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ESO’s 2018 preliminary results: historical investments and crystallisation of activities
In 2018, electricity and gas distribution company Energijos Skirstymo Operatorius (ESO) controlled by the country’s largest group of energy companies Lietuvos Energija made further investments into reliability enhancement of the distribution grid. ESO investments into the electricity and distribution grids have exceeded EUR 271 million. The number of new customers using electricity and natural gas has grown more than one sixth.
During the last several years ESO investments have given huge benefit to customers; they also ensure reliability of the grid. Duration of interruptions (SAIDI) for the reasons which fall under the responsibility of the operator comprised to 40.5 minutes in 2018, whereas it amounted to 46.2 minutes in 2017. The positive effect was determined not only by investments in the underground electricity grid which is more resistant to natural disasters, but also a shorter period of time required for removal of system failures, by a closer cooperation with meteorologists and a more efficient organisation of outage removal works.
“ESO finished the year 2018 not only with crystallisation of its activities but also putting focus on its main function, namely, distribution of electricity and gas, repair and maintenance of distribution networks, taking care of new clients wishing to connect to the network. To this end, we have put into place an important change. We transferred a share of public electricity supply business worth EUR 27 million to Lietuvos Energijos Tiekimas with all assets, rights and obligations appurtenant to this activity. ESO plans to continue focusing on ensuring grid reliability, continue investments in network modernisation, automation, to implement a large scale project on installation of smart metering system. In other words, ESO will further put every effort to ensure the best possible distribution price at rational cost in the region,” Mindaugas Keizeris, Chair of ESO’s Management Board and CEO, said.
Key indicators:
• Income of the Company reached the amount of EUR 624 million over 2018 and was 1.9% higher than in 2017. It was negatively affected by reduced prices of regulated services and discontinued operations of public energy supply activities from the fourth quarter of the year. The general growth in income was supported by the growing customers’ demand for electricity and the transaction on the transfer of business share in relation to public supply which was worth EUR 27.4 million.
•The acquisition cost of electricity, natural gas and related services during the nine months of this year amounted to EUR 411.8 million in 2018 and were 9.1% higher than in 2017. The biggest impact was made by higher electricity acquisition cost.
• ESO’s net profit for the year 2018 amounted to EUR 15.7 million or almost 80% less than in 2017. The Company’s net profit for the year 2018 was affected by one-off result of Company’s fixed assets revaluation. Valuation of fixed assets of the Electricity segment led to an uplift in value, however due to accounting aspects it was recorded as revaluation loss in the income statement of 2018, which significantly shrank the Company’s net profit, while the uplift was recorded in revaluation reserve, the equity part of the balance sheet. Revaluation of fixed assets in the electricity segment, taking into account the impact of grants related to property, reduced the Company’s profit by EUR 66.6 million. Whereas, the natural gas segment saw the restoration of impairment of fixed assets the impact of which constituted EUR 25.4 million. Excluding the effects of one-off revaluation of fixed assets, the Company earned EUR 56.9 million of net profit in 2018.
• In 2018, ESO earned EUR 169.5 million of adjusted profit before interest, tax, depreciation and amortisation (adjusted EBITDA*), which is EUR 18.6 million or 12.3% more than in 2017 where the value of this indicator was EUR 150.9 million. The growth was mainly determined by the increase in investments in the Company’s grid and continuously improving activities of the Company in terms of effectiveness.
• In 2018, ESO’s investments in electricity and natural gas distribution networks amounted to EUR 271.3 million which was 19.9% more than in 2017, which saw the investments worth EUR 226.2 million. Majority of investments – EUR 121.5 million – went to the modernisation and restoration of electricity distribution network, however, this amount was 5.2% smaller than in 2017.
*The Company’s preliminary EBITDA are reported after the adjustments made by management by eliminating the impact of one-off factors. These adjustments are made aiming to disclose the results of the Company’s operating activities after the elimination of the impact of non-typical, one-off factors or factors that are not directly related to the current reporting period. All adjustments made by management are disclosed in the Company’s interim and annual reports.
ESO’s 2018 preliminary results: historical investments and crystallisation of activities