Latvenergo Group Consolidated
and Latvenergo AS Annual Report
| 2023
About Latvenergo Group
Corporate Governance
Operating Segments
Sustainability Indicators
Annexes to
the Sustainability Report
Annual Report
– Key Figures
– Management Report
– Financial Statements
Statement of Profit or Loss
Statement of Comprehensive Income
Statement of Financial Position
Statement of Changes in Equity
Statement of Cash Flows
Notes to the Financial Statements
– Independent Auditors’
Report
Latvenergo Group Consolidated and Latvenergo AS Annual Report
Financial statements are prepared in accordance with International Financial Reporting Standards as adopted by the European Union (IFRS)
This is pdf format of the annual report further converted to the ESEF report to be considered as the official annual report prepared in accordance with the respective requirements
Contents
3 Key Figures
5 Management Report
12 Financial Statements
12 Statement of Profit or Loss
12 Statement of Comprehensive Income
13 Statement of Financial Position
14 Statement of Changes in Equity
15 Statement of Cash Flows
16 Notes to the Financial Statements
62 Independent Auditors’ Report
Notes to the Financial Statements
16 No. 1. Corporate information
16 No. 2. Summary of material accounting policies
20 No. 3. Financial risk management
23 No. 4. Critical accounting estimates and judgements
27 No. 5. Operating segment information
30 No. 6. Revenue
32 No. 7. Other income
32 No. 8. Raw materials and consumables
33 No. 9. Personnel expenses
33 No. 10. Other operating expenses
33 No. 11. Finance income and costs
34 No. 12. Income tax
34 No. 13. Intangible assets
36 No. 14. Property, plant and equipment
41 No. 15. Leases
43 No. 16. Non–current financial investments
44 No. 17. Inventories
45 No. 18. Receivables from contracts with customers and other receivables
47 No. 19. Cash and cash equivalents
47 No. 20. Share capital
48 No. 21. Reserves, dividends and earnings per share
49 No. 22. Changes in liabilities arising from financing activities
49 No. 23. Borrowings
50 No. 24. Derivative financial instruments
52 No. 25. Fair values and fair value measurement
55 No. 26. Trade and other payables
55 No. 27. Provisions
56 No. 28. Deferred income
57 No. 29. Related party transactions
61 No. 30. Commitments and contingent liabilities
61 No. 31. Events after the reporting year
FINANCIAL CALENDAR
Interim Condensed Financial Statements:
For the 3 months of 2024 (unaudited) – 31.05.2024
For the 6 months of 2024 (unaudited) – 30.08.2024
For the 9 months of 2024 (unaudited) – 29.11.2024
22
About Latvenergo Group
Corporate Governance
Operating Segments
Sustainability Indicators
Annexes to
the Sustainability Report
Annual Report
– Key Figures
– Management Report
– Financial Statements
Statement of Profit or Loss
Statement of Comprehensive Income
Statement of Financial Position
Statement of Changes in Equity
Statement of Cash Flows
Notes to the Financial Statements
– Independent Auditors’
Report
Key figures
In order to ensure an objective and comparable presentation of the financial results, Latvenergo Group and Latvenergo AS uses various financial figures and ratios that are derived from the financial statements.
Latvenergo Group
Operational figures 2023 2022 2021 2020 2019
Total electricity supply, incl.: GWh 8,659 7,346 9,260 8,854 9,259
- Retail* GWh 6,208 5,452 6,706 6,394 6,505
- Wholesale** GWh 2,450 1,894 2,554 2,460 2,754
Total natural gas supply, incl.: GWh 1,554 1,040 1,026 516 303
- Retail GWh 896 930 1,026 516 303
- Wholesale GWh 658 110 – – –
Electricity generated GWh 5,132 3,822 4,517 4,249 4,880
Thermal energy generated GWh 1,698 1,777 2,072 1,702 1,842
Number of employees 3,497 3,316 3,153 3,295 3,423
Moody’s credit rating Baa2 (stable) Baa2 (stable) Baa2 (stable) Baa2 (stable) Baa2 (stable)
EUR’000
Financial figures 2023 2022 2021 2020 2019***
Revenue 2,034,425 1,841,801 1,065,219 773,391 841,636
EBITDA 601,769 360,209 198,813 277,894 243,526
Operating profit 404,596 193,961 81,890 121,350 100,365
Profit before tax 388,529 184,545 74,930 112,699 92,072
Profit for the year 350,917 183,874 71,623 116,309 94,359
Dividends paid to equity holder of the Parent Company 152,538 70,160 98,246 127,071 132,936
Assets 4,127,922 3,855,330 3,475,890 3,358,835 3,864,941
Non–current assets 3,377,267 3,078,635 2,894,502 2,976,192 2,798,712
Equity 2,963,080 2,356,419 2,123,448 2,118,242 2,265,487
Borrowings 629,696 875,918 795,029 743,199 882,671
Net debt
1)
511,240 763,161 697,950 555,876 563,959
Net cash flows generated from operating activities**** 575,682 126,499 67,250 281,647 289,826
Adjusted funds from operations (FFO)
2)
513,678 338,977 176,143 249,534 259,237
Capital expenditure 193,349 121,666 126,728 168,855 229,427
Based on the most commonly used financial figures and ratios in the industry, the Latvenergo Group
Strategy for 2022-2026 (see also the Management Report – section Further development, and
Sustainability Report), as well as the binding financial covenants set in the Group’s loan agreements,
Latvenergo Group has set here and therefore uses the following financial figures and ratios:
y profitability measures – EBITDA; EBITDA margin; operating profit margin; profit before tax margin;
profit margin; return on assets (ROA); return on equity (ROE); adjusted ROE excluding distribution;
return on capital employed (ROCE)
y capital structure measures – net debt
1)
; adjusted FFO
2)
/net debt; equity–to–asset ratio; net debt /
EBITDA; net debt / equity; current ratio
y a dividend policy measure – dividend pay–out ratio
* Including operating consumption
** Including sale of energy purchased within the mandatory procurement on the Nord Pool
*** Figures and ratios for 2019 - 10 June 2020 are presented by excluding discontinuing operations (unbundling transmission system asset ownership)
**** Comparative figures recalculated, presenting changes in current intangible assets (CO
2
emission rights) in net cash flows from operating activities as
changes in current assets
1) Net debt = borrowings at the end of the reporting year – cash and cash equivalents at the end of the reporting year
2) Adjusted funds from operations (FFO) = Net cash flows generated from operating activities – (changes in inventories and current intangible assets+
changes in receivables from contracts with customers and other receivables+ changes in other financial investments) – changes in trade and other liabilities–
compensation from the state-on-state support for the installed capacity of CHPPs
Financial ratios 2023 2022 2021 2020 2019 Formulas
EBITDA margin 30% 20% 19% 36% 29% EBITDA / revenue
Operating profit margin 19.9% 10.5% 7.7% 15.7% 11.9% Operating profit / revenue
Profit before tax margin 19.1% 10.0% 7.0% 14.6% 10.9% Profit before tax / revenue
Profit margin 17.2% 10.0% 6.7% 15.0% 11.2% Profit for the year / revenue
Adjusted FFO / net debt 81% 46% 28% 45% 48% Adjusted FFO / ((net debt at the beginning of the reporting year + net debt at the end of the reporting year) /2)
Equity–to–asset ratio 72% 61% 61% 63% 59% Equity at the end of the reporting year / assets at the end of the reporting year
Net debt / EBITDA 1.1 2.0 3.2 2.0 2.2 (Net debt at the beginning of the reporting year + net debt at the end of the reporting year) / 2 / EBITDA
Net debt / equity 0.17 0.32 0.33 0.26 0.25 Net debt at the end of the reporting year / equity at the end of the reporting year
Current ratio 2.2 1.2 1.4 1.5 1.2 Current assets at the end of the reporting year / current liabilities at the end of the reporting year
Return on assets (ROA) 8.8% 5.0% 2.1% 3.2% 2.5% Profit for the year / ((assets at the beginning of the reporting year + assets at the end of the reporting year) / 2)
Return on equity (ROE) 13.2% 8.2% 3.4% 5.3% 4.1% Profit for the year / ((equity at the beginning of the reporting year + equity at the end of the reporting year) / 2)
Adjusted ROE excluding distribution 19.9% 16.3% 5.5% 7.7% 4.8%
(Group's profit for the year – Sadales tīkls AS profit for the year) / ((Group's equity at the beginning of the reporting year – Sadales tīkls
AS equity at the beginning of the reporting year + Group's equity at the end of the reporting year – Sadales tīkls AS equity at the end
of the reporting year) / 2)
Return on capital employed (ROCE)*** 11.9% 6.3% 2.9% 4.2% 3.4%
Operating profit / ((equity at the beginning of the reporting year + equity at the end of the reporting year) / 2) + (borrowings at the
beginning of the reporting year + borrowings at the end of the reporting year) / 2)
Dividend pay–out ratio 73% 88% 63% 126% 62% Dividends paid to equity holder of the Parent Company / profit of the Parent Company in the previous year
33
About Latvenergo Group
Corporate Governance
Operating Segments
Sustainability Indicators
Annexes to
the Sustainability Report
Annual Report
– Key Figures
– Management Report
– Financial Statements
Statement of Profit or Loss
Statement of Comprehensive Income
Statement of Financial Position
Statement of Changes in Equity
Statement of Cash Flows
Notes to the Financial Statements
– Independent Auditors’
Report
Latvenergo AS
Operational figures 2023 2022 2021 2020 2019
Total electricity supply, incl.: GWh 6,090 4,700 5,304 5,318 5,502
- Retail* GWh 3,830 3,540 3,999 4,235 4,211
- Wholesale** GWh 2,261 1,161 1,305 1,083 1,290
Total natural gas supply, incl.: GWh 1,435 905 804 453 294
- Retail GWh 777 795 804 453 294
- Wholesale GWh 658 110 – – –
Electricity generated GWh 5,115 3,800 4,495 4,215 4,832
Thermal energy generated GWh 1,457 1,531 1,800 1,475 1,603
Number of employees at the end of the
reporting year 1,414 1,329 1,269 1,267 1,328
Moody’s credit rating Baa2 (stable) Baa2 (stable) Baa2 (stable) Baa2 (stable) Baa2 (stable)
EUR’000
Financial figures 2023 2022 2021 2020 2019
Revenue 1,397,179 1,231,015 592,785 385,612 437,529
EBITDA 473,295 280,325 85,275 197,889 112,651
Operating profit 362,267 198,812 52,367 111,630 45,108
Profit before tax 362,660 209,362 79,520 154,848 101,227
Profit for the year 331,561 209,362 79,520 154,848 101,227
Dividends paid to equity holder of the Parent Company 152,538 70,160 98,246 127,071 132,936
Assets 3,474,032 3,305,536 2,915,587 2,760,155 3,136,958
Non–current assets 2,672,436 2,434,746 2,215,793 2,307,985 2,615,113
Equity 2,608,014 2,018,694 1,761,070 1,746,436 1,949,287
Borrowings 618,179 863,938 782,322 733,392 872,899
Net debt
1)
*** 511,016 763,670 689,904 548,511 555,348
Net cash flows generated from operating activities**** 423,244 258,419 291,049 436,615 352,535
Capital expenditure 64,452 30,040 29,545 50,999 48,269
* Including operating consumption
** Including sale of energy purchased within the mandatory procurement on the Nord Pool
*** Figures and ratios for 2019 - 10 June 2020 are presented by excluding discontinuing operations (unbundling transmission system asset ownership)
**** Comparative figures recalculated, presenting changes in current intangible assets (CO
2
emission rights) in net cash flows from operating activities as
changes in current assets
1) Net debt = borrowings at the end of the reporting year – cash and cash equivalents at the end of the reporting year
Financial ratios 2023 2022 2021 2020 2019 Formulas
EBITDA margin 33.9% 22.8% 14.4% 51.3% 25.7% EBITDA / revenue
Operating profit margin 25.9% 16.2% 8.8% 28.9% 10.3% Operating profit / revenue
Profit before tax margin 26.0% 17.0% 13.4% 40.2% 23.1% Profit before tax / revenue
Profit margin 23.7% 17.0% 13.4% 40.2% 23.1% Profit for the year / revenue
Equity–to–asset ratio 75% 61% 60% 63% 62% Equity at the end of the reporting year / assets at the end of the reporting year
Net debt / equity 0.20 0.38 0.39 0.31 0.29 Net debt at the end of the reporting year / equity at the end of the reporting year
Current ratio 3.5 1.5 1.8 2.3 1.8 Current assets at the end of the reporting year / current liabilities at the end of the reporting year
Return on assets (ROA) 9.8% 6.7% 2.8% 5.3% 3.2% Profit for the year / ((assets at the beginning of the reporting year + assets at the end of the reporting year) / 2)
Return on equity (ROE) 14.3% 11.1% 4.5% 8.4% 5.1% Profit for the year / ((equity at the beginning of the reporting year + equity at the end of the reporting year) / 2)
Return on capital employed (ROCE)*** 11.9% 7.3% 2.1% 4.4% 1.7%
Operating profit / ((equity at the beginning of the reporting year + equity at the end of the reporting year) / 2) + (borrowings at the
beginning of the reporting year + borrowings at the end of the reporting year) / 2)
Dividend pay–out ratio 73% 88% 63% 126% 62% Dividends paid to equity holder of the Parent Company / profit of the Parent Company in the previous year
44
About Latvenergo Group
Corporate Governance
Operating Segments
Sustainability Indicators
Annexes to
the Sustainability Report
Annual Report
– Key Figures
– Management Report
– Financial Statements
Statement of Profit or Loss
Statement of Comprehensive Income
Statement of Financial Position
Statement of Changes in Equity
Statement of Cash Flows
Notes to the Financial Statements
– Independent Auditors’
Report
Management Report
Latvenergo Group (the Group) is one of the largest power suppliers and energy generators in the Baltics,
operating in electricity and thermal energy generation and trade, natural gas trade, supply of products
and services related to electricity consumption and energy efficiency, and electricity distribution services.
Latvenergo Group – one of the largest power suppliers in the Baltics
The parent company of Latvenergo Group is Latvenergo AS which is a power supply utility operating in
electricity and thermal energy generation and trade, natural gas trade, as well as supply of products and
services related to electricity consumption and energy efficiency in Latvia.
Latvenergo Group divides its operations into two operating segments: generation and trade; and distribution.
Operating Environment
In 2023, both the Nord Pool system price and the electricity price in Latvia decreased by 58% compared
to the previous year. In the European Union (EU), the reduction in electricity prices was mainly affected
by lower natural gas prices and increased electricity generation through renewable energy resources.
According to Ember data, in 2023, the installed capacity of wind power plants (WPP) and solar power
plants(SPP) in the European Union (EU) increased by 75 GW. Consequently, the development of wind
power stations in the EU increased by 13% in 2023, while the development of solar power stations
increased by 17%, collectively accounting for 27% of total electricity generation in 2023. Improved
hydrological conditions also contributed to a 15% increase in hydroelectric power generation. Additionally,
there was a decrease in electricity demand of approximately 2–3%. The electricity market was also
stabilized with the help of the European Commission’s REPowerEU plan, in response to the difficulties
in the world energy market caused by the Russian invasion of Ukraine. The REPowerEU plan envisions
implementing energy-saving measures, diversification of energy sources to reduce dependence on
Russian fossil fuels and accelerated development of renewable energy resources.
Electricity and natural gas prices decreased
Average electricity price in Nord Pool regions, EUR/MWh (monthly)
Region 2023 2022 Δ, %
System price 56.4 135.9 (58%)
Latvia 93.9 225.9 (58%)
Lithuania 94.4 229.2 (59%)
Estonia 90.8 192.0 (53%)
Poland 111.7 166.7 (33%)
Sweden 49.3 100.3 (51%)
Finland 56.5 153.5 (63%)
Denmark 84.3 213.7 (61%)
Norway 56.5 117.0 (52%)
Germany 95.2 235.5 (60%)
France 96.9 275.9 (65%)
Great Britain 108.0 239.4 (55%)
In 2023, the average price of natural gas at the TTF (front month) reached 49 EUR/MWh, which is 63%
lower than a year earlier. Slower global economic growth, along with high liquefied natural gas (LNG)
imports, increased RES output and reduced natural gas consumption, contributed to an increase in
the natural gas reserve fill rate in EU gas storage facilities. In 2023, the average fill rate of natural gas
storage facilities, according to Gas Infrastructure Europe data, was 79% (in 2022, it was 61%). Until
the end of March 2024, the REPowerEU plan continued, aiming for voluntary measures to reduce gas
consumption by 15% in the EU territory.
Latvenergo AS has not imported natural gas from Russia since 24 February 2022, switching to supplies
of LNG from other countries. Until 2032, Latvenergo AS has secured the rights to receive for regular
natural gas deliveries at the Klaipeda LNG terminal at a volume of 6 TWh per year.
The average price of CO
2
emission allowances (EUA DEC futures) was 5% higher compared to the
year 2022, reaching 85.3 EUR / t. However, at the end of the year, there was a downward trend in
prices, affected by the reduction in natural gas prices and slower economic development. The European
Parliament’s decision to allocate additional quotas for financing REPowerEU, aimed at reducing Europe’s
dependence on Russian energy resources, led to an increased supply of quotas in the short term. The
climate goal of the European Commission to reduce CO
2
emissions by 55% by 2030 compared to the
levels of 1990 remains relevant.
100
200
300
400
500
Jan 2022 Apr 2022 Jul 2022 Oct 2022 Jan 2023 Apr 2023 Jul 2023 Oct 2023
Energy resource prices
EUR/MWh, EUR/t
Electricity: Nord Pool Latvia Natural gas: TTF CO
2
emmission allowances
55
About Latvenergo Group
Corporate Governance
Operating Segments
Sustainability Indicators
Annexes to
the Sustainability Report
Annual Report
– Key Figures
– Management Report
– Financial Statements
Statement of Profit or Loss
Statement of Comprehensive Income
Statement of Financial Position
Statement of Changes in Equity
Statement of Cash Flows
Notes to the Financial Statements
– Independent Auditors’
Report
Operating Results
Generation
Latvenergo Group is one of the largest electricity producers in the Baltics. In 2023, Latvenergo Group
produced 1/3 of the total electricity generated in the Baltics. Moreover, 73% of the electricity was
generated from renewable energy sources (in 2022: 70%). The total amount generated by Latvenergo
Group’s power plants comprised 5.1 TWh of electricity and 1.7 TWh of thermal energy.
The Daugava HPPs generated the second largest amount of electricity in the last 25 years
The Daugava HPPs generated the largest amount of electricity since 2017 and the second largest amount
in the last 25 years – 3.7 TWh, which is 39% more than in 2022. The amount of power generated at the
Daugava HPPs was impacted by 56% higher water inflow in the Daugava River. According to data from
the Latvian Environment, Geology and Meteorology Centre, the average water inflow in the Daugava River
in 2023 was 789 m
3
/s, while a year earlier it was 506 m
3
/s.
The amount generated at the Latvenergo AS CHPPs increased by 23%, reaching 1.4 TWh. The increase
was influenced by relatively low generation in the previous year, which was then affected by high natural
gas prices. The operation of the CHPPs is adjusted to the conditions of the electricity market and heat
demand.
The amount of thermal energy generated did not significantly change, reaching 1.7 TWh.
3,725 GWh
+39%
1,385 GWh
+23%
2023
100
200
300
400
500
600
700
800
900
Jan 2022 Apr 2022 Jul 2022 Oct 2022 Jan 2023 Apr 2023 Jul 2023 Oct 2023
Electricity generation at Daugava HPPs and Latvenergo AS CHPPs
GWh
Latvenergo AS CHPPs Daugava HPPs
Trade
At the end of the reporting year, the number of electricity customers was more than 845 thousand,
including almost 227 thousand foreign customers. The electricity customer portfolio shows a positive
3% increase mainly due to the increase in the number of customers within households in Lithuania.
Under the Elektrum brand, Latvenergo Group has become the second-largest electricity supplier in the
household customer segment in Lithuania.
Retail electricity trade increased by 14%
In 2023, the Group supplied 6.2 TWh of electricity to its customers in the Baltics, which is 14% more than
a year earlier. The increase in electricity sales volume was mainly impacted by the growth in sales volume
in the business customer segment, as well as the increase in sales volume in the household market in
Lithuania.
The overall amount of retail electricity trade outside Latvia accounted for about 38%. The electricity trade
volume in Latvia was 3.8 TWh, while in Lithuania it was 1.9 TWh and in Estonia it was 0.5 TWh.
Meanwhile, the number of natural gas customers has more than doubled, comprising more than
49thousand at the end of December. The Group’s natural gas sales in the Baltics decreased by4%,
reaching 896 GWh. The decrease is associated with a general decline in natural gas consumption in the
Baltic market. In total, 1.6 TWh of natural gas was sold, which is almost half as much as in 2022.
In the reporting year, we continued to develop retail activities of other products and services related to
electricity consumption and energy efficiency. The number of contracts for the installation of solar panels
and trade of solar park components in the Baltics exceeded 1,600. The total installed solar panel capacity
Completed in 2023
6.2 TWh
of electricity
sold to Baltic
retail customers.
0.9 TWh
of natural gas
sold to Baltic
retail customers.
More than
1,600 contracts
were concluded for
the installation
of solar panels
in the Baltics.
More than
44.3 thousand
electric vehicle charges
were made at the
Elektrum Drive electric
car charging stations.
66
About Latvenergo Group
Corporate Governance
Operating Segments
Sustainability Indicators
Annexes to
the Sustainability Report
Annual Report
– Key Figures
– Management Report
– Financial Statements
Statement of Profit or Loss
Statement of Comprehensive Income
Statement of Financial Position
Statement of Changes in Equity
Statement of Cash Flows
Notes to the Financial Statements
– Independent Auditors’
Report
(including remote solar parks) provided to Latvenergo Group’s retail customers in the Baltics exceeded
70MW at the end of December; thus, Latvenergo is one of the leading providers of this service in the
Baltics. Almost 3/4 of panels are installed for customers outside Latvia.
Steady growth in the number of Elektrum Insured product line customers in the Baltics continued,
reaching about 130 thousand.
In the reporting year, we further strengthened our leading position in the electric vehicle charging
station market in Latvia. The Elektrum Drive electric car charging network in the Baltics grew, reaching
400charging ports. In 2023, 44.3 thousand electric vehicle charges were made, comprising 880 MWh,
resulting in savings of 530 tonnes of CO
2
emissions. By using the Elektrum Drive application, charging is
also possible within the e-mobi network in Latvia and at LIDL charging stations in Lithuania – providing
customers access to a total of 571 charging points.
Distribution
Distribution segment provides electricity distribution services in Latvia. Sadales tīkls AS is the largest state
distribution system operator, covering approximately 99% of the territory of Latvia. Distribution system
tariffs are approved by the Public Utilities Commission (PUC).
As of 1 July 2023, the new distribution tariffs of Sadales tīkls AS have come into effect, with the tariff
calculation increasing the proportion of the fixed tariff, providing a more appropriate solution to the actual
maintenance cost structure of the distribution network. With the introduction of the new tariff, the financial
results of the distribution segment have improved.
Under the law on measures to reduce the extraordinary rise in energy prices, from 1 September 2023 to
31December 2023, a 60% reduction was applied to the fixed component of the electricity distribution
tariff (maintenance fee for power) for all households. This reduction was compensated through funds
allocated from the state budget.
To ensure a more sustainable approach and predictability of changes for customers in the future, from
1January 2024 to 31 December 2025, the increase in the capacity payments of the electricity distribution
tariff for household users will be applied gradually. The difference between the approved tariff and the one
applied to customers will be compensated from dividends of Latvenergo AS paid in the state budget.
Considering the possibilities of obtaining financing, as well as the increase in energy resource prices in
the last two years, microgeneration development in the country has been stimulated significantly. In 2022,
the volume of new microgenerator connections to the distribution grid reached its peak, and in 2023,
overall customer activity remained high. At the end of the reporting year, the total generation capacity
of microgenerators and generators connected to the distribution system reached 550 MW. In 2023, the
capacity of microgenerators connected to the distribution grid reached almost 70 MW, while the total
generation capacity of connected generators increased by 137 MW.
Unfavourable weather conditions significantly affected SAIDI (System Average Interruption Duration Index)
and SAIFI (System Average Interruption Frequency Index) indicators in 2023. However, excluding mass
damage, the reliability and quality of electricity supply have been increasing each year, and over the last
five years, SAIFI has decreased by 16%, and SAIDI by 21%.
Financial Results
In 2023, Latvenergo Group’s revenue reached EUR 2,034.4 million, which was EUR 192.6million or
10% more than a year earlier. This was mainly impacted by EUR 135.8 million higher energy sales
revenues mainly due to a 14% greater amount of electricity sold in retail, higher sales prices, a 39%greater
amount of power generated at the Daugava HPPs and an increase in revenue in the distribution segment
of 42.1million EUR, following the introduction of the new distribution tariffs by Sadales tīkls AS starting
from 1July 2023.
Latvenergo Group’s EBITDA increased by 67%
Latvenergo Group’s EBITDA increased by EUR 241.6 million, which is 67% more than a year earlier,
reaching EUR 601.8 million. This was mainly positively impacted by the greater amount of power
generated at the Daugava HPPs, lower electricity and natural gas purchase prices and an increase in
revenue in the distribution segment. The Group’s profit for the reporting year reached EUR 350.9 million.
77
About Latvenergo Group
Corporate Governance
Operating Segments
Sustainability Indicators
Annexes to
the Sustainability Report
Annual Report
– Key Figures
– Management Report
– Financial Statements
Statement of Profit or Loss
Statement of Comprehensive Income
Statement of Financial Position
Statement of Changes in Equity
Statement of Cash Flows
Notes to the Financial Statements
– Independent Auditors’
Report
Investments
In 2023, the total amount of investment comprised EUR 193.3 million, which is 59% or EUR 71.7million
more compared to the previous year, and the largest increase was generated by investments in the
development projects of solar power plants.
In the reporting year, investments in distribution comprised EUR 99.6 million, which is half of the Group’s
total investments. The majority of funds are invested in the construction and reconstruction of power lines
and transformers, thereby ensuring high-quality network services, technical performance, and operational
safety. The purpose of investments in the distribution segment is to promote the quality and security of
the energy supply, reduce the frequency and duration of power supply disruptions caused by planned
and unplanned maintenance, and ensure the appropriate voltage quality.
Latvenergo Group purposefully develops renewable generation capacity in the Baltic region
In the reporting year, EUR 34.9 million was allocated towards the development of Elektrum solar parks,
which is almost 1/5 of Latvenergo Group’s total investments. Also, the Daugava HPPs’ hydropower unit
reconstruction continued. In 2023, EUR8.2 million was invested in the Daugava HPPs’ hydropower
unit reconstruction. 8hydro units included in the programme have already been reconstructed as of
31December 2023.
As per Latvenergo Group’s strategic plan for 2022-2026, there will be a substantial increase in
investments towards expanding the Group’s renewable energy production capacity. This will lead to a
significant reduction in greenhouse gas emissions and contribute to Latvia’s goal of achieving climate
neutrality by 2050.
In the reporting year, 3 solar parks with a total capacity of 18.7 MW were put into operation in Lithuania.
By the end of the reporting year, we had 6 Elektrum solar parks in operation with a total capacity of
almost 30 MW in Lithuania. The solar park capacity in Lithuania will be distributed in three revenue
streams: selling capacity to customers, leasing capacity to customers, and supplying generated energy
to customers. Meanwhile, in Latvia, the first solar park with a total capacity of 11.7 MW is expected to be
operational in May 2024. In the Baltic region, the Group has solar and wind park projects in the project or
construction stage with a total capacity of about 400 MW, including seven SPP projects in Latvia, with a
total capacity of 40 MW, that were added to the Group’s RES generation capacity portfolio in early 2024.
Also, the development of a new WPP project has been initiated in Lithuania, in the Akmenes district,
with a capacity of up to 15 MW. Solar and wind parks are expected to be gradually commissioned in
2024–2025.
Funding
Latvenergo Group finances its investments from its own resources and external long-term borrowings,
which are regularly sourced in financial and capital markets in a timely manner. Planning the sourcing
of borrowings in a timely manner is also crucial to ensure loan refinancing risk management and debt
repayment in due time.
On February 22, 2023, Latvenergo AS concluded the third bond programme in the amount of
EUR200 million by issuing six-year green bonds with a total nominal value of EUR 50 million with a
maturity date of February 22, 2029, and a fixed interest rate (coupon) and yield of 4.952% per year. The
bonds are listed on Nasdaq Riga AS.
The bonds were issued in the format of green bonds, according to the Green Bond Framework of
Latvenergo AS. The independent research centre CICERO Shades of Green has rated the updated
Latvenergo AS Green Bond Framework as Dark Green (the highest category), indicating the compliance
of the planned projects with long-term environmental protection and climate change mitigation objectives,
as well as good governance and transparency.
As of 31 December 2023, the Group’s borrowings amount to EUR 629.7 million, all of which are
long-term loans (31 December 2022: EUR 875.9 million, including long-term loans in the amount of
EUR756.2million). The loan portfolio includes long-term loans from commercial banks and international
financial institutions, as well as green bonds in the amount of EUR 200 million.
External funding sources are purposefully diversified in the long run, thus creating a balance between
lender categories in the total loan portfolio. In the reporting year, all the binding financial covenants set in
Latvenergo Group’s loan agreements were met.
82
54
154
93
107
2029 2030-2034
70
70
Latvenergo Group’s long-term debt repayment schedule
MEUR
2027 20282023 20252024 2026
182
Loans Repaid in the reporting yearGreen Bonds
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About Latvenergo Group
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Statement of Profit or Loss
Statement of Comprehensive Income
Statement of Financial Position
Statement of Changes in Equity
Statement of Cash Flows
Notes to the Financial Statements
– Independent Auditors’
Report
Corporate Governance
Along with the financial results of Latvenergo Group, also the Corporate Governance Report of
Latvenergo AS for 2023 is published. It is based on the Corporate Governance Code, which was
published in 2020 by the Corporate Governance Advisory Board established by the Ministry of Justice.
Evaluating both the governance system of the capital company and its compliance with the principles
in 2023, the Management Board considers that Latvenergo AS complies in all material aspects with all
the principles set out in the Code, except for the criterion of gender representation on the company’s
Supervisory Board. For detailed information see the Sustainability Report 2023.
Non-financial Report
Latvenergo Group has prepared a non-financial report in accordance with the Law on the Financial
Instruments Market.
For detailed information on corporate social responsibility (CSR) activities, description of the policies and
procedures in relation to those matters, the outcome of the policies, risks and risk management, and non-
financial key performance indicators, please see the Sustainability Report 2023 which is available on the
Latvenergo website. The report is prepared in accordance with the GRIStandards requirements.
Non-financial report is in accordance with the GRI Standards
The sustainability report addresses such topics as corporate social responsibility, economic performance,
product responsibility, society, employees and the work environment, environmental protection, etc.
Further Development
In March 2022, Latvenergo Group’s medium-term strategy for 2022–2026, with new strategic operational
and financial objectives, was approved by the Supervisory Board of Latvenergo AS.
New strategic objectives comprise:
•
expand and diversify the generation portfolio with green technologies;
•
strengthen the position of Elektrum as the most valuable energy trader in the Baltics;
•
develop electrification of the transport sector;
•
ensure a sustainable and economically viable distribution service and improve the security and quality
of electricity supply.
Along with the strategy approval, Latvenergo Group’s financial targets have been set. The targets are
divided into four groups – profitability, capital structure, dividend policy and other.
The financial targets are set to ensure:
•
ambitious, yet achievable profitability, which is consistent with the average ratios of benchmark
companies in the European energy sector and provides for an adequate return on the business risk;
•
an optimal and industry-relevant capital structure that limits potential financial risks;
•
an adequate dividend policy that is consistent with the planned investment policy and capital structure
targets;
•
an investment grade credit rating to secure funding for the strategy’s ambitious investment programme.
Target group Ratio Year 2026
Profitability Return on equity (ROE) excluding Distribution* > 7%
Capital structure Adjusted FFO / Net Debt ratio > 25%
Dividend policy Dividend payout ratio > 64%
Other Moody's credit rating Maintain an investment grade credit rating
* The profitability of the regulated services provided by the Group is determined by the Public Utilities Commission. The most significant share in the Group’s
regulated services is the distribution service. When evaluating the fulfilment of the ROE target, the Group’s return indicator will be assessed, excluding the
regulated return on the distribution service – ROE excluding distribution.
More information on the 2023 targets and the new strategy can be found in the Sustainability Report2023.
Financial Risk Management
The activities of Latvenergo Group and Latvenergo AS are exposed to a variety of financial risks: market
risks, credit risk, and liquidity and cash flow risk. Latvenergo Group’s Financial Risk Management Policy
focuses on eliminating the potential adverse effects from such risks on financial performance. In the
framework of financial risk management, Latvenergo Group and Latvenergo AS use various financial risk
controls and hedging to reduce certain risk exposures.
a) Market risks
I) Price risk
Price risk might negatively affect the financial results of Latvenergo Group and Latvenergo AS due
to falling revenue from generation and a mismatch between short run electricity production costs or
electricity and natural gas purchase costs at floating market prices and retail sales at fixed prices.
The main sources of Latvenergo Group’s and Latvenergo AS exposure to price risk are the floating
market prices of electricity on the Nord Pool power exchange in Baltic bidding areas and fluctuations in
natural gas price procured for CHPPs’ fuel and retail purposes. The financial results of the Group and
the Parent Company may be negatively affected by the volatility of the electricity market price, which
depends on the weather conditions in the Nordic countries, global prices of resources, and the influence
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Report
of local factors (water availability and ambient air temperature) on electricity generation opportunities.
Movement in natural gas price due to changing demand–supply factors and seasonal fluctuations may
have a negative effect on the difference between fixed retail electricity prices in contracts with customers
and variable generation costs at CHPPs.
The Latvenergo Group and Latvenergo AS enter into long–term fixed price customer contracts for
hedging price risk of electricity generation. In order to hedge the price risk caused by mismatch between
retail sales at fixed prices and floating market prices, the Latvenergo Group and LatvenergoAS use
electricity and natural gas financial derivatives, and enter into fixed price contracts for natural gas
supply. The impact of price risk on generation is hedged gradually – price has been fixed for 60-65% of
projected electricity output prior to the upcoming year. Further hedging of risk is limited by the seasonal
generation pattern of the Daugava HPPs. The price fixing level reached 71% of the annual production
volume by the end of December.
II) Interest rate risk
Latvenergo Group’s and Latvenergo AS interest rate risk mainly arises from non–current borrowings at
variable interest rates. They expose the Group and the Parent Company to the risk that finance costs
might increase significantly when the reference rate surges. The borrowings from financial institutions
have a variable interest rate, comprising 6–month EURIBOR and a margin. The Group’s Financial
Risk Management Policy stipulates maintaining more than 35% of its borrowings as fixed interest rate
borrowings (considering the effect of interest rate swaps and issued bonds) with a duration of 1–4 years.
Considering the effect of interest rate swaps and bonds with a fixed interest rate, 46% of the Group’s
and 47% of the Parent Company’s non–current borrowings had a fixed interest rate with an average
duration of 2.1 years for the Group and 2.1 years for the parent Company as of 31 December 2023.
III) Currency risk
Foreign currency exchange risk arises when future transactions or recognised assets or liabilities are
denominated in a currency other than the functional currency, which is the EUR.
To manage the foreign currency exchange risk for liabilities arising from natural gas purchases, the
Financial Risk Management Policy envisages use of foreign exchange forward contracts. During 2023,
five EUR/USD forward foreign currencies exchange contracts in the amount of USD 153.5 thousand with
an execution date of 22 February and 26 April 2023 were fulfilled, concluded in 2022 in order to limit the
currency risk of the payments in US dollars planned in the natural gas purchase agreement concluded
in2022. As of 31 December 2023 there were no outstanding foreign exchange forward contracts.
As of 31 December 2023, all borrowings of Latvenergo Group and Latvenergo AS are denominated
in euros, and during the reporting year, there was no substantial exposure to foreign currency risk as
regards the Group’s and the Parent Company’s investments in non–current or current assets.
b) Credit risk
Credit risk is managed at the Latvenergo Group level. Credit risk arises from cash and cash equivalents,
derivative financial instruments and deposits with banks, and receivables. Credit risk exposure of
receivables is limited due to the large number of Group customers as there is no significant concentration
of credit risk with any single counterparty or group of counterparties with similar characteristics.
Credit risk related to cash and deposits with banks is managed by balancing the placement of financial
assets in order to simultaneously choose the best offers and reduce the probability of incurrence of loss.
No credit limits were exceeded during the reporting year, and the management does not expect any
losses due to the occurrence of credit risk.
c) Liquidity risk and cash flow risk
Latvenergo Group’s liquidity and cash flow risk management policy is to maintain a sufficient amount of
cash and cash equivalents and the availability of long and short–term funding through an adequate amount
of committed credit facilities in order to meet existing and expected commitments and compensate for
fluctuations in cash flows due to the occurrence of a variety of financial risks. On 31 December 2023,
Latvenergo Group’s liquid assets (cash and cash equivalents – short–term deposits up to 3 months)
reached EUR 118.5 million (31 December 2022: EUR 112.8 million), while the Latvenergo AS liquid assets
reached EUR 107.2 million (31/12/2022: EUR 100.3 million).
The Group and the Parent Company continuously monitor cash flow and liquidity forecasts, which
comprise the undrawn borrowing facilities and cash and cash equivalents.
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Statement of Profit or Loss
Statement of Comprehensive Income
Statement of Financial Position
Statement of Changes in Equity
Statement of Cash Flows
Notes to the Financial Statements
– Independent Auditors’
Report
Events after the reporting year
The Ministry of Economics and Latvenergo AS were ordered to draw up an assessment on the most
optimal solution for the structure of Latvenergo AS Group, considering the possibility of merging the
existing and planned renewable energy projects of Latvenergo AS Group into one subsidiary.
Latvijas valsts meži AS was permitted to terminate its participation in Latvijas vēja parki SIA, the joint
venture of Latvijas valsts meži AS and Latvenergo AS, by alienating all shares (20%) of Latvijas vēja
parkiSIA owned by Latvijas valsts meži AS for the benefit of Latvenergo AS.
In order to implement the installation of the total new RES (RES - renewable energy sources) capacity of
2,300MW provided for by the strategy of Latvenergo Group, the Ministry of Economics was instructed
to draw up a draft order on the authorisation for determining a different amount of dividends to be
paid by Latvenergo AS to the State budget as of 2027 in the medium-term Latvenergo AS Strategy
for2026–2030, bringing the amount of dividends to be paid by Latvenergo AS to the State budget in line
with the average dividend payout ratio of European energy sector market participants and to submit the
aforementioned draft order to the Cabinet of Ministers for consideration.
All other significant events that would materially affect the financial position, financial performance or cash
flows of the Latvenergo Group and Latvenergo AS after the reporting year are disclosed in Note 31 of the
Group’s and the Parent Company’s Financial Statements.
Statement of management responsibility
Based on the information available to the Management Board of Latvenergo AS, the Group consolidated
financial statements and the Company financial statements for the year ended 31 December 2023 have
been prepared in accordance with the International Financial Reporting Standards as adopted by the
EU and in all material aspects present a true and fair view of the financial position, profit and loss and
cash flows of Latvenergo Group and Latvenergo AS. Information provided in the Management Report
is accurate.
Profit distribution
According to the Law “On state budget for 2024 and budgetary framework for 2024, 2025 and 2026”
the expected amount of dividends to be paid by Latvenergo AS for the use of state capital in 2024 (for
the reporting year 2023) is 64% of the profit for the reporting year, but not less than EUR 199.3 million,
corporate income tax calculated and paid in accordance with the laws and regulations. The distribution of
net profit and amount of dividends payable is subject to a resolution of the Latvenergo AS Shareholders
Meeting.
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About Latvenergo Group
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Annual Report
– Key Figures
– Management Report
– Financial Statements
Statement of Profit or Loss
Statement of Comprehensive Income
Statement of Financial Position
Statement of Changes in Equity
Statement of Cash Flows
Notes to the Financial Statements
– Independent Auditors’
Report
Financial Statements
Statement of Profit or Loss
Group | Parent Company | EUR’000 | ||||
| Notes | 2023 | 2022 | 2023 | 2022 | ||
Revenue | 6 | |||||
Other income | 7 | |||||
Raw materials and consumables | 8 | ( | ( | ( | ( | |
Personnel expenses | 9 | ( | ( | ( | ( | |
Other operating expenses | 10 | ( | ( | ( | ( | |
EBITDA* | ||||||
Depreciation, amortisation and impairment of intangible assets, property, plant and equipment (PPE) and | 13 | a,14a, | ||||
| right-of-use assets | 15 | ( | ( | ( | ( | |
Operating profit | ||||||
Finance income | 11 | |||||
Finance costs | 11 | ( | ( | ( | ( | |
Dividends from subsidiaries | 16 | |||||
Profit before tax | ||||||
Income tax | 12 | ( | ( | ( | ||
Profit for the year | ||||||
| Profit attributable to: | ||||||
- Equity holder of the Parent Company | 21 c | |||||
- Non–controlling interests | ||||||
Basic earnings per share (in euros) | 21 c | |||||
Diluted earnings per share (in euros) | 21 c |
* See Alternative Performance Measures in Note 2 for the definition of this Alternative Performance Measure
The notes on pages 16 to 61 are an integral part of these Financial Statements
Statement of Comprehensive Income
Group | Parent Company | EUR’000 | |||
| Notes | 2023 | 2022 | 2023 | 2022 | |
Profit for the year | |||||
| Other comprehensive income / (loss) to be reclassified | |||||
| to profit or loss in subsequent periods, net of tax: | |||||
- gains / (losses) from change in hedge reserve | 21 a, 24 | ( | ( | ||
Net other comprehensive income / (loss) to be reclassified to profit or loss in subsequent periods | ( | ( | |||
Other comprehensive income not to be reclassified to profit or loss in subsequent periods, net of tax: | |||||
- gains on revaluation of non–current assets | 14 a, 21 a | ||||
| - (losses) / gains on remeasurement on defined benefit | |||||
plan | 21 a, 27 | ( | ( | ||
Net other comprehensive income not to be reclassified to profit or loss in subsequent periods | |||||
Other comprehensive income for the year | |||||
TOTAL comprehensive income for the year | |||||
| Attributable to: | |||||
- Equity holder of the Parent Company | |||||
- Non–controlling interests |
The notes on pages 16 to 61 are an integral part of these Financial Statements
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Mārtiņš Čakste Guntars Baļčūns
Chairman of the Management Board of Latvenergo AS Member of the Management Board of Latvenergo AS
Liāna Ķeldere
Accounting director of Latvenergo AS
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About Latvenergo Group
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Annual Report
– Key Figures
– Management Report
– Financial Statements
Statement of Profit or Loss
Statement of Comprehensive Income
Statement of Financial Position
Statement of Changes in Equity
Statement of Cash Flows
Notes to the Financial Statements
– Independent Auditors’
Report
Statement of Financial Position
Group | Parent Company | EUR’000 | |||
| Notes | 31/12/2023 | 31/12/2022 | 31/12/2023 | 31/12/2022 | |
| ASSETS | |||||
| Non-current assets | |||||
Intangible assets | 13 a | ||||
Property, plant and equipment | 14 a | ||||
Right–of–use assets | 15 | ||||
Investment property | 14 b | ||||
Non-current financial investments | 16 | ||||
Non–current loans to related parties | 29 e | ||||
Other non-current receivables | 18 c | ||||
Deferred income tax assets | 12 | ||||
Derivative financial instruments | 24 | ||||
Total non-current assets | |||||
| Current assets | |||||
Inventories | 17 | ||||
Current intangible assets | 13 b | ||||
Receivables from contracts with customers | 18 a | ||||
Other current receivables | 18 b, c | ||||
Deferred expenses | |||||
Current loans to related parties | 29 e | ||||
Derivative financial instruments | 24 | ||||
Other current financial investments | 19 | ||||
Cash and cash equivalents | 19 | ||||
Total current assets | |||||
TOTAL ASSETS |
Group | Parent Company | EUR’000 | |||
| Notes | 31/12/2023 | 31/12/2022 | 31/12/2023 | 31/12/2022 | |
| EQUITY AND LIABILITIES | |||||
| EQUITY | |||||
Share capital | 20 | ||||
Reserves | 21 a | ||||
Retained earnings | |||||
Equity attributable to equity holder of the Parent Company | |||||
Non-controlling interests | |||||
Total equity | |||||
| LIABILITIES | |||||
| Non-current liabilities | |||||
Borrowings | 23 | ||||
Lease liabilities | 15 | ||||
Deferred income tax liabilities | 12 | ||||
Provisions | 27 | ||||
Deferred income from contracts with customers | 28 I) a | ||||
Other deferred income | 28 I) b, c | ||||
Other non-current liabilities | |||||
Total non-current liabilities | |||||
| Current liabilities | |||||
Borrowings | 23 | ||||
Lease liabilities | 15 | ||||
Trade and other payables | 26 | ||||
Deferred income from contracts with customers | 28 II) a | ||||
Other deferred income | 28 II) b, c | ||||
Derivative financial instruments | 24 | ||||
Total current liabilities | |||||
Total liabilities | |||||
TOTAL EQUITY AND LIABILITIES |
The notes on pages 16 to 61 are an integral part of these Financial Statements
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Mārtiņš Čakste Guntars Baļčūns
Chairman of the Management Board of Latvenergo AS Member of the Management Board of Latvenergo AS
Liāna Ķeldere
Accounting director of Latvenergo AS
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About Latvenergo Group
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Statement of Profit or Loss
Statement of Comprehensive Income
Statement of Financial Position
Statement of Changes in Equity
Statement of Cash Flows
Notes to the Financial Statements
– Independent Auditors’
Report
Statement of Changes in Equity
Group | Parent Company | EUR’000 | |||||||||
Attributable to equity holder of the Parent Company | Company | Attributable to equity holder of the Parent | |||||||||
| Share | Reserves | Retained | Total | Non- | TOTAL | Share | Reserves | Retained | TOTAL | ||
| capital | earnings | controlling | capital | earnings | |||||||
| Notes | interests | ||||||||||
As of 31 December 2021 | |||||||||||
Non-controlling interests’ contributions to share capital | |||||||||||
Dividends for 2021 | 21 b | ( | ( | ( | ( | ( | |||||
Disposal of non-current assets revaluation reserve | 21 a | ( | ( | ||||||||
Total transactions with owners and other changes in equity | ( | ( | ( | ( | ( | ( | ( | ||||
Profit for the year | |||||||||||
Other comprehensive income for the year | 21 a | ||||||||||
Total comprehensive income for the year | |||||||||||
As of 31 December 2022 | |||||||||||
Dividends for 2022 | 21 b | ( | ( | ( | ( | ( | ( | ||||
Formed other reserves | 21 a | ( | |||||||||
Disposal of non-current assets revaluation reserve | 21 a | ( | ( | ||||||||
Total transactions with owners and other changes in equity | ( | ( | ( | ( | ( | ( | ( | ( | |||
Profit for the year | |||||||||||
Other comprehensive income for the year | 21 a | ||||||||||
Total comprehensive income for the year | |||||||||||
As of 31 December 2023 |
The notes on pages 16 to 61 are an integral part of these Financial Statements
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Mārtiņš Čakste Guntars Baļčūns
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Liāna Ķeldere
Accounting director of Latvenergo AS
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Statement of Profit or Loss
Statement of Comprehensive Income
Statement of Financial Position
Statement of Changes in Equity
Statement of Cash Flows
Notes to the Financial Statements
– Independent Auditors’
Report
Statement of Cash Flows
Group | Parent Company | EUR’000 | |||
| Notes | 2023 | 2022 | 2023 | 2022 | |
| Cash flows from operating activities | |||||
Profit before tax | |||||
| Adjustments: | |||||
- Depreciation, amortisation and impairment of intangible assets, property, plant and equipment (PPE) and | 13 a, | ||||
| right-of-use assets | 14a, 15 | ||||
- Loss / (income) from disposal of non-current assets | 2 | ( | ( | ||
- Interest expense | 11 | ||||
- Interest income | 11 | ( | ( | ( | ( |
- Fair value (gain) / loss on derivative financial instruments | 8 | ( | ( | ||
- Dividends from subsidiaries | 16 | ( | ( | ||
- (Decrease) / increase in provisions | 27 | ( | ( | ||
- Unrealised loss on currency translation differences | 11 | ||||
Interest paid | ( | ( | ( | ( | |
Interest paid on leases | 15 | ( | ( | ( | ( |
Interest received | |||||
Paid corporate income tax | ( | ( | ( | ||
Funds from operations (FFO)* | |||||
Decrease / (increase) in inventories and current intangible assets | 2 | ( | ( | ||
Decrease / (increase) in receivables from contracts with customers and other receivables | ( | ( | |||
Increase in other current financial investments | 19 | ( | ( | ||
Increase / (decrease) in trade and other liabilities | ( | ( | ( | ||
| Impact of non-cash offsetting of operating receivables | |||||
and liabilities from subsidiaries, net | 29 e | ||||
Net cash flows generated from operating activities |
Group | Parent Company | EUR’000 | |||
| Notes | 2023 | 2022 | 2023 | 2022 | |
| Cash flows from investing activities | |||||
Loans issued to related parties | 29 e | ( | ( | ||
Repayment of loans to related parties | 29 e | ||||
Purchase of intangible assets and PPE | 2 | ( | ( | ( | ( |
Dividends received from subsidiaries | 16 | ||||
Investments in subsidiaries | 16 | ( | ( | ||
Net cash flows used in investing activities | ( | ( | ( | ( | |
| Cash flows from financing activities | |||||
Repayment of issued debt securities (bonds) | 23 | ( | ( | ||
Proceeds on issued debt securities (bonds) | 23 | ||||
Proceeds on borrowings from financial institutions | 23 | ||||
Repayment of borrowings from financial institutions | 23 | ( | ( | ( | ( |
Received financing from European Union | |||||
Lease payments | 15 | ( | ( | ( | ( |
Proceeds from non-controlling interests’ contributions to share capital | |||||
Dividends paid to non-controlling interests | 21 b | ( | |||
Dividends paid to equity holder of the Parent Company | 21 b | ( | ( | ( | ( |
Net cash flows (used in) / generated from financing activities | ( | ( | |||
Net increase in cash and cash equivalents | |||||
Cash and cash equivalents at the beginning of the year | 19 | ||||
Cash and cash equivalents at the end of the year | 19 |
The notes on pages 16 to 61 are an integral part of these Financial Statements
* See Alternative Performance Measures in Note 2 for the definition of this Alternative Performance Measure
This document is signed with a secure digital signature and contains a time stamp
Mārtiņš Čakste Guntars Baļčūns
Chairman of the Management Board of Latvenergo AS Member of the Management Board of Latvenergo AS
Liāna Ķeldere
Accounting director of Latvenergo AS
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Annual Report
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– Financial Statements
Statement of Profit or Loss
Statement of Comprehensive Income
Statement of Financial Position
Statement of Changes in Equity
Statement of Cash Flows
Notes to the Financial Statements
– Independent Auditors’
Report
Notes to the Financial Statements
1. Corporate information
All shares of public limited company Latvenergo, parent company of Latvenergo Group (hereinafter –
is not subject to privatisation.
Latvenergo AS is power supply utility engaged in electricity and thermal energy generation, as well as
Subsidiaries included in Latvenergo Group (hereinafter – the Group), participating interest in
subsidiaries, associated companies and other non–current financial investments are disclosed in
Note 16.
Latvenergo AS and its subsidiaries Sadales tīkls AS and Enerģijas publiskais tirgotājs SIA are also
shareholders with 48.15% interest held in company Pirmais Slēgtais Pensiju Fonds AS (Latvenergo
AS holds 46.30% of interest) that manages a defined–contribution corporate pension plan in Latvia.
The Latvenergo Group’s and Latvenergo AS auditor is the certified audit company Ernst & Young
Baltic SIA (40003593454) (licence No. 17) and certified auditor in charge is Diāna Krišjāne, certificate
No. 124.
16
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Statement of Financial Position
Statement of Changes in Equity
Statement of Cash Flows
Notes to the Financial Statements
– Independent Auditors’
Report
| Reclassification of individual positions in the Statement of Cash Flows for the year ended 31 December 2022: | Group | Parent Company | EUR’000 | |||
2022 before reclassification | Reclassification | 2022 after reclassification | 2022 before reclassification | Reclassification | 2022 after reclassification | |
| Cash flows from operating activities | ||||||
- Loss from disposal of non-current assets | 43,229 | (39,245) | 3,984 | 36,760 | (39,245) | (2,485) |
Funds from operations (FFO) | 402,212 | (39,245) | 362,967 | 318,250 | (39,245) | 279,005 |
Decrease / (increase) in inventories and current intangible assets | (103,526) | (7,399) | (110,925) | (90,318) | (7,399) | (97,717) |
Net cash flows from operating activities | 173,143 | (46,644) | 126,499 | 305,063 | (46,644) | 258,419 |
| Cash flows from investing activities | ||||||
Purchase of intangible assets and PPE | (164,854) | 46,644 | (118,210) | (75,214) | 46,644 | (28,570) |
Net cash flows used in investing activities | (164,854) | 46,644 | (118,210) | (302,642) | 46,644 | (255,998) |
17
About Latvenergo Group
Corporate Governance
Operating Segments
Sustainability Indicators
Annexes to
the Sustainability Report
Annual Report
– Key Figures
– Management Report
– Financial Statements
Statement of Profit or Loss
Statement of Comprehensive Income
Statement of Financial Position
Statement of Changes in Equity
Statement of Cash Flows
Notes to the Financial Statements
– Independent Auditors’
Report
18
About Latvenergo Group
Corporate Governance
Operating Segments
Sustainability Indicators
Annexes to
the Sustainability Report
Annual Report
– Key Figures
– Management Report
– Financial Statements
Statement of Profit or Loss
Statement of Comprehensive Income
Statement of Financial Position
Statement of Changes in Equity
Statement of Cash Flows
Notes to the Financial Statements
– Independent Auditors’
Report
19
About Latvenergo Group
Corporate Governance
Operating Segments
Sustainability Indicators
Annexes to
the Sustainability Report
Annual Report
– Key Figures
– Management Report
– Financial Statements
Statement of Profit or Loss
Statement of Comprehensive Income
Statement of Financial Position
Statement of Changes in Equity
Statement of Cash Flows
Notes to the Financial Statements
– Independent Auditors’
Report
| Financial assets that are exposed to financial risks disclosed in the table below by measurement categories: | Group | Parent Company | EUR’000 | ||||
| Financial assets | Derivatives used for hedging | Financial instruments at fair | Financial assets | Derivatives used for hedging | Financial instruments at fair | ||
| Notes | at amortised cost | value through profit or loss | at amortised cost | value through profit or loss | |||
| Financial assets as of 31 December 2023 | |||||||
Receivables from contracts with customers | 18 a | 224,922 | – | – | 161,674 | – | – |
Other current financial receivables | 18 b | 47,972 | – | – | 51,225 | – | – |
Loans to related parties | 29 e | 863 | – | – | 624,298 | – | – |
Derivative financial instruments | 24 I | – | 5,297 | 5,872 | – | 5,297 | 5,872 |
Cash and cash equivalents | 19 | 118,456 | – | – | 107,163 | – | – |
| Financial assets as of 31 December 2022 | 392,213 | 5,297 | 5,872 | 944,360 | 5,297 | 5,872 | |
Receivables from contracts with customers | 18 a | 314,109 | – | – | 233,192 | – | – |
Other current financial receivables | 18 b | 17,089 | – | – | 36,253 | – | – |
Loans to related parties | 29 e | – | – | – | 713,308 | – | – |
Derivative financial instruments | 24 I | – | 450 | 10,279 | – | 450 | 10,279 |
Cash and cash equivalents | 19 | 112,757 | – | – | 100,268 | – | – |
443,955 | 450 | 10,279 | 1,083,021 | 450 | 10,279 |
| Financial liabilities that are exposed to financial risks disclosed in the table below by measurement categories: | Group | Parent Company | EUR’000 | ||||
| Financial liabilities | Derivatives used for hedging | Financial instruments at fair | Financial liabilities | Derivatives used for hedging | Financial instruments at fair | ||
| Notes | at amortised cost | value through profit or loss | at amortised cost | value through profit or loss | |||
| Financial liabilities as of 31 December 2023 | |||||||
Borrowings | 23 | 629,696 | – | – | 618,179 | – | – |
Lease liabilities | 15 | 11,406 | – | – | 4,824 | – | – |
Trade and other financial current payables | 26 | 136,014 | – | – | 87,078 | – | – |
| Financial liabilities as of 31 December 2022 | 777,116 | – | – | 710,081 | – | – | |
Borrowings | 23 | 875,918 | – | – | 863,938 | – | – |
Derivative financial instruments | 24 I | – | 99,154 | 22,865 | – | 99,154 | 22,865 |
Lease liabilities | 15 | 10,675 | – | – | 5,166 | – | – |
Trade and other financial current payables | 26 | 107,811 | – | – | 99,902 | – | – |
994,404 | 99,154 | 22,865 | 969,006 | 99,154 | 22,865 |
20
About Latvenergo Group
Corporate Governance
Operating Segments
Sustainability Indicators
Annexes to
the Sustainability Report
Annual Report
– Key Figures
– Management Report
– Financial Statements
Statement of Profit or Loss
Statement of Comprehensive Income
Statement of Financial Position
Statement of Changes in Equity
Statement of Cash Flows
Notes to the Financial Statements
– Independent Auditors’
Report
21
About Latvenergo Group
Corporate Governance
Operating Segments
Sustainability Indicators
Annexes to
the Sustainability Report
Annual Report
– Key Figures
– Management Report
– Financial Statements
Statement of Profit or Loss
Statement of Comprehensive Income
Statement of Financial Position
Statement of Changes in Equity
Statement of Cash Flows
Notes to the Financial Statements
– Independent Auditors’
Report
| Assessment of maximum possible exposure to credit risk | Group | Parent Company | EUR’000 | ||
| Notes | 31/12/2023 | 31/12/2022 | 31/12/2023 | 31/12/2022 | |
Receivables from contracts with customers | 18 a | 224,922 | 314,109 | 161,674 | 233,192 |
Other current financial receivables | 18 b | 47,972 | 17,089 | 51,225 | 36,253 |
Loans to related parties | 29 e | 863 | – | 624,298 | 713,308 |
Cash and cash equivalents | 19 | 118,456 | 112,757 | 107,163 | 100,268 |
Derivative financial instruments | 24 | 11,169 | 10,729 | 11,169 | 10,729 |
403,382 | 454,684 | 955,529 | 1,093,750 |
Group | Parent Company | EUR’000 | ||
31/12/2023 | 31/12/2022 | 31/12/2023 | 31/12/2022 | |
Investment level credit rating* | 118,456 | 112,757 | 107,163 | 100,268 |
118,456 | 112,757 | 107,163 | 100,268 | |
| * Investment level credit rating assigned to the parent companies of banks. |
Group | Parent Company | EUR’000 | ||
31/12/2023 | 31/12/2022 | 31/12/2023 | 31/12/2022 | |
Aa3 | 79,177 | 66,596 | 79,602 | 55,722 |
Baa1 | 17,344 | 43,644 | 16,461 | 43,154 |
Baa2 | 21,110 | 1,363 | 11,100 | 1,362 |
Baa3 | 825 | 1,154 | – | 30 |
118,456 | 112,757 | 107,163 | 100,268 |
22
About Latvenergo Group
Corporate Governance
Operating Segments
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Annexes to
the Sustainability Report
Annual Report
– Key Figures
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– Financial Statements
Statement of Profit or Loss
Statement of Comprehensive Income
Statement of Financial Position
Statement of Changes in Equity
Statement of Cash Flows
Notes to the Financial Statements
– Independent Auditors’
Report
4. Critical accounting estimates and judgements
Estimates and judgments are regularly evaluated and are based on historical experience and
other factors, including expectations of future events that are believed to be reasonable under the
circumstances. The Group and the Parent Company make estimates and assumptions concerning the
future. The resulting accounting estimates will, by definition, seldom equal the related actual results.
The Group and the Parent Company considers climate-related matters in estimates and assumptions,
where appropriate. Latvenergo Group is making targeted investments to develop a portfolio of
zero-emission and low-emission plants and to contribute to climate change mitigation. The Group
implements technologies and measures that reduce, prevent or adapt to climate change. For more
information please see Latvenergo Group Sustainability report, section Environmental Topics. Even
though climate-related risks might not currently have a significant impact on measurement, useful lives
of property, plant and equipment or impairment of non-financial assets, the Group is closely monitoring
relevant changes and developments, such as new climate-related legislation.
The Management of the Group and the Parent Company has assessed the situation at the end of the
reporting period and has determined that the events related to Russian military action in Ukraine and
related sanctions against Russia and Belarus, have not created a significant negative impact on the
Group’s and the Parent Company’s financial results, considering the nature and continuity of services
provided by the Group and the Parent Company. The Management of the Group and the Parent
| Liquidity analysis (contractual undiscounted gross cash flows) | Group | Parent Company | EUR’000 | ||||||||
| Less than | From 1 to | From 3 to | Over 5 years | TOTAL | Less than | From 1 to | From 3 to | Over 5 years | TOTAL | ||
| Notes | 1 year | 2 years | 5 years | 1 year | 2 years | 5 years | |||||
| As of 31 December 2023 | |||||||||||
Borrowings from financial institutions | 105,333 | 119,825 | 158,276 | 99,286 | 482,720 | 102,632 | 117,339 | 152,874 | 96,710 | 469,555 | |
Issued debt securities (bonds) | 5,146 | 5,153 | 162,925 | 52,483 | 225,707 | 5,146 | 5,153 | 162,925 | 52,483 | 225,707 | |
Lease liabilities* | 2,455 | 2,336 | 3,539 | 4,337 | 12,667 | 1,284 | 1,281 | 1,461 | 1,193 | 5,219 | |
Trade and other current financial payables | 26 | 136,014 | – | – | – | 136,014 | 87,078 | – | – | – | 87,078 |
| As of 31 December 2022 | 248,948 | 127,314 | 324,740 | 156,106 | 857,108 | 196,140 | 123,773 | 317,260 | 150,386 | 787,559 | |
Borrowings from financial institutions | 195,441 | 105,399 | 239,038 | 135,056 | 674,934 | 193,094 | 99,201 | 234,010 | 131,758 | 658,063 | |
Issued debt securities (bonds) | 2,670 | 2,670 | 108,010 | 50,137 | 163,487 | 2,670 | 2,670 | 108,010 | 50,137 | 163,487 | |
Overdraft from financial institutions | 119,478 | – | – | – | 119,478 | 119,478 | – | – | – | 119,478 | |
Current borrowings from related parties | – | – | – | – | – | 3,317 | – | – | – | 3,317 | |
Derivative financial instruments | 1,499 | – | – | – | 1,499 | 1,499 | – | – | – | 1,499 | |
Lease liabilities* | 2,023 | 1,798 | 2,939 | 4,581 | 11,341 | 876 | 866 | 1,847 | 1,554 | 5,143 | |
Trade and other current financial payables | 26 | 107,811 | – | – | – | 107,811 | 99,902 | – | – | – | 99,902 |
428,922 | 109,867 | 349,987 | 189,774 | 1,078,550 | 420,836 | 102,737 | 343,867 | 183,449 | 1,050,889 | ||
| * The carrying amount of the lease (discounted) for the Group is EUR 11,406 thousand and for the Parent Company EUR 4,824 thousand (31 December 2022: Group – EUR 10,675 thousand, Parent Company – EUR 5,166 thousand) (Note 15) |
| The capital ratio figures were as follows: | Group | Parent Company | EUR’000 | |
31/12/2023 | 31/12/2022 | 31/12/2023 | 31/12/2022 | |
Total equity | 2,963,080 | 2,356,419 | 2,608,014 | 2,018,694 |
Total assets | 4,127,922 | 3,855,330 | 3,474,032 | 3,305,536 |
Capital Ratio | 72% | 61% | 75% | 61% |
23
About Latvenergo Group
Corporate Governance
Operating Segments
Sustainability Indicators
Annexes to
the Sustainability Report
Annual Report
– Key Figures
– Management Report
– Financial Statements
Statement of Profit or Loss
Statement of Comprehensive Income
Statement of Financial Position
Statement of Changes in Equity
Statement of Cash Flows
Notes to the Financial Statements
– Independent Auditors’
Report
24
About Latvenergo Group
Corporate Governance
Operating Segments
Sustainability Indicators
Annexes to
the Sustainability Report
Annual Report
– Key Figures
– Management Report
– Financial Statements
Statement of Profit or Loss
Statement of Comprehensive Income
Statement of Financial Position
Statement of Changes in Equity
Statement of Cash Flows
Notes to the Financial Statements
– Independent Auditors’
Report
approximation of the credit risk exposure. The expected loss rates are based on the payment profiles of
sales and the corresponding historical credit losses experienced. When calculating the expected credit
losses, the current and forward-looking information on macroeconomic factors that affect the ability of
customers to cover receivables has been taken into account, the Group and the Parent Company have
assessed that the influence of these factors is not significant.
Counterparty model is used on individual contract basis for non–current and current loans to related
parties, other financial investments and cash and cash equivalents. If no significant increase in credit
risk is identified, the expected credit losses according to this model are based on assessment of
the individual counterparty’s or counterparty’s industry risk of default and recovery rate assigned by
Moody’s credit rating agency for 12 months expected losses rates. The circumstances indicating
a significant increase in credit risk is significant increase in Moody’s default and recovery rates
(by 1 percentage point) and counterparty’s inability to meet payment terms (overdue 30 days or more).
If significant increase in credit risk is identified, lifetime expected credit loss is calculated. The Group
and the Parent Company considers a financial asset in default and lifetime expected credit losses are
recognised when contractual payments are overdue 90 days or more, exists counterparty’s insolvency
or bankruptcy, initiated similar legal proceedings and other internal or external indications on inability to
pay outstanding contractual amounts.
Counterparty model is also used for other non–current and current financial receivables, individually
significant receivables, receivables of energy industry companies and related parties by calculating
lifetime expected losses based on corporate default and recovery rates.
None of the Group’s and the Parent Company’s other financial investments measured at amortised
cost (investments in State Treasury bonds) have significant increase in credit risk and therefore are
considered to have low credit risk (Moody’s credit rating – A3) and are in Stage 1, the loss allowance
therefore was immaterial and wasn’t recognised.
While cash and cash equivalents are also subject to the expected credit loss requirements of IFRS 9,
the identified expected credit loss was immaterial, also considering fact that almost all of cash and
cash equivalents are held in financial institutions with the credit rating grade of the institution or its
parent bank at investment grade credit rating (mostly ‘A level’ credit rating) (Stage 1).
c) Estimates concerning revenue recognition from contracts with customers
I) Recognition of mandatory procurement PSO fees
The Group and the Parent Company have applied significant judgement for use of agent principle for
recognition of mandatory procurement PSO fee (see also Note 6).
Management has considered the following indicators that the Group and the Parent Company are
acting as agents because they:
•
do not have control over the mandatory procurement PSO fee before transferring to the customer,
•
have duty for including the mandatory procurement PSO fee in invoices issued to the end customers
but are not entitled for revenues from mandatory procurement PSO fee. These fees are determined
by state support mechanism and are covered by all electricity end-users in proportion to their
electricity consumption,
•
have no discretion in establishing mandatory procurement PSO fees price, either directly or
indirectly.
II) Recognition of distribution system services and transmission system services (Parent
Company)
Management has evaluated that it does not have influence and control over distribution system services
and transmission system services, therefore the Parent Company acts as an agent. In particular,
Management has considered the following indicators that the Parent Company is acting as an agent
because it:
•
does not control provision of distribution system and transmission system services,
•
includes the distribution system and transmission system services in invoices issued to the
customers on behalf of distribution system operator or transmission system operator and receives
payment, but is not entitled to the respective revenues,
•
has no discretion in distribution system or transmission system services price, either directly or
indirectly (see also Note 6).
III) Recognition of connection service fees to distribution system (Group)
Connection fees to distribution system are not considered as separate (distinct) performance obligations,
as are not distinct individually or within the context of the contract. Sales of distribution services are
provided after customers have paid for the network connection; therefore network connection fees and
sales of distribution services are highly interdependent and interrelated.
Income from connection and other income for reconstruction of distribution system assets on demand
of clients are deferred as an ongoing service is identified as part of agreement to provide distribution
system services to customers and accounted as deferred income (contract liabilities) from contracts
with customers under IFRS 15 (see Note 6 and 28). Connection fees are recognised as income over
the estimated customer relationship period. Based on Management estimate, 20 years is the estimated
customer relationship period, which is estimated as period after which requested power output for
connection object could significantly change due to technological reasons.
Thus period over which revenue is recognised is based on Management estimate, as it is reasonably
certain that assets, whose costs are partly reimbursed by connection service fees, will be used to
provide distribution system services for a longer period than the term stated in agreement with the
customer (Note 6).
IV) State support for trade of energy, sales of distribution services and heat for end-users
In accordance with state support regulations in Latvia, Lithuania, and Estonia for reducing energy
prices, are granted support for end-users for trade of energy, sales of distribution services and heat.
These regulations do not change agreements on the scope of provided services and do not change the
approved distribution system tariffs and energy prices, and respectively do not change the Group’s and
the Company’s revenue recognition principles, but the process of receiving the transaction fees and
the payer for the services, therefore not classified as government grant to the Group and the Parent
Company (Note 6).
d) Recognition and reassessment of provisions
As of 31 December 2023, the Group had set up provisions for post–employment benefits and
termination benefits totalling EUR 18.2 million (31/12/2022: EUR 15.6 million) and the Parent Company
in amount of EUR 8.6 million (31/12/2022: EUR 7.6 million) (Note 27). The amount and timing of the
settlement of these obligations is uncertain. A number of assumptions and estimates have been used
25
About Latvenergo Group
Corporate Governance
Operating Segments
Sustainability Indicators
Annexes to
the Sustainability Report
Annual Report
– Key Figures
– Management Report
– Financial Statements
Statement of Profit or Loss
Statement of Comprehensive Income
Statement of Financial Position
Statement of Changes in Equity
Statement of Cash Flows
Notes to the Financial Statements
– Independent Auditors’
Report
26
About Latvenergo Group
Corporate Governance
Operating Segments
Sustainability Indicators
Annexes to
the Sustainability Report
Annual Report
– Key Figures
– Management Report
– Financial Statements
Statement of Profit or Loss
Statement of Comprehensive Income
Statement of Financial Position
Statement of Changes in Equity
Statement of Cash Flows
Notes to the Financial Statements
– Independent Auditors’
Report
foreign exchange spot and forward rates. The fair values of interest rate swaps are obtained from
corresponding bank’s revaluation reports and fair values of financial instruments as specified by banks
are recognised in financial statements. To make sure the fair values of interest rate swaps are accurate
in any material aspect, the Group and the Parent Company makes its own interest rate swaps fair
value calculations by discounting financial instruments future contractual cash flows using 6 months
Euribor swap rate curve. The fair value of electricity forward and future contracts and natural gas swap
contracts is calculated as discounted difference between actual market and settlement prices for the
volume set in the agreements. If counterparty is a bank, calculated fair values of financial instruments
are compared to bank’s revaluation reports and the bank’s calculated fair values of the financial
instruments are used in the financial reports; In case of electricity forward and future contracts and
natural gas swap contracts are concluded with counterparties, fair values as calculated by the Group
and the Parent Company are recognised in Financial Statements (Level 2),
g) The fair value of the bonds issued are calculated by discounting their future cash flows using the
market quoted yield to maturity rates of the respective bonds as of the end of the reporting year as
discount factor (Level 2),
h) The fair value of investment properties is determined using the income method, by discounting
expected future cash flows. In 2023, the nominal pre–tax discount rate used to determine the fair
value of investments is 7.24% (2022: 5.92%) as included in the electricity distribution and transmission
system service tariff calculation methodology (Level 3).
5. Operating segment information
27
About Latvenergo Group
Corporate Governance
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Statement of Financial Position
Statement of Changes in Equity
Statement of Cash Flows
Notes to the Financial Statements
– Independent Auditors’
Report
Group | Parent Company | EUR'000 | |||||||||
| Generation | Distribution | Corporate | TOTAL | Adjustments | TOTAL | Generation | Corporate | TOTAL | Adjustments | TOTAL | |
| and trade | functions | segments | and | Group | and trade | functions | segments | and | Parent | ||
| eliminations | eliminations | Company | |||||||||
| 2023 | |||||||||||
| Revenue | |||||||||||
External customers | 1,683,894 | 342,460 | 8,071 | 2,034,425 | – | 2,034,425 | 1,362,802 | 34,377 | 1,397,179 | – | 1,397,179 |
Inter-segment | 40,806 | 869 | 55,437 | 97,112 | (97,112) | – | 4,648 | 31,931 | 36,579 | (36,579) | – |
TOTAL revenue | 1,724,700 | 343,329 | 63,508 | 2,131,537 | (97,112) | 2,034,425 | 1,367,450 | 66,308 | 1,433,758 | (36,579) | 1,397,179 |
| Results | |||||||||||
EBITDA | 480,181 | 111,853 | 9,735 | 601,769 | – | 601,769 | 459,763 | 13,532 | 473,295 | – | 473,295 |
Depreciation, amortisation and impairment of intangible assets, property, plant and equipment and right-of-use assets | (102,660) | (82,233) | (12,280) | (197,173) | – | (197,173) | (98,586) | (12,442) | (111,028) | – | (111,028) |
Segment profit before tax | 377,521 | 29,620 | (2,545) | 404,596 | (16,067) | 388,529 | 361,177 | 1,090 | 362,267 | 393 | 362,660 |
Segment assets at the end of the year | 1,940,641 | 1,800,405 | 127,578 | 3,868,624 | 259,298 | 4,127,922 | 1,775,511 | 155,340 | 1,930,851 | 1,543,181 | 3,474,032 |
Segment liabilities at the end of the year | 221,067 | 221,656 | 16,570 | 459,923 | 705,549 | 1,164,842 | 192,896 | 18,266 | 211,162 | 654,856 | 866,018 |
| Other disclosures | |||||||||||
Capital expenditure | 76,848 | 99,608 | 18,254 | 194,710 | (1,361) | 193,349 | 46,198 | 18,254 | 64,452 | – | 64,452 |
| 2022 | |||||||||||
| Revenue | |||||||||||
External customers | 1,533,150 | 300,610 | 8,041 | 1,841,801 | – | 1,841,801 | 1,199,418 | 31,597 | 1,231,015 | – | 1,231,015 |
Inter-segment | 26,421 | 578 | 50,823 | 77,822 | (77,822) | – | 2,175 | 29,192 | 31,367 | (31,367) | – |
TOTAL revenue | 1,559,571 | 301,188 | 58,864 | 1,919,623 | (77,822) | 1,841,801 | 1,201,593 | 60,789 | 1,262,382 | (31,367) | 1,231,015 |
| Results | |||||||||||
EBITDA | 275,216 | 71,268 | 13,725 | 360,209 | – | 360,209 | 266,131 | 14,194 | 280,325 | – | 280,325 |
Depreciation, amortisation and impairment of intangible assets, property, plant and equipment and right-of-use assets | (73,208) | (81,087) | (11,953) | (166,248) | – | (166,248) | (69,418) | (12,095) | (81,513) | – | (81,513) |
Segment profit before tax | 202,008 | (9,819) | 1,772 | 193,961 | (9,416) | 184,545 | 196,713 | 2,099 | 198,812 | 10,550 | 209,362 |
Segment assets at the end of the year | 1,833,099 | 1,791,684 | 117,750 | 3,742,533 | 112,797 | 3,855,330 | 1,700,079 | 144,561 | 1,844,640 | 1,460,896 | 3,305,536 |
Segment liabilities at the end of the year | 359,253 | 181,201 | 12,804 | 553,258 | 945,653 | 1,498,911 | 366,212 | 14,078 | 380,290 | 906,552 | 1,286,842 |
| Other disclosures | |||||||||||
Capital expenditure | 20,659 | 84,633 | 16,374 | 121,666 | – | 121,666 | 13,666 | 16,374 | 30,040 | – | 30,040 |
28
About Latvenergo Group
Corporate Governance
Operating Segments
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Annexes to
the Sustainability Report
Annual Report
– Key Figures
– Management Report
– Financial Statements
Statement of Profit or Loss
Statement of Comprehensive Income
Statement of Financial Position
Statement of Changes in Equity
Statement of Cash Flows
Notes to the Financial Statements
– Independent Auditors’
Report
| The Group’s and the Parent Company’s revenue from external customers (Note 6) | Group | Parent Company | EUR'000 | ||||||
| Generation | Distribution | Corporate | TOTAL | TOTAL | Generation | Corporate | TOTAL | TOTAL | |
| and trade | functions | segments | Group | and trade | functions | segments | Parent | ||
| Company | |||||||||
| 2023 | |||||||||
| Revenue from contracts with customers recognised over time: | |||||||||
Trade of energy and related supply services | 1,432,815 | 3,395 | – | 1,436,210 | 1,436,210 | 1,157,028 | – | 1,157,028 | 1,157,028 |
Distribution system services | – | 319,643 | – | 319,643 | 319,643 | – | – | – | – |
Heat sales | 213,540 | 136 | – | 213,676 | 213,676 | 193,224 | – | 193,224 | 193,224 |
Sales of goods and energy related solutions | 31,652 | – | – | 31,652 | 31,652 | 10,842 | – | 10,842 | 10,842 |
Other revenue | 5,887 | 19,209 | 6,670 | 31,766 | 31,766 | 1,708 | 31,307 | 33,015 | 33,015 |
Total revenue from contracts with customers | 1,683,894 | 342,383 | 6,670 | 2,032,947 | 2,032,947 | 1,362,802 | 31,307 | 1,394,109 | 1,394,109 |
| Other revenue: | |||||||||
Lease of other assets | – | 77 | 1,401 | 1,478 | 1,478 | – | 3,070 | 3,070 | 3,070 |
Total other revenue | – | 77 | 1,401 | 1,478 | 1,478 | – | 3,070 | 3,070 | 3,070 |
TOTAL revenue, including | 1,683,894 | 342,460 | 8,071 | 2,034,425 | 2,034,425 | 1,362,802 | 34,377 | 1,397,179 | 1,397,179 |
Latvia | 948,591 | 342,447 | 7,844 | 1,298,882 | 1,298,882 | 969,462 | 30,531 | 999,993 | 999,993 |
Outside Latvia | 735,303 | 13 | 227 | 735,543 | 735,543 | 393,340 | 3,846 | 397,186 | 397,186 |
| 2022 | |||||||||
| Revenue from contracts with customers recognised over time: | |||||||||
Trade of energy and related supply services | 1,352,745 | 3,349 | – | 1,356,094 | 1,356,094 | 1,052,486 | – | 1,052,486 | 1,052,486 |
Distribution system services | – | 278,169 | – | 278,169 | 278,169 | – | – | – | – |
Heat sales | 150,548 | 146 | – | 150,694 | 150,694 | 133,634 | – | 133,634 | 133,634 |
Sales of goods and energy related solutions | 25,252 | – | – | 25,252 | 25,252 | 12,247 | – | 12,247 | 12,247 |
Other revenue | 4,600 | 18,874 | 6,141 | 29,615 | 29,615 | 1,051 | 28,240 | 29,291 | 29,291 |
Total revenue from contracts with customers | 1,533,145 | 300,538 | 6,141 | 1,839,824 | 1,839,824 | 1,199,418 | 28,240 | 1,227,658 | 1,227,658 |
| Other revenue: | |||||||||
Lease of other assets | 5 | 72 | 1,900 | 1,977 | 1,977 | – | 3,357 | 3,357 | 3,357 |
Total other revenue | 5 | 72 | 1,900 | 1,977 | 1,977 | – | 3,357 | 3,357 | 3,357 |
TOTAL revenue, including | 1,533,150 | 300,610 | 8,041 | 1,841,801 | 1,841,801 | 1,199,418 | 31,597 | 1,231,015 | 1,231,015 |
Latvia | 884,723 | 300,610 | 7,726 | 1,193,059 | 1,193,059 | 890,216 | 29,470 | 919,686 | 919,686 |
Outside Latvia | 648,427 | – | 315 | 648,742 | 648,742 | 309,202 | 2,127 | 311,329 | 311,329 |
29
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Report
Revenue from major customer in 2023 for the Group amounted to EUR 188,630 thousand and for the
Parent Company EUR 188,918 thousand (2022: EUR 171,919 thousand and EUR 171,912 thousand)
arising from sales by the generation and trade segment.
6. Revenue
Adjustments and eliminations
| Reconciliation of profit before tax | Group | Parent Company | EUR’000 | ||
| Notes | 2023 | 2022 | 2023 | 2022 | |
EBITDA | 601,769 | 360,209 | 473,295 | 280,325 | |
Depreciation, amortisation and impairment of intangible assets, PPE and right-of-use assets | (197,173) | (166,248) | (111,028) | (81,513) | |
Segment profit before tax | 404,596 | 193,961 | 362,267 | 198,812 | |
Finance income | 11 | 9,226 | 1,414 | 24,747 | 10,767 |
Finance costs | 11 | (25,293) | (10,830) | (25,278) | (10,802) |
Dividends received from subsidiaries | 16 | – | – | 924 | 10,585 |
Profit before tax | 388,529 | 184,545 | 362,660 | 209,362 |
| Reconciliation of assets | Group | Parent Company | EUR’000 | ||
| Notes | 31/12/2023 | 31/12/2022 | 31/12/2023 | 31/12/2022 | |
Segment operating assets | 3,868,624 | 3,742,533 | 1,930,851 | 1,844,640 | |
Non–current financial investments and joint ventures | 16 | 42 | 40 | 671,720 | 647,320 |
Loans to related parties | 29 e | – | – | 624,298 | 713,308 |
Other current financial investments | 140,000 | – | 140,000 | – | |
Prepayment for income and other taxes | 800 | – | – | – | |
Cash and cash equivalents | 19 | 118,456 | 112,757 | 107,163 | 100,268 |
Total assets | 4,127,922 | 3,855,330 | 3,474,032 | 3,305,536 |
| Reconciliation of liabilities | Group | Parent Company | EUR’000 | ||
| Notes | 31/12/2023 | 31/12/2022 | 31/12/2023 | 31/12/2022 | |
Segment operating liabilities | 459,293 | 553,258 | 211,162 | 380,290 | |
Deferred income tax liabilities | 5,475 | 667 | – | – | |
Borrowings | 23 | 629,696 | 875,918 | 618,179 | 863,938 |
Provisions and other payables | 70,378 | 69,068 | 36,677 | 42,614 | |
Total liabilities | 1,164,842 | 1,498,911 | 866,018 | 1,286,842 |
Non–current assets that consist of intangible assets, property, plant and equipment and investment
properties are located in the Group’s country of domicile – Latvia.
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Report
| IFRS | Group | Parent Company | EUR’000 | ||
| applied | 2023 | 2022 | 2023 | 2022 | |
| Revenue from contracts with customers: | |||||
Trade of energy and related supply services | IFRS 15 | 1,436,210 | 1,356,094 | 1,157,028 | 1,052,486 |
Distribution system services | IFRS 15 | 319,646 | 278,169 | – | – |
Heat sales | IFRS 15 | 213,676 | 150,694 | 193,224 | 133,634 |
Sales of goods and energy related solutions | IFRS 15 | 31,652 | 25,252 | 10,842 | 12,247 |
Other revenue | IFRS 15 | 31,763 | 29,615 | 33,015 | 29,291 |
TOTAL revenue from contracts with customers | 2,032,947 | 1,839,824 | 1,394,109 | 1,227,658 | |
| Other revenue: | |||||
Lease of other assets | IFRS 16 | 1,478 | 1,977 | 3,070 | 3,357 |
TOTAL other revenue | 1,478 | 1,977 | 3,070 | 3,357 | |
TOTAL revenue | 2,034,425 | 1,841,801 | 1,397,179 | 1,231,015 |
Group | Parent Company | EUR’000 | ||
2023 | 2022 | 2023 | 2022 | |
Goods and services transferred over time | 1,906,710 | 1,760,646 | 1,191,969 | 1,159,820 |
Goods and services transferred at a point in time | 126,237 | 79,178 | 202,140 | 67,838 |
TOTAL revenue from contracts with customers | 2,032,947 | 1,839,824 | 1,394,109 | 1,227,658 |
Group | Parent Company | EUR’000 | ||
2023 | 2022 | 2023 | 2022 | |
Latvia | 1,297,409 | 1,191,082 | 997,107 | 916,437 |
Outside Latvia | 735,538 | 648,742 | 397,002 | 311,221 |
TOTAL revenue from contracts with customers | 2,032,947 | 1,839,824 | 1,394,109 | 1,227,658 |
31
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| Gross amounts invoiced to customers by applying agent accounting principle, | ||||
| recognised on net basis under trade of energy and related supply services | Group | Parent Company | EUR’000 | |
2023 | 2022 | 2023 | 2022 | |
Mandatory procurement PSO fees* | (152) | 7,931 | (4) | 8,767 |
Distribution system services | 46,049 | 30,780 | 154,873 | 90,892 |
Transmission system services | 1,601 | 706 | 1,616 | 720 |
Insurance intermediation | 1,775 | 1,468 | 1,674 | 1,440 |
TOTAL revenue recognised applying agent accounting principle | 49,273 | 40,885 | 158,159 | 101,819 |
| * Starting from 1 May 2023 the mandatory procurement PSO fees payment for electricity end–users has been cancelled. In 2022, in accordance with state | ||||
support mechanism for reducing the prices of energy, the government granted support to all end–users for mandatory procurement PSO fees by 100% of the fee. In 2023, from distribution system operator received updated information regarding customers consumption in 2022, accordingly made recalculations | ||||
| of previous period. |
Net effect in revenue from applying agent accounting principle is 0.
| Deferred income from contracts with customers | Group | Parent Company | EUR’000 | ||
| Notes | 31/12/2023 | 31/12/2022 | 31/12/2023 | 31/12/2022 | |
Non–current deferred income from connection fees | 28 I, a | 137,838 | 132,381 | – | – |
Current deferred income from connection fees | 28 II, a | 16,510 | 15,386 | – | – |
Non-current other deferred income | 28 I, a | 668 | 735 | 668 | 735 |
Current other deferred income | 28 II, a | 4,794 | 13,944 | 67 | 13,714 |
TOTAL liabilities | 159,810 | 162,446 | 735 | 14,449 |
| Movement in deferred income from contracts with customers (non–current and | |||||
| current part) | Group | Parent Company | EUR’000 | ||
| Notes | 2023 | 2022 | 2023 | 2022 | |
At the beginning of the year | 162,446 | 152,050 | 14,449 | 869 | |
Received connection fees for connection to distribution system | 28 | 23,015 | 11,840 | – | – |
Recognised deferred income | 28 | 4,357 | 13,647 | – | 13,647 |
Credited to the Statement of Profit or Loss | (30,008) | (15,091) | (13,714) | (67) | |
At the end of the year | 159,810 | 162,446 | 735 | 14,449 |
Group | Parent Company | EUR’000 | |||
| Notes | 2023 | 2022 | 2023 | 2022 | |
Compensation from the state on state support for the installed capacity of CHPPs | 4 f | 23,990 | 23,990 | 23,990 | 23,990 |
Fines and penalties | 2,994 | 2,457 | 1,702 | 1,539 | |
| Net gain on sale of assets held for sale and property, plant | |||||
and equipment | 1,458 | 2,955 | 560 | 2,702 | |
Compensations and insurance claims | 2,463 | 816 | 1,898 | 294 | |
Other operating income | 991 | 956 | 193 | 165 | |
TOTAL other income | 31,896 | 31,174 | 28,343 | 28,690 |
8. Raw materials and consumables
Group | Parent Company | EUR’000 | |||
| Notes | 2023 | 2022 | 2023 | 2022 | |
| Energy costs: | |||||
Electricity and costs of related supply services | 378,502 | 708,114 | 89,028 | 374,581 | |
Electricity transmission services costs | 29 a | 82,376 | 72,583 | 2,834 | 2,999 |
Natural gas and other energy resources costs | 774,012 | 517,052 | 761,061 | 492,537 | |
(Gains) / losses on fair value changes on energy futures, forwards, and swaps | 24 I | (23,198) | 10,096 | (23,198) | 9,827 |
1,211,692 | 1,307,845 | 829,725 | 879,944 | ||
Raw materials, spare parts and maintenance costs | 36,628 | 25,863 | 17,261 | 11,194 | |
TOTAL raw materials and consumables used | 1,248,320 | 1,333,708 | 846,986 | 891,138 |
The decrease in electricity costs was significantly caused by lower Nord Pool spot prices (-58% in the
LV price zone), while the increase in natural gas costs was influenced by the volume of delivered and used
natural gas, which was more than a third higher than in 2022.
32
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9. Personnel expenses
Group | Parent Company | EUR’000 | ||
2023 | 2022 | 2023 | 2022 | |
Wages and salaries | 111,418 | 89,184 | 48,413 | 39,838 |
State social insurance contributions | 23,927 | 19,800 | 11,276 | 9,242 |
Expenditure of employment termination | 1,435 | 3,044 | 710 | 846 |
Pension costs – defined contribution plan | 4,647 | 4,892 | 2,233 | 2,219 |
Benefits defined in the Collective Agreement and other benefits system costs | 2,916 | 1,572 | 1,158 | 667 |
Capitalised personnel expenses | (2,461) | (1,499) | (424) | – |
TOTAL personnel expenses, including remuneration to the management | 141,882 | 116,993 | 63,366 | 52,812 |
| Remuneration to the management: | ||||
Wages and salaries | 2,925 | 2,694 | 1,158 | 1,047 |
State social insurance contributions | 623 | 593 | 267 | 246 |
Expenditure of employment termination | 14 | – | – | – |
Pension costs – defined contribution plan | 21 | 18 | 10 | 6 |
Benefits defined in the Collective Agreement and other benefits system costs | 21 | 22 | – | – |
TOTAL remuneration to the management* | 3,604 | 3,327 | 1,435 | 1,299 |
* Remuneration to the Group’s management includes remuneration to the members of the Management Boards of the Group entities, the Supervisory Board, and the Supervisory body (Audit Committee) of the Parent Company. Remuneration to the Parent Company’s management includes remuneration to the members of the Parent Company’s Management Board, the Supervisory Board, and the Supervisory body (Audit Committee). |
Group | Parent Company | Number of employees | ||
2023 | 2022 | 2023 | 2022 | |
Number of employees at the end of the year | 3,497 | 3,316 | 1,414 | 1,329 |
Average number of employees during the year | 3,456 | 3,214 | 1,388 | 1,289 |
Group | Parent Company | EUR’000 | ||
2023 | 2022 | 2023 | 2022 | |
Selling expenses and customer services | 10,370 | 10,178 | 4,196 | 3,775 |
Information technology maintenance | 6,838 | 5,726 | 6,343 | 5,371 |
Transportation expenses | 6,845 | 6,483 | 1,884 | 1,823 |
Environment protection and work safety | 11,121 | 8,893 | 10,112 | 7,771 |
Real estate maintenance and utilities expenses | 5,461 | 5,740 | 4,275 | 3,775 |
Lease of real estate and property, plant and equipment | 182 | 90 | 39 | 48 |
Telecommunications services | 2,802 | 2,565 | 2,287 | 2,148 |
Real estate tax | 928 | 941 | 619 | 651 |
Public utilities regulation fee | 1,763 | 1,513 | 1,093 | 699 |
Audit fee | 127 | 103 | 55 | 46 |
Expected credit losses (including reversals) on financial instruments | 6,944 | 2,879 | 2,868 | 2,351 |
Net losses from disposal of PPE | 6,855 | 5,379 | 147 | 41 |
Other expenses | 14,114 | 11,575 | 7,957 | 6,931 |
TOTAL other operating expenses | 74,350 | 62,065 | 41,875 | 35,430 |
11. Finance income and costs
| a) Finance income | Group | Parent Company | EUR’000 | ||
| Notes | 2023 | 2022 | 2023 | 2022 | |
Interest income | 6,146 | 27 | 5,913 | 27 | |
Interest income on loans to related parties | 3 | – | 15,757 | 9,353 | |
Interest income on interest rate swaps | 3,068 | 279 | 3,068 | 279 | |
Gains on fair value changes on interest rate swaps | 24 | 9 | 1,074 | 9 | 1,074 |
Net gain on issued debt securities (bonds) | – | 34 | – | 34 | |
TOTAL finance income | 9,226 | 1,414 | 24,747 | 10,767 |
| b) Finance costs | Group | Parent Company | EUR’000 | ||
| Notes | 2023 | 2022 | 2023 | 2022 | |
Interest expense on borrowings from financial institutions | 21,340 | 7,989 | 21,439 | 8,066 | |
Interest expense on issued debt securities (bonds) | 4,786 | 2,679 | 4,786 | 2,679 | |
Interest expense on assets lease | 162 | 136 | 83 | 80 | |
Losses on fair value changes on interest rate swaps | 128 | – | 128 | – | |
Capitalised borrowing costs | 14 a | (1,328) | (310) | (1,328) | (310) |
Net losses on redemption of other financial investments | 21 | – | 21 | – | |
Net losses on currency exchange rate fluctuations | 4 | 29 | – | 5 | |
Other finance costs | 180 | 307 | 149 | 282 | |
TOTAL finance costs | 25,293 | 10,830 | 25,278 | 10,802 |
33
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12. Income tax
Accounting policy
Group | Parent Company | EUR’000 | ||
2023 | 2022 | 2023 | 2022 | |
Current income tax | 33,604 | 2,880 | 31,099 | – |
Deferred income tax | 4,008 | (2,209) | – | – |
TOTAL income tax | 37,612 | 671 | 31,099 | – |
2023 | Group | 2022 | EUR’000 | |
Assets | Liabilities | Assets | Liabilities | |
Deferred income tax at the beginning of the year | – | 667 | 79 | 2,955 |
Deferred income tax on foreseeable profit distributions of subsidiaries | – | 4,808 | – | (2,288) |
Deferred income tax relating to temporary differences | 800 | – | (79) | – |
Deferred income tax at the end of the year | 800 | 5,475 | – | 667 |
34
About Latvenergo Group
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Group | Parent Company | EUR'000 | |||||||
Goodwill | Usage rights | Software | Assets under | TOTAL | Usage rights | Software | Assets under | TOTAL | |
| and licences | development | and licences | development | ||||||
| As of 31 December 2021 | |||||||||
Cost | 2,546 | 60,617 | 56,449 | 683 | 120,295 | 10,817 | 53,370 | 500 | 64,687 |
Accumulated amortisation | – | (23,983) | (42,755) | – | (66,738) | (6,393) | (40,888) | – | (47,281) |
Net book amount | 2,546 | 36,634 | 13,694 | 683 | 53,557 | 4,424 | 12,482 | 500 | 17,406 |
| Year ended 31 December 2022 | |||||||||
Additions | – | – | – | 4,559 | 4,559 | – | – | 4,387 | 4,387 |
Transfers | – | 253 | 3,998 | (4,251) | – | 48 | 3,960 | (4,008) | – |
Amortisation charge | – | (3,152) | (3,175) | – | (6,327) | (461) | (2,935) | – | (3,396) |
Closing net book amount as of 31 December 2022 | 2,546 | 33,735 | 14,517 | 991 | 51,789 | 4,011 | 13,507 | 879 | 18,397 |
| As of 31 December 2022 | |||||||||
Cost | 2,546 | 60,871 | 59,252 | 991 | 123,660 | 10,865 | 56,135 | 879 | 67,879 |
Accumulated amortisation | – | (27,136) | (44,735) | – | (71,871) | (6,854) | (42,628) | – | (49,482) |
Net book amount | 2,546 | 33,735 | 14,517 | 991 | 51,789 | 4,011 | 13,507 | 879 | 18,397 |
| Year ended 31 December 2023 | |||||||||
Additions | – | – | – | 11,983 | 11,983 | – | – | 6,717 | 6,717 |
Transfers | – | 10 | 5,406 | (5,416) | – | 10 | 5,065 | (5,075) | – |
Amortisation charge | – | (3,157) | (3,289) | – | (6,446) | (463) | (3,004) | (3,467) | |
Closing net book amount as of 31 December 2023 | 2,546 | 30,588 | 16,634 | 7,558 | 57,326 | 3,558 | 15,568 | 2,521 | 21,647 |
| As of 31 December 2023 | |||||||||
Cost | 2,546 | 60,878 | 63,729 | 7,558 | 134,711 | 10,875 | 60,270 | 2,521 | 73,666 |
Accumulated amortisation | – | (30,290) | (47,095) | – | (77,385) | (7,317) | (44,702) | – | (52,019) |
Net book amount | 2,546 | 30,588 | 16,634 | 7,558 | 57,326 | 3,558 | 15,568 | 2,521 | 21,647 |
Group | Parent Company | |||
2023 | 2022 | 2023 | 2022 | |
| Number of | Number of | Number of | Number of | |
| allowances | allowances | allowances | allowances | |
At the beginning of the year | 1,116,363 | 1,248,869 | 1,099,264 | 1,231,852 |
Allowances allocated free of charge* | 79,673 | 145,019 | 70,737 | 137,074 |
Purchased allowances | 479,000 | 632,966 | 479,000 | 632,966 |
Written off verified allowances | (654,694) | (906,491) | (653,604) | (902,628) |
Sold allowances | – | (4,000) | – | – |
At the end of the year | 1,020,342 | 1,116,363 | 995,397 | 1,099,264 |
including estimated allowances used during the reporting year (unverified) | (699,297) | (653,800) | (699,297) | (653,800) |
Allowances available at the end of the year | 321,045 | 462,563 | 296,100 | 445,464 |
| * The number of allowances received by the Group and the Parent Company from the Government free of charge, in accordance with the law “On Pollution” | ||||
and Directives of the Ministry of Environmental Protection and Regional Development of the Republic of Latvia. Therefore, their carrying amount as of 31 December 2023 was nil (31/12/2022: nil). |
35
About Latvenergo Group
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| Current intangible assets | Group | Parent Company | EUR’000 | |
2023 | 2022 | 2023 | 2022 | |
Net book amount at the beginning of the year | 31,664 | 24,266 | 31,664 | 24,266 |
Additions | 37,624 | 46,643 | 37,624 | 46,643 |
Disposals | (46,237) | (39,245) | (46,237) | (39,245) |
Closing net book amount at the end of the year | 23,051 | 31,664 | 23,051 | 31,664 |
14. Property, plant and equipment
a) Property, plant and equipment
Type of property, plant and equipment (PPE) | Estimated useful life, years |
Buildings and facilities | 15 – 100 |
| Assets of Hydropower plants: | |
- hydropower plants' buildings and facilities, | 25 – 100 |
- hydropower plants' technology equipment and machinery | 10 – 40 |
| Distribution system electricity lines and electrical equipment: | |
- electricity lines | 30 – 50 |
- electrical equipment of transformer substations | 30 – 35 |
Technology equipment and machinery | 3 – 40 |
Other property, plant and equipment | 2 – 25 |
36
About Latvenergo Group
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Report
| Net book amounts and movements of property, plant and equipment by groups, including groups of revalued categories are as follows: | Group | Parent Company | EUR’000 | ||||||||||
| Land, | Assets | Distribution | Technology | Other PPE | Assets | Property, | Land, | Assets | Technology | Other PPE | Assets | Property, | |
| buildings | of Hydro | system | equipment | under | plant and | buildings | of Hydro | equipment | under | plant and | |||
| and | Power Plant | electricity | and | construction | equipment | and | Power Plant | and | construction | equipment | |||
| facilities | lines and | machinery | TOTAL | facilities | machinery | TOTAL | |||||||
| electrical | |||||||||||||
| equipment | |||||||||||||
| As of 31 December 2021 | |||||||||||||
Cost or revalued amount | 427,180 | 2,044,719 | 3,031,424 | 661,828 | 168,431 | 63,334 | 6,396,916 | 346,175 | 2,044,719 | 630,116 | 101,775 | 48,075 | 3,170,860 |
Accumulated depreciation and impairment | (232,797) | (1,268,369) | (1,400,001) | (556,946) | (111,865) | (284) | (3,570,262) | (211,059) | (1,268,369) | (540,775) | (83,684) | – | (2,103,887) |
Net book amount | 194,383 | 776,350 | 1,631,423 | 104,882 | 56,566 | 63,050 | 2,826,654 | 135,116 | 776,350 | 89,341 | 18,091 | 48,075 | 1,066,973 |
| Year ended 31 December 2022 | |||||||||||||
Additions | – | – | – | – | – | 117,108 | 117,108 | – | – | – | – | 25,653 | 25,653 |
Transfers | 7,343 | 23,237 | 68,872 | 1,366 | 14,037 | (114,855) | – | 2,225 | 23,237 | 1,021 | 8,563 | (35,046) | – |
Reclassified to investment property, net | (823) | – | – | – | – | – | (823) | (315) | – | – | – | – | (315) |
Reclassified to non–current assets for sale | – | – | – | – | (8) | – | (8) | – | – | – | (8) | – | (8) |
Disposals | (321) | (47) | (6,751) | (110) | (114) | (52) | (7,395) | (266) | (47) | (36) | (46) | (15) | (410) |
Increase of assets as a result of revaluation | – | 227,695 | – | – | – | – | 227,695 | – | 227,695 | – | – | – | 227,695 |
Reversed impairment charge as a result of revaluation | – | 417 | – | – | – | – | 417 | – | 417 | – | – | – | 417 |
(Impairment)/reversed impairment charge (Note14 c I) | (2,567) | – | – | 8,613 | – | (8,459) | (2,413) | (2,567) | – | 8,613 | – | (8,410) | (2,364) |
Depreciation | (13,395) | (29,562) | (68,887) | (30,915) | (13,106) | – | (155,865) | (9,648) | (29,562) | (29,688) | (6,083) | – | (74,981) |
Closing net book amount as of 31 December 2022 | 184,620 | 998,090 | 1,624,657 | 83,836 | 57,375 | 56,792 | 3,005,370 | 124,545 | 998,090 | 69,251 | 20,517 | 30,257 | 1,242,660 |
| As of 31 December 2022 | |||||||||||||
Cost or revalued amount | 430,936 | 2,522,235 | 3,049,406 | 661,918 | 174,442 | 65,536 | 6,904,473 | 345,690 | 2,522,235 | 630,073 | 102,954 | 38,667 | 3,639,619 |
Accumulated depreciation and impairment | (246,316) | (1,524,145) | (1,424,749) | (578,082) | (117,067) | (8,744) | (3,899,103) | (221,145) | (1,524,145) | (560,822) | (82,437) | (8,410) | (2,396,959) |
Net book amount | 184,620 | 998,090 | 1,624,657 | 83,836 | 57,375 | 56,792 | 3,005,370 | 124,545 | 998,090 | 69,251 | 20,517 | 30,257 | 1,242,660 |
| Year ended 31 December 2023 | |||||||||||||
Additions | – | – | – | – | – | 181,108 | 181,108 | – | – | – | – | 57,735 | 57,735 |
Acquisition of a subsidiary | 183 | – | – | 71 | – | 3 | 257 | – | – | – | – | – | – |
Transfers | 6,611 | 6,889 | 84,967 | 6,937 | 16,697 | (122,101) | – | 1,653 | 6,889 | 1,975 | 10,559 | (21,076) | – |
Reclassified to investment property, net | (612) | – | – | – | – | – | (612) | (58) | – | – | – | – | (58) |
Reclassified to non–current assets for sale | – | – | – | – | (39) | – | (39) | – | – | – | (18) | – | (18) |
Disposals | (281) | (4) | (7,971) | (135) | (137) | (87) | (8,615) | (456) | (3) | (117) | (8) | (73) | (657) |
Increase of assets as a result of revaluation | – | 312,061 | – | – | – | – | 312,061 | – | 312,061 | – | – | – | 312,061 |
Reversed impairment charge as a result of revaluation | – | 1,108 | – | – | – | – | 1,108 | – | 1,108 | – | – | – | 1,108 |
Impairment charge (Note14 c I) | (3,142) | – | – | (19,167) | – | (123) | (22,432) | (3,142) | – | (19,167) | – | (14) | (22,323) |
Depreciation | (13,305) | (40,544) | (69,946) | (30,091) | (13,269) | – | (167,155) | (9,552) | (40,545) | (28,652) | (6,348) | – | (85,097) |
Closing net book amount as of 31 December 2023 | 174,074 | 1,277,600 | 1,631,707 | 41,451 | 60,627 | 115,592 | 3,301,051 | 112,990 | 1,277,600 | 23,290 | 24,702 | 66,829 | 1,505,411 |
| As of 31 December 2023 | |||||||||||||
Cost or revalued amount | 436,256 | 2,842,752 | 3,080,841 | 668,461 | 182,656 | 124,459 | 7,335,425 | 346,561 | 2,842,752 | 631,707 | 105,830 | 75,254 | 4,002,104 |
Accumulated depreciation and impairment | (262,182) | (1,565,152) | (1,449,134) | (627,010) | (122,029) | (8,867) | (4,034,374) | (233,571) | (1,565,152) | (608,417) | (81,128) | (8,425) | (2,496,693) |
Net book amount | 174,074 | 1,277,600 | 1,631,707 | 41,451 | 60,627 | 115,592 | 3,301,051 | 112,990 | 1,277,600 | 23,290 | 24,702 | 66,829 | 1,505,411 |
As of 31 December 2023, cost of fully depreciated PPE which are still in use for the Group amounted to
EUR 347,207 thousand (31/12/2022: EUR 231,622 thousand) and for the Parent Company amounted to
EUR 307,910 thousand (31/12/2022: EUR 188,460 thousand).
37
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Carrying amounts of revalued categories of property, plant and equipment groups at revalued amounts
and their cost basis are as follows:
| Group | EUR’000 | ||
| Revalued property, plant and equipment groups | |||
| Assets of | Distribution | TOTAL | |
| Hydropower | system | revalued PPE | |
| plants (the | electricity lines | ||
| Parent | and electrical | ||
| Company) | equipment | ||
| At revalued amounts | |||
| As of 31 December 2023 | |||
Revalued | 2,842,752 | 3,080,841 | 5,923,593 |
Accumulated depreciation | (1,565,152) | (1,449,134) | (3,014,286) |
Revalued net book amount | 1,277,600 | 1,631,707 | 2,909,307 |
| As of 31 December 2022 | |||
Revalued | 2,522,235 | 3,049,406 | 5,571,641 |
Accumulated depreciation | (1,524,145) | (1,424,749) | (2,948,894) |
Revalued net book amount | 998,090 | 1,624,657 | 2,622,747 |
| At amounts stated on historical cost basis | |||
| As of 31 December 2023 | |||
Cost | 479,618 | 1,628,116 | 2,107,734 |
Accumulated depreciation | (209,160) | (569,891) | (779,051) |
Net book amount | 270,458 | 1,058,225 | 1,328,683 |
| As of 31 December 2022 | |||
Cost | 474,331 | 1,575,174 | 2,049,505 |
Accumulated depreciation | (199,859) | (524,748) | (724,607) |
Net book amount | 274,472 | 1,050,426 | 1,324,898 |
Assets of Hydropower plants
Assets of Hydropower plants were revalued in 2023. The revaluation was performed by an independent,
external and certified valuation expert by applying the income method or the replacement cost model.
Income method is based on average perennial water inflow in each HPP, power exchange forecasts of
electricity prices, analysis of historical generation and operating expenses, forecast of expenses based
on publicly available state statistics, forecast of capital expenditure, forecast of net cash flows, as well
as discount and capitalisation rate calculation based on market data.
Considering that the estimated replacement cost of the assets exceeded the value determined by
using income method, the value of each of the hydropower plant assets item’s estimated depreciated
replacement cost was reduced to recognise the economic depreciation. The replacement cost was
determined according to technical characteristics of property, plant and equipment, current technical
requirements, and the cost of replacement of functional analogue less physical, functional, and
economic depreciation.
As a result of revaluation in 2023 the carrying amounts of property, plant and equipment of hydropower
plants increased by EUR 313,169 thousand. Increase of property, plant and equipment in the amount
Information about the pledged property, plant and equipment is disclosed in Note 23 I
b) Property, plant and equipment revaluation
38
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of EUR 312,062 thousand is included in the equity as non-current assets revaluation reserve (see
Note 21 a), while reversal of previously recognised impairment in the amount of EUR 1,108 thousand
was recognised in the Statement of Profit or Loss.
The nominal pre–tax discount rate used in valuation was 8.88% (2022: 10.25%). If the pre-tax rate
would have been increased by 1% then the value of the revalued assets of hydropower plants would
have been decreased by EUR 174,063 thousand (2022: by EUR 119,182 thousand). If the pre–tax rate
would have been decreased by 1%, the value of the revalued assets of hydropower plants would have
been increased by EUR 228,159 thousand (2022: by EUR 146,219 thousand). If electricity price would
have been increased by 5%, the value of assets would have been increased by EUR 127,937 thousand
(2022: by EUR 114,722 thousand), if the prices would have been by 5% less, the value of assets would
have been decrease by EUR 127,937 thousand (2022: by EUR 114,722 thousand).
Distribution system assets
Distribution system electrical equipment was revalued as of 1 April 2020 and distribution system
electricity lines were revalued as of 1 January 2021.
External valuation expert used cost approach and assessed how components of the replacement
or renewal costs of the same property, plant and equipment items have changed since the previous
revaluation. The same approach was used in valuation of electricity lines, by assessing the control
estimate values of cost items of the electricity lines construction used for the construction of
Sadales tīkls AS electricity network. The control estimate is an estimate of the median object for the
construction or reconstruction of electricity lines, which corresponds to the median value of the price
for each group of electricity lines (property, plant and equipment), not considering the extreme costs of
construction. In the calculation of replacement costs, cost items of construction control estimates are
priced according to market prices as of 1 January 2021.
As of 31 December 2023, the management of Sadales tīkls AS has assessed internal and external
indicators to assess whether revaluation would be needed. In this assessment, the increase in the price
levels of general construction costs and electrical equipment costs accompanied with the increase of
inflation and discount rates, which are exceeding criteria determined in the Group accounting policies,
are indicators that revaluation of assets should be performed. After examining the recoverable value
of the assets, the management of Sadales tīkls AS concluded that the fair value of the assets does
not significantly differ from the assets book value on 31 December 2023. Such conclusion was mainly
driven by the “Methodology of capital costs accounting and calculation” approved by the decision
of the Public Utilities Commission as of 29 August 2022, which stipulates that the value of assets
used in calculations of regulatory asset base are included without the effect of asset revaluations after
31 December 2021. Considering the above, revaluation of assets as of 31 December 2023 does not
need to be carried out.
39
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| EUR’000 | ||
31/12/2023 | 31/12/2022 | |
Deferred income | 113,460 | 137,450 |
Future discounted cash flow value | 34,351 | 28,607 |
True value of assets | 147,811 | 166,057 |
Book value | 170,120 | 159,827 |
Impairment | (22,309) | 6,230 |
Discount rate | Electricity price* | Natural gas price* | EUR'000 | |||
| 1 pp | 1 pp | 10% | 10% | 10% | 10% | |
| increase | decrease | increase | decrease | increase | decrease | |
Possible changes of CHPPs assets value | (1,431) | 1,497 | 34,187 | (36,955) | (20,193) | 19,465 |
| *Natural gas and electricity commodity costs are historically closely correlated | ||||||
Key assumptions used in asset valuation | 2023 | 2022 |
Discount rate | 7.24% | 5.92% |
Long-term growth rate | 2.29% | 2.0% |
| EUR’000 | |
| Discount rate | |
| 1 pp increase | |
Possible changes of distribution system assets value | no impairment |
40
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Group | Parent Company | EUR'000 | ||||||||||
| Investment properties for | Investment property held | TOTAL Investment | Investment properties for | Investment property held | TOTAL Investment | |||||||
| lease* | for capital appreciation | property | lease* | for capital appreciation | property | |||||||
2023 | 2022 | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | |
Cost at the beginning of the year | 1,784 | 1,784 | 758 | 2,023 | 2,542 | 3,807 | 2,700 | 2,700 | 214 | 1,861 | 2,914 | 4,561 |
Accumulated depreciation and impairment at the beginning of the year | (211) | (199) | (34) | (292) | (245) | (491) | (691) | (674) | (1) | (285) | (692) | (959) |
Net book amount at the beginning of the year | 1,573 | 1,585 | 724 | 1,731 | 2,297 | 3,316 | 2,009 | 2,026 | 213 | 1,576 | 2,222 | 3,602 |
Reclassified from property, plant and equipment | – | – | 612 | 823 | 612 | 823 | – | – | 58 | 315 | 58 | 315 |
Disposal | – | – | (7) | (31) | (7) | (31) | – | – | (1) | (1,678) | (1) | (1,678) |
Sold | – | – | (581) | (1,799) | (581) | (1,799) | – | – | – | – | – | – |
Depreciation | (12) | (12) | – | – | (12) | (12) | (18) | (17) | – | – | (18) | (17) |
Net book amount at the end of the year | 1,561 | 1,573 | 748 | 724 | 2,309 | 2,297 | 1,991 | 2,009 | 270 | 213 | 2,261 | 2,222 |
Cost at the end of the year | 1,784 | 1,784 | 829 | 758 | 2,613 | 2,542 | 2,700 | 2,700 | 287 | 214 | 2,987 | 2,914 |
Accumulated depreciation and impairment at the end of the year | (223) | (211) | (81) | (34) | (304) | (245) | (709) | (691) | (17) | (1) | (726) | (692) |
Net book amount at the end of the year | 1,561 | 1,573 | 748 | 724 | 2,309 | 2,297 | 1,991 | 2,009 | 270 | 213 | 2,261 | 2,222 |
| * leased property, plant and equipment and real estate related to distribution and transmission system assets |
15. Leases
a) Right-of-use assets and lease liabilities
The Group and the Parent Company have recognised the right-of-use assets for land, buildings and
facilities, and on a lease of the fiber of the combined optical cable (OPGW - optical ground wire with
dual function).
41
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| Right–of–use assets | EUR’000 | |
Group | Parent Company | |
Land, buildings and facilities | Land, buildings and facilities | |
| As of 31 December 2021 | ||
Cost | 12,871 | 7,342 |
Accumulated depreciation | (4,559) | (2,199) |
Net book amount | 8,312 | 5,143 |
| Year ended 31 December 2022 | ||
Recognised changes in lease agreements | 4,261 | 1,094 |
Depreciation | (2,047) | (1,171) |
Closing net book amount as of 31 December 2022 | 10,526 | 5,066 |
| As of 31 December 2022 | ||
Cost | 16,784 | 8,436 |
Accumulated depreciation | (6,258) | (3,370) |
Net book amount | 10,526 | 5,066 |
| Year ended 31 December 2023 | ||
Recognised changes in lease agreements | 2,928 | 875 |
Depreciation | (2,235) | (1,231) |
Closing net book amount as of 31 December 2023 | 11,219 | 4,710 |
| As of 31 December 2023 | ||
Cost | 17,994 | 9,311 |
Accumulated depreciation | (6,775) | (4,601) |
Net book amount | 11,219 | 4,710 |
| Lease liabilities | EUR’000 | |
Group | Parent Company | |
As of 31 December 2021 | 8,428 | 5,226 |
| Of which are: | ||
- Non–current | 6,540 | 4,085 |
- Current | 1,888 | 1,141 |
| Year ended 31 December 2022 | ||
Recognised changes in lease agreements | 4,261 | 1,094 |
Payments for lease liabilities | (2,150) | (1,234) |
Recognised interest liabilities | 136 | 80 |
As of 31 December 2022 | 10,675 | 5,166 |
| Of which are: | ||
- Non–current | 8,648 | 4,206 |
- Current | 2,027 | 960 |
| Year ended 31 December 2023 | ||
Recognised changes in lease agreements | 2,933 | 875 |
Payments for lease liabilities | (2,364) | (1,300) |
Recognised interest liabilities | 162 | 83 |
As of 31 December 2023 | 11,406 | 4,824 |
| Of which are: | ||
- Non–current | 9,015 | 3,607 |
- Current | 2,391 | 1,217 |
b) Expenses from leases (IFRS 16)
The following amounts are recognised in profit or loss:
Group | Parent Company | EUR’000 | ||
2023 | 2022 | 2023 | 2022 | |
Depreciation for the right-of-use assets (land buildings and facilities) | 2,235 | 2,047 | 1,231 | 1,171 |
Interest expense on lease liabilities (included in finance costs) | 162 | 136 | 83 | 80 |
Short–term and low value lease expenses | 151 | 90 | 48 | 48 |
Variable lease payments not included in the lease liabilities | 112 | 31 | 82 | 31 |
TOTAL expenses from leases | 2,660 | 2,304 | 1,444 | 1,330 |
In the Statement of Cash Flows for the year ended 31 December 2023, lease payments of the Group
in amount of EUR 370 thousand and the Parent Company in amount of EUR 534 thousand have been
made by non–cash offsetting and included in cash flows from operating activities in working capital
adjustments (2022: the Group in amount of EUR 372 thousand and the Parent Company in amount
of EUR 505 thousand). Other lease payments of the Group in amount of EUR 1,886 thousand and the
Parent Company in amount of EUR 731 thousand are included in the cash flows from financing activities
(payments of principal on leases) and in cash flows from operating activities (payments of interest on
leases) (2022: the Group EUR 1,671 thousand and the Parent Company EUR 649 thousand).
c) Income from leases
Group | Parent Company | EUR’000 | |||
| Notes | 2023 | 2022 | 2023 | 2022 | |
| Income from leases | |||||
(the Group and the Parent Company is the lessor) | 6 | 1,478 | 1,977 | 3,070 | 3,357 |
| Future minimum lease payments receivable under operating lease contracts by | ||||
| due dates (the Group and the Parent Company are the lessor) | Group | Parent Company | EUR’000 | |
2023 | 2022 | 2023 | 2022 | |
< 1 year | 1,489 | 1,969 | 3,070 | 3,357 |
1–5 years | 2,219 | 2,198 | 8,520 | 7,794 |
> 5 years | 1,486 | 1,486 | 1,486 | 1,486 |
TOTAL rental income | 5,194 | 5,653 | 13,076 | 12,637 |
42
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16. Non–current financial investments
| The Parent Company’s participating interest in subsidiaries (%) and other non–current | ||||||
| financial investments | ||||||
Name of the company | Country of | Business activity held | 31/12/2023 | 31/12/2022 | ||
| incorporation | Interest | EUR’000 | Interest | EUR’000 | ||
| held, % | held, % | |||||
| Investments in subsidiaries: | ||||||
Sadales tīkls AS (18/09/2006) | Latvia | Electricity distribution | 100% | 641,450 | 100% | 641,450 |
| Enerģijas publiskais tirgotājs SIA | Administration of mandatory | |||||
(25/04/2014) | Latvia | electricity procurement process | 100% | 40 | 100% | 40 |
Elektrum Eesti OÜ (27/06/2007) | Estonia | Electricity and natural gas trade | 100% | 35 | 100% | 35 |
| Elektrum Lietuva, UAB | Electricity and natural gas trade | |||||
(07/01/2008) | Lithuania | 100% | 25,000 | 100% | 600 | |
| Latvijas vēja parki SIA | Development of wind parks | |||||
(22/07/2022) | Latvia | and generation of electricity | 80% | 1,600 | 80% | 1,600 |
| Liepājas enerģija SIA | Thermal energy generation and | |||||
(06/07/2005) | Latvia | trade, electricity generation | 51% | 3,556 | 51% | 3,556 |
TOTAL | 671,681 | 647,281 | ||||
| Other non–current financial investments: | ||||||
Pirmais Slēgtais Pensiju Fonds AS | Latvia | Management of pension plans | 46.30% | 36 | 46.30% | 36 |
| Thermal energy generation and | ||||||
Rīgas siltums AS | Latvia | trade, electricity generation | 0.0051% | 3 | 0.0051% | 3 |
TOTAL | 39 | 39 | ||||
TOTAL non-current financial investments of the Parent Company | 671,720 | 647,320 | ||||
| Subsidiaries’ participating interest held (%) | ||||
Name of the company | Country of | Business activity held | 31/12/2023 | 31/12/2022 |
| incorporation | Interest held, % | Interest held, % | ||
| Subsidiaries of Elektrum Eesti OÜ: | ||||
| Elektrum Latvija, SIA | ||||
(18/09/2012) | Latvia | Electricity trade | 100% | 100% |
| Energiaturu Võrguehitus OÜ | ||||
(26/08/2021) | Estonia | Electricity microgrid services | 100% | 100% |
| HN põld ja mets 1 OÜ | Development of renewable | |||
(31/05/2023) | Estonia | energy generation | 100% | – |
| Subsidiaries of Elektrum Lietuva, UAB | ||||
| Klaipėda unlimited sun, UAB | Development of renewable | |||
(27/01/2023) | Lithuania | energy generation | 100% | – |
| The Group’s non–current financial investments | ||||||
Name of the company | Country of | Business activity held | 31/12/2023 | 31/12/2022 | ||
| incorporation | Interest | EUR’000 | Interest | EUR’000 | ||
| held, % | held, % | |||||
| Other non–current financial investments | ||||||
Pirmais Slēgtais Pensiju Fonds AS | Latvia | Management of pension plans | 48.15% | 37 | 48.15% | 37 |
| Thermal energy generation and | ||||||
Rīgas siltums AS | Latvia | trade, electricity generation | 0.0051% | 3 | 0.0051% | 3 |
TOTAL | 40 | 40 | ||||
| Movement in non-current investments | Group | Parent Company | EUR’000 | |
2023 | 2022 | 2023 | 2022 | |
At the beginning of the year | 40 | 40 | 647,320 | 645,218 |
Invested in share capital | – | – | 24,400 | 2,102 |
At the end of the year | 40 | 40 | 671,720 | 647,320 |
43
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17. Inventories
| Summarised financial information for subsidiaries | Equity | Net profit / (loss) for the year | Dividends from subsidiaries* | Carrying amount of interest | EUR'000 | |||
| from investment | ||||||||
| Subsidiaries | 31/12/2023 | 31/12/2022 | 2023 | 2022 | 2023 | 2022 | 31/12/2023 | 31/12/2022 |
| Subsidiaries of the Parent Company: | ||||||||
Sadales tīkls AS | 985,972 | 970,630 | 16,906 | (20,415) | – | 10,429 | 641,450 | 641,450 |
Enerģijas publiskais tirgotājs SIA | 40 | 40 | – | – | – | – | 40 | 40 |
Elektrum Eesti OÜ | 1,031 | 1,127 | 359 | 455 | 455 | 156 | 35 | 35 |
Elektrum Lietuva, UAB | 29,425 | 956 | 4,069 | 656 | – | – | 25,000 | 600 |
Latvijas vēja parki SIA | 1,134 | 1,809 | (675) | (191) | – | – | 1,600 | 1,600 |
Liepājas enerģija SIA | 16,793 | 14,469 | 3,243 | 1,276 | 469 | – | 3,556 | 3,556 |
Total Subsidiaries of the Parent Company | 1,034,395 | 989,031 | 23,902 | (18,219) | 924 | 10,585 | 671,681 | 647,281 |
| Subsidiaries of Elektrum Eesti OÜ: | ||||||||
Total Elektrum Eesti OÜ interests | 3,593 | 2,936 | 657 | 541 | – | – | 6,204 | 4,754 |
| Subsidiaries of Elektrum Lietuva, UAB: | ||||||||
Total Elektrum Lietuva, UAB interests | 3 | – | – | – | – | – | 3,932 | – |
| * in 2023 dividends from subsidiaries received in cash in the amount of EUR 924 thousand (2022: EUR 156 thousand received in cash and with non–cash offset in the amount of EUR 10,429 thousand) |
| Summarised financial information for non-controlling interests | Non-current assets | Current assets | Non-current liabilities | Current liabilities | EUR'000 | |||
| Non-controlling interest of subsidiaries | 31/12/2023 | 31/12/2022 | 31/12/2023 | 31/12/2022 | 31/12/2023 | 31/12/2022 | 31/12/2023 | 31/12/2022 |
Latvijas vēja parki SIA (20%) | 754 | 28 | 297 | 347 | – | – | 824 | 14 |
Liepājas enerģija SIA (49%) | 14,632 | 14,232 | 3,815 | 5,651 | 14,815 | 9,223 | 2,959 | 3,571 |
44
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Group | Parent Company | EUR’000 | ||
31/12/2023 | 31/12/2022 | 31/12/2023 | 31/12/2022 | |
Natural gas (at lower of cost and net realisable value) | 119,250 | 241,588 | 119,250 | 241,588 |
Raw materials and materials (at cost) | 23,377 | 18,888 | 1,205 | 1,084 |
Goods for sale (at lower of cost and net realisable value) | 13,809 | 12,802 | 3,916 | 3,259 |
Other inventories (at cost) | 19,359 | 16,585 | 18,900 | 16,055 |
Unfinished products and orders (at cost) | 6,490 | 5,128 | 88 | – |
Prepayments for natural gas and other inventories | 4,603 | 2,027 | 4,026 | 469 |
Allowances for impaired inventories | (3,090) | (1,380) | (1,340) | (869) |
TOTAL inventories | 183,798 | 295,638 | 146,045 | 261,586 |
Changes in the allowance for raw materials and materials at warehouses in amount of
EUR 1,710 thousand (2022: EUR 270 thousand) for the Group and in amount of EUR 471 thousand
(2022: EUR 134 thousand) for the Parent Company are included in the Statement of Profit or Loss
position ‘Raw materials and consumables used’.
18. Receivables from contracts with customers and other receivables
a) Receivables from contracts with customers, net
| Receivables from contracts with customers grouped by the expected credit loss | ||||
| (ECL) assessment model, net | Group | Parent Company | EUR’000 | |
31/12/2023 | 31/12/2022 | 31/12/2023 | 31/12/2022 | |
| Individually assessed receivables with lifetime ECL assessment | ||||
(counterparty model) | 28,381 | 59,630 | 30,943 | 46,609 |
| Receivables with lifetime ECL assessment by simplified approach | ||||
(portfolio model) | 196,541 | 254,479 | 130,731 | 186,583 |
TOTAL receivables from contracts with customers | 224,922 | 314,109 | 161,674 | 233,192 |
Group | Parent Company | EUR’000 | ||
31/12/2023 | 31/12/2022 | 31/12/2023 | 31/12/2022 | |
| Receivables from contracts with customers: | ||||
| - Electricity, natural gas trade and related services customers | ||||
(portfolio model) | 194,928 | 214,542 | 128,213 | 152,285 |
- Electricity and related services customers (counterparty model) | 8,273 | 36,133 | – | 14,953 |
- Heating customers (portfolio model) | 23,907 | 54,228 | 20,289 | 49,237 |
- Other receivables from contracts with customers (portfolio model) | 4,418 | 5,622 | 1,279 | 1,444 |
- Other receivables from contracts with customers (counterparty model) | 20,165 | 23,541 | 19,936 | 18,181 |
- Subsidiaries (counterparty model) | – | – | 11,057 | 13,503 |
Allowances for expected credit loss from contracts with customers: | 251,691 | 334,066 | 180,774 | 249,603 |
| - Electricity, natural gas trade and related services customers | ||||
(portfolio model) | (24,752) | (17,642) | (18,682) | (15,938) |
- Electricity and related services customers (counterparty model) | (17) | (18) | – | – |
- Heating customers (portfolio model) | (360) | (448) | (348) | (422) |
- Other receivables from contracts with customers (portfolio model) | (1,600) | (1,823) | (20) | (23) |
- Other receivables from contracts with customers (counterparty model) | (40) | (26) | (40) | (20) |
- Subsidiaries (counterparty model) | – | – | (10) | (8) |
| Receivables from contracts with customers, net: | (26,769) | (19,957) | (19,100) | (16,411) |
| - Electricity, natural gas trade and related services customers | ||||
(portfolio model) | 170,176 | 196,900 | 109,531 | 136,347 |
- Electricity and related services customers (counterparty model) | 8,256 | 36,115 | – | 14,953 |
- Heating customers (portfolio model) | 23,547 | 53,780 | 19,941 | 48,815 |
- Other receivables from contracts with customers (portfolio model) | 2,818 | 3,799 | 1,259 | 1,421 |
- Other receivables from contracts with customers (counterparty model) | 20,125 | 23,515 | 19,896 | 18,161 |
- Subsidiaries (counterparty model) | – | – | 11,047 | 13,495 |
224,922 | 314,109 | 161,674 | 233,192 |
45
About Latvenergo Group
Corporate Governance
Operating Segments
Sustainability Indicators
Annexes to
the Sustainability Report
Annual Report
– Key Figures
– Management Report
– Financial Statements
Statement of Profit or Loss
Statement of Comprehensive Income
Statement of Financial Position
Statement of Changes in Equity
Statement of Cash Flows
Notes to the Financial Statements
– Independent Auditors’
Report
| Receivables from contracts with customers with lifetime expected credit losses (ECL) assessed on the portfolio model basis and grouped by past due days | 31/12/2023 | Group | 31/12/2022 | 31/12/2023 | Parent Company | 31/12/2022 | EUR'000 | ||||||
Receivables | Allowances | Net | Receivables | Allowances | Net | Receivables | Allowances | Net | Receivables | Allowances | Net | ||
Late payment delay in days | ECL rate | for ECL | for ECL | for ECL | for ECL | ||||||||
On time | 0.20% | 186,282 | (389) | 185,893 | 248,926 | (543) | 248,383 | 123,163 | (267) | 122,896 | 183,322 | (418) | 182,904 |
Less than 30 days | 3% | 6,693 | (201) | 6,492 | 3,601 | (108) | 3,493 | 5,136 | (154) | 4,982 | 1,843 | (55) | 1,788 |
Past due 30 - 59 days | 20% | 1,154 | (231) | 923 | 1,930 | (386) | 1,544 | 795 | (159) | 636 | 1,493 | (299) | 1,194 |
Past due 60 - 89 days | 50% | 3,337 | (1,668) | 1,669 | 722 | (361) | 361 | 2,809 | (1,405) | 1,404 | 462 | (231) | 231 |
Past due 90 - 179 days | 60% | 1,806 | (1,084) | 722 | 1,079 | (648) | 431 | 426 | (255) | 171 | 713 | (428) | 285 |
Past due 180 - 359 days | 75% | 1,668 | (1,251) | 417 | 994 | (745) | 249 | 900 | (675) | 225 | 652 | (489) | 163 |
Past due more than 360 days | 100% | 10,049 | (10,049) | – | 10,179 | (10,179) | – | 7,366 | (7,366) | – | 7,929 | (7,929) | – |
Individually assessed | 90% | 10,763 | (10,338) | 425 | 5,691 | (5,673) | 18 | 7,776 | (7,359) | 417 | 5,691 | (5,673) | 18 |
Insolvent debtors* | 100% | 1,501 | (1,501) | – | 1,270 | (1,270) | – | 1,410 | (1,410) | – | 861 | (861) | – |
TOTAL | 223,253 | (26,712) | 196,541 | 274,392 | (19,913) | 254,479 | 149,781 | (19,050) | 130,731 | 202,966 | (16,383) | 186,583 | |
| * receivables under insolvency process and with an established payment schedule |
| Receivables from contracts with customers with lifetime expected credit losses | |||||
| (ECL) assessed on the counterparty model basis | Group | Parent Company | EUR’000 | ||
| Notes | 31/12/2023 | 31/12/2022 | 31/12/2023 | 31/12/2022 | |
Receivables of electricity and related services customers | 8,273 | 36,133 | – | 14,953 | |
Allowances for expected credit loss on receivables of electricity and related services customers | (17) | (18) | – | – | |
Other receivables from contracts with customers | 20,165 | 23,541 | 19,936 | 18,181 | |
| Allowances for expected credit loss on other receivables | |||||
from contracts with customers | (40) | (26) | (40) | (20) | |
Receivables from subsidiaries | 29 b | – | – | 10,779 | 11,070 |
Accrued income from subsidiaries | 29 c | – | – | 278 | 2,433 |
| Allowances for expected credit loss on subsidiaries | |||||
receivables | 29 b | – | – | (10) | (8) |
TOTAL | 28,381 | 59,630 | 30,943 | 46,609 |
There is no significant concentration of credit risk with respect to receivables from contracts with
customers as the Group and the Parent Company have large number of customers except major
heating customer the net debt of which as of 31 December 2023 amounted to EUR 25,757 thousand
(31/12/2022: EUR 48,768 thousand).
| Movements in loss allowances for impaired receivables from contracts with | ||||
| customers | Group | Parent Company | EUR’000 | |
2023 | 2022 | 2023 | 2022 | |
At the beginning of the year | 19,957 | 17,028 | 16,411 | 14,009 |
Receivables written off during the year as uncollectible | (2,048) | (2,372) | (1,789) | (2,284) |
Allowances for expected credit losses | 8,860 | 5,301 | 4,478 | 4,686 |
At the end of the year | 26,769 | 19,957 | 19,100 | 16,411 |
| b) Other financial receivables (assessed on the counterparty model basis) | Level of | Group | Parent Company | EUR’000 | |
| SICR | 31/12/2023 | 31/12/2022 | 31/12/2023 | 31/12/2022 | |
| Current financial receivables: | |||||
Uncovered costs of mandatory procurement and guaranteed fee for the installed electrical capacity of cogeneration power plants recognised as assets* | Stage 1 | 32,286 | 108 | – | – |
| Receivables for lease | Stage 1 | 15 | 34 | 9 | 31 |
Stage 3 | 3 | 1 | 2 | 1 | |
| Other current financial receivables | Stage 1 | 12,289 | 16,084 | 2,589 | 9,347 |
Stage 3 | 4,429 | 2,098 | 3,854 | 4,606 | |
Other accrued income | Stage 1 | 586 | 280 | 586 | 280 |
| Allowances for expected credit loss | Stage 1 | (102) | (73) | (50) | (66) |
Stage 3 | (1,534) | (1,443) | (1,237) | (1,132) | |
Receivables for lease from subsidiaries (Note 29 b) | Stage 1 | – | – | 26 | 13 |
Other financial receivables from subsidiaries (Note 29 b) | Stage 1 | – | – | 30,837 | 21,037 |
Other accrued income from subsidiaries (Note 29 c) | Stage 1 | – | – | 14,630 | 2,150 |
| Allowances for expected credit loss on subsidiaries | |||||
receivables (Note 29 b) | Stage 1 | – | – | (21) | (14) |
TOTAL other financial receivables | 47,972 | 17,089 | 51,225 | 36,253 | |
| * by applying agent principle, uncovered costs of mandatory procurement and guaranteed fee for the installed electrical capacity of cogeneration power plants | |||||
| are recognised as assets in net amount, as difference between revenue and costs recognised under the mandatory procurement |
46
About Latvenergo Group
Corporate Governance
Operating Segments
Sustainability Indicators
Annexes to
the Sustainability Report
Annual Report
– Key Figures
– Management Report
– Financial Statements
Statement of Profit or Loss
Statement of Comprehensive Income
Statement of Financial Position
Statement of Changes in Equity
Statement of Cash Flows
Notes to the Financial Statements
– Independent Auditors’
Report
| c) Other non-financial receivables | Group | Parent Company | EUR’000 | |
31/12/2023 | 31/12/2022 | 31/12/2023 | 31/12/2022 | |
Non–current non–financial receivables | 447 | 482 | 447 | 482 |
Current non–financial receivables | 2,109 | 432 | 1,055 | 198 |
TOTAL non–financial receivables | 2,556 | 914 | 1,502 | 680 |
19. Cash and cash equivalents
Group | Parent Company | EUR’000 | ||
31/12/2023 | 31/12/2022 | 31/12/2023 | 31/12/2022 | |
Cash at bank | 78,373 | 112,673 | 67,080 | 100,184 |
Short–term bank deposits | 40,000 | – | 40,000 | – |
Other cash equivalents | 83 | 84 | 83 | 84 |
TOTAL cash and cash equivalents | 118,456 | 112,757 | 107,163 | 100,268 |
Cash at bank balances earns daily interest for the Group mostly based on floating interbank deposit
rates. Short–term deposits are placed by the Group for different periods between three and six months
depending on the immediate cash needs of the Group and cash flow forecasts. During 2023 the average
annual effective interest rate earned on short–term cash deposits was 3.60 % (in 2022: 0%).
20. Share capital
47
About Latvenergo Group
Corporate Governance
Operating Segments
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the Sustainability Report
Annual Report
– Key Figures
– Management Report
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Statement of Profit or Loss
Statement of Comprehensive Income
Statement of Financial Position
Statement of Changes in Equity
Statement of Cash Flows
Notes to the Financial Statements
– Independent Auditors’
Report
21. Reserves, dividends and earnings per share
| a) Reserves | ||||||||||
Group | Parent Company | EUR'000 | ||||||||
| Non–current | Hedge | Defined benefit | Other | TOTAL | Non–current | Hedge | Defined benefit | TOTAL | ||
| assets revaluation | reserve | plan revaluation | reserves | assets revaluation | reserve | plan revaluation | ||||
| Notes | reserve | reserve | reserve | reserve | ||||||
As of 31 December 2021 | 1,157,825 | 19,218 | (1,798) | 110 | 1,175,355 | 778,049 | 19,218 | (1,536) | 795,731 | |
Increase of non–current assets revaluation reserve as a result of revaluation | 14 a | 227,695 | – | – | – | 227,695 | 227,695 | – | – | 227,695 |
Disposal of revaluation reserve | 14 a | (11,529) | – | – | – | (11,529) | (3,470) | – | – | (3,470) |
Gains on re–measurement of defined benefit plan | 27 a | – | – | 645 | – | 645 | – | – | 210 | 210 |
Losses from fair value changes of derivative financial instruments | 24 I | – | (109,483) | – | – | (109,483) | – | (109,483) | – | (109,483) |
As of 31 December 2022 | 1,373,991 | (90,265) | (1,153) | 110 | 1,282,683 | 1,002,274 | (90,265) | (1,326) | 910,683 | |
Increase of non–current assets revaluation reserve as a result of revaluation | 14 a | 312,061 | – | – | – | 312,061 | 312,061 | – | – | 312,061 |
Disposal of revaluation reserve | 14 a | (9,613) | – | – | – | (9,613) | (561) | – | – | (561) |
Losses on re–measurement of defined benefit plan | 27 a | – | – | (2,709) | – | (2,709) | – | – | (1,144) | (1,144) |
Gains from fair value changes of derivative financial instruments | 24 I | – | 99,380 | – | – | 99,380 | – | 99,380 | – | 99,380 |
Formed statutory reserves | – | – | – | 50 | 50 | – | – | – | – | |
As of 31 December 2023 | 1,676,439 | 9,115 | (3,862) | 160 | 1,681,852 | 1,313,774 | 9,115 | (2,470) | 1,320,419 |
b) Dividends
In May 2023, Latvenergo AS paid dividends to the State in amount of EUR 133,991 thousand for
reporting year 2022 profit. On 18 October 2023, Extraordinary Shareholder Meeting of Latvenergo AS
took decision to pay additional dividends to the State in the amount of EUR 18,547 thousand from the
undistributed profit of the reporting year 2022.
The total amount of dividends paid for year 2022 was EUR 152,539 thousand or EUR 0.232 per share (in
2022 for 2021: EUR 70,160 thousand or EUR 0.089 per share).
According to the Law “On state budget for 2024 and budgetary framework for 2024, 2025 and 2026”
the expected amount of dividends to be paid by Latvenergo AS for the use of state capital in 2024 (for
the reporting year 2023) is 64% of the profit for the reporting year, but not less than EUR 199.3 million,
corporate income tax calculated and paid in accordance with the laws and regulations. The distribution of
net profit and amount of dividends payable is subject to a resolution of the Latvenergo AS Shareholders
Meeting.
c) Earnings per share
Group | Parent Company | |||
2023 | 2022 | 2023 | 2022 | |
Profit attributable to the equity holder of the Parent Company (in thousand EUR) | 349,749 | 183,443 | 331,561 | 209,362 |
Weighted average number of shares (thousand) | 790,368 | 790,368 | 790,368 | 790,368 |
Basic earnings per share (in euros) | 0.443 | 0.232 | 0.420 | 0.265 |
Diluted earnings per share (in euros) | 0.443 | 0.232 | 0.420 | 0.265 |
48
About Latvenergo Group
Corporate Governance
Operating Segments
Sustainability Indicators
Annexes to
the Sustainability Report
Annual Report
– Key Figures
– Management Report
– Financial Statements
Statement of Profit or Loss
Statement of Comprehensive Income
Statement of Financial Position
Statement of Changes in Equity
Statement of Cash Flows
Notes to the Financial Statements
– Independent Auditors’
Report
22. Changes in liabilities arising from financing activities
The changes in lease liabilities (Note 15):
Group | Parent Company | EUR’000 | ||
2023 | 2022 | 2023 | 2022 | |
Net book amount at the beginning of the year | 10,675 | 8,428 | 5,166 | 5,226 |
Recognised changes in lease agreements | 2,928 | 4,261 | 875 | 1,094 |
Paid lease payments in cash | (1,886) | (1,671) | (731) | (649) |
Paid lease payments by non-cash offset | (370) | (372) | (534) | (505) |
Change in accrued liabilities | (108) | (107) | (35) | (80) |
Recognised interest liabilities | 162 | 136 | 83 | 80 |
Closing net book amount at the end of the year | 11,401 | 10,675 | 4,824 | 5,166 |
In 2023, the movement for borrowings (Note 23) relates to cash flows, except the effect of accrued
but not yet paid interest – for the Group increase in the amount of EUR 2,868 thousand and for the
Parent company increase in the amount of EUR 2,834 thousand (2022: the Group – increase of
EUR 2,161 thousand, the Parent Company – increase of EUR 2,087 thousand).
In 2023, deferred income on financing from European Union funds (Note 28) consists of movement
in cash, except the credited amount to Statement of Profit or Loss – for the Group in the amount of
EUR 909 thousand and for the Parent company in the amount of EUR 142 thousand (2022: the Group –
EUR 896 thousand, the Parent Company – EUR 144 thousand).
23. Borrowings
Group | Parent Company | EUR’000 | ||
31/12/2023 | 31/12/2022 | 31/12/2023 | 31/12/2022 | |
| Non-current portion of non-current borrowings from financial | ||||
institutions | 336,408 | 424,867 | 327,174 | 411,664 |
Non-current portion of issued debt securities (bonds) | 199,908 | 149,887 | 199,908 | 149,887 |
Total non-current borrowings from financial institutions | 536,316 | 574,754 | 527,082 | 561,551 |
Current portion of non-current borrowings from financial institutions | 86,625 | 177,778 | 84,491 | 175,798 |
Overdraft from financial institutions | – | 119,478 | – | 119,478 |
Accrued interest on non-current borrowings from financial institutions | 2,891 | 2,161 | 2,742 | 2,047 |
Accrued coupon interest on issued debt securities (bonds) | 3,864 | 1,747 | 3,864 | 1,747 |
Total current borrowings from financial institutions | 93,380 | 301,164 | 91,097 | 299,070 |
TOTAL borrowings from financial institutions | 629,696 | 875,918 | 618,179 | 860,621 |
Current borrowings from related parties* | – | – | – | 3,317 |
Total current borrowings | 93,380 | 301,164 | 91,097 | 302,387 |
TOTAL borrowings | 629,696 | 875,918 | 618,179 | 863,938 |
| Movement in borrowings | Group | Parent Company | EUR’000 | |
2023 | 2022 | 2023 | 2022 | |
At the beginning of the year | 875,918 | 795,029 | 863,938 | 782,322 |
Received borrowings from financial institutions | 2,000 | 207,846 | – | 200,013 |
Repaid borrowings from financial institutions | (301,090) | (129,118) | (295,276) | (123,801) |
Proceeds from issued debt securities (bonds) | 50,000 | 100,000 | 50,000 | 100,000 |
Borrowings received from related parties* | – | – | (3,317) | 3,317 |
Repayment of issued debt securities (bonds) | – | (100,000) | – | (100,000) |
Change in accrued interest on borrowings from financial institutions | 2,847 | 2,195 | 2,813 | 2,121 |
Changes in outstanding value of issued debt securities (bonds) | 21 | (34) | 21 | (34) |
At the end of the year | 629,696 | 875,918 | 618,179 | 863,938 |
| Borrowings by categories of lenders | Group | Parent Company | EUR’000 | |
31/12/2023 | 31/12/2022 | 31/12/2023 | 31/12/2022 | |
International Financial Institutions | 224,186 | 273,306 | 224,186 | 273,306 |
Commercial banks | 201,738 | 450,978 | 190,221 | 435,681 |
Issued debt securities (bonds) | 203,772 | 151,634 | 203,772 | 151,634 |
Total borrowings from financial institutions | 629,696 | 875,918 | 618,179 | 860,621 |
Related parties* | – | – | – | 3,317 |
TOTAL borrowings | 629,696 | 875,918 | 618,179 | 863,938 |
| * Within the framework of the Agreement ´On Provision of Mutual Financial Resources´, as of 31 December 2023, Parent Company didn’t have current | ||||
| borrowing from Enerģijas publiskais tirgotājs SIA (31/12/2022: in the amount of EUR 3,317 thousand), (the information is disclosed in the Note 29. II). |
| Borrowings from financial institutions by contractual maturity, excluding the | ||||
| impact of derivative instruments to the interest rate | Group | Parent Company | EUR’000 | |
31/12/2023 | 31/12/2022 | 31/12/2023 | 31/12/2022 | |
| Fixed rate non–current and current borrowings: | ||||
- < 1 year (current portion of non–current borrowings) | 3,864 | 1,747 | 3,864 | 1,747 |
- 1–5 years | 149,908 | 100,000 | 149,908 | 100,000 |
- > 5 years | 50,000 | 49,887 | 50,000 | 49,887 |
Total fixed rate borrowings | 203,772 | 151,634 | 203,772 | 151,634 |
| Floating rate non–current and current borrowings: | ||||
- < 1 year (current borrowings) | – | 119,692 | – | 119,692 |
- < 1 year (current portion of non–current borrowings) | 89,495 | 179,704 | 87,212 | 177,610 |
- 1–5 years | 246,228 | 303,329 | 239,433 | 293,199 |
- > 5 years | 90,201 | 121,559 | 87,762 | 118,486 |
Total floating rate borrowings | 425,924 | 724,284 | 414,407 | 708,987 |
TOTAL borrowings | 629,696 | 875,918 | 618,179 | 860,621 |
49
About Latvenergo Group
Corporate Governance
Operating Segments
Sustainability Indicators
Annexes to
the Sustainability Report
Annual Report
– Key Figures
– Management Report
– Financial Statements
Statement of Profit or Loss
Statement of Comprehensive Income
Statement of Financial Position
Statement of Changes in Equity
Statement of Cash Flows
Notes to the Financial Statements
– Independent Auditors’
Report
| Borrowings from financial institutions by repricing of interest, including the | ||||
| impact of derivative instruments | Group | Parent Company | EUR’000 | |
31/12/2023 | 31/12/2022 | 31/12/2023 | 31/12/2022 | |
- < 1 year | 344,074 | 606,983 | 332,557 | 591,686 |
- 1–5 years | 235,622 | 219,048 | 235,622 | 219,048 |
- > 5 years | 50,000 | 49,887 | 50,000 | 49,887 |
TOTAL borrowings | 629,696 | 875,918 | 618,179 | 860,621 |
50
About Latvenergo Group
Corporate Governance
Operating Segments
Sustainability Indicators
Annexes to
the Sustainability Report
Annual Report
– Key Figures
– Management Report
– Financial Statements
Statement of Profit or Loss
Statement of Comprehensive Income
Statement of Financial Position
Statement of Changes in Equity
Statement of Cash Flows
Notes to the Financial Statements
– Independent Auditors’
Report
Group | Parent Company | EUR’000 | |||||||
31/12/2023 | 31/12/2022 | 31/12/2023 | 31/12/2022 | ||||||
| Notes | Assets | Liabilities | Assets | Liabilities | Assets | Liabilities | Assets | Liabilities | |
Interest rate swaps | 24 II | 5,872 | – | 10,279 | – | 5,872 | – | 10,279 | – |
Energy forwards, futures, and swaps | 24 III | 5,297 | – | 450 | (120,520) | 5,297 | – | 450 | (120,520) |
Currency exchange forwards | 24 IV | – | – | – | (1,499) | – | – | – | (1,499) |
Total outstanding fair values of derivatives | 11,169 | – | 10,729 | (122,019) | 11,169 | – | 10,729 | (122,019) |
Group | Parent Company | EUR’000 | ||||||
31/12/2023 | 31/12/2022 | 31/12/2023 | 31/12/2022 | |||||
Assets | Liabilities | Assets | Liabilities | Assets | Liabilities | Assets | Liabilities | |
Non–current | 3,210 | – | 8,131 | – | 3,210 | – | 8,131 | – |
Current | 7,959 | – | 2,598 | (122,019) | 7,959 | – | 2,598 | (122,019) |
| TOTAL fair values of derivative | ||||||||
financial instruments | 11,169 | – | 10,729 | (122,019) | 11,169 | – | 10,729 | (122,019) |
| Gains / (losses) on fair value changes as a result of realised hedge agreements | Group | Parent Company | EUR’000 | ||
| Notes | 2023 | 2022 | 2023 | 2022 | |
Included in the Statement of Profit or Loss | 8 | ||||
Interest rate swaps | 11 a | (119) | 1,074 | (119) | 1,074 |
Energy forwards, futures, and swaps | 8 | 23,198 | (10,096) | 23,198 | (9,827) |
Included in the other comprehensive income | 21 a | 23,079 | (9,022) | 23,079 | (8,753) |
Interest rate swaps | 24 II | (4,288) | 13,517 | (4,288) | 13,517 |
Energy forwards, futures, and swaps | 24 III | 102,169 | (121,501) | 102,169 | (121,501) |
Currency exchange forwards | 24 IV | 1,499 | (1,499) | 1,499 | (1,499) |
99,380 | (109,483) | 99,380 | (109,483) | ||
Total loss on fair value changes | 122,459 | (118,505) | 122,459 | (118,236) |
| Fair value changes of interest rate swaps | Group | Parent Company | EUR’000 | |||||
2023 | 2022 | 2023 | 2022 | |||||
Assets | Liabilities | Assets | Liabilities | Assets | Liabilities | Assets | Liabilities | |
Outstanding fair value at the beginning of the year | 10,279 | – | – | (4,312) | 10,279 | – | – | (4,312) |
Included in Statement of Profit or Loss | (128) | 9 | – | 1,074 | (128) | 9 | – | 1,074 |
Included in other comprehensive Income | (4,279) | (9) | 10,279 | 3,238 | (4,279) | (9) | 10,279 | 3,238 |
| Outstanding fair value at the end | ||||||||
of the year | 5,872 | – | 10,279 | – | 5,872 | – | 10,279 | – |
51
About Latvenergo Group
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– Key Figures
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Statement of Profit or Loss
Statement of Comprehensive Income
Statement of Financial Position
Statement of Changes in Equity
Statement of Cash Flows
Notes to the Financial Statements
– Independent Auditors’
Report
| Fair value changes of energy forwards, futures, and swaps | Group | Parent Company | EUR'000 | ||||||
2023 | 2022 | 2023 | 2022 | ||||||
| Notes | Assets | Liabilities | Assets | Liabilities | Assets | Liabilities | Assets | Liabilities | |
Outstanding fair value at the beginning of the year | 450 | (120,520) | 25,735 | (14,208) | 450 | (120,520) | 25,466 | (14,208) | |
Included in the Statement of Profit or Loss | 8 | 333 | 22,865 | 181 | (10,277) | 333 | 22,865 | 450 | (10,277) |
Included in other comprehensive income | 4,514 | 97,655 | (25,466) | (96,035) | 4,514 | 97,655 | (25,466) | (96,035) | |
Outstanding fair value at the end of the year | 5,297 | – | 450 | (120,520) | 5,297 | – | 450 | (120,520) |
| Fair value changes of forward currencies exchange contracts | Group | Parent Company | EUR'000 | |||||
2023 | 2022 | 2023 | 2022 | |||||
Assets | Liabilities | Assets | Liabilities | Assets | Liabilities | Assets | Liabilities | |
Outstanding fair value at the beginning of the year | – | (1,499) | – | – | – | (1,499) | – | – |
Included in other comprehensive income | – | 1,499 | – | (1,499) | – | 1,499 | – | (1,499) |
| Outstanding fair value at the end | ||||||||
of the year | – | – | – | (1,499) | – | – | – | (1,499) |
25. Fair values and fair value measurement
In this Note are disclosed the fair value measurement hierarchy for the Group’s and the Parent Company’s
financial assets and liabilities and revalued PPE.
Methods and assumptions used to estimate the fair values are disclosed in Note 4 i).
52
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Report
| Quantitative disclosures of fair value measurement hierarchy for assets at the end of the year | Group | Parent Company | EUR'000 | ||||||
Fair value measurement using | Fair value measurement using | ||||||||
| Quoted prices | Significant | Significant | TOTAL | Quoted prices | Significant | Significant | TOTAL | ||
| in active | observable | unobservable | in active | observable | unobservable | ||||
| markets | inputs | inputs | markets | inputs | inputs | ||||
Type of assets | Notes | (Level1) | (Level 2) | (Level 3) | (Level1) | (Level 2) | (Level 3) | ||
| As of 31 December 2023 | |||||||||
| Assets measured at fair value | |||||||||
Revalued property, plant and equipment | 14 c | – | – | 2,909,307 | 2,909,307 | – | – | 1,277,600 | 1,277,600 |
Non-current financial investments | 16 | – | – | 40 | 40 | – | – | 39 | 39 |
| Derivative financial instruments, including: | |||||||||
Interest rate swaps | 24 | – | 5,872 | – | 5,872 | – | 5,872 | – | 5,872 |
Energy forwards, futures, and swaps | 24 | – | 5,297 | – | 5,297 | – | 5,297 | – | 5,297 |
| Assets for which fair values are disclosed | |||||||||
Investment properties | 14 b | – | – | 2,309 | 2,309 | – | – | 2,261 | 2,261 |
| Loans to related parties: | |||||||||
- Floating rate loans | 29 e | – | – | – | – | – | 263,182 | – | 263,182 |
- Fixed rate loans | 29 e | – | 863 | – | 863 | – | 361,116 | – | 361,116 |
Current financial receivables | 18 a, b | – | – | 272,894 | 272,894 | – | – | 212,899 | 212,899 |
Cash and cash equivalents | 19 | – | 118,456 | – | 118,456 | – | 107,163 | – | 107,163 |
| As of 31 December 2022 | |||||||||
| Assets measured at fair value | |||||||||
Revalued property, plant and equipment | 14 c | – | – | 2,622,747 | 2,622,747 | – | – | 998,090 | 998,090 |
Non-current financial investments | 16 | – | – | 40 | 40 | – | – | 39 | 39 |
| Derivative financial instruments, including: | |||||||||
Interest rate swaps | 24 | – | 10,279 | – | 10,279 | – | 10,279 | – | 10,279 |
Energy forwards, futures, and swaps | 24 | – | 450 | – | 450 | – | 450 | – | 450 |
| Assets for which fair values are disclosed | |||||||||
Investment properties | 14 b | – | – | 2,297 | 2,297 | – | – | 2,222 | 2,222 |
| Loans to related parties: | |||||||||
- Floating rate loans | 29 e | – | – | – | – | – | 266,737 | – | 266,737 |
- Fixed rate loans | 29 e | – | – | – | – | – | 446,571 | – | 446,571 |
Current financial receivables | 18 a, b | – | – | 331,198 | 331,198 | – | – | 269,445 | 269,445 |
Cash and cash equivalents | 19 | – | 112,757 | – | 112,757 | – | 100,268 | – | 100,268 |
53
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Notes to the Financial Statements
– Independent Auditors’
Report
| Quantitative disclosures of fair value measurement hierarchy for liabilities at the end of the year | Group | Parent Company | EUR'000 | ||||||
Fair value measurement using | Fair value measurement using | ||||||||
| Quoted prices | Significant | Significant | TOTAL | Quoted prices | Significant | Significant | TOTAL | ||
| in active | observable | unobservable | in active | observable | unobservable | ||||
| markets | inputs | inputs | markets | inputs | inputs | ||||
Type of liability | Notes | (Level1) | (Level 2) | (Level 3) | (Level1) | (Level 2) | (Level 3) | ||
| As of 31 December 2023 | |||||||||
| Liabilities for which fair values are disclosed | |||||||||
Issued debt securities (bonds) | 23 | – | 203,772 | – | 203,772 | – | 203,772 | – | 203,772 |
Borrowings from financial institutions | 23 | – | 425,924 | – | 425,924 | – | 414,407 | – | 414,407 |
Trade and other financial current payables | 26 | – | – | 136,014 | 136,014 | – | – | 87,078 | 87,078 |
| As of 31 December 2022 | |||||||||
| Liabilities measured at fair value | |||||||||
| Derivative financial instruments, including: | |||||||||
Energy forwards, futures, and swaps | 24 | – | 120,520 | – | 120,520 | – | 120,520 | – | 120,520 |
Forward currencies exchange contracts | 24 | – | 1,499 | – | 1,499 | – | 1,499 | – | 1,499 |
| Liabilities for which fair values are disclosed | |||||||||
Issued debt securities (bonds) | 23 | – | 151,634 | – | 151,634 | – | 151,634 | – | 151,634 |
Borrowings from financial institutions | 23 | – | 724,284 | – | 724,284 | – | 708,987 | – | 708,987 |
Borrowings from related parties | 23 | – | – | – | – | – | 3,317 | – | 3,317 |
Trade and other financial current payables | 26 | – | – | 107,811 | 107,811 | – | – | 99,902 | 99,902 |
Group | Parent Company | EUR'000 | ||||||
Carrying amount | Fair value | Carrying amount | Fair value | |||||
31/12/2023 | 31/12/2022 | 31/12/2023 | 31/12/2022 | 31/12/2023 | 31/12/2022 | 31/12/2023 | 31/12/2022 | |
| Financial assets | ||||||||
Fixed rate loans to related parties | 863 | – | 863 | – | 361,116 | 446,571 | 343,998 | 414,187 |
| Financial liabilities | ||||||||
Issued debt securities (bonds) | 203,772 | 151,634 | 188,678 | 128,948 | 203,772 | 151,634 | 188,678 | 128,948 |
54
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Report
26. Trade and other payables
Group | Parent Company | EUR’000 | |||
| Notes | 31/12/2023 | 31/12/2022 | 31/12/2023 | 31/12/2022 | |
| Financial liabilities: | |||||
Payables for suppliers | 94,389 | 59,392 | 56,524 | 19,283 | |
Payables to related parties | 29 b | 9,795 | 8,191 | 16,800 | 24,026 |
Accrued expenses | 21,212 | 27,204 | 7,139 | 21,351 | |
Accrued expenses from related parties | 29 d | – | – | 3,321 | 31,191 |
Other financial current payables | 10,618 | 13,024 | 3,294 | 4,051 | |
TOTAL financial liabilities | 136,014 | 107,811 | 87,078 | 99,902 | |
| Non–financial liabilities: | |||||
Taxes other than income tax | 33,681 | 38,418 | 19,055 | 27,159 | |
Contract liabilities | 28,907 | 15,539 | 7,547 | 5,368 | |
Other current payables | 4,131 | 3 506 | 1,620 | 1,339 | |
TOTAL NON–FINANCIAL LIABILITIES | 66,719 | 57,463 | 28,222 | 33,866 | |
TOTAL trade and other current payables | 202,733 | 165,274 | 115,300 | 133,768 |
Contract liabilities include current advances received from the customers before the transfer of related
goods or services, transferred in less than 12 months.
27. Provisions
Group | Parent Company | EUR’000 | ||
31/12/2023 | 31/12/2022 | 31/12/2023 | 31/12/2022 | |
| Non-current: | ||||
- post–employment benefits (recognised in profit or loss) | 14,378 | 14,413 | 6,265 | 6,395 |
- post–employment benefits (recognised in equity) | 3,862 | 1,153 | 2,300 | 1,157 |
TOTAL post–employment benefits | 18,240 | 15,566 | 8,565 | 7,552 |
Provisions for post–employment benefits
Group | Parent Company | EUR’000 | |||
| Notes | 2023 | 2022 | 2023 | 2022 | |
At the beginning of the year | 15,566 | 15,421 | 7,552 | 7,407 | |
Current service cost | 253 | 1,029 | 153 | 497 | |
Interest cost | 492 | 511 | 225 | 246 | |
Post–employment benefits paid | (780) | (750) | (508) | (388) | |
Losses / (gains) on remeasurement on defined benefit plan | 21 a | 2,709 | (645) | 1,143 | (210) |
At the end of the year | 18,240 | 15,566 | 8,565 | 7,552 |
Total charged / (credited) provisions are included in the Statement of Profit or Loss position ‘Personnel
expenses’ within state social insurance contributions and other benefits defined in the Collective
agreement (Note 9):
Group | Parent Company | EUR’000 | |||
| Notes | 2023 | 2022 | 2023 | 2022 | |
At the beginning of the year | 15,566 | 15,421 | 7,552 | 7,407 | |
(Credited) / charged to the Statement of Comprehensive Income | 21 a | 2,709 | (645) | 1,143 | (210) |
Charged to the Statement of Profit or Loss | (35) | 790 | (130) | 355 | |
At the end of the year | 18,240 | 15,566 | 8,565 | 7,552 |
55
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Weighted average discount rate used for discounting benefit obligations was 2.98% (2022:
3.32%), considering EIOPA risk-free interest rate, interest rates of Latvian government bonds and
EURBMK BBB electricity industry rate at the end of the reporting year. The Group’s Collective
Agreement provides indexation of employees’ wages at least at the level of inflation. Long–term
inflation determined at the level of 5.0% (2022: 6.0%) when calculating long–term post–employment
benefits. In calculation of these liabilities also the probability, determined on the basis of previous
experience, of retirement in different employees’ aging groups was also considered.
A quantitative sensitivity analysis for significant assumptions on provisions for post–employment
benefits as of the end of the year is as shown below:
Assumptions | Date of | Group | Parent Company | EUR’000 | |||||||||
| valuation | Discount rate | Future salary changes | Retirement probability changes | Discount rate | Future salary changes | Retirement probability changes | |||||||
1% increase | 1% decrease | 1% increase | 1% decrease | 1% increase | 1% decrease | 1% increase | 1% decrease | 1% increase | 1% decrease | 1% increase | 1% decrease | ||
| Impact on provisions for | 31/12/2023 | 2,107 | (1,754) | 2,065 | (1,754) | 2,279 | (1,912) | 943 | (782) | 924 | (781) | 1,019 | (851) |
| post–employment benefits | 31/12/2022 | 1,779 | (1,483) | 1,737 | (1,477) | 1,936 | (1,625) | 799 | (664) | 780 | (661) | 869 | (727) |
The sensitivity analysis above has been determined based on a method that extrapolates the impact on
post-employment benefits obligation as a result of reasonable changes in key assumptions occurring
at the end of the reporting period.
Contributions are monitored on an annual basis and the current agreed contribution rate is 5%. The
next valuation is due to be completed as of 31 December 2024.
Group | Parent Company | EUR’000 | |||||||
Less than 1 year | From 1 to 5 years | Over 5 years | TOTAL | Less than 1 year | From 1 to 5 years | Over 5 years | TOTAL | ||
| Defined benefit obligation | 31/12/2023 | 2,831 | 3,209 | 12,200 | 18,240 | 1,896 | 1,394 | 5,275 | 8,565 |
31/12/2022 | 2,454 | 2,780 | 10,332 | 15,566 | 1,755 | 1,340 | 4,457 | 7,552 |
28. Deferred income
Expected contributions to post–employment benefit plan for the year ending 31 December 2023 is
EUR 4.9 million.
In 2023 the weighted average duration of the defined benefit obligation is 19.58 years (2022 –
19.94 years).
56
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Report
Group | Parent Company | EUR’000 | |||
| Notes | 31/12/2023 | 31/12/2022 | 31/12/2023 | 31/12/2022 | |
| I) Non-current deferred income | |||||
| a) contracts with customers | |||||
From connection fees | 6 | 137,838 | 132,381 | – | – |
Other deferred income | 668 | 735 | 668 | 735 | |
| b) operating lease | 138,506 | 133,116 | 668 | 735 | |
Other deferred income | 300 | 321 | 300 | 321 | |
| c) other | 300 | 321 | 300 | 321 | |
On grant for the installed electrical capacity of CHPPs | 89,470 | 113,460 | 89,470 | 113,460 | |
On financing from European Union funds | 22,702 | 7,329 | 4,456 | 1,973 | |
Other deferred income | 37 | 70 | 37 | 44 | |
112,209 | 120,859 | 93,963 | 115,477 | ||
TOTAL non-current deferred income | 251,015 | 254,296 | 94,931 | 116,533 | |
| II) Current deferred income | |||||
| a) contracts with customers | |||||
From connection fees | 6 | 16,510 | 15,386 | – | – |
Other deferred income | 4,794 | 13,944 | 67 | 13,714 | |
| b) operating lease | 21,304 | 29,330 | 67 | 13,714 | |
Other deferred income | 20 | 20 | 20 | 20 | |
| c) other | 20 | 20 | 20 | 20 | |
On grant for the installed electrical capacity of CHPPs | 23,990 | 23,990 | 23,990 | 23,990 | |
On financing from European Union funds | 963 | 891 | 142 | 142 | |
24,953 | 24,881 | 24,132 | 24,132 | ||
TOTAL current deferred income | 46,277 | 54,231 | 24,219 | 37,866 | |
TOTAL deferred income | 297,292 | 308,527 | 119,150 | 154,399 |
| Movement in deferred income (non-current and current part) | Group | Parent Company | EUR’000 | ||
| Notes | 2023 | 2022 | 2023 | 2022 | |
At the beginning of the year | 308,527 | 323,071 | 154,399 | 164,981 | |
Received connection fees for connection to distribution system | 6 | 23,015 | 11,840 | – | – |
Received deferred income (financing and other income) | 20,606 | 13,647 | 2,625 | 13,647 | |
Other deferred income credited to the Statement of Profit or Loss | (24,933) | (24,920) | (24,139) | (24,142) | |
Deferred income from contracts with customer and operating lease credited to the Statement of Profit or Loss | (29,923) | (15,111) | (13,735) | (87) | |
At the end of the year | 297,292 | 308,527 | 119,150 | 154,399 |
29. Related party transactions
57
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| a) Sales/purchases of goods, PPE and services to/from related parties | Group | Parent Company | EUR’000 | |||
2023 | 2022 | 2023 | 2022 | |||
| Other | Other | Subsidiaries | Other | Subsidiaries | Other | |
| related | related | related | related | |||
| parties* | parties* | parties* | parties* | |||
Sales of goods, PPE and services, finance income: | ||||||
- Sales of goods and services | 54,759 | 54,528 | 183,807 | 54,665 | 69,136 | 54,223 |
- Sales of property, plant and equipment | – | – | – | – | 27 | – |
- Lease of assets | 882 | 1,034 | 1,669 | 882 | 1,457 | 1,034 |
- Interest income | – | – | 15,757 | – | 9,353 | – |
TOTAL | 55,641 | 55,562 | 201,233 | 55,547 | 79,973 | 55,257 |
Purchases of goods, PPE, and services: | ||||||
- Purchases of goods and services | 122,209 | 123,151 | 149,371 | 39,274 | 268,123 | 50,380 |
- including gross expenses from transactions with Sadales tīkls AS recognised in net amount | – | – | 145,236 | – | 92,691 | – |
- Purchases of property, plant and equipment and construction services | 7,774 | 3,313 | 1,408 | 830 | 76 | 715 |
- Lease of assets | 1,049 | 1,114 | 150 | 669 | 168 | 788 |
TOTAL | 131,032 | 127,578 | 150,929 | 40,773 | 268,367 | 51,883 |
* Other related parties included transmission system operator – Augstsprieguma tīkls AS and its subsidiary Conexus Baltic Grid AS, Latvijas valsts meži AS, Pirmais Slēgtais Pensiju Fonds AS and other entities controlled by the management members of Latvenergo Group, if any | ||||||
Group | Parent Company | EUR’000 | |||
| Notes | 31/12/2023 | 31/12/2022 | 31/12/2023 | 31/12/2022 | |
| b) Receivables and payables at the end of the year | |||||
arising from sales/purchases of goods, PPE, and services:: | |||||
| Receivables from related parties: | |||||
- Subsidiaries | 18 a, b | – | – | 41,642 | 35,120 |
- Other related parties* | 15,506 | 17,245 | 15,172 | 16,810 | |
| - Loss allowances for expected credit loss from receivables | |||||
of subsidiaries | 18 a, b | – | – | (31) | (22) |
| - Loss allowances for expected credit loss from receivables | |||||
of other related parties* | (33) | (20) | (33) | (20) | |
Payables to related parties: | 26 | 15,473 | 17,225 | 56,750 | 51,888 |
- Subsidiaries | – | – | 15,214 | 22,369 | |
- Other related parties* | 14,864 | 12,511 | 6,176 | 5,439 | |
c) Accrued income raised from transactions with related parties: | 14,864 | 12,511 | 21,390 | 27,808 | |
- For goods sold / services provided for subsidiaries | 18 a, b | – | – | 11,425 | 2,483 |
- For interest received from subsidiaries | 18 a, b | – | – | 3,483 | 2,100 |
d) Accrued expenses raised from transactions with related parties: | 26 | – | – | 14,908 | 4,583 |
- For purchased goods / received services from subsidiaries | – | – | 3,321 | 31,191 | |
– | – | 3,321 | 31,191 | ||
* Other related parties included transmission system operator – Augstsprieguma tīkls AS and its subsidiary Conexus Baltic Grid AS, Latvijas valsts meži AS, Pirmais Slēgtais Pensiju Fonds AS and other entities controlled by the management members of Latvenergo Group, if any |
The Group and the Parent Company have not incurred write–offs of trade payables and receivables from
transactions with related parties, as all debts are recoverable.
Receivables and payables with related parties are current balances for services and goods. None of the
amounts at the end of the reporting year are secured.
Remuneration to the Latvenergo Group’s management includes remuneration to the members of
the Management Boards the Group entities, the Supervisory Board, and the Supervisory body (Audit
Committee) of the Parent Company. Remuneration to the Parent Company’s management includes
remuneration to the members of the Parent Company’s Management Board, the Supervisory Board, and
the Supervisory body (Audit Committee). Information disclosed in Note 9.
Dividend payments to Shareholder of the Parent Company and share capital contributions are disclosed
in Note 20 and Note 21 b, respectively.
Dividends received from subsidiaries are disclosed in Note 16.
58
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e) Loans to related parties
| Non-current and current loans to related parties | Group | Parent Company | EUR’000 | |
31/12/2023 | 31/12/2022 | 31/12/2023 | 31/12/2022 | |
| Non–current loans to subsidiaries | ||||
Sadales tīkls AS | – | – | 445,553 | 494,979 |
Elektrum Eesti OÜ | – | – | 6,960 | 7,260 |
Elektrum Lietuva, UAB | – | – | 10,888 | 8,535 |
Allowances for expected credit loss | – | – | (371) | (306) |
| Non-current loans to other related parties | ||||
UAB Geniva | 432 | – | – | – |
UAB Vėjo miestas | 431 | – | – | – |
TOTAL non–current loans | 863 | – | 463,030 | 510,468 |
| Current portion of non–current loans | ||||
Sadales tīkls AS | – | – | 105,839 | 95,312 |
Elektrum Eesti OÜ | – | – | 300 | 300 |
Elektrum Lietuva, UAB | – | – | 1,555 | 904 |
Allowances for expected credit loss | – | – | (85) | (57) |
| Current loans to subsidiaries | ||||
Sadales tīkls AS | – | – | 1,961 | 10,000 |
Elektrum Eesti OÜ | – | – | 18,965 | 41,700 |
Elektrum Lietuva, UAB | – | – | 3,731 | 54,746 |
Enerģijas publiskais tirgotājs SIA | – | – | 29,046 | – |
Allowances for expected credit loss | – | – | (44) | (65) |
TOTAL current loans | – | – | 161,268 | 202,840 |
TOTAL loans to related parties | 863 | – | 624,298 | 713,308 |
All current loans to related parties as of 31 December 2023 will be settled in 2024.
| Movement in loans issued to related parties | Group | Parent Company | EUR’000 | |
2023 | 2022 | 2023 | 2022 | |
At the beginning of the year | – | – | 713,308 | 706,378 |
Change in current loans in cash (net) | – | – | (68,272) | 225,482 |
| Change in current loans by non–cash offsetting of operating | ||||
receivables and payables (net) | – | – | 76,311 | (120,831) |
Issued non–current loans in cash | 863 | – | – | – |
Repaid non–current loans by non–cash offset | – | – | (96,977) | (97,746) |
Impairment for expected credit loss | – | – | (72) | 25 |
At the end of the year | 863 | – | 624,298 | 713,308 |
| incl. loan movement through bank account | ||||
Issued loans to subsidiaries | 863 | – | 719,798 | 921,687 |
Repaid loans issued to subsidiaries | – | – | (788,070) | (696,205) |
(Repaid) / issued loans, net | 863 | – | (68,272) | 225,482 |
| Interest received from related parties | Group | Parent Company | EUR’000 | |
2023 | 2022 | 2023 | 2022 | |
Interest received | 3 | – | 15,812 | 9,378 |
TOTAL interest paid | 3 | – | 15,812 | 9,378 |
I) Non–current loans, including current portion
| Concluded non–current loan agreements with Sadales tīkls AS | EUR’000 | ||||
| Agreement | Principal amount | Outstanding loan amount | Interest rate | Maturity date | |
| conclusion date | of the loan | 31/12/2023 | 31/12/2022 | 6 months EURIBOR + | |
29/09/2011 | 316,271 | 4,156 | 12,538 | floating rate | 01/09/2025 |
18/09/2013 | 42,686 | – | 4,269 | fixed rate | 10/08/2023 |
29/10/2014 | 90,000 | 10,000 | 20,000 | fixed rate | 10/09/2024 |
20/10/2015 | 90,000 | 20,000 | 30,000 | fixed rate | 21/10/2025 |
22/08/2016 | 60,000 | 20,000 | 26,667 | fixed rate | 22/08/2026 |
22/08/2016 | 50,000 | 20,000 | 25,000 | fixed rate | 14/06/2027 |
14/12/2018 | 260,000 | 147,750 | 175,811 | fixed rate | 31/01/2030 |
03/03/2020 | 200,000 | 154,136 | 177,067 | fixed rate + floating rate | 25/03/2030 |
| 6 months EURIBOR + | |||||
08/03/2022 | 175,000 | 175,350 | 118,939 | floating rate | 31/03/2032 |
| 6 months EURIBOR + | |||||
31/08/2023 | 175,000 | – | – | floating rate | 31/01/2034 |
TOTAL | 1,458,957 | 551,392 | 590,291 |
As of 31 December 2023, total outstanding amount of non–current loans with Sadales tīkls AS
amounted to EUR 551,392 thousand (31/12/2022: EUR 590,291 thousand), including current portion
of the loan repayable in 2023 – EUR 105,839 thousand (31/12/2022: EUR 95,312 thousand). As of
31 December 2023, 34.46% of non–current loans issued to Sadales tīkls AS (31/12/2022: 24.3%) was
bearing floating interest rate, which was influenced by 6 months EURIBOR interbank rate fluctuations.
During 2023 the effective average interest rate of non–current loans was 2.22% (2022: 1.42%).
59
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As of 31 December 2023, for non–current floating rate loans issued to Sadales tīkls AS 6-month
EURIBOR ranged from 4.000% to 4.125% (31/12/2022: 6M EURIBOR ranged from 1.763% to
2.726%). As of 31 December 2023, impairment for expected credit loss of non–current loans to
Sadales tīkls AS in the amount of EUR 441 thousand EUR (31/12/2022: EUR 354 thousand) was
recognised. Non–current loans are not secured with a pledge or otherwise.
| Non–current loans to Sadales tīkls AS by maturity | Parent Company | EUR’000 |
31/12/2023 | 31/12/2022 | |
| Non–current loan: | ||
- < 1 year (current portion) | 105,839 | 95,312 |
- 1 – 5 years | 326,443 | 334,109 |
- > 5 years | 119,110 | 160,870 |
551,392 | 590,291 |
| Concluded non–current loan agreements with Elektrum Eesti OÜ | EUR’000 | ||||
| Agreement | Principal amount | Outstanding loan amount | Interest rate | Maturity date | |
| conclusion date | of the loan | 31/12/2023 | 31/12/2022 | ||
| 6 months EURIBOR + | |||||
25/08/2021 | 7,860 | 7,260 | 7,560 | fixed rate | 24/08/2031 |
As of 31 December 2023, total outstanding amount of non–current loans with Elektrum Eesti OÜ
amounted to EUR 7,260 thousand (31/12/2022: EUR 7,560 thousand), including current portion of the
loan repayable in 2023 – EUR 300 thousand (31/12/2022: EUR 300 thousand). The annual interest rate
according to the loan agreement is 6 (six) months EURIBOR (Euro Interbank Offer Rate) plus margin
0.74% (2022: 0.74%). If the Base rate is negative, it is equal to zero. The final repayment date of the
loan is 24 August 2031.
| Non–current loans to Elektrum Eesti OÜ by maturity | Parent Company | EUR’000 |
31/12/2023 | 31/12/2022 | |
| Non–current loan: | ||
- < 1 year (current portion) | 300 | 300 |
- 1 – 5 years | 600 | 900 |
- > 5 years | 6,360 | 6,360 |
7,260 | 7,560 |
| Concluded non–current loan agreements with Elektrum Lietuva, UAB | EUR’000 | ||||
| Agreement | Principal amount | Outstanding loan amount | Interest rate | Maturity date | |
| conclusion date | of the loan | 31/12/2023 | 31/12/2022 | ||
| 6 months EURIBOR + | |||||
31/10/2021 | 22,280 | 12,443 | 9,439 | fixed rate | 29/09/2031 |
As of 31 December 2023, total outstanding amount of non–current loans with Elektrum Lietuva, UAB
amounted to EUR 12,443 thousand (31/12/2022: EUR 9,439 thousand), including current portion
of the loan repayable in 2023 – EUR 1,555 thousand (31/12/2022: EUR 904 thousand). The annual
interest rate according to the loan agreement is 6 (six) months EURIBOR (Euro Interbank Offer Rate)
plus margin 0.68% (2022: 0.68%). If the Base rate is negative, it is equal to zero. The final repayment
date of the loan is 29 September 2031.
| Non–current loans to Elektrum Lietuva, UAB by maturity | Parent Company | EUR’000 |
31/12/2023 | 31/12/2022 | |
| Non–current loan: | ||
- < 1 year (current portion) | 1,555 | 904 |
- 1 – 5 years | 6,222 | 4,340 |
- > 5 years | 4,666 | 4,195 |
12,443 | 9,439 |
II) Current loans / borrowings
To ensure efficiency and centralised management of Latvenergo Group companies’ financial resources
and using the functionality of Group accounts and possibility for non–cash offsetting of mutual invoices
between the parties, current loans / borrowings are provided. In the reporting period Latvenergo AS
issued loans to subsidiaries in accordance with mutually concluded agreement ‘On provision of
mutual financial resources’, allowing the subsidiaries to borrow and to repay the loan according to
daily operating needs and including non-cash offsetting of operating receivables and payables.
In 2023 the effective average interest rate was 3.70% (2022: 0.74%). Within the framework of the
agreement, as of 31 December 2023, Parent Company issued loans to subsidiaries in the amount
of EUR 53,703 (31/12/2022: EUR 106,446 thousand), as of 31 December 2023 Latvenergo AS
had no current borrowings from subsidiaries (31/12/2022: there was current borrowing from
Enerģijas publiskais tirgotājs SIA in the amount of EUR 3,317 thousand).
As of 31 December 2023 impairment for expected credit loss of current loans to related parties is
recognised in the amount of EUR 44 thousand (31/12/2022: EUR 65 thousand).
f) Interest paid to related parties
Financial transactions between related parties have been carried out by using current loans / borrowings
with a target to manage Latvenergo Group companies’ financial resources effectively and centrally,
using Group accounts. In the reporting period Latvenergo AS has received borrowings from subsidiaries
in accordance with mutually concluded agreement “On provision of mutual financial resources”. In 2023
the effective average interest rate was 3.70% (2022: 0.74%).
| Parent Company | EUR’000 | |
2023 | 2022 | |
Interest paid | 12 | 18 |
TOTAL interest paid | 12 | 18 |
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About Latvenergo Group
Corporate Governance
Operating Segments
Sustainability Indicators
Annexes to
the Sustainability Report
Annual Report
– Key Figures
– Management Report
– Financial Statements
Statement of Profit or Loss
Statement of Comprehensive Income
Statement of Financial Position
Statement of Changes in Equity
Statement of Cash Flows
Notes to the Financial Statements
– Independent Auditors’
Report
31. Events after the reporting year
After the end of the reporting year, at the beginning of 2024, Renewable energy generation capacity
portfolio of Latvenergo AS has been expanded by seven solar power plant projects in Latvia, with a
total capacity of 40 MW and which are planned to be built by the end of the year 2024. Also has been
starter the development of a new wind station project in Lithuania, Akmenes district, with a capacity of
up to 15 MW. The project is planned to be completed in the second half of the year 2025.
Latvijas valsts meži AS was permitted to terminate its participation in Latvijas vēja parki SIA, the joint
venture of Latvijas valsts meži AS and Latvenergo AS, by alienating all shares (20%) of Latvijas vēja
parki SIA owned by Latvijas valsts meži AS for the benefit of Latvenergo AS.
There have been no other significant events after the end of the reporting year that might have a
material effect on the Latvenergo Consolidated and Latvenergo AS Annual Financial Statements for the
year ending 31 December 2023.
This document is signed with a secure digital signature and contains a time stamp
Mārtiņš Čakste Guntars Baļčūns
Chairman of the Management Board of Latvenergo AS Member of the Management Board of Latvenergo AS
Liāna Ķeldere
Accounting director of Latvenergo AS
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