Good morning, dear listeners. Welcome to KN Energies Investor Relations Conference. I'm Emilia from Nasdaq Vilnius, and I'll be moderating today's event. We will start with the presentation from the management, which will be followed by the Q&A session. Please be informed that this webinar is being recorded and will be available on the Nasdaq Baltic YouTube channel. I encourage everyone to submit questions in the Q&A section at the bottom of the screen. You can submit them either anonymously or with your name. With that said, I am pleased to introduce today's presenter, Tomas Tumėnas. Please, the floor is yours.
Hello, everyone. Good morning. It's nice to see the participants and, looking forward for the tomorrow's celebration that we will have, and maybe longer weekend. I'm happy to present the 6 months results of KN Energies. Let's start. I will make a short introduction how we'll present. We would like to show some highlights on the development of the energy sector, energy segment in Baltics, as well as in the world. To touch main key things that's happening. Also, to touch upon the key components, I would say, of macro environment that directly and indirectly affects the company's performance.
Then I will give a very short summary overview of the business segments, how we are performing, how we performed within the last six months, and as well as some facts about our financial results, and we'll be happy to answer your questions. So let's start. Let's start from the main key KPIs, I would say, our main highlights that I would like to point out. So if we start from the bottom of profit loss statement, as usual, so we're taking and talking about the revenues. The first six months revenues of the company reach around EUR 43 million, and actually, we are slightly above the last year. And very important to note that almost EUR 20 million of revenues came from our commercial activities.
And this is a really good achievement because the commercial activities are very important for the company's development. And looking forward in the next forthcoming years, looking into our strategy, long-term strategy, the development of commercial activities, I would see are one of the key for the company's success, driving forces, for the revenues increase and for the profitability. So commercial activities grew by almost 13% versus the last year, and almost by 10% versus the budget. If we take a regulated business activity, which accounts approximately to 47... 50, sorry, 57% of the revenues, it's the biggest so far business segment, LNGT, the revenues remained almost stable, being precisely slightly less than the last year.
One of the key reasons are those that our independence, our Indie, our vessel, which you see on the screen, has been in the dry dock, and I will touch more in more details in following slides. From revenues point of view, company was I would say on the stable level, but taking into account growing commercial activities, this should be regarded as successful factor. The company's EBITDA grew 30% versus the last year, and we reached around EUR 22 million in revenues, in EBITDA amount. The biggest part of the EBITDA, more than approximately up to 60%, came from regulated business activity, and specifically 57%, and from commercial activity, 43%.
If we compare commercial activities contribution to EBITDA, it grew from 40% that we had last year to 43%. So this is, again, growth in commercial activities. Revenues directly affects company's profitability and EBITDA ratio. And looking forward, of course, our aim, long-term goal is to increase the share of commercial activities into EBITDA. As of current, from 43% to reach definitely 50% and even higher, up to 60% in the long term. Because, as I said, this is the key drivers for the company's long-term strategy and its success. Net profit, adjusted net profit, please be reminded that adjusted net profit excludes impact of foreign exchange into our profit loss statement. Because we will be able to acquire, by the end of this year, the FSRU, and our acquisition price is nominated in U.S. dollars.
Therefore, fluctuation exchange of exchange rate, euro versus dollars, has direct effect on the profit loss statement. So if we exclude that, Forex impact, which was in the first half, amounted to 5.7 million of loss in Forex, adjusted net profit was EUR 6.3 million. And as you see, it's almost EUR 2 million above of the last year. So basically, about a brief intro regarding our, let's say, financial performance. If we took on the business side, the first half of the year was really successful, especially for commercial activities. First of all, as you know, we already issued the notice via the stock exchange. We won four contracts of floating LNG terminals in Germany out of five.
So, KN Energy has secured long-term contracts with the Deutsche Energy Terminal GmbH, state-owned company, DET, that's as we're calling. So we have 4 agreements for long-term contracts on operating 4 floating terminals in Germany. Plus, on top, we won also technical contract of one out of the 4 terminals. So this is really good and big achievement, and it shows big efforts and big, let's say, professionalism of the KN Energy team. And that's it. It's really that we could. We are proud, and proud not only as a company, but I would say proud as a country as well, because we are selling, we're exporting our greens and our expertise abroad.
So, we managed to put into our export markets, our commercial activities, our global business, not only Brazil, as you know. We already have Brazil for more than 1.5 year in our portfolio, so we added Germany as well. Looking forward, German market is very important. It's one of the biggest, of course, markets in LNG business in Europe. Definitely, it's the biggest economy of Europe, Germany is. So our presence is really, really, a very big one, very beneficial for the company, and looking. And we are really wanna to expand beyond of our current, let's say, obligations, and it's only the start. So we see that market and opportunities for the further growth, very, let's say, prosperous, and this is where we will focus in the next five years.
The last news is that the company established a daughter company. It will be called KN Energies Deutschland, KN Energy Deutschland, which will operate those terminals. Also, on new energy business segment, we have small business segment created very recently, new energies. Here, we are focused mainly on carbon capture activities, and important news is that Lithuania has been granted common interest, let's say, status of carbon capture business activities, which KN Energy leads. And we are like front runners for having that consortium, and also, this is only the start for a new energy business, for a particular carbon capture activity.
As well, I would say the path is quite long in the future, and also we have big ambitions here to expand the business. And nearest future will show us, and of course, we will announce that to the public how we're succeeding. On regulated business, also we had important things. Our Indie, our vessel, this is how we're calling, has been in, let's say, in dry dock, in the beauty salon. And the vessel spent 1.5 months, and we, you know, renovated that, refurbished that. So, it's already in Klaipėda.
It came back home to the Klaipėda port, Klaipėda Harbor, and we are ready to, you know, for the acquisition of the vessel, which will happen at the end of this year, in particular, in, on the sixth of December. Also, the recent news is that the regulator increased the WACC, which we had, which we have at the moment, from 5% - 6.5%. That will give us additional revenues, additional income into our, let's say, regulated business portfolio, and that also is very important for the company's, profitability and the cash flow. So small, small update on the, on the global market. Basically, we are watching from business perspective, also from financial perspective, on several things, because they are very important for us. And we exclude three of them.
One is the exchange rate, dollar versus euro, and then, of course, this is the natural gas price and, carbon permit prices. Because all these three components directly and indirectly affect the company's performance. And I will make small comment how it look like, how it affects on the performance. So as you see, let's say from the foreign exchange fluctuation, it was quite big, and somebody, someone who is also interested in the foreign markets and, you know, tracing the exchange rate fluctuations, they are very, very volatile. And as I said, we will need to acquire our vessel, and it is nominated in U.S. dollars.
So for us, the exchange rate fluctuation is very important because we will buy in euros, and our loan, which is secured by Lithuanian government, and it's already agreed with the Northern Investment Bank, also is nominated in euro, and we have a cap—our cap is EUR 138 million, and the price of the vessel is $ 153.5 million . So definitely, fluctuation affects in one or another way. And for example, if we have a ratio, we have 1.6. So like our direct loss could be at that exchange rate around EUR 6 million. And if we take the last one in the graph, 1.7, it's almost EUR 4 million. And if we take today's rate, it's only EUR 1 million. What it means?
It means, as I said, directing back on our profit and loss statement and also directing back on our cash flow, because what is above EUR 134 million, EUR 138 million, we will need to give from our, from our, let's say, coffers, from our pockets. Therefore, we're watching carefully the exchange rate, and we are in negotiations with the energy regulator, and hope after when the law in Parliament this summer has been passed, allowing us to hedge and to include the results of the hedge into, hopefully into regulated asset base, which we will need to agree and to have the final verdict for the national regulator.
This is our aim, and our aim is for, of course, is to secure, is to secure the exchange rate as best as possible in the market, and to pass on to our end of, end of consumers, the best rate that we could obtain in the market. This is very important. And the gas itself, of course, fluctuation is, is not so... It's quite steep, but maybe it's not, it's not, everyday big fluctuation. It impacts our variable costs, and, KN Energies usually, hedges the gas at the beginning of the season. So here we are more or less secured.
But as you see, in the recent trends, the gas price in the market grows, because of the many reasons and the foreign, and the future shows also increased trend for the gas prices, especially in forthcoming autumn and winter. Carbon permits, as we operate the business, which is, let's say, makes pollution, and we need to buy the permits, and it impacts also our performance quite a lot. So we are hedging in that sense that we are looking on the prices of the permits and trying to find the best one time for the entering into the hedge. Not exactly hedge, but buying the permits and securing, because we have certain quantity which we need during the year, over the year to purchase.
So currently, our average price of the acquisition is 68 EUR per carbon permit, and it's much more better than we had last year. And after that action, especially if we compare to the prices which we paid last year and we paid, and we had in our budget, we are saving 0.6 million EUR. So this is very as well important, as the total costs of the permit accounts to almost 5% of our total costs of the group. So actually, small... Basically, I touched upon the development of the energy, especially gas, worldwide situation.
And here the graph shows the, you know, the differences of the price trends for the gas in the different markets and major events. This is just for information for you and for investors, which would be keen on knowing. I'll be happy to answer later on or separately. But as you see, our environment is quite, it's quite, in which we operate, is really fluctuated. It's very, let's say, vulnerable, I would say, and all energy sector operates under, you know, under quite vulnerable market conditions. And every day it needs to adopt and to make appropriate decisions in order to secure the profits and to mitigate the risks. So if we... Here we can start very briefly upon our business segment.
So regulated activity, I already mentioned, in terms of the revenues we have, we are quite flat, slightly below in, on the revenue level of the last year, because of the simply simple factor that our vessel was in the dry dock, which I mentioned, and we has not been operating it almost 1.5 months. Therefore, definitely the volumes of regasification declined versus the last year, and it was definitely expected into the budget, and this is nothing new, but simply explaining the overall situation. This is one of the reasons. But so far, we managed to unload 30 ships and unload almost 800 billion cubic meters of natural gas. And as you see, it's below of the last year because already mentioned reason.
Important to notice, to send a message that as I already mentioned again, the vessel is ready for the acquisition. Everything is checked. It's operated well. So we will acquire in a very good condition a good vessel, and we are happy about that, and prepared for this very important strategic, I would say, strategic move for the whole energy sector, and then KN Energy will be the operator owner, ultimate owner of our Indi. And Indi, as you know, is really, really good example how many years ago was made very profound looking forward decisions to secure our energy sector, and also not only to secure but allowing us to export our brains, our expertise in the foreign markets. Liquid energy.
Liquid energy market, as you see, we take a short, I mean, brief look from the market situation. So, in the Baltic Sea ports, meaning Estonia, Latvia, and Lithuania, this year, first half of this year, still we are declining in the volumes of the liquid energy products transshipped via all ports. But despite of that, KN Energy volumes are very close to the last year, so our decline is less than the total decline of the ports. Again, here, as you see, the Klaipėda port, I would say, performed comparing with other Baltic ports in total, better. Of course, it's anyway, declining by 6.5% in the volumes, but it's much less than as you see in our neighboring ports.
KN Energy loading of liquid energy, liquid energy products are less in terms of the... in, are less, I mean, we are declined less than total market. So this is again, it's like a signal that we are managing better or performing better than the total business environment at the moment. If, let's say, you give some figures, if our transshipment of oil products declined by 3.3% versus the last year in terms of the quantity, we transshipped 1.9 million tons of liquid energy this year, versus 1.95 million tons of the last year.
The volumes, volume-wise, we sold volume-wise, I mean, not volume-wise, but on the revenue level, the sales of the liquid energy reached EUR 14.6 million, and this is almost 3% above versus the last year. So the quantities declined, but the revenues increased. And the main reason is that we managed to negotiate with our clients on better terms of service, that service fee, simply speaking. So this is also very important and shows company's abilities, you know, to adapt to the market. Despite of the declining the trend on the transshipped volumes, we managed to increase the service fee, and therefore, on revenue, revenue level, we are not declining.
Actually, actually, I mentioned almost everything that I wanted to say about liquid energy, but here maybe a couple points is that very interesting products we are managing, we are transshipping, like bitumen products, like biofuels products, and we are calling them light oil products. And the tendency for light oil products versus the traditional ones, dark oil products, over the past couple years increasing. So that tendency will prevail in the next years as well, and the company sees that, and the company also prepares for, for this because we, we need to have a certain different capacities and abilities and equipments while transship, transshipping light oil products. And we are considering one of, one...
We have many, let's say, plans for our investments in the next 3-5 years, and one of the directions will be strengthening the reloading capacities at Klaipėda port, our port, of bitumen and light oil, light oil products. One of the directions of our investments will go into that area because we see the market trend and the growing trend for, and the demand, growing demand for those products in the future. We came to a very interesting part, commercial LNG, and here basically is everything, is everything that is beyond Lithuania. I'm very happy, as I mentioned, that we managed successfully to enter into the German market. Of course, that happened not within one day. It was long-lasting efforts and performances, our team.
Finally, we managed to enter into the market, adding Germany on top to the, let's say, Brazil activities. This is not, of course, the last things. So we really hope in the next couple years to expand abroad in other different countries as well, because we have already the track record, and this is really important for the KN Energy. And again, I'm very proud that this is also is export of Lithuania as well as, as a, as a export for LNG business in the worldwide markets. And KN Energy are very known already as a company operating LNG business, knowing how to operate and a lot of our clients looking forward, you know, to cooperate with us. So here also definitely shows all data for Šintava results.
From commercial energy sales, we had, for the six months, EUR 4.3 million, and this is almost 1.18 times higher than we had last year. And, definitely the future, I would say it's bright here, and, it doesn't mean that, we don't have any challenges or things to overcome, but, we have very solid ground for going further. And export activities, not only for KN Energies and for the, for the energy sector, but I would say for the whole Lithuania, the, the company's economy is strong, as much as it could have strong presence in foreign countries and, and have the capacities for export, especially taking into account our current political environment. So we are, we are very proud of that, and I see good prospects of the commercial activities.
We are preparing for the business and for continuation of the business. As I said, it's only a start of the long journey. New energy is very, very small business segment. At the moment, we don't have sales here. We have only small costs related to the long-term projects, and one of them is Carbon Capture project, which already I mentioned at the beginning of my presentation, and it's really interesting one. It's very, I would say, up-to-date to what is happening in the energy markets. I'm happy that, again, that we are at the beginning of that journey as well.
We are trying to use all opportunities what is, what is going on at the moment, and, KN Energies is, is, is one or to be the, like, pioneer here from the Lithuanian perspective, from the Baltic perspective. And if a real opportunity, real business cases will appear, I hope that we'll be the first ones which could use that business cases and, you know, make it alive and, profitable for the, for the businesses. Therefore, we are, we already made a consortium of, several companies in, in that direction, and we will start, step-by-step investigation, deep investigation of that business case, let's call it.
All our investments, a part of our company's investments will be directed into that activities, which we hope could, in an optimistic case, be very profitable and successful, and also upfront runner in the whole European Carbon Capture market. Sustainability worth to mention, because it's really important for the KN Energies, and used to be always. I'm happy that the company won a badge from Nasdaq of sustainability index 9.6. It's very high rank, I would say, and we are happy that again, we are one of the upfront runners for sustainability business project, how to call it? Transparency things, because stakeholders, our shareholder, our board puts a lot of attention into this area.
As the whole energy sector, it needs to, you know, to adapt, to rechange, reshape its activities, so we are not an exception. And here, KN Energies is doing the good things, good investments, and strong background for, you know, being a carbon capture free till 2050. It's long journey, but, but it already shows that we're in a good track. So I'm very happy about that. Financial results, actually, everything I mentioned, basically, mentioned the revenues, the drivers for the revenues, EBITDA, EBITDA drivers, net profit, as you see, we had EUR 1.5, but again, excluding the impact of... So basically, the six months are successful, for the company's operations.
Then the second half, I hope will be nevertheless, even maybe the better, not to give concrete forecasts, but I hope that, this year, as whole year for the company's activities, will be, really good one, and, allows us, you know, to have everything in our pockets in order to prepare for our strategic implementation, till 2030 and beyond. If we take some metrics on our profitability ratios, maybe I will even just skip those. They are the facts. They are more or less reflects the average industry level in energy sector, because we are operating in capital-intensive business environment, in the business environment, with heavy investments into the assets. And, some information on our indebtedness, on our leverage ratios. Our total loans, amounts, as you see, around, EUR 30 million.
After acquisition of the vessel, as I said, that will happen at the beginning of December. Financial loans will reach around EUR 320 million. On one hand, it's quite big amount, but on the other hand, it's secured by the government and if we recalculate the net debt to EBITDA level, we have quite high, but as I said, we have the government guarantees for that. Also we're carrying some positions in our cash, which we have together with deposits more than EUR 60 million, and all our deposits are definitely invested into the, let's say, liquid instruments, basically a high-ranking deposit instruments. And they are, of course, earning money, not delaying free.
And looking from a very important debt service coverage ratio, which shows capacity, company's capacity, capacity to serve the loans, we have it quite high, reaching almost 5 x. It's really quite high, as you know, especially financial analyst, the normal one is around 1.5 x, maximum 2 x, because our loans are long-term in nature. They are lasting till 2044.
But again, looking forward, taking into account our appetite for investments, of course, the company will go into the market for commercial loans in the nearest future, because we have investment projects, as I said, which we need to implement, and we are, as normal business, need to, you know, to leverage our cash flow situation and to invest not only shareholders' money, but of course, to use the lending facilities and for the projects, for different projects, for business maintenance projects, as well as for the projects which are profit-oriented, which will give additional profit for the whole KN operations and strengthen group's financial view and financial capacities in the nearest future.
So, this is my presentation, information about the KN performance, about the market things, and I'm very happy to answer your questions if you will have those.
Thank you for your presentation. We will now proceed with the questions. Before that, I would like to remind everyone, you can submit your questions in the Q&A section at the bottom of the screen. The first question we received was regarding the dividend policy. Are you planning to update the policy?
Yes, we will update that policy, and we will update afterwards when we will have final, let's say, let's call it final conditions approved by the ministries, by our shareholder. Let's put it this way, because we need to be here very clear, very transparent, definitely, and as the shareholder, the final shareholder will make a decision, concrete decisions, we will update those. But as you know, we already paid for the last year, the dividends, you know, the amount of the dividends the market knows, so it most likely would be in that direction.
Thank you. The technologies and demand from the market are changing very rapidly. Are you planning your strategy plan 2023-2050 update in the near future?
Strategy plan, we are, we have a, like, confirmed strategy, and, every company, I would say, not even exception, KN Energy usually once per year updates the strategy because of, the reasons, again, what you mentioned. So we are in, we're already updating that, let's say, and basically, we are in the line with the long-term strategy. But of course, some minor changes might happen, and we will, make, those announcements as soon as we will be ready to do that. But basically, we're in the same direction, and nothing, dramatically is a different one, absolutely materially not. But, it also confirms us that, you know, we're on the right track.
Since we once per year update, and it's needed because the market changes, and if material changes in strategy will appear, of course, we will, you know, update the strategy, and we will announce that in our website, which is at the moment posted. Yes.
Thank you. The company now generates around EUR 40 million of operating cash flow. How will it change when the FSRU will be bought out, and the new RAB and WACC figures will come into power?
Basically, I would comment in this way, that we will have a positive effect versus current situation. I would not say that it will be materially different, no materially big change, but it will be, of course, on positive side. This is my comment in brief.
Thank you. Will there be significant changes after December 2024 in EBITDA in each business line, regulated LNG, liquid terminals, commercial, and LNG for the upcoming years?
If we take a regulated business, you know... As we, as KN Energies, we are not announcing publicly our forecasts. And, of course, I'm very cautious about giving these hints, especially what relates to the things that it's beyond 2024. I would say, if we take the second half of this year, the directions which I already described, what happened during the first half... it should remain, so directions, the trends should be the same. So you can make your own decisions and what it will be beyond.
As I said, our aim is really to try to increase the revenues, definitely the revenues and EBITDA from commercial activities, to increase the share of commercial activities, of the share contribution share to EBITDA and to the revenue side, and that's obvious. So I don't want to give you any concrete like things directions, but this is the goal, let's say, of the management, the division, and as well, this is in our strategy. So I hope that the things that we're doing at the moment lays strong background for that direction.
Thank you. And what are your RAB and WACC projections for the year 2026 and further? And do you see this current high WACC level sustainable?
Every year, every year the company, usually, it's a usual procedure, it's a normal procedure, have negotiations with regulator regarding asset base. And, and of course, the aim of the company, you know, of course, to have the highest, much as possible. But from another hand, it's again an interesting topic because this is the WACC, it's you know, the price which company receive. Eventually, it comes from the end consumers, indirectly from the end consumer. So we again understand the situation. We need to be, as a company, how to say... Theoretically, we would like to have as big as that's possible, but in reality, the directions of the company is directed into the efficiency, let's say, because it's our aim.
We need to operate as efficient as possible and to, let's say, to have as, less cost base on regulated activities because of the, of the reasons, why we are created and, why we need to operate. We need to pass as less as possible cost to than the consumer. So here it's like not, not a thing that, you know, it's not a thing that it's commercial, 100%. It's also the thing of, efficient operation of the company because we have that, on our shoulders, and this is our one of the missions, let's say. But, but of course, the cost increases, and we need to operate the regulated asset base, the vessel. We need to secure operations.
We need to be ahead of the many things, and also we need to invest. We need to have the newest possible and also IT solutions in various activities, and that also into regulated business, because this is the market again. Otherwise, you can't sleep on and do nothing in simplified version. So, the WACC, we will see. It's not like, you know, to give long-term indication that we will have 6% WACC or 7% WACC, but I would say this is a direction where it's could be sustainable from 5.5% - 6%. It's more on sustainable level.
Thank you. The next question is: Can you disclose the approximate price of the FSRU sale purchase deal, and what will be the sources of financing?
So the price is $153.5 million. This is that we need for what we need to buy. This is the last piece of our lease, let's say, lease payment. And we had secured the loan, as I mentioned, and our floor of the loan is 138.4 million EUR.
Thank you. Question about the CEO: Why was it decided to search for a new CEO, and what stage is the process at right now?
So, as we are state-owned company and we are transparent company, and the shareholder also is the Lithuanian Ministry of Energy. And it's a normal, logical procedure once per 4 years, if I'm not mistaken. I'm sorry, you know, to see and to look for to make that procedure for renewing the position of CEO. And only what I can comment that our current CEO also participates in that process, let's say. And we hope that maybe even this month we will know the outcome of that procedure, let's say, of the decision of the shareholder.
Thank you. And the final question is: How big is the business of commercial LNG, and how are the projects in Germany going?
So, as I mentioned, currently, commercial business accounts, if we take six months actual results, 43% of total sales, and, sorry, 47% of total sales and 43% of EBITDA, contribution to EBITDA. And, so this is the thing, what we had last year as an example, the contribution to EBITDA of commercial activities accounted to 40%, today is 43%. Not maybe big change, but still an upward trend. And as I mentioned, again, looking forward, we really would like to increase that contribution percentage from current 43% - 50% and even beyond. One thing, the German activities are, you know, right now, as we won the contracts, right now we are in the process of simply starting the day-to-day business operations. What it means?
It means that right now we are in process of selecting people. We are actually buying the company based in Germany, and this is the most efficient solution which will operate those terminals. And we will have in our, in a group of a group of the companies, another one, KN Deutschland, Germany company, operated in the Germany, based in the Germany. So everything is in, I would say, according to the plan, and we are starting real business right now, looking for the people, looking for the staff, and already getting first income from our contracts. So it's the real business starts right now, and we have a lot of things to do in the nearest future.
But we are secured from terms of the revenue intake, everything, and so day-to-day business, of course, it's very important to show us, to show to our partners that we are, you know, successfully managing the business and are fulfilling our obligations that we have. What we are doing at the moment with Brazil, so we are operating very successfully and managing the business and managing the risk also successfully. And this is really, really important.
Thank you. It looks like we've covered all the questions so far. If you would like to send in a question, please do so now. So as all questions have been answered, on behalf of KN Energies and Nasdaq Vilnius, thank you, everyone. It was a pleasure being with you today. The recording of the presentation will be available on the Nasdaq Baltic YouTube channel, and thank you for a very informative conference.
Thank you. Thank you, all of you. So have a good longer weekend. Goodbye.