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Eesti Energia sales revenues for the financial year 2014 amounted to 880 million euros (-8.9%), while EBITDA reached 312 million euros (+0.6%) and net profit 159 million euros (-0.1%).

Financial results

Group turnover decreased in 2014 for all key products. Electricity sales revenue decreased mainly due to lower sales volume (-19.6% compared to 2013), while the average sales price was improved by financial hedges and reached 3.7% higher than in 2013 at 47.9 €/MWh. In total, sales revenue from electricity sales amounted to 451 million euros (-15.6% y-o-y). Electricity distribution sales revenue decreased by 1% to 241 million euros on the back of lower distribution tariff. Shale oil sales volume increased by 10.8% due to record production level, but the sales revenue was held back by lower sales price for shale oil (despite the positive effect of the financial hedges). Altogether, sales revenue from shale oil sales amounted to 85.3 million euros (-7.4% y-o-y). Sales revenue for other products and services amounted to 103 million euros, which is 6.2% more than in 2013.

Group EBITDA expanded marginally in 2014 despite electricity EBITDA decreasing by 24.9 million euros (-17.1%). Lower sales volume as well as higher electricity generation costs were mainly behind the decline of electricity EBITDA. Reduction of electricity EBITDA was, however, balanced by positive performance in electricity distribution (EBITDA 9.6% higher at 97.3 million euros), shale oil sales (EBITDA 16% higher at 62.2 million euros) and other products and services (EBITDA 41.6% higher at 32.4 million euros).

Key performance indicators

Electricity sales amounted to 9.1 TWh in 2014, of which sales to retail customers amounted to 6 TWh (-15%) and sales in the wholesale market reached 3.1 TWh (-27%). Group average retail market share in Estonia was 59% in 2014, while it maintained 15% and 7% share in Latvian and Lithuanian retail power markets, respectively. Eesti Energia generated 9.7 TWh of power in 2014, which is 8.3% less than in 2013.

Group distributed 6.3 TWh of electricity last year, which is 0.2% more than in 2013. Eesti Energia sold 231 thousand tonnes of shale oil in 2014, while the production of shale oil increased by 51.6 thousand tonnes to 265 thousand tonnes (+24.2%).

Capital expenditure

Group capital expenditure reached 276 million in 2014, which is 34.1% less than in the year before. Main investments were made into distribution network (97 million euros) and new Auvere power plant (84 million euros). Group´s operating cash flow covered the cash flow from investments in 2014.

Financing, credit ratings and dividends

Group available liquidity as of the end of 2014 comprised of 100 million euros of cash and cash equivalents and 250 million euros of undrawn loan facilities.

As at 31 December 2014 the Group’s total net debt amounted to 835 million euros. Net debt/EBITDA ratio was 2.7x and financial leverage at 34%. Compared to the end of 2013, Group´s leverage increased as it paid its sole shareholder, the Republic of Estonia, 93.6 million euros of net dividends in 2014.

The Group is rated BBB+ and Baa2 by S&P and Moody´s respectively, both credit ratings have a stable outlook.

Outlook

Eesti Energia currently expects the sales revenues to increase slightly in 2015 on the back of larger power generation and oil production volume. On the other hand, group expects its EBITDA to decrease slightly in 2015, as lower sales prices put pressure on earnings. Eesti Energia has sold forward 7.2 TWh of electricity (average price of 40.5 €/MWh) and also hedged the price risk of 207,000 tonnes of shale oil (average price of 419 €/tonne) for 2015. For 2016, group has sold forward 2.9 TWh of electricity (average price of 38.1 €/MWh) and 11,000 tonnes of shale oil (average price of 353 €/tonne). In addition, group has hedged a further 120 000 tonnes of shale oil production in 2016 with options.

To cover the CO2 emission expenses Eesti Energia has mainly relied on forward contracts. Together with allocated free of charge CO2 allowances group has covered 18.2 million tonnes (average price of 4.2 €/tonne) for the year 2015 and 6.6 million tonnes (average price of 2 €/tonne) for the year 2016.

In 2015 the total capital expenditure is expected to increase from the 276 million euros in 2014. Increase is mainly due to higher maintenance investments, as capital expenditure into development projects will decline.

More information on the audited financial results of Eesti Energia Group is available at Eesti Energia homepage