Interim / Quarterly Report • Aug 25, 2016
Interim / Quarterly Report
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CONDENSED CONSOLIDATED AND THE COMPANY'S INTERIM FINANCIAL STATEMENTS FOR A SIX-MONTH PERIOD ENDED 30 JUNE 2016, PREPARED ACCORDING TO INTERNATIONAL FINANCIAL REPORTING STANDARDS AS ADOPTED BY THE EUROPEAN UNION (UNAUDITED) PRESENTED TOGETHER WITH CONSOLIDATED INTERIM REPORT
| CONDENSED INTERIM REPORT | |
|---|---|
| CONDENSED INTERIM FINANCIAL STATEMENTS | |
| CONDENSED INTERIM STATEMENTS OF FINANCIAL POSITION | 25 |
| CONDENSED INTERIM STATEMENTS OF COMPREHENSIVE INCOME | 26 |
| CONDENSED INTERIM STATEMENTS OF CHANGES IN EQUITY | 28 |
| CONDENSED INTERIM STATEMENTS OF CASH FLOWS | 29 |
| NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS | 30 |
The consolidated interim report has been prepared for the first 6 months of 2016.
| Name | Litgrid AB (hereinafter referred to as "Litgrid" or the "Company") |
|---|---|
| Legal form | AB (public company) |
| Registration date and place | 16/11/2010, Register of Legal Entities of the Republic of Lithuania |
| Business ID | 302564383 |
| Registered office address | A. Juozapavičiaus g. 13, LT-09311, Vilnius |
| Telephone | +370 5 278 2777 |
| Fax | +370 5 272 3986 |
| [email protected]; www.litgrid.eu |
Litgrid, Lithuania's electricity transmission system operator (the "TSO"), maintains stable operation of the country's 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 order to strengthen 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.
The Company as the backbone of the national power sector is responsible for the maintenance of the balance of the electricity consumed and produced in the system and the reliable transmission of electricity and 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 operations.
Litgrid works actively and responsibly in the following key directions:
Once Lithuania becomes a full-fledged participant of the European electricity system, European system management standards will be introduced in the electricity sector, and electricity flow management based on market principles and participation in maintaining the system's frequency will be ensured. The desired result 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 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 allow for the most effective use of networks and generation infrastructure and for ensuring electricity transmission security.
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 country's grid ensure the integration of new electricity generators, the safe transmission of electricity, and the reliability of the system's operations.
LitPol Link has been in operation since the beginning of 2016. The HVDC converter station is the main and most complex unit of the new power link. The station converts current from alternating to direct current and back to alternating current, thus enabling the transmission of electricity between asynchronous Lithuanian and Polish power systems.
EUR 109 million were invested in LitPol Link project in Lithuania. In July 2015, the European Commission approved the EUR 27 million funding for the LitPol Link project. In all, investments of EUR 31 million in LitPol Link were financed by the EU.
In June 2016 Environmental Protection Agency and other related authorities approved the LitPol Link Environmental Impact Monitoring Programme. Under this programme the environmentalists will monitor specific areas where natural habitats of rare species have been identified. The monitoring will take three years. In addition, electromagnetic field investigations will be carried out in those parts of the route where the transmission line extends near residential and public buildings.
NordBalt power link started regular operations in June 2016, after the period of trial operations. One of the longest submarine cables in the world NordBalt is contributing significantly to the security of supply in Lithuania as well as in the Baltic countries.
Investments in NordBalt power link on the Lithuanian side totalled EUR 223 million including EUR 65 million of EU funding. It is the biggest joint Lithuanian-Swedish investment into energy sector.
The Law on the Integration of the Power System of the Republic of Lithuania into the European Electricity Systems adopted by the Seimas (Parliament) of the Republic of Lithuania in 2012 sets 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.
Out of a number of feasibility studies on connecting the electricity systems of the Baltic countries and the continental Europe completed in the period 1998-2013, the scenario of synchronisation via infrastructure links constructed across the territories of the EU Member States was chosen in 2014. The value of this complex project, according to different scenarios, varies between EUR 435 million and EUR 1,071 million.
In 2014, connecting the electricity systems of the Baltic countries with the continental Europe for synchronous operation was listed among the projects of common interest by the European Commission, and in 2015 the European Council highlighted the importance of all dimensions of the European energy union for the energy security of the region. The following projects have been listed as the Projects of Common Interest (PCI) by the European Commission in 2015:
In 2015, a study for the setting of the route of the new electricity transmission line from the new transformer substation in the Lithuanian electricity transmission grid to the Lithuanian-Polish border was conducted. The Lithuanian-Polish border crossing point and the feasibility of the power link's construction have been discussed with PSE, the Polish electricity transmission system operator.
The complex project on the synchronisation with the continental European network includes numerous technical engineering and IT solutions, and individual works have to be planned and started in the nearest future. Apart from international agreements, synchronisation requires internal network development projects; some of them will be launched this year.
Reconstruction of the transformer substation at the Ignalina Nuclear Power Plant is one of such projects. The transformer substation was put into operation in 1981. At present it is one of the largest electricity transmission hubs in East Lithuania. Due to the closure of the Ignalina NPP, it was transformed from a huge electricity producer into one of the largest electricity consumers due to nuclear fuel contained therein as well as the future nuclear fuel depositories. The reconstruction will involve a replacement of all outdated substation installations and a re-installation of the sites of connection of cross-border power lines from Latvia and Byelorussia. It is planned that the modernised substation will be fully prepared for power system's synchronisation with continental Europe networks.
The concentration of business and service centres in Vilnius, the capital of Lithuania means that the increasing electricity consumption in the city now accounts for one-third of Lithuania's total electricity demand. At present Vilnius is supplied with electricity via high-voltage lines extending from the Lithuanian Power Plant and Belarus. In order to ensure a reliable transmission of electricity to Vilnius and to prepare for the synchronisation, the Vilnius transformer substation will be reinforced and new electricity transmission lines will be built. One of such lines is the projected 330 kV transmission line from the Lithuanian Power Plant to Vilnius.
The reconstruction of the 110 kV overhead lines from Merkinė to Trakai was completed in April-June 2016.
With the view of creating a common Baltic and Nordic market for reserve, regulation, and balancing, Litgrid and other Baltic electricity transmission system operators have agreed on the principles and an implementation plan of the common Baltic regulation and balancing market to be implemented by the end of 2017. Since 2015, common balancing of the Baltic countries' systems (imbalance netting) is being performed. This means that the three operators have been collectively accounting for the differences between planned and actually consumed electricity in the Lithuanian, Latvian and Estonian electricity systems for a more efficient control of the regulation and balancing costs of the electricity systems. This enabled Lithuania to save EUR 1.8 million in the balancing electricity costs in the first 6 months of 2016.
At the end of June 2016 the Lithuanian, Estonian and Latvian transmission system operators Litgrid, Elering and Augstsprieguma tīkls presented for public consultations a first set of documents on the Baltic countries market in balancing electricity. The purpose of the market is to enable a stronger competition between the market participants and ensure equal rights for the balancing electricity suppliers in all the countries. Integration of the Baltic and Nordic markets for regulating and balancing energy is projected for 2018 - 2020.
In the first 6 months of 2016, the average electricity price in the Lithuanian bidding area of the Nord Pool electricity exchange was 36.2 EUR/MWh. On average, 76 % of the electricity consumed during the same period was imported.
As of 1 January 2016, the Baltic Rules for the calculation and allocation of cross-border capacities signed by the Baltic electricity transmission system operators Litgrid, Augstsprieguma tīkls and Elering have come into effect to ensure maximum market access to the cross-border power links.
In order to create equal opportunities for consumers and flexibility for service providers to actively participate in the electricity market and system control, Lithuanian, Latvian, Estonian and Finnish electricity transmission system operators initiated a Joint Baltic and Nordic project and have submitted an application for European Regional Development Fund (Interreg Baltic) funding.
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) and Central Europe Energy Partners (CEEP).
ENTSO-E (European Network of Transmission System Operators for Electricity) unites 41 electricity transmission system operators from 34 countries. Its main functions are: to resolve European-level issues on transmission grid management and development and the electricity market; to promote regional collaboration among TSOs; to make proposals regarding draft legislation prepared by the European Commission; and to prepare the Ten-Year Network Development Plan (TYNDP) and network codes. Litgrid representatives are on the organisation's System Operations, System Development, Market, and R&D committees as well as in 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.
On the initiative of three Baltic electricity transmission system operators, Litgrid together with ENTSO-E organised conference "Regional integration: hub of opportunities" on 1st June. In the first regional conference on energy strategies, held in Vilnius, energy experts from around the Baltic Sea region and other European countries presented their energy strategies in search of opportunities to benefit all countries in the region. The discussions in the conference involved the top managers from Lithuanian, Latvian, Estonian, Finnish, Swedish, Polish, Danish and Swedish electricity transmission system operators, high-ranking Baltic Sea region officials, energy experts, scientists and regulators.
CEEP (Central Europe Energy Partners) unites 26 organisations from five Central and Eastern Europe countries. CEEP's main objective is to support integration of the energy sector of newest European Union member states in the context of common EU energy and energy security policy. Litgrid uses its participation in CEEP to contribute to the development of regional positions on the EU energy policy issues, to take part in energy and industry forums organised by partners, and to present and seek support for key projects.
As at 30 June 2016, the Litgrid group of companies consisted of AB Litgrid, UAB Tetas, and UAB Litgrid Power Link Service.
| Name | UAB Tetas | UAB Litgrid Power Link Service |
|---|---|---|
| Legal form | Private company | Private company |
| Registration date and place | 08/12/2005, Register of Legal Entities of the Republic of Lithuania |
14/02/2014, 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 5 278 2766 |
| Fax | +370 45 504 684 | +370 5 272 3986 |
| Type of activities | Specialised transformer substations' and distribution stations' installation, maintenance, repair and testing services; designing energy facilities |
Preparation for the installation, maintenance and operation of high-voltage direct current power links with the power systems of Poland and Sweden |
| Country of operation | Lithuania | Lithuania |
| Litgrid's shareholding | 100 % | 100 % |
Other Litgrid's shareholdings as of 30 June 2016:
| Name | LitPol Link Sp.z.o.o | UAB Duomenų logistikos centras |
UAB Technologijų ir inovacijų centras |
Nord Pool AS |
|---|---|---|---|---|
| Country of establishment |
Republic of Poland | Republic of Lithuania |
Republic of Lithuania | Kingdom of Norway |
| Registered office | ul. Wojciecha Gorskiego 9, 00-33 Warszawa, Poland |
Žvejų g. 14, LT-09310 Vilnius |
A. Juozapavičiaus g.13, LT-09311, Vilnius |
PO Box 121, NO-1325 Lysaker, Norway |
| Country of operation |
Lithuania and Poland | Lithuania | 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 |
0.01 % 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 energy equipment. 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 of the management of the high voltage electricity transmission grid and ensuring a reliable, effective, high-quality, transparent and safe electricity transmission.
In order to maintain reliable system operations, Litgrid purchases from energy producers the services for the capacity reserve assurance at power generation facilities, reactive capacity and voltage management, and emergency and disruption prevention and response, 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. Regulating 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.
Balancing 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 with the technical facilities to quickly change power generation and consumption routines, 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. PSO funds are funds that are paid to providers of PSO.
Litgrid provides the following PSO:
In order to maintain high transmission grid's reliability indicators and to properly plan and carry out the operation of the grid equipment, Litgrid has updated the methodology for the formation of the emergency reserve, approved new emergency reserve lists, conducted stock-taking of the emergency reserve's equipment and spare parts, and drawn up a plan for the acquisition of the emergency reserve equipment.
Tetas, Litgrid's subsidiary, offers the following maintenance and repair services for electricity grid equipment:
Maintenance and repairs of electric equipment of the grids;
On 24 February 2014, Litgrid's subsidiary UAB Tinklo priežiūros centras (renamed into UAB Litgrid Power Link Service from 29 April 2016) was established as a centre for high qualification and specialised engineering competences in the area of management and operation of high voltage direct current links (HVDC). The company is managed as an internal unit of Litgrid.
Since the beginning of 2016, Litgrid Power Link Service has taken over the operation of LitPol Link. The LitPol Link operation agreement has been concluded with PSE, the Polish TSO, and the parties have agreed on the power link operation model.
The company has taken over the operation of NordBalt power link in June 2016. The power link operation model has been agreed with Svenska Kraftnät, the Swedish TSO, and contracts with external contractors required for the HVDC equipment operation have been concluded.
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 June 2016, Litgrid Group had 677 employees: Litgrid – 233 employees, Tetas – 415 employees, and Litgrid Power Link Service – 29 employees.
Litgrid's wage fund in the reporting period amounted to EUR 2,821,000.
| Number of employees as of 30 June 2016 |
Average monthly pay, EUR |
|
|---|---|---|
| Specialists | 228 | 1,811 |
| Management | 5 | 5,639 |
| Total | 233 | 1,909 |
Litgrid Group's wage fund in the reporting period amounted to EUR 5,342,000.
| Number of employees as of 30 June 2016 |
Average monthly pay, EUR |
|
|---|---|---|
| Workers | 246 | 766 |
| Specialists | 420 | 1,552 |
| Management | 11 | 4,528 |
| Total | 677 | 1,342 |
14 students had their traineeship placements in the Company during the first 6 months of 2016.
The goal of Litgrid's remuneration policy is to contribute to the realisation of the mission and vision of an organisation with contemporary and effective management, to mobilise people to work together and motivate them to implement strategic priorities, to form and imbue the 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 an employee's position, work performance, achievement of individual annual goals, level of competencies, and sharing of organisational values. 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 non-financial elements: basic pay, variable part of pay, fringe benefits, and emotional reward.
Performance appraisal takes place continuously at Litgrid as one of the most important tools for effective corporate management, helping to link personal and organisational goals, showing the importance of each employee's work for the attainment of common objectives, making career planning possible, and motivating employees by providing an objective basis for incentivisation.
Litgrid enables its employees to develop their competences and qualifications in the following ways:
In June 2015, Litgrid concluded an updated collective agreement with the trade union operating in the company. The agreement defines and ensures a fair remuneration policy and work-rest balance and governs the socio-economic relations between the employer and employee. It also contains provisions on support for employees at important/difficult moments in life.
In its activities Litgrid follows the principles of social responsibility, sustainable development, transparency, and advanced environmental protection. The company's operations form an integral part of the successful functioning of the country's 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.
We devote our energy and resources to ensure the country's economic growth, to support communities in which we work, to provide working conditions that motivate and encourage personal development of our employees, and to protect nature which provides us with resources. We implement strategic projects of high value and historic significance, and we understand that big tasks mean great responsibility. Maintaining and encouraging a quality dialogue with the society for whom and among whom we work is a priority in Litgrid's daily operations.
Every year Litgrid provides information to residents about the risks related to high-voltage electricity transmission lines. Information materials on safety for people living and working near the lines are disseminated, on a periodic basis, in municipalities, wards, forestries, territorial labour exchanges, regional SoDra's (State's Social Insurance Fund) offices, branches of the State Tax Inspectorate and Centre of Registers, and Litgrid's contractors. Such information includes safe distance under the lines, action to be taken if electric wires are torn or fall onto a vehicle, safe distance for fishing in water bodies under the lines etc. In the spring of 2016 Litgrid presented 5 videos on safe behaviour near electricity lines. The videos published on the internet have reached the audience of 600,000 people.
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 reconstructing 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 document proving the 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.
In cooperation with Lithuanian Ornithological Society, Litgrid is implementing a project "Implementation of Bird Protection Measures in the High-Voltage Electricity Transmission Network". 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. Electricity transmission lines are made more visible by equipping them with bird-diverting devices in places of the most intensive bird migration. In pre-migratory white stork accumulation areas, specific protection devices are installed to protect them from the short-circuit impact. Special nesting-boxes are installed for kestrels.
By the end of the first 6-month period of 2016, the company installed 3,884 wire visibility increasing facilities, 8,796 bird protection facilities on the pylons, and 360 nesting-boxes for kestrels. According to the Lithuanian Ornithological Society, 11% of the nestingboxes were used by kestrels for hatching, thus the population of this protected species in Lithuania has increased by at least 10%. The value of all these works carried out in the said period is EUR 281,000. This project is co-financed under the EU LIFE+ financial instrument for the environment and by the Ministry of Environment of the Republic of Lithuania.
Every year Litgrid prepares power system development and research programmes aimed at expanding and enhancing the efficiency of the transmission grid. The reconstruction of energy facilities involves the replacement of old equipment and the implementation of modern systems for relay protection, system automation, management, and data collection and transmission. Plans for the construction and reconstruction of facilities based on scientific research and studies are made for a 10-year period and updated annually.
By agreement of the Lithuanian, Latvian and Estonian electricity transmission system operators, a regional study on the overview of generation of electricity from renewable energy sources in the Baltic countries has been launched under the leadership of Litgrid.
Three Baltic transmission system operators together with the consultants are conducting a study on the flow-based capacity calculation method application possibilities in the Baltic electricity markets. The study aims to evaluate the technical options of flow-based method application and compare their use and reliability benefits with those of current capacity calculation methods.
Lithuanian and Polish transmission system operators together with researchers and consultants perform the feasibility study of the second LitPol Link direct current converter installation. The study aims to assess the need and possibility to increase LitPol Link capacity from 500 MW to 1000 MW, as well as the impact of such increase to the electricity market.
Jointly with researchers from the Kaunas University of Technology, Litgrid conducted a study to analyse the technical means to limit the electricity flow from Astravas nuclear power plant (NPP) and to assess their impact on the power system's reliability and the market. It has been concluded that the measures would lead to a considerable decrease in the stability and reliability of the Baltic countries' power systems.
Any of the options analysed could only be implemented if all the Baltic countries agree on them unanimously. If the technical measures are applied in Lithuania only, the system's reliability will decrease, and the electricity flow from Belarus would reach Lithuania from Latvia.
The implementation of the technical flow restriction measures would require investments between EUR 20 million and EUR 198 million. All the technical options would lead to an increase in the electricity prices on the Baltic countries markets from EUR 3 to EUR 10.5 per MWh.
Another method to limit the flow of electricity from third countries is related to the market limiting only. Technical measures and investments in the technical infrastructure would not be required in such a case, just a consensus of the Baltic countries.
The most effective means to restrict the flow of electricity from the Astravas NPP is the Baltic countries' synchronisation with the continental European networks. The TSOs of the Baltic countries and Poland are ready to launch the synchronisation project's
works immediately after a high-level political agreement on the technical specifications and the plan of synchronisation is reached by all the countries involved.
Litgrid Group's consolidated financial statements are prepared according to 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.
Efficient information technology and communications (ITC) solutions are critically important in ensuring smooth and uninterrupted operations and have become an integral part of the electricity system's planning and management as well as equipment control and servicing.
The concentration of know-how on the automation of the power system's control at Litgrid's ITC centre has enabled a successful integration of LitPol Link and NordBalt power links' current converter control systems. The smooth linking of the control system used at Litgrid's System Control Centre with the control systems of the neighbouring Polish and Swedish systems ensures a sound control of the links and the real-time information exchange among the Lithuanian, Polish and Swedish power systems.
Financial results of the Group and the Company are provided in the table below.
| January – June 2016 | January – June 2015 | January – June 2014 | ||||
|---|---|---|---|---|---|---|
| Group | Company | Group | Company | Group | Company | |
| Financial indicators (EUR'000) | ||||||
| Sales income related to electricity | 73,756 | 73,756 | 39,776 | 39,776 | 52,625 | 52,625 |
| Other operating income | 10,932 | 5,193 | 8,532 | 1,393 | 5,963 | 848 |
| EBITDA* | 24,514 | 24,522 | 14,270 | 14,176 | 18,565 | 18,960 |
| Profit (loss) before tax | 9,621 | 9,837 | 2,818 | 2,837 | (2,667) | (2,090) |
| Net profit (loss) | 8,670 | 8,882 | 2,366 | 2,409 | (2,651) | (2,073) |
| Cash flows from operations | 10,200 | 9801 | 11,887 | 11,085 | 15,324 | 15,727 |
| Ratios | ||||||
| EBITDA margin, % | 28.9 | 31.1 | 29.5 | 34.4 | 31.7 | 35.5 |
| Operating profit margin, % | 12.3 | 13.3 | 6.4 | 7.6 | -4.3 | -3.7 |
| Return on equity, % | 7.1 | 7.1 | 1.9 | 2.0 | -1.3 | -1.0 |
| Return on assets, % | 3.5 | 3.6 | 0.8 | 0.8 | -0.7 | -0.6 |
| Shareholder's equity / Assets, % | 49.8 | 50.5 | 38.9 | 41.3 | 54.4 | 56.7 |
| Financial liabilities / Equity, % | 83.1 | 81.8 | 80.9 | 75.4 | 22.2 | 21.5 |
| Liquidity ratio | 0.77 | 0.76 | 0.54 | 0.36 | 1.25 | 1.38 |
| TSO operating indicators | ||||||
| Energy transmission volume, m kWh | 4,784 | 4,553 | 4,541 | |||
| Process costs in transmission network, % | 2.90 | 1.98 | 1.90 | |||
| ENS (Energy Not Supplied due to interruptions), MWh** |
1.03 | 0.45 | 1.55 | |||
| AIT (Average Interruption Time), min. ** | 0.04 | 0.02 | 0.08 |
* 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.
In the first 6 months of 2016, Litgrid's volumes of electricity transmission via high-voltage networks for national needs amounted to 4,784 million kilowatt-hours (kWh), which is 5.1 % more than in the same period of 2015. The volumes of transmission to customers of the distribution operator amounted to 4,391 million kWh (+6 % compared to 2015), to other customers 393 million kWh (- 4.3 % compared to 2015).
Litgrid Group's income for the first 6 months of 2016 was EUR 84.7 million, a 75 % increase compared to the same period of 2015.
Income from electricity transmission increased 35% (to EUR 33.7 million) with the same period of 2015. Income from electricity transmission accounted for 40 % of total revenues of the Group. The increase has resulted from larger electricity transmission volumes and a 28 % higher tariff rate set for the transmission service by the National Commission on Prices and Energy Control.
Income from balancing/regulating electricity more than doubled, reaching EUR 12.4 million. The increase has largely resulted from the nearly doubled volumes of balancing/regulating electricity sold, which, in its turn, was largely determined by securing the allocated capacity (i. e. the capacity traded on the electricity exchange) of the new power links with Sweden and Poland.
Income from system services has grown four-fold (to EUR 18.6 million). The main growth driver was the tariff for system services increased by the National Commission on Prices and Energy Control 3.8 times from 1 January 2016.
Upon putting the Lithuanian-Polish and the Lithuanian-Swedish power links into operation, in the first 6 months of 2016 Litgrid's revenues from congestion charges was EUR 7.5 million (2015: EUR 225,000). 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 2.9 million as income, i. e. part of the congestion revenues that was used for ensuring the
allocated capacity of the power links. 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 1.0 million; PSO income – EUR 2.9 million; reactive energy income – EUR 0.8 million; connection of new customers – EUR 1.5 million. Other operating income consists mainly of the income from services provided by Tetas, a subsidiary of Litgrid.
The Group's costs for the first 6 months of 2016 totalled EUR 74.3 million, which is 64 % more compared to the same period of 2015.
Costs of purchase of electricity and related services account for the majority of the Group's costs: EUR 43.6 million or 29 %. These costs increased 2.5 times compared with 2015. Balancing (regulating) electricity costs increased 2.2 times (to EUR 9.4 million), system service costs increased almost 4-fold to EUR 20.1 million, costs of compensating process losses in the transmission grid increased 72% to EUR 7.5 million. Transit (ITC) costs were EUR 0.8 million, PIS provision costs EUR 2.9 million, and costs of ensuring the allocated capacity of the Swedish and Polish links EUR 2.9 million.
Due to putting assets into operation at the end of 2015, depreciation and amortisation costs increased 22 % or EUR 2.3 million (to EUR 13.1 million) compared to the period of the first 6 months of 2015. Other operating costs increased by 4% (to EUR 17.6 million) compared to the same period.
The Group's EBITDA for the first 6 months of 2016 amounted to EUR 24.5 million. Compared to the same period of 2015, the EBITDA increased by EUR 10.2 million, or 72 %; the EBITDA margin decreased to 28.9 % (H1 of 2015: 29.5 %). The increase in the EBITDA and net profit was mainly determined by the growth in the transmission service volumes and revenues from the crossborder congestion charges.
The Group's net profit for the first 6 months of 2016 was EUR 8.7 million (first 6 months of 2015: EUR 2.3 million).
The Group's operating profit for the first 6 months of 2016 consists of: profit of the transmission segment EUR 8.9 million (same period of 2015: EUR 1 million profit), loss in the system services segment EUR 1.5 million (same period of 2015: EUR 0.5 million loss), profit in the balancing (regulating) electricity segment EUR 3 million (same period of 2015: 2.6 million profit). As in 2015, results of other activities have not had a significant impact on profit.
Litgrid Group's return indicators, %
There has been an increase in the annual ROE and ROA ratios for the first 6 months of 2016 compared to the same period of 2015: from 1.9 % to 7.1 % and from 0.8 % to 3.5 %, respectively.
As of 30 June 2016, assets of the Group amounted to EUR 493.6 million. Non-current assets accounted for 82.5 % of total assets of the Group. Shareholders' equity accounted for 49.8 % of total assets.
As of 30 June 2016, the Group's financial liabilities to credit institutions were EUR 204.3 million (+ EUR 0.9 million over the 6 month period). The ratio between financial liabilities and equity was 83.1 %. Long-term financial debts payable after one year accounted for 24 % of all financial debts. Cash and cash equivalents amounted to EUR 3.1 million, unused overdraft limit was EUR 40.2 mln.
The Group's net cash flows from operations in the first 6 months of 2016 amounted to EUR 10.2 million, while payments for noncurrent tangible and intangible assets were EUR 44.4 million; subsidies received amounted to EUR 41 million.
The Group's net cash flows (excluding cash flows from financial activities) in the first 6 months of 2016 totalled EUR 6.9 million.
In the first 6 months of 2016, investments of Litgrid (works performed and assets acquired irrespective of terms of payment) amounted to EUR 26.2 million. 60 % of these investments were earmarked for the implementation of strategic energy projects and 40% 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 Energy Control and Prices, two indicators are used to measure the electricity transmission reliability level: ENS (Energy not Supplied due to interruptions) and AIT (Average Interruption Time). The indicators set for Litgrid for 2016 are as follows: ENS 6.3 MWh and AIT 0.29 min. In the period of the first 6 months of 2016, ENS was 1.03 MWh and AIT was 0.04 min.
Detailed explanations about financial information are provided in the Explanatory Notes to the financial statements for the first six months of 2016.
The Government of the Republic of Lithuania, which indirectly through UAB EPSO-G controls 97.5% of Litgrid shares, has established the principles for the allocation of dividends for shares owned by the State in its Resolution No. 20 of 14 January 1997 (revised text: Resolution No. 359 of 4 April 2012). On 26 April 2016 Ordinary general meeting of Litgrid shareholders, it was decided to pay out dividends of EUR 4.6 mln or EUR 0,0091 per share.
The power sector is a vitally important part of the economy with considerable influence over political and economic interests. The structure and management of the power sector and the operation of the companies in the energy 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 the results of Litgrid Group. 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 questions posed by public or control authorities regarding the Company's activities.
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 performance results but also funds that the Company allocates to cover the operating costs, investments that maintain a reliability of the transmission grid, as well as opportunities to finance 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, internal legislation drafting, and setting of contractual obligations.
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 of 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 complex strategic plans. For that purpose, educational and substitutability plans are being developed and the remuneration and motivation policy has been updated.
Companies in the Litgrid Group encounter financial risk 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 customers / third party's risk level).
Lithuania's energy system has 15 interconnections with the neighbouring energy systems. The available means for power and energy balance control are limited, whereas 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. Investments in equipment and materials has a direct impact on financial results. The Company ranks investments in the network considering objective criteria and applying a specific evaluation methodology so that the investment process is optimised.
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. At facilities that pose an increased risk to the environment due to pollutants or waste, work is organised according to the conditions set out in the Integrated Pollution Prevention and Control Permits issued by regional environmental protection departments.
Litgrid has not acquired any of its 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 either.
Since 22 December 2010, Litgrid's shares are included 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 19 April 2016, the company had 5,545 (five thousand five hundred and forty five) shareholders. 97.50% 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. On 28 September 2012, to fulfil the provisions of the European Union's Third Energy Package, Litgrid as the transmission system operator was separated from the other companies in the power sector.
Services of accounting for Litgrid's securities and the related services from 1 February 2016 to 31 January 2019 are provided by Swedbank AB.
Securities of subsidiaries of the Company are not traded on any securities exchange.
| Indicator | 2014 | 2015 | 2016 |
|---|---|---|---|
| Opening price, EUR | 0,593 | 0,698 | 0,708 |
| Highest price, EUR | 0,750 | 0,740 | 0,745 |
| Lowest price, EUR | 0,582 | 0,550 | 0,677 |
| Closing price, EUR | 0,664 | 0,708 | 0,687 |
| Turnover, pcs | 1 176 548 | 656 613 | 514 125 |
| Turnover, EUR m | 0,80 | 0,45 | 0,36 |
| Capitalisation, EUR m | 334,88 | 357,07 | 346,48 |
Price
The Articles of Association of Litgrid 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.
On 26 April 2016 the general meeting of shareholders of Litgrid approved a new version of the Articles of Association of the Company. It was registered in 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.
If 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 action plan of the Company, a ten-year plan for the development of the Company's transmission grid, 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 on other matters as stated in the Articles of Association.
The Chief Executive Officer (CEO) is the single-handed management body of the Company. The CEO organises and directs the Company's activities, acts on behalf of the Company, and concludes transactions at his/her sole discretion. The scope of competence of the CEO, as well as the procedure for his/her election and recall, is prescribed by laws, other legal acts and the Articles of Association.
| Position | Name and surname | Start date | End date | Number of the issuer's shares held |
|---|---|---|---|---|
| Supervisory Board | ||||
| Chairperson | Aleksandras Spruogis | 2013 04 24 | 2016 04 26 | - |
| Member | Audrius Misevičius | 2013 04 24 | 2016 04 26 | - |
| Independent member | Mindaugas Vaičiulis | 2014 04 07 | 2015 04 24 | - |
| Member | Rolandas Zukas | 2015 04 24 | 2016 04 26 | - |
| Audit Committee | ||||
| Member | Aušra Pranckaitytė | 2014 02 24 | 2016 04 26 | - |
| Member | Rima Kvietkauskaitė | 2014 02 24 | 2016 04 26 | - |
| Member | Ana Tursienė | 2014 02 24 | 2016 04 26 | - |
| Board | ||||
| Member | Daivis Virbickas | 2013 09 10 | - | |
| Member | Vidmantas Grušas | 2013 09 10 | - | |
| Member | Rimvydas Štilinis | 2016 07 29 | - | |
| Member | Nemunas Biknius | 2016 07 29 | - | |
| Member | Domas Sidaravičius | 2016 07 29 | - | |
| Member | Karolis Sankovski | 2013 09 10 | 2016 07 29 | - |
| Member | Rimantas Busila | 2013 09 10 | 2016 07 29 | 1421 |
| Member | Rolandas Masilevičius | 2013 12 18 | 2016 05 09 | - |
| CEO | Daivis Virbickas | 2013 09 10 | - | |
| - | ||||
| Chief Financier | Jūratė Vyšniauskienė | 2015 10 19 | - | |
| - | ||||
Daivis Virbickas, Member of the Board (Chairman of the Board until 29 July 2016)
Born in 1978. Responsible for strategic management and the power system control. 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 management of electricity transmission grid. Has experience of many years 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. He also graduated from Riga University of Technology with the Energy Engineering qualifications in 1985.
Born in 1985. Responsible for strategic electricity grid projects. Has comprehensive experience working at power companies and with strategic international interconnector projects.
Mr Sankovski holds a Master's Degree in Environmental Science from Aix-Marseille University (graduated in 2008) and Bachelor's Degree in Law from Mykolas Romeris University (2007).
Rimantas Busila, Member of the Board (until 29 July 2016) Born in 1958. Responsible for financial management. Experienced in financial, investment and securities management.
Mr Busila graduated from Vilnius Gediminas Technical University in 1981 with the qualifications of an Engineer-Economist. In 1993 Mr Busila completed advanced training at the Paris stock exchange (Basics of capital markets functioning. Financial instruments trading), in 1996 studied in American Association of Lawyers and Commercial Law Centre (Stock market legal regulation), in 1998 – at the U.S. Securities and Exchange Commission (Financial regulation and supervision).
Born in 1978. Mr Rimvydas Štilinis holds a Master's Degree in Electrical Engineering from Kaunas University of Technology (KTU). In 2002-2014 worked with 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 worked as the CEO of VAE SPB UAB. Mr R. Štilinis is the Director for Infrastructure at EPSO-G, the parent company of Litgrid controlling 97.5 % of its shares, and the Member of the Board of Amber Grid, Lithuania's gas transmission network operator.
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.
Domas Sidaravičius, Independent Member of the Board (from 29 July 2016)
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. Has many years' experience of work in financial, insurance and business risk management areas. Member of the Board and CEO of ERGO Invest SIA since March 2016.
No payments were made to the CEO of the Company or the Members of the Board for their work on the Board. No payments were made to the members of the Audit Committee for the work in the Committee during the first 6 months of 2016.
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 9.
The Company complies with all the main provisions of Sections IV-VIII of the Transparency Guidelines except that:
| Date | Notice |
|---|---|
| 2016 01 08 | Convocation of an extraordinary general meeting of Litgrid shareholders |
| 2016 01 28 | Resolutions adopted at the Extraordinary General Meeting of Litgrid Shareholders, 28 January 2016 |
| 2016 02 05 | Regarding the sale of UAB Baltpool shares |
| 2016 02 26 | Litgrid Group financial results for 12 months of 2015 announced |
| 2016 04 04 | Convocation of Ordinary General Meeting of Litgrid Shareholders |
| 2016 04 26 | Decisions adopted at the Ordinary General Meeting of Litgrid Shareholders, 26 April 2016 |
| 2016 04 26 | Consolidated Annual Report of Litgrid and its Subsidiaries for 2015 |
| 2016 04 27 | Litgrid CEO Daivis Virbickas presentation in company's annual report event |
| 2016 05 09 | Procedure for the Payment of Litgrid Dividend for 2015 |
| 2016 05 09 | Information about a notice of resignation |
| 2016 05 16 | Amended Articles of Association for Litgrid AB Have Been Registered |
| 2016 05 27 | Litgrid Group starts the year with growing income and net profit |
| 2016 07 08 | Convocation of Extraordinary General Meeting of Litgrid Shareholders |
| 2016 07 29 | Decisions adopted at Extraordinary General Meeting of Litgrid Shareholders, 29 July 2016 |
Detailed information on all material events published in 2016 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/about-us/for-investors/announcements/611.
| Notes | Group | Company | ||||
|---|---|---|---|---|---|---|
| 30-06-2016 | 31-12-2015 | 30-06-2016 | 31-12-2015 | |||
| (unaudited) | (audited) | (unaudited) | (audited) | |||
| ASSETS | ||||||
| Non-current assets | ||||||
| Intangible assets | 3 | 1,268 | 876 | 1,263 | 870 | |
| Property, plant and equipment | 3 | 401,699 | 409,643 | 400,782 | 408,757 | |
| Prepayments for property, plant and equipment | 1,084 | 56,298 | 1,084 | 56,298 | ||
| Investments in subsidiaries | 4 | - | - | 4,089 | 4,089 | |
| Investments in associates and jointly controlled | 4 | 721 | 720 | 752 | 752 | |
| entities | ||||||
| Deferred income tax assets | 36 | 63 | - | - | ||
| Available-for-sale financial assets | 2,273 | 2,273 | 2,273 | 2,273 | ||
| Total non-current assets | 407,081 | 469,873 | 410,243 | 473,039 | ||
| Current assets | ||||||
| Inventories | 2,919 | 2,518 | 1,198 | 1,157 | ||
| Prepayments | 704 | 240 | 528 | 203 | ||
| Trade receivables | 17,547 | 12,918 | 15,619 | 8,720 | ||
| Other accounts receivable | 5 | 55,728 | 20,277 | 55,739 | 22,318 | |
| Prepaid income tax | 398 | 1,457 | 383 | 1,435 | ||
| Other financial assets | 6,125 | 2,574 | 6,125 | 2,574 | ||
| Cash and cash equivalents | 3,094 | 791 | 3,045 | 483 | ||
| Total current assets | 86,515 | 40,775 | 82,637 | 36,890 | ||
| Assets of disposal group classified as held for sale | - | 43,726 | - | 325 | ||
| TOTAL ASSETS | 493,596 | 554,374 | 492,880 | 510,254 | ||
| EQUITY AND LIABILITIES | ||||||
| Equity | ||||||
| Share capital | 6 | 146,256 | 146,256 | 146,256 | 146,256 | |
| Share premium | 8,579 | 8,579 | 8,579 | 8,579 | ||
| Revaluation reserve | 5,914 | 6,228 | 5,834 | 6,138 | ||
| Reserve of changes in fair value of financial assets | 298 | 298 | 298 | 298 | ||
| Legal reserve | 14,726 | 14,606 | 14,626 | 14,606 | ||
| Other reserves | 62,747 | 62,747 | 62,747 | 62,747 | ||
| Retained earnings (loss) | 7,257 | 2,897 | 10,349 | 5,772 | ||
| Equity attributable to the shareholders of the parent company |
245,777 | 241,611 | 248,689 | 244,396 | ||
| Non-controlling interest | - | 133 | - | - | ||
| Total equity | 245,777 | 241,744 | 248,689 | 244,396 | ||
| Liabilities | ||||||
| Non-current liabilities | ||||||
| Grants received in advance | - | 3,870 | - | 3,870 | ||
| Non-current loans | 7 | 120,476 | 124,518 | 120,476 | 124,518 | |
| Deferred income tax liabilities | 9,963 | 10,430 | 9,963 | 10,430 | ||
| Deferred income | 4,614 | - | 4,614 | - | ||
| Other non-current accounts payable and liabilities | 163 | 203 | 111 | 151 | ||
| Total non-current liabilities | 135,216 | 139,021 | 135,164 | 138,969 | ||
| Current liabilities | ||||||
| Current portion of non-current borrowings | 7 | 48,082 | 8,082 | 48,082 | 8,082 | |
| Current loans | 7 | 35,771 | 70,838 | 34,828 | 69,842 | |
| Trade payables | 13,632 | 28,068 | 12,405 | 25,301 | ||
| Advances received | 1,102 | 2,014 | 1,102 | 2,014 | ||
| Income tax payable | - | 4 | - | - | ||
| Other accounts payable | 14,016 | 23,160 | 12,610 | 21,650 | ||
| Total current liabilities | 112,603 | 132,166 | 109,027 | 126,889 | ||
| Total liabilities | 247,819 | 271,187 | 244,191 | 265,858 | ||
| Liabilities of disposal group classified as held for sale | - | 41,443 | - | - | ||
| TOTAL EQUITY AND LIABILITIES | 493,596 | 554,374 | 492,880 | 510,254 |
| Group | Company | ||||
|---|---|---|---|---|---|
| 30-06-2016 | 30-06-2015 | 30-06-2016 | 30-06-2015 | ||
| (unaudited) | (unaudited) | (unaudited) | (unaudited) | ||
| Continuing operations | |||||
| Revenue | |||||
| Sales of transmission and related services | 73,756 | 39,776 | 73,756 | 39,776 | |
| Other revenue Total revenue |
8 | 10,932 84,688 |
8,532 48,308 |
5,193 78,949 |
1,393 41,169 |
| Expenses | |||||
| Cost of transmission and related services | (43,605) | (17,546) | (43,605) | (17,546) | |
| Depreciation and amortisation | 3 | (13,105) | (10,764) | (12,996) | (10,627) |
| Wages and salaries and related expenses | (6,777) | (5,682) | (3,716) | (2,933) | |
| Repair and maintenance expenses | (1,991) | (2,128) | (2,974) | (3,044) | |
| Telecommunications and IT systems expenses Write-off of property, plant and equipment |
(1,577) (592) |
(1,895) (418) |
(1,506) (592) |
(1,838) (409) |
|
| Impairment charge of assets | 31 | 847 | 30 | 839 | |
| Impairment charge of property, plant and | |||||
| equipment | 3 | (434) | - | (434) | - |
| Other expenses | (6,255) | (7,634) | (2,656) | (2,471) | |
| Total expenses | (74,305) | (45,220) | (68,449) | (38,029) | |
| Operating profit (loss) | 10,383 | 3,088 | 10,500 | 3,140 | |
| Financial operations | |||||
| Finance income | 87 | 260 | 182 | 255 | |
| Finance expenses | (850) | (578) | (845) | (558) | |
| Total finance income | (763) | (318) | (663) | (303) | |
| Share of profit/(loss) of associates and jointly | |||||
| controlled entities | 1 | 48 | - | - | |
| Profit (loss) before income tax | 9,621 | 2,818 | 9,837 | 2,837 | |
| Income tax | |||||
| Current year income tax (expense) | (1,423) | (851) | (1,422) | (836) | |
| Deferred tax income (expense) | 440 | 379 | 467 | 408 | |
| Total income tax | (983) | (472) | (955) | (428) | |
| Net profit (loss) for the period from continuing | 8,638 | 2,346 | 8,882 | 2,409 | |
| operations | |||||
| Profit (loss) for the period from discontinued | |||||
| operations | 32 | 20 | - | - | |
| Net profit (loss) for the period | 8,670 | 2,366 | 8,882 | 2,409 | |
| Other comprehensive income that will not be | |||||
| reclassified subsequently to profit or loss | - | - | - | - | |
| Total comprehensive income (loss) for the period | 8,670 | 2,366 | 8,882 | 2,409 | |
| Net profit (loss) attributable to: | |||||
| Owners of the Parent Company | 8,660 | 2,359 | 8,882 | 2,409 | |
| Non-controlling interest | 10 | 7 | - | - | |
| 8,670 | 2,366 | 8,882 | 2,409 | ||
| Total comprehensive income (loss) attributable to: |
|||||
| Owners of the Parent Company | 8,660 | 2,359 | 8,882 | 2,409 | |
| Non-controlling interest | 10 | 7 | - | - | |
| 8,670 | 2,366 | 8,882 | 2,409 | ||
| Basic and diluted earnings (deficit) per share (in EUR) |
0.017 | 0.005 | 0.018 | 0.005 |
| Group | Company | |||
|---|---|---|---|---|
| 2016 II Q | 2015 II Q | 2016 II Q | 2015 II Q | |
| (unaudited) | (unaudited) | (unaudited) | (unaudited) | |
| Continuing operations | ||||
| Revenue | ||||
| Sales of transmission and related services Other revenue |
35,648 8,254 |
18,795 4,472 |
35,648 4,765 |
18,795 847 |
| Total revenue | 43,902 | 23,267 | 40,413 | 19,642 |
| Expenses | ||||
| Cost of transmission and related services | (23,477) | (8,230) | (23,477) | (8,230) |
| Depreciation and amortisation | (6,653) | (5,435) | (6,598) | (5,367) |
| Wages and salaries and related expenses | (3,788) | (2,941) | (2,074) | (1,454) |
| Repair and maintenance expenses Telecommunications and IT systems expenses |
(1,132) (809) |
(1,153) (837) |
(1,746) (776) |
(1,701) (825) |
| Write-off of property, plant and equipment | (315) | (412) | (315) | (403) |
| Impairment charge of assets | 37 | 1 | 34 | - |
| Impairment charge of property, plant and | ||||
| equipment | - | - | - | - |
| Other expenses | (3,617) | (3,832) | (1,382) | (1,341) |
| Total expenses | (39,754) | (22,839) | (36,334) | (19,321) |
| Operating profit (loss) | 4,148 | 428 | 4,079 | 321 |
| Financial operations | ||||
| Finance income | 71 | 157 | 103 | 152 |
| Finance expenses | (417) | (225) | (414) | (215) |
| Total finance income | (346) | (68) | (311) | (63) |
| Share of profit/(loss) of associates and jointly | ||||
| controlled entities | (6) | 12 | - | - |
| Profit (loss) before income tax | 3,796 | 372 | 3,768 | 258 |
| Income tax | ||||
| Current year income tax (expense) | (179) | (274) | (181) | (259) |
| Deferred tax income (expense) | 133 | 217 | 162 | 242 |
| Total income tax | (46) | (57) | (19) | (17) |
| Net profit (loss) for the period from continuing | 3,750 | 315 | 3,749 | 241 |
| operations | ||||
| Profit (loss) for the period from discontinued | ||||
| operations | - | 55 | - | - |
| Net profit (loss) for the period | 3,750 | 370 | 3,749 | 241 |
| Other comprehensive income that will not be | - | - | - | - |
| reclassified subsequently to profit or loss | ||||
| Total comprehensive income (loss) for the period | 3,750 | 370 | 3,749 | 241 |
| Net profit (loss) attributable to: | ||||
| Owners of the Parent Company | 3,750 | 351 | 3,749 | 241 |
| Non-controlling interest | - | 19 | - | - |
| 3,750 | 370 | 3,749 | 241 | |
| Total comprehensive income (loss) attributable | ||||
| to: | ||||
| Owners of the Parent Company | 3,750 | 351 | 3,749 | 241 |
| Non-controlling interest | - 3,750 |
19 370 |
- 3,749 |
- 241 |
| Basic and diluted earnings (deficit) per share | ||||
| (in EUR) | 0.007 | 0.001 | 0.007 | 0.000 |
| Attributable to owners of the Group | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Group | Reserve of changes in fair value of |
Non | |||||||||
| Share capital |
Share premium |
Revaluation reserve |
financial assets |
Legal reserve |
Other reserves |
Retained earnings |
Interim amount |
controllin g interest |
Total | ||
| Balance at 1 January 2015 (audited) |
146,064 | 8,579 | 6,840 | - | 14,609 | 171,355 | (107,931) | 239,516 | 57 | 239,573 | |
| Comprehensive income/(expenses) for the period |
- | - - |
- | - | - | 2,359 | 2,359 | 7 | 2,366 | ||
| Depreciation of revaluation reserve and amounts written off |
- | - (293) |
- | - | - | 293 | - | - | - | ||
| Transfer to retained earnings | - | - - |
- | (3) | (108,608) | 108,611 | - | - | - | ||
| Conversion of authorised share capital to the euro |
192 | - - |
- | - | - | - | 192 | - | 192 | ||
| Change in interest in the subsidiary |
- | - - |
- | - | - | - | - | 19 | 19 | ||
| Balance at 30 June 2015 (unaudited) |
146,256 | 8,579 | 6,547 | - | 14,606 | 62,747 | 3,332 | 242,067 | 83 | 242,150 | |
| Balance at 1 January 2016 (audited) |
146,256 | 8,579 | 6,228 | 298 | 14,606 | 62,747 | 2,897 | 241,611 | 133 | 241,744 | |
| Comprehensive income/(expenses) for the period |
- | - - |
- | - | - | 8,660 | 8,660 | 10 | 8,670 | ||
| Depreciation of revaluation reserve and amounts written off |
- | - (314) |
- | - | - | 314 | - | - | - | ||
| Transfers to reserves | - | - - |
- | 120 | - | (120) | - | - | - | ||
| Dividends | 10 | - | - - |
- | - | - | (4,589) | (4,589) | - | (4,589) | |
| Disposal of subsidiary | - | - - |
- | - | - | 95 | 95 | (143) | (48) | ||
| Balance at 30 June 2016 (unaudited) |
146,256 | 8,579 | 5,914 | 298 | 14,726 | 62,747 | 7,257 | 245,777 | - | 245,777 |
| Company | Reserve of changes in fair value of |
||||||||
|---|---|---|---|---|---|---|---|---|---|
| Share capital |
Share premium |
Revaluation reserve |
financial assets |
Legal reserve |
Other reserves |
Retained earnings |
Total | ||
| Balance at 1 January 2015 (audited) |
146,064 | 8,579 | 6,739 | - | 14,606 | 171,355 | (107,036) | 240,307 | |
| Comprehensive income/(expenses) for the period |
- | - | - | - | - | - | 2,409 | 2,409 | |
| Depreciation of revaluation reserve and amounts written off |
- | - | (287) | - | - | - | 287 | - | |
| Conversion of authorised share capital to the euro |
192 | - | - | - | - | - | - | 192 | |
| Transfer to retained earnings | - | - | - | - | - | (108,608) | 108,608 | - | |
| Balance at 30 June 2015 (unaudited) |
146,256 | 8,579 | 6,452 | - | 14,606 | 62,747 | 4,268 | 242,908 | |
| Balance at 1 January 2016 (audited) |
146,256 | 8,579 | 6,138 | 298 | 14,606 | 62,747 | 5,772 | 244,396 | |
| Comprehensive income/(expenses) for the period |
- | - | - | - | - | - | 8,882 | 8,882 | |
| Depreciation of revaluation reserve and amounts written off |
- | - | (304) | - | - | - | 304 | - | |
| Transfers to reserves | - | - | - | - | 20 | - | (20) | - | |
| Dividends | 10 | - | - | - | - | - | - | (4,589) | (4,589) |
| Balance at 30 June 2016 (unaudited) |
146,256 | 8,579 | 5,834 | 298 | 14,626 | 62,747 | 10,349 | 248,689 |
| Group | Company | ||||
|---|---|---|---|---|---|
| 30-06-2016 | 30-06-2015 | 30-06-2016 | 30-06-2015 | ||
| (unaudited) | (unaudited) | (unaudited) | (unaudited) | ||
| Cash flows from operating activities | |||||
| Profit/(loss) for the year | 8,670 | 2,366 | 8,882 | 2,409 | |
| Adjustments for non-cash items and other adjustments: | |||||
| Depreciation and amortisation expenses | 3 | 13,105 | 10,766 | 12,996 | 10,627 |
| Revaluation of property, plant and equipment | 434 | - | 434 | - | |
| (Reversal of)/impairment of trade receivables | (29) | (839) | (30) | (839) | |
| Share of profit of associates and joint ventures | (1) | (48) | - | - | |
| Income tax expenses | 983 | 472 | 955 | 428 | |
| (Gain)/loss on disposal/write-off of property, plant and | 592 | 418 | 592 | 409 | |
| equipment | |||||
| Elimination of results of financing and investing activities: | |||||
| Interest income | - | (15) | - | (15) | |
| Interest expenses | 833 | 302 | 828 | 298 | |
| Dividends income | (59) | (122) | (91) | (122) | |
| Other finance (income)/costs | (11) | 139 | (,74) | 142 | |
| Changes in working capital: | |||||
| (Increase) decrease in trade receivables and other amounts | (8,131) | 9,398 | (10,346) | 4,772 | |
| receivable | |||||
| (Increase) decrease in inventories, prepayments and other | (1,110) | (597) | (328) | (531) | |
| current assets Increase (decrease) in amounts payable, grants, deferred income |
|||||
| and advance amounts received | (1,142) | (9,493) | (88) | (5,633) | |
| Changes in other financial assets | (3,551) | (446) | (3,551) | (446) | |
| Income tax (paid) | (383) | (414) | (378) | (414) | |
| Net cash generated from operating activities | 10,200 | 11,887 | 9,801 | 11,085 | |
| Net cash used in operating activities of the discontinued | |||||
| operations | 4,623 | (2,970) | - | - | |
| Cash flows from investing activities | |||||
| (Purchase) of property, plant and equipment and intangible assets | (44,400) | (135,873) | (44,253) | (135,833) | |
| Grants received | 41,016 | 20,792 | 41,016 | 20,792 | |
| Disposal (acquisition) of subsidiaries (associates) | - | - | 388 | (39) | |
| Proceeds from redemption of held-to-maturity investments | - | 15,929 | - | 15,929 | |
| Interest received | - | 92 | - | 92 | |
| Dividends received | 59 | 122 | 91 | 122 | |
| Net cash used in investing activities | (3,325) | (98,938) | (2,758) | (98,937) | |
| Net cash used in investing activities of the discontinued | |||||
| operations | - | - | - | - | |
| Cash flows from financing activities | |||||
| Proceeds from borrowings | 40,000 | 65,500 | 40,000 | 65,500 | |
| Repayments of borrowings | (4,042) | (1,100) | (4,042) | (1,100) | |
| Overdraft | (35,068) | (726) | (35,014) | - | |
| Interest paid | (838) | (256) | (833) | (236) | |
| Dividends paid | (4,592) | (4) | (4,592) | (4) | |
| Net cash generated from financing activities | (4,540) | 63,414 | (4,481) | 64,160 | |
| Net cash generated from financing activities of the | (4,655) | 2,911 | - | - | |
| discontinued operations | |||||
| Net increase (decrease) in cash and cash equivalents | 2,303 | (23,696) | 2,562 | (23,692) | |
| Cash and cash equivalents at the beginning of the period | 791 | 25,293 | 483 | 25,003 | |
| Cash and cash equivalents at the end of the period | 3,094 | 1,597 | 3,045 | 1,311 | |
Litgrid AB is a public limited liability company registered in the Republic of Lithuania. The address of its registered office is: A. Juozapavičiaus str. 13, LT-09311, Vilnius, Lithuania. Litgrid AB (hereinafter Litgrid or "the Company") is a limited liability profit-making entity established as a result of spin-off of Lietuvos Energija AB operations based the decision of the Extraordinary General Meeting of Shareholders of Lietuvos Energija AB dated 28 October 2010 which was passed to approve the spin-off of Lietuvos Energija AB. The Company was registered with the Register of Legal Entities on 16 November 2010. The Company's code is 302564383; VAT payer's code is LT100005748413.
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, Company is responsible for the integration of Lithuania's electricity 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.
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.
On 30 June 2016 the Company's share capital was Eur 146,256,100.20. It consists of 504,331,380 ordinary shares with a nominal value of Eur 0.29 per share.
As at 30 June 2016 and 31 December 2015, 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 UAB EPSO-G (company code 302826889, address A. Juozapavičiaus g. 13, Vilnius) 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 the date of these financial statements the Group included Litgrid and its directly controlled subsidiaries listed below:
| Company | Address of the company's registered office |
Shareholding as at 30 June 2016 |
Shareholding as at 31 December 2015 |
Profile of activities |
|---|---|---|---|---|
| UAB Tetas | Senamiesčio str. 102B, Panevėžys, Lithuania |
100% | 100% | Transformer substation and distribution station design, reconstruction, repair and maintenance services |
| UAB Litgrid Power Link Service |
A. Juozapavičiaus str. 13, Vilnius, Lithuania |
100% | 100% | Management and operation of electricity interconnection facilities |
The structure of the Group's investments in the associates and the jointly controlled entity as at 30 June 2016 and 31 December 2015 was as follows:
| Company | Address of the company's registered office |
The Group's shareholding as at 30 June 2016 |
The Group's shareholding as at 31 December 2015 |
Profile of activities |
|---|---|---|---|---|
| UAB Duomenų Logistikos Centras |
Žvejų str. 14, Vilnius, Lithuania |
20% | 20% | IT services |
| LitPol Link Sp.z.o.o | Wojciecha Gorskiego 900-033 Warsaw, Poland |
50% | 50% | Coordination and implementation of common tasks, related to the control of Lithuanian-Polish interconnection, planned development of the grid and other areas of cooperation |
As at 30 June 2016, the Group had 677 employees (31 December 2015: 659), as at 30 June 2016, the Company had 233 employees (31 December 2015: 235).
The principal accounting policies adopted in the preparation of the Company's and the Group's condensed interim financial information for the six-month period ending 30 June 2016 is:
The Company's and the Group's condensed interim financial statements for the six-month period ending 30 June 2016 have been prepared in accordance with the 34th International Accounting Standard (hereinafter - IAS) "Interim Financial Reporting".
The condensed interim 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 2015, prepared according to International Financial Reporting Standards as adopted by the European Union.
This condensed interim financial statements has 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 losses, 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.
The accounting principles applied in preparing the condensed interim financial statements are the same as those applied in preparing the financial statements for 2015 (except Revenues from congestion charges which are disclosed in Note 2.4).
Subsidiary is an entity directly or indirectly controlled by the Company. The Company controls an entity when it can or has the right to receive a variable returns from this relation and it can have impact on these returns due to the power to govern the entity to which the investment is made.
The consolidated financial statements of the Group include Litgrid and its subsidiaries. The financial statements of the subsidiaries have been prepared for the same reporting periods, using uniform accounting policies.
Subsidiaries are consolidated from the date from which effective direct or indirect control is transferred to the Company. They are de-consolidated from the date that control ceases. All intercompany transactions, balances and unrealized gains and losses on transactions among the Group companies are eliminated.
The Government and the European Union grants received in the form of property, plant and equipment or intended for the purchase of property, plant and equipment are considered as asset-related grants. Grants are recorded as a deduction of value of the respective asset and subsequently recognized as income, reducing the depreciation charge of related asset over the expected useful life of the asset.
Public service obligations (hereinafter "PSO") funds allocated to the Company for the development and implementation of strategic plans are recognized as asset-related grants. They are also recorded as a deduction of value of related assets and subsequently recognized as income, reducing the depreciation charge of related asset over the expected useful life of the asset.
Grants received in advance in relation to acquisition of non-current assets are stated as non-current liabilities until the moment of acquisition of such assets.
Accrued grants receivable are recorded in other amounts receivable when the agreement whereby the European Commission commits to finance strategic projects provides evidence confirming that the financing will be received.
Congestion income arise due to insufficient capacity of power transmission lines and different market prices for electricity in Lithuania, Sweden, Poland and Latvia. 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, any revenues resulting from the allocation of interconnection shall be used for the (a) guaranteeing the actual availability of the allocated capacity; (b) maintaining or increasing interconnection capacities through network investments, in particular in new inter-connectors; (c) where the revenues cannot be efficiently used for the purposes set out in points (a) and/or (b) above, 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 network tariffs.
The congestion revenue received by the company is recognized as: a) income in the income statement when used for guaranteeing the actual availability of the allocated capacity; b) grants, when used for investment guaranteeing the capacity of interconnectors; c) income in the income statement, if the regulatory authority will reduces transmission tariff. The remaining unused income is recorded in the deferred income line in the statement of financial position.
| Net book amount at 31 December 2014 944 364,401 Additions 28 52,228 Write-offs - (454) Transfer to inventories - (3) Offsetting grants with non-current assets - (3,155) Depreciation and amortization charge (196) (10,578) Net book amount at 30 June 2015 776 402,439 Net book amount at 31 December 2015 876 409,643 Additions 564 80,891 Disposals - (8) Write-offs - (630) Impairment - (434) Reclassification 43 (43) Offsetting grants not received with non-current assets (Note 5) - (13,520) Offsetting grants with non-current assets - (61,310) Depreciation and amortization charge (215) (12,890) Net book amount at 30 June 2016 1,268 401,699 Property, plant, and Company Intangible assets equipment Net book amount at 31 December 2014 915 363,431 Additions 25 52,192 Write-offs - (445) Offsetting grants with non-current assets - (3,155) Depreciation and amortization charge (184) (10,443) Net book amount at 30 June 2015 756 401,580 Net book amount at 31 December 2015 870 408,757 Additions 564 80,744 Write-offs - (630) Impairment - (434) Reclassification 43 (43) Offsetting grants not received with non-current assets (Note 5) - (13,520) Offsetting grants with non-current assets - (61,310) Depreciation and amortization charge (214) (12,782) Net book amount at 30 June 2016 1,263 400,782 |
Group | Intangible assets | Property, plant, and equipment |
|---|---|---|---|
* As of 31 December 2015, EUR 55 million of the property, plant and equipment acquisitions were carried in Prepayments for property, plant and equipment.
Property, plant, and equipment value are carried at the asset acquisition cost less grants received or receivable for the acquisition of the asset and less income from the connection of new users. If the value of the Property, plant, and equipment was not reduced by the grants and the income from new users' connection, the book value of these assets as of 30 June 2016 would be higher by Eur 289,088 thousand. Information about the Property, plant, and equipment the value of which has been reduced by the grants received/receivable and by the income from new users' connection is presented below:
| Net book amount at 31 December 2015 | 217,633 |
|---|---|
| Additions | 74,831 |
| Depreciation charge | (3,349) |
| Write-offs | (27) |
| Net book amount at 30 June 2016 | 289,088 |
As at 30 June 2016 and 31 December 2015 the Company's investments comprised as following:
| Subsidiaries | Investment cost | Impairment | Carrying amount | Ownership interest (%) |
|---|---|---|---|---|
| UAB Tetas UAB Litgrid Power Link Service |
4,356 174 |
(441) - |
3,915 174 |
100 100 |
| 4,530 | (441) | 4,089 |
Pursuant to the decision passed during the extraordinary general meeting of the shareholders of Litgrid held on 28 January 2016, the Company and EPSO-G signed the agreement on the purchase and sale of shares on 5 February 2016. Under this agreement the Company transferred to EPSO-G 478,800 ordinary registered intangible shares of Baltpool representing 67% of the total share capital of Baltpool. The agreement stipulates that the right of ownership is transferred to EPSO-G from 1 March 2016. Shares of Baltpool were sold for the market share price established by the independent property value amounting to EUR 387,828.
Investments in associates and jointly controlled entities in the Company's and the Group's financial statements
Movement in the account of investments in associates and jointly controlled entities is given in the table below:
| Group | Company | |||
|---|---|---|---|---|
| 30-06-2016 | 31-12-2015 | 30-06-2016 | 31-12-2015 | |
| Opening balance | 720 | 1,088 | 752 | 1,047 |
| Impairment of investments | - | (343) | - | (295) |
| Share of profit (loss) of associates and jointly controlled entities |
1 | (25) | - | - |
| Closing balance | 721 | 720 | 752 | 752 |
Other receivables as of 30 June 2016 consist mainly of grants receivables – EUR 16,425 thousand and grants not received – EUR 29,985 thousand (31 December 2015 – EUR 16,465 thousand), by the amount of these grants is reduced the value of property, plant, and equipment (Note 3).
On 30 June 2016 the Company's share capital was Eur 146,256,100.20. It consists of 504,331,380 ordinary shares with a nominal value of Eur 0.29 per share.
Loans of the Group/Company were as follows:
| Group | Company | ||||
|---|---|---|---|---|---|
| 30-06-2016 | 31-12-2015 | 30-06-2016 | 31-12-2015 | ||
| Non-current borrowings | |||||
| Bank loans | 120,476 | 124,518 | 120,476 | 124,518 | |
| Current borrowings | |||||
| Current portion of non-current borrowings | 48,082 | 8,082 | 48,082 | 8,082 | |
| Overdraft | 35,771 | 70,838 | 34,828 | 69,842 | |
| Total | 204,329 | 203,438 | 203,386 | 202,442 |
| Group | Company | ||||
|---|---|---|---|---|---|
| 30-06-2016 | 31-12-2015 | 30-06-2016 | 31-12-2015 | ||
| Between 1 and 2 years | 8,082 | 8,082 | 8,082 | 8,082 | |
| From 2 to 5 years | 39,604 | 36,533 | 39,604 | 36,533 | |
| After 5 years | 72,790 | 79,903 | 72,790 | 79,903 | |
| Total | 120,476 | 124,518 | 120,476 | 124,518 |
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 presented by 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 and Litgrid Power Link Service. Tetas services include reconstruction, repair and technical maintenance of medium voltage transformer substations and distribution stations. Litgrid Power Link Service was established as a centre for high qualification and specialised engineering competences in the area of management and operation of high voltage direct current links (HVDC).
The Group's information on segments for the period ended 30 June 2016 is presented in the table below:
| Operating segments | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Provision of | |||||||||
| 2016 | Trade in balancing/ | services | Repair and | ||||||
| Electricity transmission |
regulating electricity |
Provision of system services |
under PSO scheme 2,909 - - 2,909 1 x x x x x x x x x x x x 68 - |
maintenance activities |
Total | ||||
| Revenue | 45,048 | 12,436 | 18,558 | 7,866 | 86,817 | ||||
| Inter-segment revenue | - | - | (2,129) | (2,129) | |||||
| Revenue after elimination of intercompany revenue | |||||||||
| within the Group | 45,048 | 12,436 | 18,558 | 5,737 | 84,688 | ||||
| Operating profit/(loss) | 9,195 | 2,943 | (1,639) | (117) | 10,383 | ||||
| Finance income/(cost), net* | x | x | x | (763) | |||||
| Share of result of associates and joint ventures* | x | x | x | 1 | |||||
| Profit/(loss) before income tax | x | x | x | 9,621 | |||||
| Income tax* | x | x | x | (983) | |||||
| Discontinued operations | x | x | x | 32 | |||||
| Profit/(loss) for the period | x | x | x | 8,670 | |||||
| Depreciation and amortisation expenses | 12,906 | 23 | 108 | 13,105 | |||||
| Write-offs of property, plant and equipment | 592 | - | - | - | - | 592 |
* Income tax, share of result of associates and jointly controlled entities and financing income and expenses are not allocated between the Company's operating segments.
| Operating segments | ||||||||
|---|---|---|---|---|---|---|---|---|
| Provision of | ||||||||
| 2015 | Trade in balancing/ | services | Repair and | |||||
| Electricity | regulating | Provision of | under PSO | maintenance | ||||
| transmission | electricity | system services | scheme | activities | Total | |||
| Revenue | 28,409 | 6,014 | 4,667 | 2,079 | 9,766 | 50,935 | ||
| Inter-segment revenue | - | - | - | - | (2,627) | (2,627) | ||
| Revenue after elimination of intercompany revenue | ||||||||
| within the Group | 28,409 | 6,014 | 4,667 | 2,079 | 7,139 | 48,308 | ||
| Operating profit/(loss) | 957 | 2,639 | (457) | - | (51) | 3,088 | ||
| Finance income/(cost), net* | x | x | x | x | x | (318) | ||
| Share of result of associates and joint ventures* | x | x | x | x | x | 48 | ||
| Profit/(loss) before income tax | x | x | x | x | x | 2,818 | ||
| Income tax* | x | x | x | x | x | (472) | ||
| Discontinued operations | x | x | x | x | x | 20 | ||
| Profit/(loss) for the period | x | x | x | x | x | 2,366 | ||
| Depreciation and amortisation expenses | 10,625 | - | - | - | 137 | 10,762 | ||
| Write-offs of property, plant and equipment | 409 | - | - | - | 9 | 418 |
* Income tax, share of result of associates and jointly controlled entities and financing income and expenses are not allocated between the Company's operating segments.
The Group operates in Lithuania and its revenue generated from customers in Lithuania accounts for 87% of total revenue.
In 2016 and 2015, the Group's and the Company's revenue by geographical location of customers:
| Group | Company | |||
|---|---|---|---|---|
| 30-06-2016 | 30-06-2015 | 30-06-2016 | 30-06-2015 | |
| Lithuania | 73,781 | 46,594 | 68,042 | 39,455 |
| Norway | 2,967 | 225 | 2,967 | 225 |
| Sweden | 6,097 | 60 | 6,097 | 60 |
| Latvia | 511 | 222 | 511 | 222 |
| Estonia | 770 | 986 | 770 | 986 |
| Poland | 308 | - | 308 | - |
| Greece | 172 | - | 172 | - |
| Belgium | 24 | - | 24 | - |
| Austria | 58 | - | 58 | - |
| Russia | - | 221 | - | 221 |
| Total: | 84,688 | 48,308 | 78,949 | 41,169 |
The Company's/Group's related parties in 2016 and 2015 were as follows:
EPSO-G (the parent of the Company). 100% of EPSO-G share capital is owned by the Ministry of Energy of the Republic of Lithuania;
Subsidiaries of the Company;
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 | |||
|---|---|---|---|---|
| 30-06-2016 | 30-06-2015 | 30-06-2016 | 30-06-2015 | |
| UAB EPSO-G | 388 | 10 | 388 | 10 |
| UAB Tetas | - | - | 3 | 7 |
| UAB Litgrid Power Link Service | - | - | 55 | 86 |
| UAB Baltpool | 11,594 | 11,080 | 11,594 | 11,080 |
| Group's associates and jointly controlled entities | 717 | 784 | 717 | 784 |
| 12,699 | 11,874 | 12,757 | 11,967 |
| Group | Company | |||
|---|---|---|---|---|
| 30-06-2016 | 30-06-2015 | 30-06-2016 | 30-06-2015 | |
| UAB Tetas | - | - | 1,517 | 2,096 |
| UAB Litgrid Power Link Service | - | - | 578 | 472 |
| UAB Baltpool | (652) | 7,787 | (652) | 7,787 |
| Group's associates and jointly controlled entities | 153 | 208 | 153 | 208 |
| (499) | 7,995 | 1,596 | 10,563 | |
| Amounts receivable from related parties | ||||
| Group | Company | |||
| 30-06-2016 | 2015-12-31 | 30-06-2016 | 2015-12-31 |
| UAB EPSO-G | - | 2 | - | 2 |
|---|---|---|---|---|
| UAB Litgrid Power Link Service | - | - | 10 | 13 |
| UAB Baltpool | 4,785 | 2,028 | 4,785 | 2,028 |
| Group's associates and jointly controlled entities | 146 | 143 | 146 | 143 |
| 4,931 | 2,173 | 4,941 | 2,186 |
| Group | Company | ||
|---|---|---|---|
| 30-06-2016 | 2015-12-31 | 30-06-2016 | 2015-12-31 |
| 154 | |||
| 38 | |||
| - | 149 | - | 149 |
| 21 | 94 | 21 | 94 |
| 21 | 243 | 943 | 435 |
| - - |
- - |
653 269 |
| Group | Company | |||
|---|---|---|---|---|
| 30-06-2016 | 30-06-2015 | 30-06-2016 | 30-06-2015 | |
| Employment-related payments, whereof: | 359 | 339 | 236 | 227 |
| - Termination benefits | 33 | 15 | 33 | 15 |
| Average number of the key management personnel | 12 | 12 | 6 | 6 |
The management comprises the heads of administration and chief financiers of the holding group companies, the members of the Management Board of the company, department directors of the subsidiaries.
During the Ordinary General Meeting of Shareholders of Litgrid held on 26 April 2016, the decision was made in relation to the payment of dividends in the amount of EUR 4,589,416. Dividends per share amounted to EUR 0.0091.
In 2016 and 2015, basic and diluted earnings per share of the Group were as follows:
| 30-06-2016 | 30-06-2015 | |
|---|---|---|
| Net profit (loss) attributable to the Company's shareholders (thousand EUR) | 8,660 | 2,359 |
| Weighted average number of shares (units) | 504,331,380 | 504,331,380 |
| Basic and diluted earnings per share (in EUR) | 0.017 | 0.005 |
The extraordinary meeting of shareholders of Litgrid held on 29 July 2016 elected an audit firm PriceWaterhouseCoopers UAB for conducting an audit of financial statements of the Company for 2016, recalled the Board of Litgrid and elected the new Board. Two employees of EPSO-G, the parent company, two employees of the Company and one independent member were elected as the Board Members.
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