Presentation of the Company‘s Performance and Results in 2017 Lietuvos Energijos Gamyba, AB (LEG) Eglė Čiužaitė 28/2/2018 Vilnius
Table of Contents About the Company Overview of 2017: The most important events of Q4 2017 The most important achievements in 2017 Trade and commodities market overview LEG production amounts LEG financial results Plans for H1 2018 Your questions Presented by Moderated by EGLĖ ČIUŽAITĖ VALENTAS NEVIERA Planned duration: Chairwoman of the Board Head of Communication 20 minutes + Your questions and CEO 2
LEG provides services that are necessary for the energy system security ELEKTRĖNAI COMPLEX KRUONIS PSHP KAUNAS A. BRAZAUSKAS HPP Production of electricity and heat Commercial production of electricity Commercial production of electricity System services System services (main – tertiary reserve), System services (main – secondary reserve) strategic reserve Capitalization Minority shareholders Shareholder structure 29/12/2017 – approximately 96.75% - Lietuvos Energija, UAB € 396 5 900 LE 3.25% - minority shareholders million 3
The most important events of Q4 2017 29 11 29 November November November The test of restoring Lithuanian The Government confirmed Preparatory works for the wind electricity system after a black-out strategic reserve capacity for 2018 farm project in the territory of was successfully performed at – 212 MW (supplied by the 8th Kruonis PSHP were completed Kruonis PSHP unit of Elektrėnai complex) 11 22 22 December December December Decision to terminate Contract on the secondary active Contract on the tertiary active the operation of the 7th unit in power reserve supplied by the power reserve supplied by the Elektrėnai complex, currently in Kruonis PSHP in 2018 (400 MW) combined cycle unit in 2018 (260 conservation mode was signed MW) was signed 4
The most important achievements in 2017 € TOP1 22 TOP1 1.3 Kaunas A. Brazauskas HPP New clients 21 The most produced the million € highest annual transparent thousand m 2 Financial value of company in the electricity amount the operational Lithuanian energy since the start of Approximately 9 excellence efforts sector its operation 50% of the area (value created (and 7th place and buildings no due to the among 49 longer used for Development and improvements evaluated key activity is asset optimization (kaizens) companies) currently rented projects were suggested by completed employees) 5
Trade and commodities market overview Electricity balance in Lithuania Wholesale electricity price in NP Lithuania 100% Other 60 2016/2017 -3.7% % of full demand 80% Peak Wind PP € /MWh (6-22 h) 60% Kaunas A. Brazauskas 40 Off-peak 40% 76% HPP 74% (22-6 h) Kruonis PSHP 20% NP LT price 20 Elektrėnai Complex (0-24 h) 0% 1 3 5 7 9 11 1 3 5 7 10 12 2016 2017 2016 2017 Purchase price of gas Price of CO2 emission allowances (EUA) 30 10 2016/2017 +7.3% 31/12/2016 / 31/12/2017 +23.5% 8 € /MWhA € /t CO2 20 6 10 4 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 2016 2017 2016 2017 Source: Energijos tiekimas , Nord Pool, Company‘s accounting information, eex.com Remark: gas price – without taxes for user capabilities and without constituent for security of LNGT. 6
In 2017, more power was produced in hydroelectric power plants. Reserve services were reliably provided by all power plants Quantity of generated and sold power of LEG power plants -72% +6% +26% 600 500 400 GWh 2016 300 549 517 491 2017 459 200 363 100 139 0 Elektrėnai Complex Kruonis PSHP Kaunas A. Brazauskas HPP 98.8% 96.2% 86.7% availability availability availability The availability indicator shows the time over the calendar year when power plants generated or were fully ready to • generate power (including scheduled repairs). The availability of the Kaunas A. Brazauskas HPP was lower in 2017 due to the repair works on the 110 kV • switchyard of the transmission system operator. 7
Revenue decreased due to one-off sale of trading activities in 2016, expenses increased due to the impairment of the units ‘ no. 7-8 asset value in Elektr ėnai complex LEG revenue Total: € 172.9 MLN 2016 70.2 4.1 41.2 36.3 21.2 Total: € 149.8 MLN (-13%) 2017 55.9 3.7 40.4 47.1 0 25 50 75 100 125 150 175 200 € MLN Revenue of sales of electricity energy and related services Revenue of sales of heat production Revenue of sales of capacity reserve services Subsidies for strategic reserve Revenue from other operations LEG expenses Total: € 123.9 MLN 2016 26.4 50.0 20.6 7.5 10.0 5.5 2.7 Total: € 133.6 MLN (+8%) 2017 26.3 32.2 25.0 8.1 31.8 6.3 -1.6 5.5 -5 20 45 70 95 120 145 € MLN Purchases of electricity or related services Gas, biomass and heavy fuel expenses Depreciation and amortisation Wages and salaries and related expenses Repair and maintenance expenses Emission allowance revaluation expenses Impairment of other non-current assets Other expenses 8
LEG 5-year trend: though revenue decreased, LEG maintains sustainable profitability Revenue Adjusted* EBITDA and adjusted EBITDA margin 37 36 70 40 300 60 27 30 23 50 240 19 € MLN 40 20 € MLN % 180 64 64 30 60 54 315 50 20 10 120 233 214 10 173 150 60 0 0 2013 2014 2015 2016 2017 0 Adjusted EBITDA Adjusted EBITDA margin 2013 2014 2015 2016 2017 *EBITDA was adjusted due to the one- off effects of regulator‘s decisions. **2013-2015 indicators were not recalculated. Net profit Dividends (for the year) 40 50 30 40 € MLN 40 20 37 34 33 33 31 30 30 € MLN 27 21 10 43.4 42.0 40.0 20 -1 8.9 -0.2 2013 2014 2015 2016 2017 10 Net profit 2.7 10.8 0 Net profit after the adjustments on EBITDA, plus the elimination of the impact of asset 2013 2014 2015 2016 2017 impairment, EUA market price change and sale of business 9
Plans for H1 2018: production and services Maximising the generation in Utilisation of the residual Performing the refurbishment the Kaunas A. Brazauskas power of the CCU in the of unit 2 of Kruonis PSHP HPP based on weather market (besides provision of successfully conditions the tertiary reserve service) Reliable provision of the reserve service and prompt operations if necessary Attracting new clients during the NordBalt maintenance in summer 10
Plans for H1 2018: projects and research The wind The unit 5 development Asset optimization projects farm project project in Kruonis PSHP in Kruonis PSHP Partial funding In progress: from the EU funds Pause to waiting The project of Pause of waiting dismantling of for the research on for the regional dismantling 2 for policy regarding units no. 5-6 of poles and decisions regarding chimneys of the support Elekrėnai Complex infrastructure was the selected Elektrėnai Complex schemes of RES and other granted in January synchronization was initiated in development optimization 2018 ( € 62.5 model February 2018 projects thousand) 11
Thank You. Your questions? 12
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