Eesti Energia’s results for the financial year 2005/2006

In the past financial year ending in March, Eesti Energia Group earned EUR 137 million in profits, and invested EUR 153 million. The Company's operating revenue, according to unaudited data, amounted to EUR 534 million. The financial results for the year were mostly affected by increase in domestic consumption of electricity, and sales of emission allowances, arising from continuous growth in Estonian economy. In the financial year 2005/2006, domestic electricity sales increased by 4,9%, amounting to 6 235 GWh. Revenue from domestic sales of electricity increased by 11,1% (EUR 32 million). Regardless of the 12,3% decrease in electricity exports in the financial year, export revenue increased by 19,5% to EUR 40 million. In the financial year 2005/2006, the company ended exports to Russia, starting exporting electricity to Lithuania instead. 87,7% of total exports went to Latvia, and 12,3% to Lithuania. “The most significant event in the financial year 2005/2006 was launch of construction of the Estonian-Finnish submarine cable. It represents the first step towards connecting Estonia to the European power systems. Estlink will have a significant long-term effect on both the Estonian market and the Baltic energy market in general, allowing to make electricity purchase and sales transactions between the Baltic States and Nordic countries, and to cover possible insufficiencies in production capacity,” Sandor Liive, Chairman of the Eesti Energia Management Board commented on the highlights of the financial year. According to Margus Kaasik, Eesti Energia’s Financial Director, the highlights of the year included a rise in the company’s credit ratings, and a successful bond exchange. Moody’s decided to raise Eesti Energia’s credit rating from A3 to A1 positive at the end of last financial year. Standard & Poor’s fixed the company’s rating at A-, changing the negative outlook to stable. In order to extend the term of its borrowings, Eesti Energia conducted a bond issue by replacing the bonds to be redeemed in 2009 with those to be redeemed in 2020. This provided the company with long-term financing at a favourable fixed interest rate. Total power losses amounted to 12,09% in the financial year  - an all time low for the company. The financial results 2005/06 were also affected by revenue from emissions trading. "The CO2 emission quota generated extraordinary EUR 74 million in revenue in the financial year. However, this constitutes an advance payment to be invested in the implementation of a more CO2-free production technology," said Sandor Liive, Chairman of the Eesti Energia Management Board. Thermal energy sales amounted to 1 981 GWh in the financial year 2005/2006, having increased by 5 GWh, compared to the financial year 2004/2005. The company also increased extra-group sales of shale oil by 73% in the financial year. "Increase in the price of oil on the global market had a significant effect on the European energy markets, conditioning an increase in the price of energy," said Margus Kaasik, Eesti Energia’s Financial Director. "The price of oil raised the prices of both fuel oil and gas. Continued deficit in energy source material, and the increased electricity demand give reason to assume that the situation is not about to change any time soon,”  added Kaasik. Eesti Energia Group invested a total of EUR 153 million in the financial year 2005/2006. Now that the two new fluidised bed technology-based production units in AS Narva Elektrijaamad have been completed, the Group is changing the focus of its investments from energy production to power network development. Total investments into power networks amounted to approximately 69%. Distribution network (OÜ Jaotusvõrk), on the other hand, increased investments into network connections, with the related total investments amounting to approximately EUR 32 million. In the financial year 2006/2007, Eesti Energia will continue focusing its investments in raising the quality of power networks. The planned total investments for the year amount to EUR 170 million. The biggest investment objects include construction of the new ash disposal system by AS Narva Elektrijaamad, and launch of the new 330 kV transmission line in the Tallinn-Narva direction. As of the end of 2005/2006 financial year, Eesti Energia's total liabilities amounted to EUR 525 million, EUR 341 million of which - long-term borrowings. The audited financial results of Eesti Energia will be published at the end of June. Additional information:
Iveri Marukashvili
Eesti Energia Communications Specialist
Tel.: +372 71 51 218
GSM.: + 372 53 411 813
E-mail: [email protected]