In 2016, state-owned group of electricity transmission and exchange enterprises EPSO-G generated net profit of EUR 39.1 million, while in 2015, its profit was EUR 12.2 million. The best financial result witnessed since the group started its activities was largely determined by an increase in income from electricity and natural gas transmission, volume of balancing services and launch of cross-border links that allowed increasing competition and liquidity on the wholesale market.
These results of EPSO-G group were approved by the General Meeting of Shareholders on 28 April. The Meeting, furthermore, approved audited consolidated financial statements and annual report for 2016. The audit was carried out and the auditor’s report was presented by PricewaterhouseCoopers, UAB.
Targeted activities
According to Rolandas Zukas, CEO of EPSO-G, all enterprises directly controlled by the group generated profit in 2016, and return on equity of the group was the highest among state-owned energy enterprises. The major part of the last year’s profit will be used to cover liabilities to the state-owned enterprise Lietuvos Energija for the shares of the subsidiary Litgrid.
“2016 was highly constructive year for the group of electricity transmission and exchange enterprises EPSO-G: energy consumption was growing with the growing Lithuanian economy. Electricity grid connection between Lithuania and Sweden paved the way for a new flow of cheaper electricity to Lithuania and the neighbouring countries. LNG terminal has created genuine competition against the main supplier from the East, while open biofuel trading platform has become the most important space for fair competition among suppliers.
All of this had a positive impact on the income and financial results of EPSO-G enterprise group and, most importantly, on lower energy prices to the residents and businesses in both Lithuania and the neighbouring countries. Stable financial situation of enterprises controlled by the group allows us to continue activities in the fields of electricity synchronization, gas infrastructure integration and market development in the Baltic, Nordic countries and Poland as planned in the five-year strategy of the group,” says R. Zukas.
Income and expenses
In 2016, income of the consolidated EPSO-G group was EUR 234.5 million or 50 percent more than in 2015.
Compared to 2015, income from electricity transmission increased by 34.8 percent to EUR 68 million and accounted for 29 percent of the total income of the EPSO-G group. Such growth was primarily the result of the highest amount of electricity consumed since 1992: 10.47 terawatt hours (TWh), the transmission tariff and the launch of NordBalt and LitPol links.
Income from natural gas transmission was EUR 59.9 million. Compared to 2015, it increased by 20.1 percent and accounted for 25.5 percent of the total income of the group. Increase in income from natural gas transmission was largely the result of the diversification of gas supply sources: the ordered transmission capacities at several entry points and an increased demand for short-term transmission capacities.
In 2016, the group incurred expenses of EUR 189.6 million (EUR 49.4 million more than in 2015). The main reasons of such an increase in expenses were costs of electricity and related services incurred due to the launch of new grid links with Sweden and Poland, and increased depreciation costs resulting from the completed gas and electricity infrastructure projects.
Operating result
In 2016, the audited earnings of the consolidated EPSO-G group before interest, tax, depreciation and amortization (EBITDA) were EUR 90.5 million. Compared to 2015, EBITDA increased by 61.7 percent. The group’s EBITDA margin increased to 38.6 percent (35.8 percent in 2015).
Net profit of the consolidated EPSO-G group increased to EUR 39.1 million (EUR 12.2 million in 2015). Therefore, the return on equity (ROE) increased from 6.2 percent in 2015 to 17.7 percent.
In line with the electricity transmission price policy applicable in Lithuania, the profit of the EPSO-G group exceeding the amount provided for in the regulations will allow reducing prices to residents and businesses in 2018.
On 31 December 2016, the value of assets of the EPSO-G enterprise group was EUR 1,093.4 million. Seven enterprises controlled by the EPSO-G group had 1,078 employees.