Iseteenindus

Eesti Energia Group audited results for FY2012

01.03.2013
Consolidated revenues of Eesti Energia for FY2012 amounted to 868 million euros (+1% y-o-y), EBITDA to 278 million euros (+5% y-o-y) and net profit to 77 million euros (-48% y-o-y).

Financial results

The Group's revenues were supported by the higher sales of network services (+34.7 million euros) and liquid fuels (+16.9 million euros), while sales of electricity (-24.8 million euros) had a negative impact.

The Group's operating profit before impairment amounted to 163.4 million euros, down 2.7% y-o-y. The Group´s profitability was mostly influenced by the higher profitability of network services (+24 million euros) and sales of liquid fuels (+13 million euros). In addition, in 2012 the Group registered lower revaluation of CO2 emission allowances and other hedging instruments, which increased the Group's profitability by 15 million euros compared to 2011. Higher depreciation (-19 million euros) as well as lower electricity margin and sales volume (-39 million euros) had a negative impact on the Group's profitability.

The Group's operating profit was 100.1 million euros, down 40.4% due to non-cash impairment of electricity generating assets in the amount of 63.3 million euros. The impairment was driven by weaker power price outlook as well as changes in regulatory environment.

Group´s operating cash flow amounted to 185.2 million euros (+14.5% y-o-y). Lower prepayments for CO2 emission allowances (+34 million euros) and higher EBITDA (+13 million euros) increased the operating cash flow while higher receivables (-17 million euros) and loan and interest expenses (-9 million euros) had a negative impact on the Group´s operating cash flow.

Key performance indicators

Electricity sales amounted to 10.0 TWh, down 6.4% y-o-y, of which electricity sold at regulated prices was 5.6 TWh (+3.1% compared to 2011).

Sales at non-regulated prices to Baltic unregulated market retail customers amounted to 2.8 TWh in 2012, which is 36% more than a year ago. In Estonia, Eesti Energia's average share in the unregulated electricity market was around 74% in the financial year 2012. In Latvia and Lithuania the market share was around 20% and 8%, respectively. The average market share in the Baltic unregulated market was around 24% in FY2012.

In 2012 Eesti Energia sold 1.6 TWh to power exchanges and wholesale companies, which is 1.6 TWh less than a year ago due to lower generation arising from low price levels.

Sales of network services amounted to 6.4 TWh, up 3.2% y-o-y while network losses increased from 5.8% in 2011 to 6.0% in FY2012.

Sales of shale oil amounted to 189 thousand tonnes, up 15% year-on-year. This represents an all-time record result and was mainly achieved due to higher availability of Enefit140 oil plants. Oil shale sales amounted to 1.4 million tonnes, 33 percent reduction y-o-y.

Capital expenditure

In 2012 Eesti Energia invested the all-time record of 513 million euros, up 1.1% y-o-y.

The largest investments were made into new 300 MW CFB power plant (208 million euros), new network connections and improvement of network's reliability (100 million euros), construction of Iru waste-to-energy plant (31 million euros) and installation of desulphurisation equipment and lime injection systems at Narva Power Plants (16 million euros).

At the end of the financial year the construction of new Enefit280 oil plant, which we started already in 2009, was completed. Over years a total of 222 million euros (54 million euros in 2012) was invested to the plant with annual production capacity of 257,000 tonnes of shale oil. Just before the year end we received the first barrel of shale oil from the new Enefit280 oil plant.

The construction of Narva and Paldiski wind parks was completed in the financial year (18 million euros invested in FY2012) increasing the annual wind energy generation capability by 133 GWh. 39 MW Narva and 22.5 MW Paldiski wind parks will bring the Group's total wind electricity generation capacity to 111 MW.

Financing

The Group's available liquidity as at 31 December 2012 amounted to 647 million euros (liquid assets of 152 million euros, undrawn revolving credit facilities of 400 million euros and 95 million euros investment loan from EIB). In October 2012 the Group decided to reduce the undrawn revolving credit facilities by 100 million euros due to the sufficiently high liquidity buffer. The Group paid its sole shareholder net dividends in the amount of 65.2 million euros in 2012.

As at 31 December 2012, the Group´s main source of debt were Eurobonds due in 2018 and 2020 with combined face value of 600 million euros. In April 2012 the Group carried out a new bond issue in the nominal amount of 300 million euros for attracting long-term financing of capital expenditure. The annual coupon rate of bonds is 4.25% and the maturity date is 2 October 2018. As at 31 December 2012 the Group's total net debt amounted to 581 million euros. Net debt/EBITDA ratio was 2.1 and financial leverage at 29.2%.

150 million euro equity increase to support the Group´s investment program was completed by the Government of Estonia on 10 July 2012, increasing the Group's share capital from 471.6 million euros to 621.6 million euros.

Outlook

The Group revenues for 2013 are expected to increase compared to FY2012 due to new generating assets (wind parks, Enefit280 and Iru waste-to-energy plant) and full electricity market opening from 1 January 2013.

We expect the Group's EBITDA to increase due to the added output of liquid fuels. The addition of full CO2 expenditure related to electricity generation will have a negative impact on the profitability. Until the end of 2012, majority of emission allowances were allocated for electricity generation free of charge.

In 2013 the total capex is expected to amount to 438 million euros including 155 million euros to the new 300 MW CFB power plant, 112 million euros to renovating the distribution network and 39 million euros to completion of Iru waste-to-energy plant.

The Estonian state budget for 2013 foresees net dividends from Eesti Energia of 73.5 million euros.

Credit ratings

At the end of the financial year, Eesti Energia had a credit rating of Baa1 with stable outlook from Moody's and BBB+ with stable outlook from Standard & Poor's. On 8 January 2013, Moody's changed the rating outlook to negative. Eesti Energia's credit ratings are at the investment grade level that allows the Group to access debt capital markets if needed.

More information on the audited financial results of Eesti Energia Group is available at Eesti Energia homepage: www.energia.ee/investor

Veiko Räim
Head of Investor Relations and Treasury
Eesti Energia AS
Tel: +372 715 2884
Mobile + 372 5668 1568
[email protected]