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ESO results for 6 months of 2019: growing number of new customers and improving connection times
Results of Half 1 of 2019 of the electricity and gas distribution company Energijos Skirstymo Operatorius (ESO) owned by Lietuvos Energija, the largest energy group in the country, reflect a stable growth of the company’s activities, while electricity transmission remains the main source of ESO’s revenue. Exclusive of one-off factors of the regulated activity, the company’s profitability ratios improved, and investments in the distribution network were in line with the level planned for 2019, but they declined compared to the same period of 2018. Profitability was affected by a decrease in the difference between the price of acquisition of electricity in regulated services set by the regulator and the actual cost of acquisition of electricity, changed principles of recognizing revenue from the connection of new customers and increased scopes of guarantee electricity supply.
“ESO’s investments in the renovation of electricity and gas networks were somewhat more moderate. In Half 1 of 2019, investments in electricity and gas distribution networks totalled EUR 95.9 million, which is 15.7 % less compared to the same period of 2018. However, ESO invested EUR 42.6 million in the development of the electricity distribution networks, which is 21.4% more than in the same period of 2018. The main reason of an increase in investments was a continuously growing number of new customers and improving connection times”, says the Chairman of the Board and CEO of ESO Mindaugas Keizeris.
In January-June 2019, ESO’s adjusted EBITDA was EUR 95.3 million, and compared to the same period of the previous year, it increased by more than EUR 11 million, or 13.1%. The growing base of assets of the Company, more efficient activities and increased revenue from the connection of new customers have helped maintain such dynamics of the indicator.
“A higher scope of force majeure, which determines the level of network reliability, has remained an important challenge: in the 6 months of 2019, the average time spent on fixing a malfunction was 1 hour 30 minutes compared to 1 hour 24 minutes in the respective period of 2018. Unfavourable weather conditions in the first months of 2019 had a material impact on the deterioration of the indicator”, – says M. Keizeris.
Key indicators:
• In January-June 2019, ESO’s revenue was EUR 263.2 million, which was 14.8% lower than in January-June 2018, when it totalled EUR 309 million. After eliminating the impact of the discontinued public supply activity, revenue in the 6 months of 2019 was 1.8 % higher than revenue of the respective period of 2018, when it was EUR 258.5 million.
• Costs of purchase of electricity, natural gas and the related services totalled EUR 136.4 million in the six months of 2019 and were 36.1% lower than in the respective period of 2018. This was mainly due to the sale of the public electricity supply activity on 1 October 2018.
• Costs of purchase of natural gas and the related services resulted in increased net profit of the company, which was due to the sold public electricity supply activity on 1 October 2018. In Half 1 of this year, net profit totalled EUR 28.6 million, which is 60.6% more than in the same period of 2018.
• In January-June 2019, ESO earned EUR 95.3 million in adjusted earnings before interest, taxes, depreciation and amortization (adjusted EBITDA*), which is 13.1 % more than in the same period of 2018, when the indicator totalled EUR 84.2 million.
• In January-June 2019, ESO investments in electricity and gas distribution networks were EUR 95.9 million, which is 15.7 % less than in January-June 2018, when investments totalled EUR 113.7 million.
• The average outage duration for each customer served (SAIDI) was 51.26 minutes as a result of more severe force majeure in Half 1 of 2019, which was 19.97 minutes longer compared to the same period of 2018 (SAIDI of the 6 months of 2018 was 31.29 minutes). The average number of interruptions that a customer would experience (SAIFI) inclusive of force majeure effects was 0.69 times in the 6 months of 2019 compared to 0.49 times in 2018.
* the company’s EBITDA and net profit results have been presented after adjustments made by the management by eliminating the effect of actual and regulated revenue and of one-off factors. The purpose of these adjustments is to disclose the results of the ordinary activities of the company, without any atypical, one-off factors or factors that are not directly related to the current period of operations. All adjustments made by the management are disclosed in the company’s interim and annual reports.