Lietuvos energijos gamyba, AB - Notification on material event

Preliminary pre-audited results of Lietuvos Energijos Gamyba, AB in Q1 2016

Elektrėnai, Lithuania, 2016-05-16 16:00 CEST (GLOBE NEWSWIRE) -- Lietuvos
Energijos Gamyba, AB (legal entity code 302648707, registered headquarters
address Elektrinės Str. 21, Elektrėnai, hereinafter referred to as the Company)
hereby announces preliminary pre-audited financial indicators of the Company in
Q1 2016: 

  -- According to preliminary pre-audited data, in Q1 2016 the sales revenue of
     the Company comprised EUR 33.46 million and was 10.1 per cent lower than
     the sales revenue in Q1 2015 (EUR 37.23 million).
  -- In Q1 2016, preliminary pre-audited earnings of the Company before
     interest, taxes, depreciation and amortisation (EBITDA) comprised EUR 9.56
     million and were 48.1 per cent lower than in Q1 2015 (EUR 18.41 million).
  -- Preliminary pre-audited net profit of the Company amounted to EUR 13.96
     million in Q1 2016, while in Q1 2015 net profit amounted to EUR 14.82
     million.

Q1 2016 was active for the Company: approximately 25 per cent more electricity
was generated in comparison with the same period last year (305 GWh and 247 GWh
respectively). Power plants managed by the Company ensured the steady supply of
electricity and contributed to the stabilisation of electricity prices when at
the exchange they were increasing because of particularly cold weather and the
disconnection of the cross-system power link to Sweden “NordBalt”, which
operates in trial mode. 

The generation results of all three power plants in Q1 2016 were better than
last year. As a result of higher water levels, generation at Kaunas Algirdas
Brazauskas' Hydroelectric Power Plant (Kaunas HPP) increased the most (by 22.6
per cent, up to 118 GWh). Generation of Kruonis Pumped Storage Hydroelectric
Plant (Kruonis PSHP) stayed at a similar level (153 GWh generated), while the
competitively operating combined cycle unit generated 34 GWh. During Q1 2015,
no electricity was generated in Elektrėnai. 

However, a part of the results of the Company’s commercial activity, according
to the decision of the National Commission for Energy Control and Prices (NCC),
was allocated for reducing the revenue of public service obligations (PSO)
allocated to the Company: it is estimated that, without the influence of the
NCC decisions, EUR 5.8 million would be added to the Company’s EBITDA. Most of
this amount (EUR 4.8 million) is a share of profits generated by the commercial
activity of Kruonis PSHP and Kaunas HPP, which, according to the NCC decision,
is currently used to cover the fixed costs incurred by the Company as a PSO
provider. 

As a reminder, the influence of the NCC decisions was not recorded a year ago,
in the reports of Q1 2015. In accordance with these decisions on the results of
inspecting the Company’s activity in 2010–2012 and on recognising the Company
as a particularly important company on the market of electricity generation,
proceeds from funds of public service obligations (PSO) allocated to the
Company and power reserve securing services are decreasing, i.e. the share of
proceeds from regulated activity is not recognised. The Company does not
include these proceeds in the financial reports in compliance with the
auditors’ recommendations; however, it continues actively defending its
position regarding the recognition and seeks to cancel the aforementioned
decisions of the NCC in court. 

The result of selling the wholesale electricity trade business share had a
major positive impact on the net result of the Company in Q1 2016. As a
reminder, Energijos tiekimas UAB, which purchased this business share, will pay
the Company EUR 13.1 million in cash in instalments till 31 March 2017.
Additionally, EUR 8 million (EUR 2 million per year) may be paid depending on
the results of the sold activity during the period of time till 2019. The
overall final transaction sum, if all conditions provided for in the contract
are fulfilled, may amount to EUR 21.1 million. However, the sale of the
wholesale electricity trade business share negatively influenced the Company’s
EBITDA because after the sale of this business share on 1 January 2016 the
Company no longer receives proceeds from the trade in financial derivatives. 

Interim financial statements and the interim report of the Company for Q1 2016
will be published on 31 May 2016. 


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