Energy, Investments, Latvia

In the first half of 2015, Latvenergo Group revenue amounted to EUR 474.1 million, which is 13% less than in the respective period of 2014. The decrease in revenue was determined by discontinuation of recognizing the mandatory procurement public service obligation fee income in the revenue of Latvenergo Group along with the entrance into operation of the joint-stock company Energijas publiskais tirgotajs as of April 1, 2014.

Latvenergo Group's EBITDA and profit increased 22% and 46%, respectively, and constitute EUR 177.8 million and EUR 61.7 million respectively. Investments amounted to EUR 79.3 million. In June, the joint-stock company Latvenergo issued green bonds in the nominal amount of EUR 75 million.

The higher profit is, in part, thanks to the opening of electricity market to households as of January 1, 2015. Until then, Latvenergo supplied electricity to households at regulated tariffs which were below the market price. In the first half of last year, the loss of revenue from supply of electricity at regulated tariffs in Latvia constituted EUR 21.1 million.

In the first half of 2015, Latvenergo Group retained its leadership in retail electricity supply in the Baltics. The market share of Latvenergo Group is approximately one-third of the total Baltic electricity retail market. The number of customers in Lithuania and Estonia, compared to the respective period last year, has increased 9%. In total, retail electricity supply in the Baltics reached 3,934 gigawatt-hours (GWh). The amount of electricity supplied in Lithuania and Estonia constituted 1,250 GWh, which is 50% more than the competing electricity traders have supplied in Latvia.

In the first six months of 2015, Latvenergo Group power plants generated 1,931 GWh of electricity and 1,395 GWh of thermal energy. Compared to the respective period last year, the amount of electricity generated at Daugava hydroelectric power plants (HPP) increased 7% reaching 1,461 GWh. However, the output of electricity generated at Riga combined heat and power plants (CHPP) was by 271 GWh lower than in the first six months last year and constituted 443 GWh. The decrease in the electricity output was mainly determined by the decrease in electricity price.

The total investments in the first six months of 2015 were by 23% higher than in the respective period last year and constituted EUR 79.3 million. Investments in the distribution and transmission system network assets accounted for 61% or EUR 48.6 million of all investments, thereby improving the quality of services, technical performance indicators and operational safety of the network. EUR 18.3 million has been invested in the reconstruction of hydropower units of Daugava HPPs. Also, in May 2015 an agreement with the European Commission Innovations and Networks Executive Agency was concluded on construction of the final stage of the transmission network project Kurzeme Ring, Ventspils-Tume-Riga, stipulating 45% EU co-funding of eligible project costs.

Within the borrowed capital sourcing plans and for the purpose of diversification of Latvenergo Group borrowing sources, on June 10 Latvenergo issued green bonds in the nominal amount of EUR 75 million. The issue was carried out under the second bond offering program in the total amount of EUR 100 million. The attracted capital is invested in environmentally friendly projects. On August 3, the international credit rating agency Moody's Investors Service assigned a credit rating "Baa2" (stable) to the green bonds issued by Latvenergo.