Lietuvos energijos gamyba, AB - Notification on material event

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

Elektrėnai, Lithuania, 2016-08-16 15:03 CEST (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–June 2016: 

  -- According to preliminary unaudited data, in January–June 2016 the Company’s
     sales revenue was EUR 69.15 million, which is 29.5% smaller than in
     January–June 2015 (EUR 98.03 million).
  -- Preliminary unaudited profit before interest, tax, depreciation and
     amortisation (EBITDA) of the Company for January–June 2016 was EUR 21.66
     million (the one-off effect of sale of a part of business activities is not
     evaluated), which is 23.5% less than for the period of January–June 2015
     (EUR 28.33 million).
  -- Preliminary unaudited net profit of the Company earned in January–June 2016
     was EUR 17.79 million, while net profit in January–June 2015 was EUR 19.26
     million.

The total amount of electricity generated in the power plants owned by the
Company that was sold during January–June 2016 was 0.637 TWh. Compared to the
same period in 2015, the total amount of electricity produced in all power
plants of the Company  decreased by 30.7% (from 0.919 TWh). 

This was largely due to discontinued quotas for subsidised electricity
production since 2016, therefore in January–June 2016 the electricity
production facilities of the Elektrėnai Complex were switched on during energy
consumption peak hours, i.e. when the price of electricity was the highest and
it was possible to make a competitive in the neighbouring countries electricity
production proposal. In almost all cases, this meant switching the
combined-cycle unit on in the morning and switching it off in the evening. As a
result, during January–June 2016 the unit was switched on as many as 30 times
(twice more than during the whole year 2015), but the amount of produced
electricity was 2.7 times less than in January–June 2015 (0.163 TWh and 0.445
TWh, respectively). In 2015, the combined-cycle unit operated almost
uninterruptedly from the middle of April until October. 

The sale of electricity produced at the Kruonis Pumped Storage Hydroelectric
Plant (Kruonis PSHP) was also slightly lower. The result for January–June 2016
was 0.271 TWh (January–June 2015 – 0.300 TWh). During the reporting period,
this Power Plant provided first aid to the energy system many times and
produced 41 GWh of electricity while providing the emergency capacity reserve
service. During January–June 2016, the emergency reserve of the Kruonis PSHP
was activated 40 times (throughout 2015 – only 20 times). A large part of the
capacity reserve activation cases was related to disconnections of the NordBalt
power interconnection between Lithuania and Sweden. 

During January–June 2016, the Kaunas Algirdas Brazauskas’ Hydroelectric Power
Plant (Kaunas HPP) produced 0.203 TWh of electricity, which is 16% more than
during the same period in 2015 (0.175 TWh). This Power Plant produced more
electricity due to a higher amount of water in the river Nemunas. 

However, the profitable operation of the power plants did not offset the
negative impact of the decisions of the National Commission for Energy Control
and Prices (hereinafter – NCC) on the Company’s performance results. The most
significant effect was due to the transfer of a part of the profit of the
commercial activities of the Kruonis PSHP and the Kaunas HPP (according to
preliminary calculations, in January–June 2016 it amounted to EUR 9.2 million)
to cover the Company’s fixed costs, incurred in the course of carrying out
regulated activities in the provision of public interest services. According to
preliminary calculations, if the impact of this and the other decision of the
NCC regarding the audit of the Company’s activities in 2010–2012 were removed,
the Company’s EBITDA would be EUR 11.1 million higher in January–June 2016 (in
January–June 2015, the impact of the above factors amounted to EUR 6.9
million). The Company further seeks the annulment of the above decisions of the
NCC in court. 

The Company’s net result for January–June 2016 was due to several key factors.
A positive factor was the sale of a part of electricity wholesale business
activities, for which, if all the terms and conditions laid down in the
contract are fulfilled, the Company may receive EUR 21.1 million by 2019. In
addition, as a result of a significant decrease in the market price of
greenhouse gas emission allowances during January–June 2016, the Company
recognised the loss amounting EUR 7.9 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–June 2016 will be published on 31 August 2016. 


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