Interim / Quarterly Report • Nov 23, 2017
Interim / Quarterly Report
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CONSOLIDATED INTERIM REPORT AND CONDENSED INTERIM CONSOLIDATED AND THE COMPANY'S FINANCIAL STATEMENTS, PREPARED ACCORDING TO INTERNATIONAL FINANCIAL REPORTING STANDARDS AS ADOPTED BY THE EUROPEAN UNION (UNAUDITED), FOR THE NINE-MONTHS PERIOD ENDED 30 SEPTEMBER 2017
| CONSOLIDATED INTERIM REPORT | |
|---|---|
| CONDENSED INTERIM FINANCIAL STATEMENTS | |
| STATEMENTS OF FINANCIAL POSITION | 23 |
| STATEMENTS OF COMPREHENSIVE INCOME | 24 |
| STATEMENTS OF CHANGES IN EQUITY | 26 |
| STATEMENTS OF CASH FLOWS | 27 |
| NOTES TO THE FINANCIAL STATEMENTS | 28 |
This Consolidated Interim Report has been prepared for the nine months of 2017.
| Legal form | AB (public company) |
|---|---|
| Business ID | 302564383 |
| Telephone | +370 707 02171 |
| Fax | +370 5 272 3986 |
| [email protected]; www.litgrid.eu |
Name LITGRID AB (hereinafter referred to as 'Litgrid' or the 'Company') Registration date and place 16/11/2010, Register of Legal Entities of the Republic of Lithuania Registered office address A. Juozapavičiaus g. 13, LT-09311, Vilnius E-mail [email protected]; www.litgrid.eu
Litgrid, Lithuania's electricity transmission system operator (the 'TSO'), maintains the stable operation of the national power system, manages electricity flows, and enables competition in the open market for electricity. Litgrid is responsible for the integration of Lithuania's power system into Europe's electricity infrastructure and the common market for electricity. The Company has implemented the strategic NordBalt (Lithuania–Sweden) and LitPol Link (Lithuania–Poland) power link projects. In our work toward strengthening the country's energy independence, we foster a culture of responsibility, rational creativeness, and dialogue.
Litgrid's mission is to ensure the reliable transmission of electricity and to enable competition in the open electricity market. Litgrid's vision is full integration of Lithuania's power system into Europe's electricity infrastructure and the common market for electricity, creating conditions for a competitive economy.
Litgrid's values are cooperation, respect, responsibility, professionalism, and initiative.
Litgrid's strategy is to ensure energy independence while creating value for the public.
As the backbone of the national power sector, Litgrid not only is responsible for the maintenance of the balance of the electricity used and produced in the system and the reliable transmission of electricity, but also implements strategic national electricity projects. Its vision and strategic operating guidelines are based on the long-term goals identified in the National Energy Independence Strategy. The Lithuanian TSO's most important operational areas and responsibilities include the maintenance of the country's electricity infrastructure and its integration with the Western and Northern European electricity infrastructure; development of the electricity market and participation in the creation of a common Baltic and European electricity market; and the integration of the Lithuanian and continental European electricity systems for synchronous operation.
EPSO-G UAB, a state-controlled company (100% of its shares are owned by the Ministry of Energy), has a 96.6% shareholding in Amber Grid AB, the gas transmission system operator, and a 97.5 % shareholding in Litgrid AB, the electricity transmission system operator. EPSO-G UAB also controls 67 % of the shares in Baltpool UAB, an operator of the Lithuanian energy resources' exchange; its subsidiary Amber Grid AB controls 66 % of the shares in GET Baltic UAB, an operator of the Lithuanian natural gas exchange. The said exchange operators seek to become regional platforms for the trading in energy resources.
Objectives of EPSO-G's corporate governance are to:
Main lines of Litgrid's activities are as follows:
Once Lithuania becomes a full and active participant of the European electricity system, European system management standards will be introduced in the electricity sector, and management of electricity flows will be based on market principles and participation the system's frequency maintenance. The aim is the Baltic countries' synchronous operation within continental European grids.
The integration of the Lithuanian electricity market into the Baltic and Nordic electricity market, and later into the common European electricity market, will ensure transparent wholesale electricity prices, competition, and freedom of choice for all market participants as well as equitable trade in electricity with neighbouring European states. Being part of a large electricity market will enable the most effective use of networks and generation infrastructure and for ensuring the security of electricity transmission.
Lithuania's electricity transmission grid is well-developed and reliably meets the needs of its customers. Since the end of 2015, the country's electricity transmission grid has been connected to Sweden and Poland via asynchronous power links (LitPol Link is a double-circuit power link) and to the electricity grids of Latvia as well as the neighbouring states in the east via 12 synchronous power links. NordBalt (with Sweden) and LitPol Link (with Poland) power links have connected, for the first time, Lithuania's power system to electricity grids of Northern and Western Europe. The electricity transmission grid operated and maintained by Litgrid enables trade in electricity between power systems and provides access to electricity markets rich in diverse energy resources. Optimal investments in the national grid ensure the integration of new electricity generators, the safe transmission of electricity, and the reliability of the system's operation.
Since September 2016, the Lithuanian Ornithologists Society (jointly with the Nature Fund of Lithuania) are working under the programme on monitoring the environmental impact of LitPol Link. During three years ornithologists are observing the areas that are crossed by the power link's route and in which valuable habitats or rare plant species have been found. Ornithologists are also studying birds' accumulations near the electricity line.
LitPol Link interconnection was available to the market 97% of the time throughout the nine months of 2017.
Nordbalt, one of the world's longest cables of this type, has considerably increased the security of energy supply to Lithuania and other Baltic States. NordBalt interconnection was available to the market 81% of the time throughout the nine months of 2017.
On 28 April 2017, an agreement on replacing all the underground sleeves connecting cables of NordBalt was announced. The agreement was concluded by and between Litgrid, the Lithuanian electricity transmission system operator, Svenska Kraftnät, the Swedish electricity transmission system operator, and ABB that had designed, manufactured and installed the cables. The replacement works are planned for 2018 after completion of tests of all the newly designed sleeves. The exact dates of start and completion of these works will be announced in Nord Pool's exchanges information system.
The Law on the Integration of the Power System of the Republic of Lithuania into the European Electricity Systems set the strategic objective to re-orientate the power system of Lithuania to synchronous operation with the continental European network. Full integration of Lithuania's power system into the European electricity infrastructure and common market for electricity, with the independent system control, is one of strategic objectives of Litgrid. Its attainment requires an understanding, harmonisation, and coordination of national and international interests.
The European Commission's Joint Research Study on Synchronization Alternatives was completed in March 2017. The results of the study once again confirmed the scenario of synchronization with continental European networks through the Polish electricity system, is the most effective in terms of technical, economical and reliability aspects of electricity supply.
During nine months of 2017 Litgrid carried out works under the following transmission network development projects:
Major procurement tenders in 2017:
International visibility of and support for projects implemented by Litgrid is ensured through participation in international associations, specifically, the European Network of Transmission System Operators for Electricity (ENTSO-E).
ENTSO-E (European Network of Transmission System Operators for Electricity) represents 42 electricity transmission system operators from 35 countries across Europe. Its main functions include: resolving European-level issues concerning transmission grid management and development and the electricity market; promoting regional collaboration among TSOs; making proposals for draft legal acts of the European Commission; and preparing the Ten-Year Network Development Plan (TYNDP) and network codes. Litgrid's representatives sit on the organisation's System Operations, System Development, Market, and R&D committees as well as the related working groups. Participation in ENTSO-E activities is aimed at representing national interests and those of Litgrid in the making of European and regional decisions related to system management, the planning and implementation of projects to develop Lithuania's electricity infrastructure, electricity market connections and electricity transmission systems' integration.
As of 30 September 2017, Litgrid group of companies consisted of Litgrid AB, Tetas UAB, and Litgrid Power Link Service UAB.
| Name | Tetas UAB | Litgrid Power Link Service UAB |
|---|---|---|
| Legal form | Private company | Private company |
| Registration date and place | 08/12/2005, Register of Legal Entities of the Republic of Lithuania |
24/02/2014, Register of Legal Entities of the Republic of Lithuania |
| Country of establishment | Republic of Lithuania | Republic of Lithuania |
| Business ID | 300513148 | 303249180 |
| Registered office | Senamiesčio g. 102B, LT-35116, Panevėžys |
A. Juozapavičiaus g.13, LT-09311, Vilnius |
| Telephone | +370 45 504 670 | +370 707 02094 |
| Fax | +370 45 504 684 | +370 5 272 3986 |
| Type of activities | Specialised services of transformer substations' and distribution stations' installation, maintenance, repair and testing; designing energy facilities |
Control and operation of the power system's links with the Polish and Swedish systems |
| Country of operation | Lithuania | Lithuania |
| Litgrid's shareholding | 100 % | 100 % |
| Name | LitPol Link Sp.z.o.o | Duomenų logistikos centras UAB |
Nord Pool AS |
|---|---|---|---|
| Country of establishment |
Republic of Poland | Republic of Lithuania | Kingdom of Norway |
| Registered office | ul. Wojciecha Gorskiego 9, 00-33 Warszawa, Poland |
Žvejų g. 14, LT-09310 Vilnius |
PO Box 121, NO-1325 Lysaker, Norway |
| Country of operation | Lithuania and Poland | Lithuania | Norway, Sweden, Finland, Denmark, Lithuania, Latvia, Estonia |
| Litgrid's shareholding | 50 % of shares and voting rights attached thereto |
20.36 % of shares and voting rights attached thereto |
2 % of shares and voting rights and a board member on rotation basis |
Litgrid, the electricity transmission system operator, provides the following services:
The electricity transmission service is the transmission of electricity over the high voltage (330 and 110 kV) electric installations. The transmission system operator transmits electricity from producers to customers that are connected to the transmission grid, and to distribution network operators. Electricity transmission is a regulated activity.
The main operations of the TSO consist in the management of the high voltage electricity transmission grid and ensuring a reliable, effective, high-quality, transparent and safe transmission of electricity.
In order to maintain reliable system operations, Litgrid purchases the services for the capacity reserve assurance at power generation facilities, reactive capacity and voltage management, and emergency and disruption prevention and response from energy generating companies, and provides customers with system (capacity reserve) services. The capacity reserve is needed when electricity production suddenly and unexpectedly falls or its consumption increases.
Litgrid secures the country's electricity production and consumption balance. Balancing electricity is electricity that is consumed or produced outside of established electricity consumption and production schedules. Litgrid organises trading in balancing electricity, buying and selling balancing electricity that is necessary to ensure the country's electricity production and consumption balance.
Regulating electricity is electricity that is bought and/or sold on instruction of the TSO as electricity necessary for performing the function of balancing the country's electricity consumption and production. Litgrid organises trading in regulating electricity by auction. The auction participants are suppliers of regulating energy and TSOs of other countries possessing technical facilities for quickly changing the electricity generation and consumption conditions and having concluded a relevant agreement with Litgrid.
Public service obligations (PSO) in the electricity sector are services that ensure and enhance the national energy security and the integration and use of electricity produced from renewable resources. The list of PSO, their providers, and procedures for the provision of PSO are approved by the Government of the Republic of Lithuania, or an institution authorised by it, having regard to the public interest in the power sector. PIS funds are funds that are paid to the PSO providers.
Litgrid provides the following PSO services:
Tetas, Litgrid's subsidiary, offers the following maintenance and repair services for electricity grid equipment:
On 24 February 2014, Litgrid's subsidiary Tinklo priežiūros centras UAB (renamed into Litgrid Power Link Service UAB from 29 April 2016) was established as a centre of competences for high qualification and specialised engineering areas in the management and operation of high voltage direct current (HVDC) power links.
Since the beginning of 2016, Litgrid Power Link Service has taken over the operation of LitPol Link, and since June 2016 – the operation of NordBalt as well.
Every year Litgrid prepares the power system's long-term development plans aimed at ensuring reliability of transmission network and improving the security of supply of electric power. The reconstruction of energy facilities involves the replacement of old equipment and the implementation of modern systems for relay protection, system automation, control, data collection and electricity accounting. Plans for the construction and reconstruction of facilities are made for a 10-year period and updated annually.
The TSOs of the three Baltic States conducted, jointly with consultants, a feasibility study on the application of the flow-based method in the calculation of cross-border capacities in the Baltic States' electricity markets. The study assessed the technical feasibility of applying this method, comparing the benefits provided by this method and its reliability with the methods and the reliability of the current methodologies for capacity calculation. Based on the results of network security, socio-economic and third-party impact analysis, it was found that the application of the flow-based method in the Baltic region is technically feasible, but would not be more effective than the current method. Based on the results of the study and in cooperation with the neighbouring transmission system operators the capacity calculation methodology for internal Baltic cross border capacities and cross border capacities with Poland, Sweden and Finland was developed and was presented to the national regulators of the concerned countries for approval.
A joint analysis of the long-term adequacy of the electricity system in the Baltic States, prepared in 2017 by electricity transmission system operators of Lithuania, Latvia and Estonia, showed that new reliable and flexible power plants must be installed in the Baltic region before 2030 in order to ensure the smooth operation of electric systems and reliable power supply.
A demand side response study is being conducted together with the distribution system operator ESO. It will help to find out the potential of electricity demand management in Lithuania. The study seeks to assess the potential positive role of electricity consumers in balancing the system and identifying possible instruments that enable it to operate.
Litgrid, along with the Estonian and Latvian TSOs is conducting a study on the possible model of demand side response market in the Baltic States.
Litgrid's direct customers are electricity transmission grid users and suppliers of balancing and regulating electricity. Transmission grid users include:
Suppliers of balancing and regulating electricity include electricity producers and suppliers.
As of 30 September 2017, Litgrid Group employed 653 people: Litgrid AB – 234, Tetas UAB – 389, and Litgrid Power Link Service – 30 employees.
Litgrid Group's wage fund in the reporting period amounted to EUR 8,051,000, Litgrid's wage fund – EUR 4,119,000
| Group | Litgrid | |||||
|---|---|---|---|---|---|---|
| Number of employees 30 September 2017 |
Average monthly pay, Eur |
Number of employees 30 September 2017 |
Average monthly pay, Eur |
|||
| General director | 3 | 6,745 | 1 | 9,383 | ||
| Top managers | 11 | 4,607 | 6 | 5,903 | ||
| Middle managers | 39 | 2,713 | 22 | 3,394 | ||
| Experts - specialists | 373 | 1,465 | 205 | 1,679 | ||
| Workers | 227 | 800 | - | - | ||
| Total | 653 | 1,387 | 234 | 1,983 |
The goal of Litgrid's remuneration policy is to contribute to the realisation of the mission and vision of the organisation that is being managed by modern and effective methods, to mobilise people for joint work and motivate them to implement the strategic priorities, to form and establish an attitude that employees are the company's main asset, and to foster the corporate values of professionalism, cooperation, responsibility, initiative, and respect. Remuneration depends on the employee's position, performance, achievement of individual annual goals, level of competencies, and adherence to the values of organisation. The remuneration policy is based on the principle that employees who create value added for the company and who work in accordance with corporate values are entitled to higher pay. The pay package consists of financial and nonfinancial elements: basic pay, variable part of pay, fringe benefits, and psychological reward.
Litgrid carries out an ongoing evaluation of employees' performance as one of the most important tools for an effective corporate governance that allows linking personal and organisational goals, showing the importance of each employee's work for the attainment of common objectives, making career planning possible, motivating employees, and providing an objective basis for incentives.
Litgrid enables its employees to develop their competences and qualifications by:
Litgrid concluded a collective agreement with the trade union operating in the company n 8 July 2013. The agreement was amended on 8 May 2017. The agreement stipulates a fair remuneration policy, balance between working and resting times, and social and economic relations between the employer and employee. It also contains provisions on support for employees at important/difficult moments in life. The collective agreement is valid until 31 December 2017.
Litgrid adheres to the principles of social responsibility, sustainable development, transparency, and advanced environmental protection in its activities. The company's operations form an integral part of the successful functioning of the national economy, while its long-term strategic goals and the strategic electricity projects it is implementing help secure the country's energy independence.
The importance of the projects being implemented requires that the company, its employees and management apply the highest professional and ethical standards and seek to contribute to the development of the society's responsibility and involvement in the improvement of social welfare. Litgrid's social responsibility policy is focussed on the ensuring of fair and motivating working conditions, development of responsibility and civic qualities, and assisting the community in which the company carries out its activities.
Litgrid constantly reminds its contractors working on the high-voltage grid about the necessary to comply with the safety at work regulations.
Procedures for environmental impact assessment or screening are carried out for the electricity transmission lines to be constructed and their conclusions are taken into account in the preparation of technical designs. Environmental protection requirements are set in the design specifications for the construction of new or reconstruction of existing transformer substations and switchyards. In all cases, efforts are made to select such equipment which is less harmful to the environment. For example, in the reconstruction of substations, oil-consuming equipment is replaced with modern gas equipment. This both reduces the risk of pollution in case of an accident and cuts equipment operating costs. Contractors are obliged to organise works so as to eliminate or reduce any impact on the environment and to present documents evidencing appropriate management of construction waste. In service procurement process, contractors are required to have the Environmental Management Systems according to LST EN ISO 14001 in place. When accepting completed works, contractors' compliance with the requirements is checked including the waste management and the relevant documentation.
Monitoring of environmental impact of LitPol Link continues in 2017. In the spring, surveys were carried out at monitoring points for migratory goose and waterbirds. Environmental monitoring of another electricity transmission line - Telšiai – Klaipėda is continued: birds accumulations in the Minija River valley at Dovilai are observed, density of predatory birds in Mižuikai forest (Rietavas district) was recorded.
In cooperation with Lithuanian Ornithological Society, Litgrid has launched a project 'Implementation of Bird Protection Measures in the High-Voltage Electricity Transmission Network', partly funded by European Commission and the Ministry of Environment. The objective of this project is to reduce the number of deaths of migrating birds, improve breeding conditions of kestrels in Lithuania, monitor bird death cases in the high-voltage electricity transmission network, and make recommendations for the bird protection. Visibility of electricity transmission lines is increased by equipping them with bird-diverting devices in places of most intensive bird migration. In pre-migration white stork accumulation areas, special protection devices are installed, to prevent the birds from sitting on insulators and to protect them from the short-circuit impact. Upper insulators in the strings are being replaced with ones of larger diameter which reduces the short-circuit risk. Special nesting-boxes are installed for kestrels on 110 kV towers at places indicated by the ornithologists.
In 2017 the measures were taken to reduce the noise coming from the existing electrical equipment into the residential area. The noise walls were installed in Alytus Back-to Back converter station next to the converter transformers, which significantly reduced the noise. The identical measures will be taken in Klaipėda transformer substation to improve the conditions of life of the residents. The technical project was finalised and the new noise walls will be built in 2018.
Efficient information technology and communications (ITC) solutions are critically important in ensuring smooth and uninterrupted operations and form an integral part of the electricity system's planning and management as well as equipment control and servicing. Know-how in the automation of the power system control, pooled at Litgrid ITC Centre, ensure the continuity of the company's IT solutions, security control, and transparency of operations. Litgrid has implemented IT recovery solutions to ensure continuity of operation of its information systems.
Litgrid Group's consolidated financial statements are prepared in accordance with the International Financial Reporting Standards as adopted by the EU. Litgrid's internal control process includes the control of business processes related to service provision, IT system operations, and drawing up of financial statements.
The drawing up of consolidated financial statements is governed by Litgrid's accounting policies and procedures, which ensures that accounting practices are in accordance with International Financial Reporting Standards as adopted by the EU and the laws of the Republic of Lithuania. The procedures identify potential risks associated with accounting and financial reporting and specify risk management methods and principles and the employees responsible for risk management.
Financial results of the Group and the Company are provided in the table below.
| January-September 2017 |
January-September 2016 |
January-September 2015 |
|||||
|---|---|---|---|---|---|---|---|
| Group | Company | Group | Company | Group | Company | ||
| Financial indicators (EUR'000) | |||||||
| Income from electricity sales | 105,756 | 105,756 | 107,982 | 107,982 | 60,127 | 60,127 | |
| Other operating income | 11,346 | 888 | 15,160 | 5,523 | 12,660 | 1,979 | |
| EBITDA* | 30,190 | 32,106 | 36,003 | 35,888 | 20,661 | 20,430 | |
| Profit (loss) before tax | 9,243 | 7,498 | 13,895 | 14,041 | 3,980 | 3,961 | |
| Net profit (loss) | 7,317 | 5,628 | 12,368 | 12,514 | 3,515 | 3,420 | |
| Cash flows from operations | 31,361 | 32,780 | 12,570 | 12,182 | 31,789 | 30,038 | |
| Ratios | |||||||
| EBITDA margin, % | 25.8 | 30.1 | 29.2 | 31.6 | 28.4 | 32.9 | |
| Operating profit margin, % | 8.6 | 7.8 | 12.2 | 13.3 | 6.1 | 7.1 | |
| Return on equity, % | 5.2 | 4.0 | 4.1 | 5.0 | -43.1 | -43.7 | |
| Return on assets, % | 2.8 | 2.2 | 1.8 | 2.3 | -16.9 | -18.4 | |
| Shareholder's equity / Assets, % | 55.1 | 56.1 | 53.5 | 54.5 | 36.6 | 39.3 | |
| Financial liabilities / Equity, % | 65.6 | 64.0 | 70.8 | 69.5 | 91.1 | 80.7 | |
| Liquidity ratio | 0.68 | 0.66 | 0.78 | 0.76 | 0.42 | 0.19 | |
| TSO's operating indicators | |||||||
| Energy transmission volume, m kWh | 7,358 | 7,121 | 6.777 | ||||
| Process costs in transmission network, % | 2.85 | 2.99 | 1.94 | ||||
| ENS (Energy Not Supplied due to interruptions), MWh** |
1.34 | 1.03 | 3.65 | ||||
| AIT (Average Interruption Time), min. ** | 0.05 | 0.04 | 0.19 |
* EBITDA = operating profit + depreciation and amortisation + non-current asset and investment impairment + non-current asset write-off costs;
** Only due to the operator's fault or due to undetermined causes.
During nine months of 2017, Litgrid's volumes of electricity transmission via high-voltage networks for national needs amounted to 7,358 million kilowatt-hours (kWh), which is 3.3 % more than during the same period of 2016. The volumes of transmission to customers of the distribution operator amounted to 6,585 million kWh (+1.9 % compared to 2016), and to other customers 773 million kWh (+17.3 % compared to 2016).
Group's income structure, EUR million
Litgrid Group's income for the nine months of 2017 was EUR 117.1 million, an 4.9% decrease compared to the same period of 2016.
Income from electricity transmission increased 1.1% (to EUR 50.3 million) compared to 2016. Income from electricity transmission accounted for 43 % of total revenues of the Group. The increase has resulted from larger electricity transmission volumes.
Income from balancing/regulating electricity decreased 21.5% to EUR 13.5 million. The reduction has resulted mainly from the 23.8% decrease in the balancing/regulating electricity sales volumes, which, in turn, was largely determined by lower demand from the balancing energy suppliers and the reduced need for securing the allocated capacity (i.e. the capacity traded on the electricity exchange) of the power links with Sweden and Poland.
Income from system services has grown 20.7% to EUR 31.3 million. The main growth driver was an 17% higher tariff for system services set by the National Commission on Energy Control and Prices from 1 January 2017.
Revenues from congestion charges for Lithuanian-Polish, Lithuanian-Swedish and Lithuanian-Latvian power links during nine months of 2017 decreased 31.7% compared to 2016 (to EUR 6.6 million). Congestion charges result from insufficient crossborder capacities, due to which different market prices for electricity form in the Lithuanian, Swedish, Polish and Latvian bidding areas. According to Regulation of the European Parliament and of the Council (EC) No 714/2009 of 13 July 2009 on conditions for access to the network for cross-border exchanges in electricity and repealing Regulation (EC) No 1228/2003, revenues resulting from the allocation of interconnection are to be used for the following purposes: (a) guaranteeing the actual availability of the allocated capacity; (b) maintaining or increasing interconnection capacities through network investments, in particular in new interconnectors; (c) If the revenues cannot be efficiently used for the purposes set out in points (a) and/or (b) of the first subparagraph, they may be used, subject to approval by the regulatory authorities of the Member States concerned, up to a maximum amount to be decided by those regulatory authorities, as income to be taken into account by the regulatory authorities when approving the methodology for calculating network tariffs and/or fixing net work tariffs. Litgrid has recognised, in accordance with the Regulation, EUR 1.1 million as income for the nine months of 2017, i. e. part of the
congestion revenues that were used for ensuring the allocated capacity of the power links and spent EUR 8.9 million of the congestion revenues (incl. incomes of past periods) for financing of construction of a 330 kV electricity transmission line Kruonis HPSP-Alytus. The remaining revenues are carried in the 'Future Period Income' line of the Statement of Financial Position.
Other income related to transmission operations include: the ITC transit income (Inter-Transmission Operator Compensation Mechanism, i.e. payment for electricity imported from or exported to countries other than the EU) – EUR 1.8 million; Public service obligation income – EUR 6 million; reactive energy income – EUR 1.1 million; connection of new customers – EUR 0.7 million. Other income from repair works, investment projects etc. consists mainly of the income from services provided by Tetas UAB, a subsidiary of Litgrid.
Litgrid Group's cost structure, EUR million
The Group's costs during nine months of 2017 totalled EUR 107 million, which is 1% less compared to the same period of 2016.
Costs of purchase of electricity and related services account for the majority of the Group's costs: EUR 59.5 million or 56% of total costs, 3.1% decrease compared to the same period of 2016. Balancing (regulating) electricity costs shrunk 25.6% (to EUR 9.8 million). The system service costs increased 6.8% to EUR 30.3 million. Costs of compensating for process losses in the transmission grid decreased 3.7% to EUR 11.1 million. Transit (ITC) costs were EUR 1.2 million, public obligation services provision costs EUR 5.9 million, and costs of ensuring the allocated capacity of the Swedish and Polish links EUR 1.1 million.
Depreciation and amortisation costs were EUR 19.8 million, almost the same amount as in 2016. Other operating costs increased by 3% (to EUR 27.8 million) compared to the same period of 2016.
CONSOLIDATED INTERIM REPORT FOR THE PERIOD ENDED 30 SEPTEMBER 2017 (All amounts in EUR thousands unless otherwise stated)
The Group's EBITDA in nine months of 2017 amounted to EUR 30.2 million. Compared to the same period of 2016, the EBITDA decreased by EUR 5.8 million, or 16.1%; the EBITDA margin decreased to 25.8% (2016: 29.2 %). The net profit of the Group in nine months of 2017 was EUR 7.3 million (2016: EUR 12.4 million).
The Group's operating profit for the nine months of 2017 consists of: profit of the transmission segment EUR 7.9 million (2016: EUR 13.7 million profit), profit of the system services segment EUR 0.7 million (2016: EUR 2.6 million loss), profit in the balancing (regulating) electricity segment EUR 3.6 million (2016: 4 million profit), and loss on other activities EUR 2.1 million (2016: EUR 0.1 million loss).
Litgrid Group's return indicators, %
There has been an increase in the annual ROE and ROA ratios for the nine months of 2017 compared to the same period of 2016: from 4.1% to 5.2% and from 1.8% to 2.8%, respectively.
As of 30 September 2017, assets of the Group amounted to EUR 442.6 million. Non-current assets accounted for 88.6% of total assets of the Group. Shareholders' equity accounted for 55.1% of total assets.
As of 30 September 2017, the Group's financial liabilities to credit institutions were EUR 160 million (- EUR 5.5 million over nine months of 2017). The ratio between financial liabilities and equity was 65.6%. Long-term financial debts payable within one year accounted for 29.7% of all financial debts. Cash and cash equivalents totalled EUR 0.5 million and unused overdraft was EUR 18.3 million.
The Group's net cash flows from operations in nine months of 2017 amounted to EUR 31.4 million, while payments for noncurrent tangible and intangible assets were EUR 15.9 million; EUR 3.2 million were received as subsidies.
The Group's net cash flows (excluding cash flows from financial activities) in nine months of 2017 totalled EUR 25.7 million.
During nine months of 2017, investments of Litgrid (works performed and assets acquired irrespective of terms of payment) amounted to EUR 19 million, with 57% of them earmarked for the implementation of strategic energy projects and 43% for the reconstruction and development of national electricity transmission grid.
Based on the requirements for the electricity transmission reliability and service quality approved by the National Commission for Prices and Energy Control, two indicators are used to measure the electricity transmission reliability level: END (Energy not delivered due to interruptions) and AIT (Average Interruption Time). The indicators set for Litgrid for 2017 are as follows: END 6.3 MWh and AIT 0.29 min. The actual ENS was 1.34 MWh and AIT was 0.05 min in nine months of 2017.
Detailed explanations about financial information are provided in the Explanatory Notes to the financial statements for the nine months of 2017.
LITGRID AB applies dividend policy of EPSO-G group since 14 July 2017. The policy determines that depending on return on equity, company allocates 60-85% of distributable profit to dividends.
The general meeting of shareholders of LITGRID AB held on 25 April 2017 declared payable dividend of EUR 18.2 million, or EUR 0.036 per share.
The electric power sector is a vitally important part of the economy that exerts a significant influence over political and economic interests. The structure and management of the electric power sector and the operation of the companies in the sector are governed by the Law on Electricity of the Republic of Lithuania and the relevant regulations. Any amendments to national or European Union energy legislation can have an impact on both results of Litgrid Group and reliability of the system. In order to reduce the impact of the risk on the performance results, the Company's representatives actively participate in discussions, inform about decisions that have to be taken and / or submit proposals to institutions that draft legal acts. The company also responds effectively to any issues regarding the Company's activities raised by the public, regulatory authorities or other stakeholders.
Prices for electricity are regulated, with the price ceilings set by the National Commission for Energy Control and Prices. The operating results of Litgrid are directly dependent on these decisions. These decisions by the regulator directly affect not only Litgrid's performance results but also funds that the Company allocates to cover the operating costs, investments that maintain the reliability of the transmission grid, as well as opportunities for financing strategic projects from the Company's own or borrowed funds. In order to reduce the impact of regulatory risks on performance results, the Company actively cooperates
with the Commission and participates in discussions on projected amendments to legal acts, with its argumentation based on the impact of the decisions and long-term strategic objectives of the Company.
To reduce the compliance risk, i. e. the probability that the Company will be in breach of the requirements set for the regulated activities, the Company's legal team carefully supervises the decision-making process, drafting of internal legal acts, and setting of contractual obligations. The Company's legal team is also carefully monitoring legal environment.
One of the main functions and responsibilities of the Company's operations is ensuring the reliability of electricity transmission and preventing disruptions of energy supply. Main operational risks that could affect the reliability of the transmission are caused by external environmental factors: natural disasters, disruptions in the operations of main contractors, criminal acts of third parties, as well as internal factors such as information systems' failures. The Company has implemented solutions which meet the requirements of physical and information technology security set for enterprises that have strategic or important role for national security, and modern information systems.
Emergency response plans that ensure business continuity are prepared and kept up to date. In order to avoid potential delays in grid reconstruction and development projects, Litgrid has a project management system in place. Up-to-date and highly selective requirements for qualifications of contractors ensure that they are able to implement complex projects.
The company focuses on the attraction and retention of highly-qualified employees that are able to implement ambitious operational and strategic plans. For that purpose, educational and substitutability plans are being developed and the remuneration and motivation policies have been updated.
Companies in the Litgrid Group encounter financial risks in their operations including credit risk, liquidity risk and market risk (currency exchange risk and interest rate risk). In managing this risk, the Group's companies seek to minimise the effects of factors that can have an adverse impact on financial results of the Group. The Company has a significant concentration of credit risk. The Company requires its customers/third parties to provide adequate securities to ensure the execution of contracts (measures are applied according to the customer's/third party's risk rating).
Lithuania's energy system has 15 interconnections with the neighbouring energy systems. The available means for the power and energy balance control are limited, and the power and energy balance control process is complex.
Litgrid Power Link Service UAB, a subsidiary of Litgrid employing highly qualified specialists was formed to ensure a reliable operation of the new high-voltage direct current power links. The employed of the company have acquired their specialist skills and knowledge on the operation and repairs of the power links at training courses provided by the links' equipment manufacturers as well as by participating in the testing of the relevant equipment, systems and links and the analyses of the causes of disconnection of the links during the trial operation.
More than one half of the high-voltage electricity transmission grid equipment is older than 45 years. Faults and failures of the most important process equipment can have a negative impact on Litgrid's operations and financial results. In order to avoid disruptions in the power supply, Litgrid monitors the condition of the transmission network, develops monitoring plans and plans new investments in the network in due time. Asset management system that is currently being implemented, will allow to achieve more effective assessment of the transmission grid status and technological asset management. The system will allow monitoring of identified key performance indicators and condition of the electricity transmission grid. Investments in equipment and materials has a direct impact on financial results. The Company ranks investments in the network based on objective criteria and applying a specific evaluation methodology with the aim to optimise investments and ensure an even investment process.
Companies of the Group comply with the environmental regulations on appropriate labelling, use and storage of hazardous materials and ensures that equipment operated by the companies meets the established requirements.
Litgrid has not acquired its own shares, nor has made any acquisitions or disposals of own shares during the reporting period. Subsidiaries of the Company have not acquired shares of the Company.
Since 22 December 2010, Litgrid's shares are on the Baltic Secondary List at the NASDAQ OMX Vilnius exchange, ISIN code LT0000128415.
Litgrid's authorised capital is EUR 146,256,100.2, divided into 504,331,380 ordinary registered shares of EUR 0.29 par value per share. The number of shares to which voting rights are attached: 504,331,380.
As of 24 May 2017, the company had 5,491 (five thousand four hundred ninety one) shareholders. 97.5% of Litgrid shares are owned by EPSO-G (A. Juozapavičiaus 13, LT-09310 Vilnius, business ID 302826889), 100% of which are owned by the Ministry of Energy.
Services of accounting for Litgrid's securities and the related services from 8 September 2017 to 7 September 2020 are provided by SEB Bankas AB.
Securities of the Company's subsidiaries are not traded on any securities exchange.
| Rodiklis | 2015 | 2016 | 2017 |
|---|---|---|---|
| Opening price, EUR | 0.698 | 0.708 | 0.700 |
| Highest price, EUR | 0.740 | 0.745 | 0.751 |
| Lowest price, EUR | 0.550 | 0.676 | 0.676 |
| Closing price, EUR | 0.708 | 0.705 | 0.690 |
| Turnover, pcs | 656,613 | 788,916 | 549,407 |
| Turnover, EUR m | 0.45 | 0.56 | 0.39 |
| Capitalisation, EUR m | 357.07 | 355.55 | 347.99 |
Comparison of the price of Litgrid shares (LGD1L) with the OMX Baltic Benchmark GI (OMXBBGI) and OMX Vilnius (OMXV) indexes during the reporting period:
The Articles of Association of Litgrid AB may be amended according to the procedure prescribed by the Republic of Lithuania Law on Companies. Adoption of an amendment requires a two-third majority vote of the shareholders participating in a general meeting of shareholders.
The Articles of Association of Litgrid AB were registered on 16 May 2016.
The general meeting of shareholders is the supreme management body of the Company.
The remit of the general meeting of shareholders and the procedures for its convention and decision-adoption are prescribed by the laws, other legal acts and the Articles of Association.
The Board consists of five members and is elected for a four-year term of office. The term of the Board starts after the end of the general meeting of shareholders at which the Board was elected and ends on the date of the ordinary general meeting of shareholders held in the last year of the Board's term.
Where the Board or a Board Member is recalled, resigns or ceases to perform its duties for any other reason, a new Board/Board
Member is elected for the remainder of the Board's term. The structure of the Board must be as follows: two members – representatives of top management of the parent company (EPSO-G), two members – representatives of top management of Litgrid, and one independent member.
The Board elects the Chairperson from among its members.
The Board works in accordance with the laws and other legal acts, the Articles of Association, decisions of the general meeting of shareholders and Work Regulations of the Board.
The Board is a collegiate management body of the Company. The remit of the Board and the procedures for adoption of decisions and electing and recalling of its members are prescribed by the laws, other legal acts and the Articles of Association. The Board reports to the general meeting of shareholders.
The Board considers and approves the Company's strategy, a three-year operating plan of the Company, a ten-year transmission grid development plan, the budget of the Company, the procedure for granting support and charity, and other documents governing strategic operations of the Company. The Board takes decisions on the Company's undertaking of new types of activities or ceasing to carry out certain activities to the extent that this does not contradict the purpose of the Company's operations. It also takes decisions on the issue of bonds, restructuring of the Company, transfer of the Company's shares to other persons, and financial transactions exceeding EUR 3 million in value. The Board also decides other matters as stated in the Articles of Association.
The Managing Director is the single-handed management body of the Company. The Managing Director organises and directs the Company's activities, acts on behalf of the Company, and concludes transactions at his/her sole discretion. The remit of the Managing Director as well as the procedure for his election and recall is prescribed by laws, other legal acts and the Articles of Association.
| Position | Name | Start date | End date | Number of the issuer's shares held |
|---|---|---|---|---|
| Board | ||||
| Chairperson of the Board Member of the Board Member of the Board Member of the Board Member of the Board |
Rimvydas Štilinis Daivis Virbickas Vidmantas Grušas Nemunas Biknius Domas Sidaravičius |
2016 07 29 2013 09 10 2013 09 10 2016 07 29 2016 07 29 |
- - - - - |
|
| Managing Director | Daivis Virbickas | 2013 09 10 | - | |
| Chief Financier Chief Financier Acting Chief financier |
Žydrūnas Augutis Jūratė Vyšniauskienė Raimonda Duobuvienė |
2017 06 05 2015 10 19 2017 02 10 |
2017 02 09 2017 06 04 |
- |
Born in 1978. Mr Rimvydas Štilinis holds a Master's Degree in Electrical Engineering from Kaunas University of Technology (KTU). In 2002-2014 he worked for Lietuvos energija UAB: in 2008-2014 as the Head of the Nuclear Energy Department, the Construction and Infrastructure Department, and the Centre for Infrastructure Competences. In 2014-2015 he worked as the CEO of VAE SPB UAB. Mr R. Štilinis is Director for Infrastructure at EPSO-G, the parent company of Litgrid controlling 97.8 % of its shares, and Member of the Board of Amber Grid, Lithuania's gas transmission network operator.
Born in 1978. Responsible for strategic management and the power system control. He has experience of many years in the development and management of long-term strategies for power transmission system development, analysis of electricity markets, and corporate governance. Until 2013: Director of Commerce at Alpiq Energija Lietuva representing Alpiq AG, a Swiss holding company, in the Baltic States. Until 2011: Technical Director at Litgrid.
Mr Virbickas holds a Master's Degree in Energy Systems Management from Kaunas University of Technology (KTU) (graduated in 2002), a Bachelor's Degree in Business Management from KTU and the Corporate Governance Certificate (2008) from Baltic Management Institute and IMD Business School (Switzerland).
Born in 1962. Responsible for the management of electricity transmission grid. He has vast experience in the operation of high voltage electricity transmission grid equipment, development of grid facilities and dispatch control of the power system.
Mr Grušas holds a diploma in Managing Energy Business (2009) from Scandinavian International Management Institute in Denmark. In 1985 he graduated from Riga University of Technology (former Riga Polytechnic Institute) with the Energy Engineering qualifications.
Born in 1978. Mr Nemunas Biknius holds a Master's Degree in Energy and Thermal Engineering from Vilnius Gediminas Technical University. He has worked in the Ministry of the Economy and the Ministry of Energy, was the Member of the Board and the Director of Service and Development Division of Lietuvos dujos AB. Mr N. Biknius is the Chairman of the Board of Amber Grid, Lithuania's gas transmission network operator, Member of the Board of Baltpool energy resources exchange, and Director for Strategy and Development at EPSO-G.
Born in 1975. Mr D. Sidaravičius holds a Bachelor's Degree in Business Administration and Management and a Master's Degree in International Trade at Vilnius University. He has many years' experience of work in financial, insurance and business risk management areas. Member of the Board and CEO of ERGO Invest SIA (Latvia) since March 2016.
Gross payment for nine months of 2017 to those Members of the Board who receive remuneration for their work in the Board based on the shareholders' decision of 29 July 2016 totalled EUR 19,650.
Information about major related party transactions and their amounts, type of relations between the related parties and other information required for the understanding of the Company's financial position is provided in the Explanatory Notes to the Financial Statements, Note 10.
The Company complies with all the main provisions of Sections IV-VIII of the Transparency Guidelines.
| Date | Notice |
|---|---|
| 2017 02 23 | D. Virbickas: Our goal is sustainable results. Publication of interim unaudited financial results for 12 months of 2016 |
| 2017 03 07 | Strategy of EPSO-G Group: strategic projects, regional development and efficiency |
| 2017 04 03 | Convention of a general meeting of shareholders of Litgrid AB |
| 2017 04 05 | EPSO-G Supervisory Council's feedback to the general meeting of shareholders of Litgrid AB |
| 2017 04 19 | Invitation: 'Inspiring Works and Goals: Litgrid AB's Operating Report to the Public'. 27 April, 10.00 at ISM University and online |
| 2017 04 21 | CORRECTION: Convention of a general meeting of shareholders of Litgrid AB A mistake in the record date of the general meeting of shareholders was corrected |
| 2017 04 25 | Decisions adopted at the general meeting of shareholders of Litgrid on 25 April 2017 |
| 2017 04 25 | Consolidated Annual Report and Financial Report of Litgrid AB and Its Subsidiaries for 2016 |
| 2017 04 25 | Litgrid's dividend payment procedure for 2016 |
| 2017 04 27 | Litgrid AB presents its results for 2016 in an event under the title 'Inspiring Works and Goals'. Report by Litgrid AB's Managing Director Daivis Virbickas in the event presenting the Annual Operating Report |
| 2017 05 02 | Litgrid AB Strategy and Corporate Social Responsibility Report |
| 2017 05 09 | Convention of an extraordinary general meeting of shareholders of Litgrid AB |
| 2017 05 16 | Litgrid sold shares of Technologijų ir inovacijų centras to Lietuvos energija |
| 2017 05 25 | Litgrid Group's results point to steady growth in Q1 |
| 2017 06 01 | Decisions adopted at Extraordinary General Meeting of Litgrid shareholders, 31 May 2017 |
| 2017 06 14 | Litgrid's results for 2017 Q1: sustainable growth and value for society |
| 2017 07 14 | Regarding the management board decision of the parent company |
| 2017 08 07 | Lietuvos Energija and Litgrid Signed a Duomenų Logistikos Centras Sale Agreement with Telia Lietuva |
| 2017 08 09 | An internal check at Litgrid initiated due to the conclusions presented by the Public Procurement Office |
| 2017 08 17 | Litgrid will hold an Investor Conference Webinar to introduce the financial results for first-half year of 2017 |
| 2017 08 21 | Dividend policy applied in Litgrid |
| 2017 08 24 | Reminder of an Investor Conference Webinar |
| 2017 08 24 | Litgrid Group's Results for the First Six Months of 2017 |
| 2017 08 25 | Litgrid holds a webinar on financial results of first half-year 2017 |
|---|---|
| 2017 08 30 | Concerning the conclusions of Public procurement office and decision of Lithuanian Business Support Agency |
| 2017 09 11 | Regarding the change of service provider for Litgrid securities accounting |
| 2017 10 02 | Commission for Prices and Energy set the price cap for electricity transmission |
| 2017 10 09 | Regarding the agreement on the energy savings with the Ministry of Energy |
| 2017 10 16 | Regarding loan to UAB "TETAS" |
| 2017 10 30 | Electricity transmission rates for 2018 set |
Detailed information on all material events published in 2017 is provided on the website of the Vilnius Securities Exchange http://www.nasdaqomxbaltic.com/market/?pg=news&issuer=LGD&start\_d=1&start\_m=1&start\_y=1996 and the website of Litgrid http://www.litgrid.eu/index.php/apie-litgrid/investuotojams/esminiai-ivykiai-/478.
(All amounts in EUR thousands unless otherwise stated)
| Group | Company | |||||
|---|---|---|---|---|---|---|
| Notes | 30-09-2017 | 31-12-2016 | 30-09-2017 | 31-12-2016 | ||
| ASSETS | ||||||
| Non-current assets | ||||||
| Intangible assets | 3 | 3,442 | 1,491 | 3,439 | 1,486 | |
| Property, plant and equipment | 3 | 384,988 | 398,433 | 382,832 | 397,542 | |
| Prepayments for property, plant, equipment | 851 | 727 | 851 | 727 | ||
| Investments in subsidiaries | 4 | - | - | 174 | 4,089 | |
| Deferred income tax assets | 25 | 66 | - | - | ||
| Available-for-sale financial assets | 2,693 | 2,693 | 2,693 | 2,693 | ||
| Total non-current assets | 391,999 | 403,410 | 389,989 | 406,537 | ||
| Current assets | ||||||
| Inventories | 2,446 | 3,910 | 160 | 125 | ||
| Prepayments | 374 | 274 | 252 | 122 | ||
| Trade receivables | 17,648 | 19,041 | 14,930 | 14,552 | ||
| Other amounts receivable | 23,312 | 24,916 | 22,751 | 24,593 | ||
| Prepaid income tax | 8 | 3 | - | - | ||
| Other financial assets | 5 | 6,330 | 10,012 | 6,330 | 10,012 | |
| Cash and cash equivalents | 529 | 798 | 324 | 608 | ||
| Total current assets | 50,647 | 58,954 | 44,747 | 50,012 | ||
| TOTAL ASSETS | 442,646 | 462,364 | 434,736 | 456,549 | ||
| EQUITY AND LIABILITIES | ||||||
| Equity | ||||||
| Authorised share capital | 146,256 | 146,256 | 146,256 | 146,256 | ||
| Share premium | 8,579 | 8,579 | 8,579 | 8,579 | ||
| Revaluation reserve | 5,224 | 5,608 | 5,157 | 5,533 | ||
| Reserve of changes in fair value of financial assets | 655 | 655 | 655 | 655 | ||
| Legal reserve | 14,790 | 14,726 | 14,626 | 14,626 | ||
| Other reserves | 62,767 | 62,747 | 62,767 | 62,747 | ||
| Retained earnings (deficit) | 5,695 | 16,234 | 6,003 | 18,175 | ||
| Total equity | 243,966 | 254,805 | 244,043 | 256,571 | ||
| Liabilities | ||||||
| Non-current liabilities | ||||||
| Grants | 38 | 38 | 38 | 38 | ||
| Non-current borrowings | 6 | 111,294 | 116,435 | 111,294 | 116,435 | |
| Finance lease liabilities | 7 | 1,179 | - | - | - | |
| Deferred income tax liability | 6,927 | 8,216 | 6,927 | 8,216 | ||
| Deferred revenue | 4,475 | 7,966 | 4,475 | 7,966 | ||
| Other non-current amounts payable and liabilities | 152 | 152 | 81 | 81 | ||
| Total non-current liabilities | 124,065 | 132,807 | 122,815 | 132,736 | ||
| Current liabilities | ||||||
| Current portion of non-current borrowings | 6 | 8,082 | 8,082 | 8,082 | 8,082 | |
| Current borrowings | 6 | 39,283 | 40,986 | 36,738 | 40,171 | |
| Current portion of finance lease liabilities | 7 | 201 | - | - | - | |
| Trade payables | 17,299 | 13,857 | 14,348 | 8,376 | ||
| Advance amounts received | 964 | 869 | 964 | 869 | ||
| Income tax liability | 1,365 | 1,360 | 1,352 | 1,360 | ||
| Other current amounts payable and liabilities | 7,421 | 9,598 | 6,394 | 8,384 | ||
| Total current liabilities | 74,615 | 74,752 | 67,878 | 67,242 | ||
| Total liabilities TOTAL EQUITY AND LIABILITIES |
198,680 442,646 |
207,559 462,364 |
190,693 434,736 |
199,978 456,549 |
||
(All amounts in EUR thousands unless otherwise stated)
| Group | Company | ||||||
|---|---|---|---|---|---|---|---|
| Notes | 30-09-2017 | 30-09-2016 | 30-09-2017 | 30-09-2016 | |||
| Continuing operations Revenue |
|||||||
| Revenue from electricity transmission and related | 105,756 | 107,982 | 105,756 | 107,982 | |||
| services Other income |
11,346 | 15,160 | 888 | 5,523 | |||
| Total revenue | 8 | 117,102 | 123,142 | 106,644 | 113,505 | ||
| Expenses | |||||||
| Expenses of electricity transmission and related services |
(59,482) | (61,389) | (59,482) | (61,389) | |||
| Depreciation and amortisation Wages and salaries and related expenses |
3 | (19,754) (9,979) |
(19,771) (10,042) |
(19,577) (5,144) |
(19,606) (5,402) |
||
| Repair and maintenance expenses | (3,081) | (3,212) | (4,811) | (4,872) | |||
| Telecommunications and IT maintenance | (1,124) | (2,074) | (1,018) | (1,966) | |||
| expenses Expenses of property, plant and equipment write off |
(490) | (789) | (490) | (789) | |||
| Impairment of inventories and amounts receivable |
162 | 31 | 163 | 30 | |||
| Impairment of property, plant and equipment | 3 | - | (434) | - | (434) | ||
| Impairment of investments | 4 | - | - | (3,915) | - | ||
| Other expenses | (13,246) | (10,422) | (4,083) | (3,988) | |||
| Total expenses | (106,994) | (108,102) | (98,357) | (98,416) | |||
| Operating profit/(loss) | 10,108 | 15,040 | 8,287 | 15,089 | |||
| Financing activities | |||||||
| Finance income | 168 | 99 | 218 | 194 | |||
| Finance costs Total finance costs |
(1,033) (865) |
(1,250) (1,151) |
(1,007) (789) |
(1,242) (1,048) |
|||
| Share of profit/(loss) of associates and joint ventures |
- | 6 | - | - | |||
| Profit/(loss) before income tax | 9,243 | 13,895 | 7,498 | 14,041 | |||
| Income tax | |||||||
| Current year income tax expenses | (3,174) | (2,151) | (3,159) | (2,148) | |||
| Deferred income tax (expenses)/income | 1,248 | 592 | 1,289 | 621 | |||
| Total income tax | 9 | (1,926) | (1,559) | (1,870) | (1,527) | ||
| Profit/(loss) for the period from continuing operations |
7,317 | 12,336 | 5,628 | 12,514 | |||
| Discontinued operations | |||||||
| Profit (loss) for the period from discontinued | - | 32 | - | - | |||
| operations Profit (loss) for the period |
7,317 | 12,368 | 5,628 | 12,514 | |||
| Other comprehensive income that will not be reclassified to profit or loss |
- | - | - | - | |||
| Total comprehensive income (loss) for the period | 7,317 | 12,368 | 5,628 | 12,514 | |||
| Profit/(loss) attributable to: Owners of the Parent |
7,317 | 12,358 | 5,628 | 12,514 | |||
| Non-controlling interest | - | 10 | - | - | |||
| 7,317 | 12,368 | 5,628 | 12,514 | ||||
| Total comprehensive income(loss) attributable to: Owners of the Parent |
7,317 | 12,358 | 5,628 | 12,514 | |||
| Non-controlling interest | - 7,317 |
10 12,368 |
- 5,628 |
- 12,514 |
|||
| Basic and diluted earnings (deficit) per share (in EUR) |
12 | 0.015 | 0.025 | 0.011 | 0.025 |
(All amounts in EUR thousands unless otherwise stated)
| Group Company 01-07 – 01-07- 01-07 – 01-07 – 30-09-2017 30-09-2016 30-09-2017 30-09-2016 |
|
|---|---|
| Continuing operations | |
| Revenue Revenue from electricity transmission and related |
|
| 35,615 34,226 35,615 34,226 services |
|
| Other income 3,379 4,228 228 |
330 |
| Total revenue 38,994 38,454 35,843 34,556 |
|
| Expenses | |
| Expenses of electricity transmission and related (20,402) (17,784) (20,402) (17,784) |
|
| services Depreciation and amortisation (6,625) (6,666) (6,565) (6,610) |
|
| Wages and salaries and related expenses (3,211) (3,265) (1,632) (1,686) |
|
| Repair and maintenance expenses (950) (1,221) (1,678) (1,898) |
|
| Telecommunications and IT maintenance (381) (497) (347) expenses |
(460) |
| Expenses of property, plant and equipment write | |
| (247) (197) (247) off |
(197) |
| Impairment of inventories and amounts 55 - 54 |
- |
| receivable Impairment of property, plant and equipment - - - |
- |
| Impairment of investments - - (3,915) |
- |
| Other expenses (4,270) (4,167) (1,401) (1,332) |
|
| Total expenses (36,031) (33,797) (36,133) (29,967) |
|
| Operating profit/(loss) 2,963 4,657 (290) 4,589 |
|
| Financing activities | |
| Finance income 6 12 6 |
12 |
| Finance costs (342) (400) (335) Total finance costs (336) (388) (329) (385) |
(397) |
| Share of profit/(loss) of associates and joint - 5 - |
- |
| ventures Profit/(loss) before income tax 2,627 4,274 (619) 4,204 |
|
| Income tax | |
| Current year income tax expenses (789) (728) (782) Deferred income tax (expenses)/income 277 152 278 |
(726) 154 |
| Total income tax (512) (576) (504) (572) |
|
| Profit/(loss) for the period from continuing 2,115 3,698 (1,123) 3,632 |
|
| operations | |
| Discontinued operations | |
| Profit (loss) for the period from discontinued - - - |
- |
| operations | |
| Profit (loss) for the period 2,115 3,698 (1,123) 3,632 |
|
| Other comprehensive income that will not be - - - |
- |
| reclassified to profit or loss Total comprehensive income (loss) for the period 2,115 3,698 (1,123) 3,632 |
|
| Profit/(loss) attributable to: | |
| Owners of the Parent 2,115 3,698 (1,123) 3,632 |
|
| Non-controlling interest - - - 2,115 3,698 (1,123) 3,632 |
- |
| Total comprehensive income(loss) attributable to: | |
| Owners of the Parent 2,115 3,698 (1,123) 3,632 |
|
| Non-controlling interest - - - |
- |
| 2,115 3,698 (1,123) 3,632 |
|
| Basic and diluted earnings (deficit) per share 0.004 0.007 (0.002) 0.007 (in EUR) |
(All amounts in EUR thousands unless otherwise stated)
| Attributable to owners of the Group | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Reserve of | |||||||||||
| Group | Share capital |
Share premium |
Revaluation reserve |
changes in fair value of financial assets |
Legal reserve |
Other reserves |
Retained earnings |
Interim amount |
Non controlling interest |
Total | |
| Balance at 1 January 2016 | 146,256 | 8,579 | 6,228 | 298 | 14,606 | 62,747 | 2,476 | 241,190 | 133 | 241,323 | |
| Comprehensive income/(expenses) for the period |
- | - | - | - | - | - | 12,358 | 12,358 | 10 | 12,368 | |
| Depreciation of revaluation reserve and amounts written off |
- | - | (461) | - | - | - | 461 | - | - | - | |
| Transfer to reserves | - | - | - | - | 120 | - | (120) | - | - | - | |
| Dividends | - | - | - | - | - | - | (4,589) | (4,589) | - | (4,589) | |
| Change in interest in the subsidiary | - | - | - | - | - | - | 95 | 95 | (143) | (48) | |
| Balance at 30 September 2016 | 146,256 | 8,579 | 5,767 | 298 | 14,726 | 62,747 | 10,681 | 249,054 | - | 249,054 | |
| Balance at 1 January 2017 | 146,256 | 8,579 | 5,608 | 655 | 14,726 | 62,747 | 16,234 | 254,805 | - | 254,805 | |
| Comprehensive income/(expenses) for the period |
- | - | - | - | - | - | 7,317 | 7,317 | - | 7,317 | |
| Depreciation of revaluation reserve and amounts written off |
- | - | (384) | - | - | - | 384 | - | - | - | |
| Transfer to reserves | - | - | - | - | 64 | 20 | (84) | - | - | - | |
| Dividends | 11 | - | - | - | - | - | - | (18,156) | (18,156) | - | (18,156) |
| Balance at 30 September 2017 | 146,256 | 8,579 | 5,224 | 655 | 14,790 | 62,767 | 5,695 | 243,966 | - | 243,966 |
| Company | Share capital |
Share premium |
Revaluation reserve |
Reserve of changes in fair value of financial assets |
Legal reserve |
Other reserves |
Retained earnings |
Total |
|---|---|---|---|---|---|---|---|---|
| Balance at 1 January 2016 | 146,256 | 8,579 | 6,138 | 298 | 14,606 | 62,747 | 5,351 | 243,975 |
| Comprehensive income/(expenses) for the period Depreciation of revaluation reserve and |
- - |
- - |
- (449) |
- - |
- - |
- - |
12,514 449 |
12,514 - |
| amounts written off Transfer to reserves |
- | - | - | - | 20 | - | (20) | - |
| Dividends | - | - | - | - | - | - | (4,589) | (4,589) |
| Balance at 30 September 2016 | 146,256 | 8,579 | 5,689 | 298 | 14,626 | 62,747 | 13,705 | 251,900 |
| Balance at 1 January 2017 Comprehensive income/(expenses) for the |
146,256 | 8,579 | 5,533 | 655 | 14,626 | 62,747 | 18,175 | 256,571 |
| period Depreciation of revaluation reserve and amounts written off |
- - |
- - |
- (376) |
- - |
- - |
- - |
5,628 376 |
5,628 - |
| Transfer to reserves | - | - | - | - | 20 | (20) | - | |
| Dividends 11 |
- | - | - | - | - | - | (18,156) | (18,156) |
| Balance at 30 September 2017 | 146,256 | 8,579 | 5,157 | 655 | 14,626 | 62,767 | 6,003 | 244,043 |
(All amounts in EUR thousands unless otherwise stated)
| Group | Company | ||||
|---|---|---|---|---|---|
| 30-09-2017 | 30-09-2016 | 30-09-2017 | 30-09-2016 | ||
| Cash flows from operating activities | |||||
| Profit/(loss) for the year Adjustments for non-cash items and other |
7,317 | 12,368 | 5,628 | 12,514 | |
| adjustments: Depreciation and amortisation expenses |
19,754 | 19,772 | 19,577 | 19,607 | |
| Impairment of investments | - | - | 3,915 | - | |
| Impairment of property, plant and equipment | - | 434 | - | 434 | |
| (Reversal of)/impairment charge on assets | (899) | (30) | (900) | (30) | |
| Write-off of bad debt | 737 | - | 737 | - | |
| Share of profit of associates and joint ventures | - | (6) | - | - | |
| Income tax expenses | 1,926 | 1,559 | 1,870 | 1,527 | |
| (Gain)/loss on disposal/write-off of property, plant and equipment |
490 | 789 | 490 | 789 | |
| Adjustments for other non-cash items | (1,139) | (3,438) | (1,139) | (3,438) | |
| Elimination of results of financing and investing activities: |
|||||
| Interest expenses | 1,028 | 1,223 | 1,002 | 1,215 | |
| Dividends income | (134) | (59) | (184) | (91) | |
| Other finance (income)/costs | (29) | (13) | (29) | (76) | |
| Changes in working capital: | |||||
| (Increase) decrease in trade receivables and other amounts receivable |
2,771 | (5,141) | 1,425 | (6,745) | |
| (Increase) decrease in inventories, prepayments and other current assets |
1,438 | (2,016) | (91) | (122) | |
| Increase (decrease) in amounts payable, grants, deferred income and advance amounts received |
(2,394) | (6,433) | (36) | (6,968) | |
| Changes in other financial assets | 3,682 | (5,227) | 3,682 | (5,227) | |
| Income tax (paid) | (3,187) | (1,212) | (3,167) | (1,207) | |
| Net cash generated from operating activities | 31,361 | 12,570 | 32,780 | 12,182 | |
| Net cash used in operating activities of the discontinued operations |
- | 4,623 | - | - | |
| Cash flows from investing activities | |||||
| (Purchase) of property, plant and equipment and intangible assets |
(15,886) | (49,815) | (15,682) | (49,641) | |
| Congestion revenue received | 6,845 | 6,399 | 6,845 | 6,399 | |
| Grants received | 3,216 | 63,204 | 3,216 | 63,204 | |
| Dividends received | 134 | 59 | 134 | 91 | |
| Disposal of subsidiaries (associates) | - | - | - | 388 | |
| Net cash generated from (used in) investing activities Net cash generated from (used in) investing activities of the discontinued operations |
(5,691) - |
19,847 - |
(5,487) - |
20,441 - |
|
| Cash flows from financing activities | |||||
| Repayments of borrowings | - | 40,000 | - | 40,000 | |
| Finance lease payments | (5,141) | (5,142) | (5,141) | (5,142) | |
| Finance lease payments | (66) | - | - | - | |
| Overdraft | (1,703) | (61,693) | (3,433) | (61,818) | |
| Interest paid | (922) | (1,030) | (896) | (1,022) | |
| Dividends paid | (18,107) | (4,593) | (18,107) | (4,593) | |
| Net cash generated from (used in) financing activities Net cash generated from (used in) financing activities of the discontinued operations |
(25,939) - |
(32,458) (4,655) |
(27,577) - |
(32,575) - |
|
| Net increase (decrease) in cash and cash equivalents | (269) | (73) | (284) | 48 | |
| Cash and cash equivalents at the beginning of the period | 798 | 791 | 608 | 483 | |
| Cash and cash equivalents at the end of the period | 529 | 718 | 324 | 531 |
Litgrid AB (hereinafter "the Company") is a public limited liability company registered in the Republic of Lithuania. The address of its registered office is: A. Juozapavičiaus g. 13, LT-09311, Vilnius, Lithuania. The Company was established as a result of the unbundling of Lietuvos Energija AB operations and was registered with the Register of Legal Entities on 16 November 2010, entity's code is 302564383.
Litgrid is an operator of electricity transmission system, operating electricity transmissions in the territory of Lithuania and ensuring the stability of operation of the whole electric power system. In addition, the Company is also responsible for the integration of the Lithuanian power system into the European electricity infrastructure and common electricity market.
On 27 August 2013, the National Commission for Energy Control and Prices (hereinafter – "NCC") issued in respect of the Company an open – ended License for the engagement in activity of Transmission electric power.
The Company was involved in the implementation of the projects for cross-border strategic power links NordBalt (Lithuania– Sweden) and LitPol Link (Lithuania–Poland).
The principal objectives of the Company's activities include ensuring the stability and reliability of the electric power system in the territory of Lithuania within its areas of competence, creation of objective and non-discriminatory conditions for the use of the transmission networks, management, use and disposal of electricity transmission system assets and its appurtenances.
As at 30 September 2017 the share capital of the Company amounted to EUR 146,256,100.20. It was divided into 504,331,380 ordinary registered shares with the nominal value of EUR 0.29 each. All the shares of the Company were fully paid. The Company has not acquired any own shares.
As at 30 September 2017 and 31 December 2016, the Company's shareholders structure was as follows:
| Company's shareholders | Number of shares held |
Number of shares held (%) |
|---|---|---|
| UAB EPSO-G | 491,736,153 | 97.5 |
| Other shareholders | 12,595,227 | 2.5 |
| Total: | 504,331,380 | 100,0 |
The ultimate controlling shareholder of EPSO-G UAB (company code 302826889, address A. Juozapavičiaus g. 13, Vilnius, Lithuania) is the Ministry of Energy of the Republic of Lithuania.
The shares of the Company are listed on the additional trading list of NASDAQ OMX Vilnius Stock Exchange, issue ISIN code LT0000128415.
As at 30 September 2017 and 31 December 2016 the Group included Litgrid, its directly controlled subsidiaries, associates and joint ventures, listed below:
| Company | Address of the company's registered office |
Shareholding as at 30 September 2017 |
Shareholding as at 31 December 2016 |
Profile of activities |
|---|---|---|---|---|
| Tetas UAB | Senamiesčio g. 102B, Panevėžys, Lithuania |
100% | 100% | Transformer substation and distribution station design, reconstruction, repair and maintenance services |
| Litgrid Power Link Service UAB |
A. Juozapavičiaus g. 13, Vilnius, Lithuania |
100% | 100% | Management and operation of electricity interconnection facilities |
| Duomenų Logistikos Centras UAB |
Žvejų g. 14, Vilnius, Lithuania |
20% | 20% | IT services |
| LitPol Link Sp.z.o.o | Wojciecha Gorskiego 900- 033 Warsaw, Poland |
50% | 50% | Implementation and co-ordination of joint assignments in relation to operation of current interconnection Lithuania–Poland, planned development of the network and other fields of co-operation. |
On 27 January 2017, the Company's Board gave its consent to the arrangement of sale of all 20.36% shares held under the title of ownership by Litgrid AB in Duomenų Logistikos Centras UAB, together with the shares held in Duomenų Logistikos Centras UAB by Lietuvos Energija UAB. On 7 August 2017 shareholders of UAB Duomenų Logistikos Centras, the Company and Lietuvos energija, UAB, signed a share sale - purchase agreement with Telia Lietuva. The sale process of UAB Duomenų Logistikos Centras should be finalised, supposed by the beginning of 2018 on obtaining authorisation from the Competition Council. The transaction value will not be announced until that time.
Company's investment in associated entity was accounted in the item Other financial assets of Statement of financial position.
As at 30 September 2017, the Group had 653 employees (31 December 2016: 685), and the Company had 234 employees (31 December 2016: 235).
These condensed interim Consolidated and the Company's financial statements, for the nine months period ended 30 September 2017 are prepared in accordance with the International Financial Accounting Standards, as adopted by the European Union, including International Accounting Standard (hereinafter – IAS) 34 "Interim Financial Reporting". In all material respects, the same accounting principles have been followed as in the preparation of financial statements for 2016.
The presentation currency is euro. These financial statements are presented in thousands of euro, unless otherwise stated.
In order to better understand the data presented in this condensed interim financial statements, this financial statements should be read in conjunction with the Consolidated and the Company's financial statements for the year 2016, prepared according to International Financial Reporting Standards as adopted by the European Union.
These financial statements have been prepared on a historical cost basis, except for property, plant and equipment which is recorded at revalued amount, less accumulated depreciation and estimated impairment loss, and available-for-sale financial assets which are carried at fair value.
The financial year of the Company and other Group companies coincides with the calendar year.
These financial statements for the period ended 30 September 2017 are not audited. Financial statements for the year ended 31 December 2016 are audited by the external auditor UAB PricewaterhouseCoopers.
| Group | Intangible assets | Property, plant, and equipment |
|
|---|---|---|---|
| Net book amount at 31 December 2015 | 876 | 409,148 | |
| Additions | 879 | 84,383 | |
| Disposals | - | (8) | |
| Write-offs | - | (841) | |
| Impairment | - | (434) | |
| Transfer from inventories | - | 64 | |
| Reclassification | (146) | 146 | |
| Transfer from grants received | - | (3,870) | |
| Transfer from grants not received | - | (8,623) | |
| Set-off of grants with non-current assets | - | (63,203) | |
| Depreciation and amortization charge | (333) | (19,439) | |
| Net book amount at 30 September 2016 | 1,276 | 397,323 | |
| Net book amount at 31 December 2016 | 1,491 | 398,433 | |
| Additions | 182 | 20,804 | |
| Write-offs | - | (516) | |
| Transfer to inventories | - | (48) | |
| Reclassification | 2,295 | (2,295) | |
| Set-off of grants with non-current assets | - | (12,162) | |
| Depreciation and amortization charge | (526) | (19,228) | |
| Net book amount at 30 September 2017 | 3,442 | 384,988 |
| Company | Intangible assets | Property, plant, and equipment |
|
|---|---|---|---|
| Net book amount at 31 December 2015 | 870 | 408,262 | |
| Additions | 877 | 84,211 | |
| Write-offs | - | (841) | |
| Impairment | - | (434) | |
| Transfer from inventories | - | 64 | |
| Reclassification | (146) | 146 | |
| Transfer from grants received | - | (3,870) | |
| Transfer from grants not received | - | (8,623) | |
| Set-off of grants with non-current assets | - | (63,203) | |
| Depreciation and amortization charge | (331) | (19,276) | |
| Net book amount at 30 September 2016 | 1,270 | 396,436 | |
| Net book amount at 31 December 2016 | 1,486 | 397,542 | |
| Additions | 182 | 19,364 | |
| Write-offs | - | (516) | |
| Transfer to inventories | - | (48) | |
| Reclassification | 2,295 | (2,295) | |
| Set-off of grants with non-current assets | - | (12,162) | |
| Depreciation and amortization charge | (,524) | (19,053) | |
| Net book amount at 30 September 2017 | 3,439 | 382,832 |
Property, plant, and equipment value are carried at the asset acquisition cost less grants received or receivable. Grants comprise of EU structural funds, connection fees of new consumers (producers) for connection their to electricity transmission network (applicable for fees received until 1 July 2009), PSO funds and congestion income funds. If the value of the Property, plant, and equipment was not reduced by the grants, the book value of these assets as of 30 September 2017 would be higher by Eur 292,209 thousand. Information about the Property, plant, and equipment the value of which has been reduced by the grants received/receivable is presented below:
| Net book amount at 31 December 2016 | 285,745 |
|---|---|
| Additions | 12,162 |
| Depreciation charge | 5,698 |
| Net book amount at 30 September 2017 | 292,209 |
As at 30 September 2017 and 31 December 2016 the Company's investments comprised as following:
| Subsidiaries | Investment cost | Impairment | Carrying amount | Ownership interest, % |
|---|---|---|---|---|
| 30 September 2017 | ||||
| TETAS UAB | 4,356 | (4,356) | - | 100 |
| Litgrid Power Link Service UAB | 174 | - | 174 | 100 |
| Total | 4,530 | (4,356) | 174 | |
| 31 December 2016 | 100 | |||
| TETAS UAB | 4,356 | (441) | 3,915 | 100 |
| Litgrid Power Link Service UAB | 174 | - | 174 | 100 |
| Total | 4,530 | (441) | 4,089 |
The recoverable value of investment portfolio (100 %) to UAB "Tetas" shares as at 30 September 2017 was calculated due to market changes, resulted UAB "Tetas" activity, and additional impairment amounted to Eur 3,915 thousand was accounted. The recoverable value was calculated based on the discounted cash flow method, used forecasted financial results, applied after taxes discount rate (WACC) equal to 9%.
On 15 May 2017 AB Litgrid and Lietuvos energija, UAB have signed a share sale - purchase agreement Under this agreement AB Litgrid has transfered to UAB Lietuvos energija the ownership of 1000 units of ordinary registered non-material shares of UAB Technologiju ir inovaciju centras. This constitutes to 0.004 % of all UAB Technologiju ir inovaciju centras shares. Shares were sold for EUR 847.
In the item Other financial assets Group and Company accounted funds deposited for guarantees and deposits, congestion income funds and shareholding in UAB Duomenų logistikos centras. As at 30 September 2017 Other financial assets was amounted to EUR 6,330 thousand (as at 31 December 2016 – EUR 10,012 thousand). Other financial assets includes shareholding in Duomenų Logistikos Centras UAB amounting to EUR 752 thousand.
Borrowings of the Group/Company were as follows:
| Group | Company | |||
|---|---|---|---|---|
| 30-09-2017 | 31-12-2016 | 30-09-2017 | 31-12-2016 | |
| Non-current borrowings | ||||
| Borrowings from banks | 111,294 | 116,435 | 111,294 | 116,435 |
| Current borrowings | ||||
| Current portion of non-current borrowings | 8,082 | 8,082 | 8,082 | 8,082 |
| Overdraft | 39,283 | 40,986 | 36,738 | 40,171 |
| Total borrowings | 158,659 | 165,503 | 156,114 | 164,688 |
Maturity of non-current borrowings:
| Group | Company | ||||
|---|---|---|---|---|---|
| 30-09-2017 | 31-12-2016 | 30-09-2017 | 31-12-2016 | ||
| Between 1 and 2 years | 11,154 | 8,082 | 11,154 | 8,082 | |
| From 2 to 5 years | 42,676 | 42,676 | 42,676 | 42,676 | |
| After 5 years | 57,464 | 65,677 | 57,464 | 65,677 | |
| Total | 111,294 | 116,435 | 111,294 | 116,435 |
As at 30 September 2017, the weighted average interest rate on the Group's and the Company's borrowings was 0.87% (31 December 2016: 0.95%).
As at 30 September 2017, the Group's unwithdrawn balance of loans and overdrafts amounted to EUR 18,317 thousand (31 December 2016: EUR 36,014 thousand), the Company's – EUR 18,262 thousand (31 December 2016: EUR 34,829 thousand).
Under the credit agreements signed with foreign banks the Company is committed to comply with the net debt to EBITDA ratio and not to exceed interest coverage ratio. The Company as at 30 September 2017 and as at 31 December 2016 complied with these requirements.
The Group's future minimum finance lease payments were as follows:
| 30-09-2017 | 31-12-2016 | ||||
|---|---|---|---|---|---|
| Group | Minimum lease payments |
Present value of minimum lease payments |
Minimum lease payments |
Present value of minimum lease payments |
|
| Finance lease payments: | |||||
| Not later than 1 year | 208 | 201 | - | - | |
| Later than 1 year and not later than 5 years | 1,225 | 1,179 | - | - | |
| Minimum finance lease payments | 1,433 | 1,380 | - | - | |
| Less: future finance charges | (53) | - | - | - | |
| Present value of minimum finance lease payments | 1,380 | 1,380 | - | - |
The fair value of the finance lease liabilities approximated their carrying amount.
The Group has distinguished the following 5 segments:
The Company's segments coincide with the electricity transmission, trade in balancing/regulating electricity, provision of system (capacity reserve) services and provision of services under PSO (public service obligation) scheme segments distinguished within the Group. Segments of the Group and the Company are not aggregated.
The electricity transmission segment is engaged in transmitting electricity over high voltage (330-110 kV) networks from producers to users or suppliers not in excess of the limit established in the contract. The main objective of these activities is to ensure a reliable, effective, high quality, transparent and safe electricity transmission to distributions networks, large network users from power stations and neighbouring energy systems.
Trade in balancing/regulating electricity is a service ensuring the balancing of electricity generation/import and demand/export levels.
Provision of system (capacity reserve) services. In order to ensure a reliable work of the system, the Company purchases from electricity producers the service of ensuring capacity reserve for power generation facilities, reaction power and voltage control, breakdown and disorder prevention and its liquidation and provides capacity reserve services to users. The capacity reserve is required in case of unexpected fall in electricity generation volumes or increase in electricity consumption.
The Company's/Group's services provided under PSO scheme comprise as follows:
development and implementation of strategic projects for the improvement of energy security, installing interconnections between the electricity transmission systems abroad and (or) connecting the electricity transmission systems in the Republic of Lithuania with the electricity transmission systems in foreign countries (interconnections Lithuania-Sweden and Lithuania-Poland, connection of the Lithuanian electric energy system to continental Europe networks);
connection of power generation facilities that use the renewable energy resources to transmission networks; optimisation, development and/or reconstruction of transmission networks ensuring the development of power generation that uses the renewable energy resources;
balancing of electricity generated using the renewable energy resources.
Repair and maintenance services are carried out by the Company's subsidiaries TETAS UAB and Litgrid Power Link Service UAB. The core line of business of Tetas UAB is provision of medium-voltage transformer substation and distribution station reconstruction, repair and maintenance services. The purpose of Litgrid Power Link Service UAB is a centre of competence of high qualification and specific engineering fields, and operation and management of HVDC (High Voltage Direct Current) links.
The Group's information on segments for the period ended 30 September 2017 is presented in the table below:
| Operating segments | |||||||
|---|---|---|---|---|---|---|---|
| Provision of | |||||||
| 2017 | Electricity transmission |
Trade in balancing/ regulating electricity |
Provision of system services |
services under PSO scheme |
Repair and maintenance activities |
Total | |
| Revenue | 55,838 | 13,525 | 31,314 | 5,967 | 13,837 | 120,481 | |
| Inter-segment revenue | - | - | - | - | (3,379) | (3,379) | |
| Revenue after elimination of intercompany revenue within the Group |
55,838 | 13,525 | 31,314 | 5,967 | 10,458 | 117,102 | |
| Operating profit/(loss) | 7,926 | 3,533 | 730 | 13 | (2,094) | 10,108 | |
| Finance income/(cost), net* | x | x | x | x | x | (865) | |
| Profit/(loss) before income tax | x | x | x | x | x | 9,243 | |
| Income tax* | x | x | x | x | x | (1,926) | |
| Profit/(loss) for the year | x | x | x | x | x | 7,317 | |
| Depreciation and amortisation expenses | 19,410 | 42 | 125 | - | 177 | 19,754 | |
| Write-offs of property, plant and equipment | 490 | - | - | - | - | 490 |
* Income tax and finance income and costs are not allocated between the Company's operating segments and are attributed to electricity transmission operations.
(All amounts in EUR thousands unless otherwise stated)
The Group's information on segments for the period ended 30 September 2016 is presented in the table below:
| Operating segments | ||||||||
|---|---|---|---|---|---|---|---|---|
| Provision of | ||||||||
| 2016 | Trade in balancing/ | services | Repair and | |||||
| Electricity | regulating | Provision of | under PSO | maintenance | ||||
| transmission | electricity | system services | scheme | activities | Total | |||
| Revenue | 65,648 | 17,232 | 25,953 | 4,673 | 12,750 | 126,256 | ||
| Inter-segment revenue | - | - | - | - | (3,114) | (3,114) | ||
| Revenue after elimination of intercompany revenue | 65,648 | 17,232 | 25,953 | 4,673 | 9,636 | 123,142 | ||
| within the Group | ||||||||
| Operating profit/(loss) | 13,665 | 4,007 | (2,585) | 2 | (49) | 15,040 | ||
| Finance income/(cost), net* | x | x | x | x | x | (1,151) | ||
| Share of result of associates and joint ventures* | x | x | x | x | x | 6 | ||
| Profit/(loss) before income tax | x | x | x | x | x | 13,895 | ||
| Income tax* | x | x | x | x | x | (1,559) | ||
| Discontinued operations | x | x | x | x | x | 32 | ||
| Profit/(loss) for the year | x | x | x | x | x | 12,368 | ||
| Depreciation and amortisation expenses | 19,471 | 34 | 101 | - | 165 | 19,771 | ||
| Write-offs of property, plant and equipment | 789 | - | - | - | - | 789 |
* Income tax and finance income and costs are not allocated between the Company's operating segments and are attributed to electricity transmission operations.
The Group operates in Lithuania and its revenue generated from customers in Lithuania accounts for 96% of total revenue.
Income tax expenses for the period comprise current and deferred tax.
Profit for 2017 is taxable at a rate of 15 percent in accordance with Lithuanian regulatory legislation on taxation (2016: 15 percent).
The Company's/Group's related parties in 2017 and 2016 were as follows:
Transactions with related parties are carried out in accordance with market conditions and the tariffs approved under legislation or in accordance with the requirements of the Law on Public Procurement.
Sales of goods and services
| Group | Company | ||||
|---|---|---|---|---|---|
| 30-09-2017 | 30-09-2016 | 30-09-2017 | 30-09-2016 | ||
| The Group's parent company (EPSO-G UAB) | - | 388 | - | 388 | |
| EPSO-G UAB group companies | 3,754 | 17,598 | 3,754 | 17,598 | |
| The Company's subsidiaries | - | - | 112 | 85 | |
| 3,754 | 17,986 | 3,866 | 18,071 | ||
| Purchases of goods and services | |||||
| Group | Company | ||||
| 30-09-2017 | 30-09-2016 | 30-09-2017 | 30-09-2016 | ||
| The Group's parent company (EPSO-G UAB) | 77 | - | 69 | - | |
| EPSO-G UAB group companies | 158 | (652) | 158 | (652) | |
| The Company's subsidiaries | - | - | 3,191 | 3,121 | |
| 235 | (652) | 3,418 | 2,469 |
| Group | Company | |||
|---|---|---|---|---|
| 30-09-2017 | 31-12-2016 | 30-09-2017 | 31-12-2016 | |
| EPSO-G UAB group companies | 3,234 | 4,871 | 3,234 | 4,871 |
| The Company's subsidiaries | - | - | 59 | 332 |
| 3,234 | 4,871 | 3,293 | 5,203 | |
| Amounts payable to related parties | ||||
| Group | Company | |||
| 30-09-2017 | 31-12-2016 | 30-09-2017 | 31-12-2016 | |
| The Group's parent company (EPSO-G UAB) | 27 | 15 | 26 | 14 |
| The Company's subsidiaries | - | - | 920 | 345 |
| 27 | 15 | 946 | 359 |
| Group | Company | |||
|---|---|---|---|---|
| 30-09-2017 | 30-09-2016 | 30-09-2017 | 30-09-2016 | |
| Employment-related payments | 613 | 613 | 403 | 422 |
| Whereof: termination benefits | 25 | 43 | - | 33 |
| Number of the key management personnel (average annual) |
13 | 12 | 7 | 7 |
During the nine months of the years 2017 and 2016 the Management of the Group and the Company did not receive any loans, guarantees, or any other payments or property transfers were made or accrued.
Key management personnel consists of the Group's heads of administration and department directors.
During the Ordinary General Meeting of Shareholders of LITGRID AB held on 25 April 2017, the decision was made in relation to the payment of dividends in the amount of EUR 18,155,930. Dividends per share amounted to EUR 0.036.
Basic earnings per share are calculated dividing the Group net profit for the period by the weighted average number of ordinary shares during the reportable period. The Group has no financial instruments, that can be potentially converted into ordinary shares and therefore diluted earnings per share are the same as basic earnings per share. Basic and diluted earnings are provided below:
| 30-09-2017 | 30-09-2016 | |
|---|---|---|
| Net profit (loss) attributable to the Company's shareholders (EUR thousands) | 7,317 | 12,358 |
| Weighted average number of shares (units) | 504,331,380 | 504,331,380 |
| Basic and diluted earnings (deficit) per share (in EUR) | 0.015 | 0.025 |
The National Control Commission for Energy and Prices (hereinafter – the Commission) on 26th March 2015 imposed an economic sanction to LITGRID AB (hereinafter – the Company) of EUR 100 000 due to the violations relating to the regulated activity that were allegedly made by the Company during the regulatory period of 2011-2013. The Company issued a complaint to Vilnius Regional Administrative Court (hereinafter – the Court) objecting the decision of the Commission for the imposed sanction. The Court rejected the Company's claim. LITGRID AB transferred the amount of 100 000 EUR to the bank account of The State Tax Inspectorate under the Ministry of Finance on September 1, 2017.
Subsequently, on September 2017 the Commission was provided with the reports of regulatory expenses for the period of 2011 – 2013, with adjustments by taking into account the results of inspection, approved by the Commission, decision No. O3-815, as of 26 September 2014 and reports on the actual expenses for the period of 2011-2013.
On 3rd September, 2017 the Company started a lawsuit in Vilnius Regional Administrative Court regarding the administrative acts made by the Public Procurement Office (hereinafter – PPO) and by the Public Institution Lithuanian Business Support Agency (hereinafter - LBSA). These acts were issued with the respect to Company's performed public procurement procedure for the project "110 kV transmission line Kretinga-Benaičiai wind power plant construction", which was partially financed by EU funds. At the final stage of the project implementation, PPO (at the request of LBSA) performed evaluation procedure and reported on 3 August 2017, that the Company has improperly evaluated unusually low price of the winning tender and therefore violated principles of reasonable use of funds, transparency and equality. Following the PPO report, LBSA on 24th August 2017 adopted the decision acknowledging that the Company violated public procurement law and imposed financial sanctions equal to 25 percent of the eligible EU financial support (EU financial support is reduced by amount of EUR 243,463.62) for the Company. The Company objected the decision and initiated legal proceedings in the Court aiming to abolish and suspend the validity of adopted administrative acts. The court accepted the complaint but rejected to apply assurance measures and to abolish the validity of administrative acts. The Company is waiting for further procedural actions from the court.
LITGRID AB has granted the loan to UAB Tetas equal to EUR 1,600 thousand for balancing the cash flow of UAB Tetas main activities, Loan agreement dated 25th October 2017. Loan is fixed interests bearing and maturity term was set 25th October 2020.
LITGRID AB – the sole shareholder of UAB Tetas, decided on 10th November 2017 to abolish the previous decision of the sole shareholder on 24 April 2017 by which dividends amounted to EUR 50 thousand were distributed from UAB Tetas profit for the year 2016.
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