2021–2024 Strategic Plan of AB “Ignitis grupė” group of companies has been approved
On 25 February 2021 the Supervisory Board of AB “Ignitis grupė” (hereinafter – the Company) approved the Strategic Plan for 2021–2024 (hereinafter – Strategic plan) of the Company’s group of companies (hereinafter – the Group), which establishes the Group’s ambition to focus mainly on the Green Generation investments and Network modernisation and digitisation in the following years. The Strategic Plan describes the implementation of priorities and directions of the updated long-term strategy of the Group, which was announced in June 2020, for the period of 2021–2024.
- It is estimated that the Group’s adjusted EBITDA in 2024 will reach EUR 350–390m. Average annual EBITDA growth during 2020–2024 is estimated to be 4.7–7.5% – it will be mostly affected by growth in Green Generation segment
- The Group over the period of 2021–2024 is planning to invest EUR 1.7–2.0bn
- EUR 0.8–1.0bn of investments will be directed towards Green Generation segment, in order to increase the installed green generation capacity to 1.8–2.0 GW by 2024
- Investments into network digitisation and service quality and increasing network efficiency and resilience over 2021–2024 will reach EUR 0.8–0.9bn
- The Company is committed to its shareholders to ensure at least 3% annual increase in dividends
- Over the period of 2021–2024 net debt and adjusted EBITDA ratio is expected to be less than four times, the investment-grade BBB+ rating will also be maintained
- The Group has integrated the environmental, social, and corporate governance (ESG) principles in its objectives
Objectives promoting sustainable growth
The Group is planning to invest EUR 1.7–2.0 billion over the period of 2021–2024 in green generation development projects, new customer connections, modernisation and upgrades in the electricity distribution network and smart metering programme. 85–95% of the investments are directed towards the implementation of projects which are directly or indirectly related to the United Nations Sustainable Development Goals (SDGs).
45–50% or EUR 0.8–1.0 billion of investments will be directed towards the Green generation segment – this will allow to increase the installed green generation capacity to 1.8–2.0 GW by 2024. The current Group’s total installed capacity reaches 1.1 GW.
The Strategic Plan also established an aim to ensure the digitisation of networks as well as to increase the service quality, network efficiency and resilience, which will condition the energy transition. The investments into the Network segment will reach EUR 0.8–0.9 billion or 45–50% of total planned investments by the Group in 2021–2024.
By the end of 2023, we aim to install smart meters for all business customers and households consuming more than 1,000 kWh of electricity per year. It is estimated that by 2024 there will be 1.2–1.3 million smart meters deployed. Investments in Network segment will be directed towards replacing overhead electricity distribution lines with underground cables, facilitating grid connections and empowering prosumers. Investments in service quality and network efficiency will boost the network resilience, resulting in an expected decline of the SAIFI indicator in 2024 by 3–13%, compared to 2020.
The remaining up to 5% share of investments will be directed towards the segments of Flexible generation and Customers & solutions. Flexible generation segment will aim to maintain the current installed capacity of 1,1 GW by 2024 and remain the leader in the ancillary services market in Lithuania as well as contribute towards the synchronisation with the electricity network system of Continental Europe.
Customers & solutions segment aims to develop energy supply services in Polish and Finnish markets, increase innovative energy product sales, increase annual retail sales volumes of electricity as well as utilise synergies with the Green generation segment. The compound annual growth rate (CAGR) of electricity and gas retail sales volumes is estimated to reach 2.6% by 2024.
Commitment to sustainability
Ignitis Group also includes the aspects of environmental, social responsibility and corporate governance principles in the business goals provided in the Strategic Plan. Set goals and target indicators include a broad spectrum of topics and actions – from one’s with which the Group aims to contribute to reducing the climate change to one’s increasing the sustainability of supply chain, ensuring employee health and safety, increasing engagement and diversity.
By working towards these objectives the Group aims to get closer to the companies leading in sustainability globally, therefore, it will compare itself according to the assessment results measured by the leading international rating agencies Sustainalytics and MSCI, which evaluate ESG-related risks and their management. At the same time, Ignitis Group is working to remain the leading example in the region and a leader in Good Corporate Governance Index compiled by the Governance Coordination Centre.
Financial discipline and shareholder return
Updated Strategic plan establishes aim to maintain strong financials. We estimate that the adjusted EBITDA in 2024 will reach EUR 350–390 million. Average annual EBITDA growth during 2020–2024 is estimated to be 4.7–7.5%, which will be mostly affected by growth in Green generation segment. Return on capital employed (ROCE) over the period of 2021–2024 will reach 5.5–6.5%.
Ignitis Group also plans to maintain solid investment-grade BBB+ rating over the period of 2021–2024. The net debt and adjusted EBITDA ratio will not exceed four times.
The Company is committed to its shareholders to ensure at least 3% annual increase in dividends starting with the proposed dividends of EUR 85 million for the financial year 2020. The minimum dividend per share (DPS) in 2024 should be equal to or greater than 1.29.
It must be noted that the strategic objectives of the Group are aligned with the United Nations Sustainable Development Goals, the Group is committed to become net CO2 neutral by 2050. Activities provided in the Strategic plan also contribute to the targets of National Energy Independence Strategy.
Objectives of executive long-term incentive programme
The executive long-term incentive programme was approved in accordance with good practices of linking long-term goals of listed companies with executive incentives in order to increase loyalty, pursuit of long-term sustainable results, motivation to increase the share value growth. It must be noted that the long-term goals set in the incentive programme for the executives who are eligible for the incentive programme are linked to the objectives set out in the Strategic plan of the Group.
Currently the Supervisory Board has already approved the long-term goals of the incentive programme for 2023. The approval of goals for 2024 is in the agenda of the next meeting of the Supervisory Board. The Company will inform about it in a separate notice. All relevant information about the Group Remuneration Policy and the annual and simultaneously set long-term goals is available on the website of the Company (link).
Note: The provided activity projections of the Company and the Group (including future projects, development opportunities, alternatives) cannot be considered as final decisions or commitments to invest, conclude contracts or perform other actions. Information about specific decisions, if they must be disclosed publicly, will be disclosed in accordance with the requirements of legal acts regulating the disclosure of such information as well as will be provided by ensuring provision of required, sufficient and detailed information and implementation of principles of transparency.
Group’s 4-year Strategic plan is published every year.
The Company has published the Strategic Plan 2021–2024 and previous strategic plans on its website https://ignitisgrupe.lt/en/strategy
For additional information please contact:
+370 620 76076
+370 643 14925