Lietuvos energijos gamyba, AB - Notification on material event

Preliminary pre-audited results of Lietuvos energijos gamyba, AB, over the course of twelve months in 2016: more efficient activity allowed to counterbalance the loss of revenue and to operate more profitably

Elektrėnai, Lithuania, 2017-01-31 15:00 CET (GLOBE NEWSWIRE) -- Lietuvos
energijos gamyba, AB, legal entity code 302648707, registered head office
address Elektrinės Str. 21, Elektrėnai (hereinafter referred to as the
Company). The total number of registered ordinary shares issued by the Company
is 635 083 615, ISIN code – LT0000128571. 

The Company hereby announces the preliminary pre-audited financial indicators
of the Company over the course of twelve months in 2016: 

  -- According to preliminary pre-audited data, in 2016 the sales revenue of the
     Company comprised EUR
151,76 
million and was 
25,3 
per cent lower than the sales revenue in 2015 (EUR 203.10 million).
  -- In 2016, preliminary pre-audited earnings of the Company before interest,
     taxes, depreciation and amortisation (EBITDA) comprised EUR
58,00 
million and were 
15,4 
per cent higher than in 2015 (EUR 50.27 million).
  -- Preliminary pre-audited net profit of the Company in 2016 comprised EUR 
39,79 
million. In 2015, net loss of the Company comprised EUR 0.23 million.

The cancellation of the supported electricity production quota as of the
beginning of 2016 was the main reason for the loss of revenue of the Company.
For this reason, the Elektrėnai complex produced 0.491 TWh of electricity in
2016, i.e. 54 per cent less than in 2015 (1.067 TWh). As a result of decreased
production, variable costs incurred by the Company were significantly reduced
(-43 per cent) as well. In addition, due to efficient organisation and
performance of repair works and constant improvement of processes for
operations, the Company managed to significantly reduce operating costs as
well. Costs reduction in the Elektrėnai complex, which met public service
obligations (PSO) and provided the tertiary active power reserve service in
2016, amounted to almost 10 per cent, which grants direct benefits to
electricity consumers because it contributes to the electricity rate reduction. 

The professionalism of the Company’s employees and their ability to adapt in a
flexible way to a rapidly changing market situation helped to use the most
efficient device Combined Cycle Gas Turbine unit (CCGT) in the Elektrėnai
complex when it was particularly necessary to contribute to the stabilisation
of electricity prices on the wholesale market. In 2016, the CCGT was switched
on as many as 58 times. In comparison, throughout 2015 it was switched on only
14 times. Produced competitive electricity by CCGT was sold on the market and
over the year it has allowed to earn nearly EUR 6 million gross profit which
will be given to the PSO tariff reduction for consumers. 

As the market situation changed, hydroelectric power plants managed by the
Company operated more efficiently and flexibly; after the launch of the new
links to Sweden and Poland, the plants were faced with stronger competition. In
2016, Kaunas Algirdas Brazauskas' Hydroelectric Power Plant produced 0.363 TWh
or 32 per cent more electricity than in 2015 (0.273 TWh). Production at Kruonis
PSHP decreased by 22 per cent (from 0.665 TWh to 0.517 TWh); however, this
power plant played a particularly important role in ensuring the safety of
electricity supply when the operation of the “NordBalt” link was unstable. When
the link was disconnected, particularly in the first half of 2016, Kruonis PSHP
was the first to provide help: the emergency reserve of this power plant was
activated 57 times in 2016 (20 times in 2015). 

The increased scope of the secondary reserve service in 2016 improved the
EBITDA result of the Company’s regulated activity, while the EBITDA indicator
of commercial activities of the hydroelectric power plants, despite increased
competition, was similar to 2015. However, the change in the Company’s EBITDA
in 2016 in comparison with 2015 was substantially affected by the decisions of
the   National Commission for Energy Control and Prices (NCC) related to the
inspection of the Company’s activity in 2010–2012 and its recognition as very
influential on the electricity production market. As a result of these
decisions, financial reports of the Company in 2015 did not acknowledge a part
of regulated activity income and this had a negative impact of EUR 15.9 million
on the EBITDA indicator of the Company. Meanwhile, the same decisions in 2016
had a negative impact of EUR 5.6 million on the financial reports. As announced
before, on 17 October 2016 the Supreme Administrative Court of Lithuania
cancelled the resolution of the NCC according to which the Company was
recognised as an entity with significant influence on the electricity
production market and according to which the revenues from commercial
activities of the Company were regulated. 

The net profit of the Company in 2016 exceeded the profit from 2015 due to
higher EBITDA and the impact of one-off factors: the sale of a part of the
business at the beginning of 2016 (the recorded result before tax was EUR 19.8
million) and the reduction of the assets value recorded in 2015 related to the
decision to terminate the operation of units 5 and 6, which caused a reduction
of the net profit by EUR 30 million in 2015. 

The annual report and statements of the Company on twelve months in 2016 will
be available on 28 February 2017. 


         Valentas Neviera, Head of Corporate Communication Division, tel. +370
670 25997, e-mail. valentas.neviera@le.lt