decreased due to lower prices of electricity transmission and
public supply services, lower price of natural gas distribution services for
clients of ESO. 

During January-March of this year ESO allocated 2.455 billion kWh of
electricity and 2.8 billion kWh of natural gas - respectively 3.4% more and
2.9% less compared to the same period of 2016. 

During three months of this year ESO investments in the electricity and gas
distribution networks amounted to EUR 23.175 million – 28.4% more than during
January-March of 2016, when investments reached EUR 18.053 million. Major part
of the investment – almost EUR 12.412 million – was assigned to the renewal of
electricity distribution network. Investments in the electricity network
upgrade has improved the quality of service for more than 11.000 customers. 

During January-March of 2017 ESO EBITDA (Earnings Before Interest, Taxes,
Depreciation and Amortization) amounted to EUR 45.1 million – 7.8% less
compared to the same period of 2016. Adjusted EBITDA* on a comparable time
increased by 9.7% to EUR 46.9 million due to implemented investments of the
Company. 

During three months of 2017 electricity, natural gas purchase and related
services costs made up EUR 101.7 million and, compared to the same period of
2016, decreased by 6.5%. This was mainly influenced by lower electricity
purchase price. 

During three months of 2017 with the influence of natural disasters (“force
majeure”) the system average interruption duration index (SAIDI) per customer
amounted to 22.52 minutes. This is 13.45 minutes less compared to the same
period of 2016, when it amounted 35.97 minutes. The system average interruption
frequency index (SAIFI) with the influence of natural disasters per customer
during three months of 2017 reached 0.23 – 0.05 times less compared to the same
period of 2016, when it was 0.28 times. 

ESO shares are quoted on the Nasdaq Vilnius. The state-owned energy company
Lietuvos Energija owns 94.98% ESO shares, remaining shares are traded on the
stock exchange. 

The Company adjusted EBITDA due to the difference between the actual profit and
previous reporting periods profits, National Commission for Energy Control and
Prices (hereinafter - the Commission) for the corresponding periods of
permitted investment returns. The difference was due to the Company's effective
activity and other factors. 

The Company does not evaluate the Commission’s established incentive mechanism
to influence adjusted EBITDA, according which return on investment for 2016 and
2017 can be increased due to operational efficiency, which the Company will
have to justify to the Commission. 


         Representative for Public Relations Martynas Burba, tel. (8~5) 2514516.

Attachments:

ESO_report_2017_1Q.pdf

ESO presentation _2017_1Q.pdf