Performance and Results in 2017 Lietuvos Energijos Gamyba, AB (LEG) - - PowerPoint PPT Presentation

Presentation of the Company‘s Performance and Results in 2017

Lietuvos Energijos Gamyba, AB (LEG)

Eglė Čiužaitė 28/2/2018 Vilnius

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Table of Contents

About the Company Overview of 2017:

The most important events of Q4 2017 The most important achievements in 2017 Trade and commodities market overview LEG production amounts LEG financial results

Plans for H1 2018 Your questions Presented by EGLĖ ČIUŽAITĖ Chairwoman of the Board and CEO Moderated by VALENTAS NEVIERA Head of Communication

Planned duration: 20 minutes + Your questions

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LEG provides services that are necessary for the energy system security

ELEKTRĖNAI COMPLEX KRUONIS PSHP KAUNAS A. BRAZAUSKAS HPP

Production of electricity and heat Commercial production of electricity Commercial production of electricity System services (main – tertiary reserve), strategic reserve System services (main – secondary reserve) System services Capitalization 29/12/2017

€ 396

million Shareholder structure

96.75% - Lietuvos Energija, UAB 3.25% - minority shareholders

Minority shareholders – approximately

5 900

LE

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The most important events of Q4 2017

The test of restoring Lithuanian electricity system after a black-out was successfully performed at Kruonis PSHP

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November

Preparatory works for the wind farm project in the territory of Kruonis PSHP were completed

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November

The Government confirmed strategic reserve capacity for 2018 – 212 MW (supplied by the 8th unit of Elektrėnai complex)

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November

Decision to terminate the operation of the 7th unit in Elektrėnai complex, currently in conservation mode

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December

Contract on the secondary active power reserve supplied by the Kruonis PSHP in 2018 (400 MW) was signed

22

December

Contract on the tertiary active power reserve supplied by the combined cycle unit in 2018 (260 MW) was signed

22

December

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The most important achievements in 2017

TOP1

The most transparent company in the Lithuanian energy sector (and 7th place among 49 evaluated companies)

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New clients

21

thousand m2 Approximately 50% of the area and buildings no longer used for key activity is currently rented

TOP1

Kaunas A. Brazauskas HPP produced the highest annual electricity amount since the start of its operation

1.3

million € Financial value of the operational excellence efforts (value created due to the improvements (kaizens) suggested by employees)

€

9

Development and asset optimization projects were completed

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20 40 60 1 3 5 7 9 11 1 3 5 7 10 12 €/MWh

Wholesale electricity price in NP Lithuania

Peak (6-22 h) Off-peak (22-6 h) NP LT price (0-24 h)

Trade and commodities market overview

74% 76%

0% 20% 40% 60% 80% 100% 2016 2017 % of full demand

Electricity balance in Lithuania

Other Wind PP Kaunas A. Brazauskas HPP Kruonis PSHP Elektrėnai Complex 2016 2017

2016/2017 -3.7%

10 20 30 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 €/MWhA

Purchase price of gas

4 6 8 10 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 €/t CO2

Price of CO2 emission allowances (EUA)

2016/2017 +7.3%

Source: Energijos tiekimas, Nord Pool, Company‘s accounting information, eex.com Remark: gas price – without taxes for user capabilities and without constituent for security of LNGT.

2016 2017 2016 2017

31/12/2016 / 31/12/2017 +23.5%

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In 2017, more power was produced in hydroelectric power plants. Reserve services were reliably provided by all power plants

491 517 363 139 549 459

100 200 300 400 500 600

Elektrėnai Complex Kruonis PSHP Kaunas A. Brazauskas HPP GWh Quantity of generated and sold power of LEG power plants 2016 2017

98.8%

availability

96.2%

availability

86.7%

availability

• The availability indicator shows the time over the calendar year when power plants generated or were fully ready to

generate power (including scheduled repairs).

• The availability of the Kaunas A. Brazauskas HPP was lower in 2017 due to the repair works on the 110 kV

switchyard of the transmission system operator.

• 72%

+26% +6%

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55.9 70.2 3.7 4.1 40.4 41.2 47.1 36.3 21.2 25 50 75 100 125 150 175 200 2017 2016 € MLN

LEG revenue

Revenue of sales of electricity energy and related services Revenue of sales of heat production Revenue of sales of capacity reserve services Subsidies for strategic reserve Revenue from other operations 26.3 26.4 32.2 50.0 25.0 20.6 8.1 7.5

5.5 5.5

• 1.6

2.7

31.8 6.3 10.0

• 5

20 45 70 95 120 145 2017 2016 € MLN

LEG expenses

Purchases of electricity or related services Gas, biomass and heavy fuel expenses Depreciation and amortisation Wages and salaries and related expenses Repair and maintenance expenses Emission allowance revaluation expenses Impairment of other non-current assets Other expenses

Total: € 172.9 MLN Total: € 149.8 MLN (-13%) Total: € 123.9 MLN Total: € 133.6 MLN (+8%)

Revenue decreased due to one-off sale of trading activities in 2016, expenses increased due to the impairment of the units‘ no. 7-8 asset value in Elektrėnai complex

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LEG 5-year trend: though revenue decreased, LEG maintains sustainable profitability

315 233 214 173 150

60 120 180 240 300 2013 2014 2015 2016 2017

€ MLN

Revenue

60 64 50 64 54 19 27 23 37 36

10 20 30 40 10 20 30 40 50 60 70 2013 2014 2015 2016 2017

% € MLN

Adjusted* EBITDA and adjusted EBITDA margin

Adjusted EBITDA Adjusted EBITDA margin

27 33

• 0.2

40 21 31 37 33 34 30

• 1

10 20 30 40 2013 2014 2015 2016 2017

€ MLN

Net profit

Net profit Net profit after the adjustments on EBITDA, plus the elimination of the impact of asset impairment, EUA market price change and sale of business

43.4 42.0 2.7 40.0 10.8 8.9

10 20 30 40 50 2013 2014 2015 2016 2017

€ MLN

Dividends (for the year)

*EBITDA was adjusted due to the one-off effects of regulator‘s decisions. **2013-2015 indicators were not recalculated.

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Plans for H1 2018: production and services

Maximising the generation in the Kaunas A. Brazauskas HPP based on weather conditions Utilisation of the residual power of the CCU in the market (besides provision of the tertiary reserve service) Reliable provision of the reserve service and prompt

• perations if necessary

during the NordBalt maintenance in summer Performing the refurbishment

• f unit 2 of Kruonis PSHP

successfully Attracting new clients

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Plans for H1 2018: projects and research

The wind farm project in Kruonis PSHP

Pause of waiting for policy regarding the support schemes of RES development

The unit 5 development project in Kruonis PSHP

Partial funding from the EU funds for the research on poles and infrastructure was granted in January 2018 (€ 62.5 thousand) Pause to waiting for the regional decisions regarding the selected synchronization model

Asset optimization projects

In progress: dismantling of units no. 5-6 of Elekrėnai Complex and other

• ptimization

projects The project of dismantling 2 chimneys of Elektrėnai Complex was initiated in February 2018

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Thank You. Your questions?