Energijos Skirstymo Operatorius AB - Half-Yearly information

ESO 2017 six months results: investments in renewal and development of networks up by 45%

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), continues to increase its investments in renewal and development of electricity and gas distribution networks. Most of all - even 50% - increased investments in the renewal of the electricity network and increase of its reliability.

During six months of this year ESO investments in the electricity and gas distribution networks amounted to EUR 74.14 million – 44.7% more than during the same period of 2016, when investments reached EUR 51.24 million. Major part of the investment – almost EUR 38.56 million – was assigned to the renewal of electricity distribution network. In order to increase the electricity distribution network reliability during the first half of this year ESO laid down 645 km of underground electricity cables. Altogether 2,662 km of low and medium voltage overhead lines with underground cables are planned to replace in 2017. This is 2.6 times more than in 2016.

Having increased operational efficiency, ESO since July 1^st for the second time this year reduced the prices of natural gas distribution services by 5.7% on average. The company’s operating expenses during the first half of 2017 amounted EUR 44.2 million - 9.72% less compared to the same period of 2016, when it amounted EUR 48.96 million.

"This year we continue a consistent improvement of the quality of services and increase of operational efficiency. By better understanding customers’ needs and digitising processes we provide services in a more rapid and convenient manner. New services offered to customers save their time and cause less trouble. Operational efficiency and service reliability will be further improved by the modernisation of electricity and gas distribution networks. We are increasingly investing in the renewal of our electricity network, thereby increasing its resilience to natural occurrences" - says Chairman of the Board and CEO Dalia Andrulionienė.

During January-June of 2017 the net profit of ESO amounted to EUR 46.3 million – 13% lower than during the same period of 2016 when it amounted to EUR 53.22 million. Net profit decreased due to lower revenue.

ESO revenue during the first half of 2017 amounted to EUR 307.79 million – 7.8% lower compared to the same period of 2016, when it amounted to EUR 333.95 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 the first half of this year ESO allocated 4.62 billion kWh of electricity and 4 billion kWh of natural gas – respectively 2.9% more and 1.78% more compared to the same period of 2016.

During January-June of 2017 ESO EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) amounted to EUR 76.6 million – 12.67% less compared to the same period of 2016 when it amounted EUR 87.71 million. Adjusted EBITDA* on a comparable time increased by 4.54% to EUR 75.28 million due to implemented investments of the Company.

During first half of 2017 with the influence of natural disasters (“force majeure”) the system average interruption duration index (SAIDI) per customer amounted to 63.79 minutes. This is 51.14 minutes less compared to the same period of 2016, when it amounted 114.93 minutes. The system average interruption frequency index (SAIFI) with the influence of natural disasters per customer during three months of 2017 reached 0.6 – 0.06 times less compared to the same period of 2016, when it was 0.66 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.

         Head of Communications Unit Martynas Burba, tel. +370 626 36 952.

Attachments:

Interim report 6 months of 2017.pdf

ESO presentation.pdf