Annual report 2021: twofold Green Generation increase, recognition of ESG excellence
AB “Ignitis grupė” (hereinafter – the Group) publishes its Annual report 2021, which is attached to this notice, and announces that the Group’s Adjusted EBITDA grew by 35.3%, compared to 2020, reaching EUR 332.7 million. We surpassed our guidance of EUR 300–310 million by 7.3%, mainly driven by Green Generation, which result increased more than twofold and now makes up one-third of our total result. In 2022, we expect Adjusted EBITDA in the range of EUR 290–335 million.
The Group’s Adjusted EBITDA grew in all business segments with Green Generation installed capacity expansion as the main driver, given the higher green electricity generation due to the launch of Pomerania WF (94 MW) and Vilnius CHP WtE unit (19 MWe, 60 MWth), and a full year effect of Kaunas CHP (24 MWe, 70 MWth) launched in August 2020. Increased results of Kruonis PSHP, due to better commercial result exploiting favourable spread between peak and off-peak market prices, and Kaunas HPP, mostly due to higher electricity market price, were also supporting factors, adding to the Group’s Adjusted EBITDA. Further on, Customers & Solutions also grew due to temporary positive effect on natural gas performance as a result of changes in natural gas market prices, which is expected to partly reverse in 2022 after settlement of hedging contracts.
In 2021, the Group’s investments amounted to EUR 234.9 million and were lower by 32.3% compared to 2020. It is mainly due to lower investments in Green Generation segment, as main investments of big projects were finished in 2020 or in the beginning of 2021 (Pomerania WF, Kaunas CHP and Vilnius CHP WtE unit) and new projects have not yet reached heavy investment phase. The decrease was partly offset by higher investments in the Networks segment.
In line with the Dividend Policy, for 2021 we intend to distribute a dividend of EUR 1.19 per share, corresponding to EUR 87.6 million and a yield of 5.7% for ordinary registered shareholders, and – 5.8% for GDR holders (considering the year-end closing prices). Worth mentioning, a dividend of EUR 0.600 per share (out of EUR 1.19) for the second half of 2021, is subject for approval at the Ordinary General Meeting of Shareholders, to be held on 29 March 2022.
Outlook for 2022
For 2022 we expect Adjusted EBITDA in the range of EUR 290-335 million. We expect increase in results from both of our main segments – Green Generation and Networks. Green Generation is expected to grow as a result of full year effect of Pomerania WF as well as due to implementation of asset rotation program. Better result in Networks segment is mainly related to additional tariff component established in updated regulatory Methodology. However, in Customers & Solutions segment skewed result of natural gas business between 2021 and 2022 (positive effect falling to 2021 and negative to 2022) will have a negative impact.
In 2021, we expanded Green Generation installed capacity by 113 MW after the CODs of Vilnius CHP’s WtE unit (19 MWe, 60 MWth) and Pomerania WF (94 MW). Our pipeline further increased by up to 460 MW after acquiring wind farm projects in Latvia and Poland, a solar portfolio in Poland and the start of greenfield development by securing land plots for onshore wind and solar projects in Lithuania and Poland. To accelerate growth even further as well as to capture return premium, we aim to initiate asset rotation program in 2022.
All Green Generation projects are fully on track with exceptions of Vilnius CHP’s biomass unit (73 MWe, 169 MWth) and Polish solar portfolio I (up to 170 MW). In respect of Vilnius CHP’s biomass unit (73 MWe, 169 MWth), we still plan to start generating first energy by the end of 2022. However, due to the delay in the procurement procedures initiated after the announcement of Rafako (former main contractor) restructuring process, we rescheduled COD to Q2 2023 (from Q4 2022). In Polish solar portfolio I (up to 170 MW), over the last six months we held agreement renegotiations with the developer (Sun Investment Group) due to no projects being awarded CfD tariff in the last auctions. As no agreement regarding acceptable return level which would be in line with our target range was reached, the conditional SPA agreement was terminated. The Group will suffer no loss in respect of this transaction, as advanced payments paid to the developer (around EUR 3.8 million) will be fully returned to the Group.
On the Networks side, Networks Methodology was updated maintaining the sustainable regulatory framework. Additionally, we have concluded an agreement with the supplier who will be responsible for implementing Networks’ smart metering infrastructure. The supplier set a framework to comply with all high market standards, including cybersecurity related, which resulted in the replanning of the project end date to 2025 (from 2023). Finally, Networks 10-year investment plan for 2021–2030 has been updated with forecasted investments of EUR 1.9 billion.
During the year, we progressed well on ESG side by receiving a rating upgrade from both MSCI (from ‘A’ to ‘AA’) and Sustainalytics (from 26.5 to 20.4), which places the Group as a leader among global industry peers and significantly above the utility group average. Moreover, a globally recognised environmental disclosure organisation CDP rated climate change mitigation and adaptation efforts of the Group for the first time. In Q4 2021, CDP granted the Group a score of ‘B’ which is in line with the utilities average. All these recognitions are in large part due to the recognition of the Group’s continuous commitment to reducing carbon dioxide emissions to combat climate change, expanding renewable energy portfolio, and strengthening key social and governance practices. And finally, our GHG emission reduction targets across all scopes have been validated by the Science-based Targets Initiative (SBTi) as well. By 2030 we aim to cut our greenhouse gas emissions by 47% compared to the 2020 baseline.
There were significant changes on the Group’s corporate governance front. New members of the Supervisory Board have been elected by the General Meeting of Shareholders for a four-year term on 26 October 2021. The majority of them, including the Chair, are independent and 5 out of 7 members are international. Additionally, 4 members worked in the previous term of the Supervisory Board or Committees, thus ensuring continuity. Further on, in Q4 2021 the committees (Audit, Nomination and Remuneration, and Risk Management and Business Ethics Supervision) have been fully formed. After the reporting period, the new members of the Management Board, its Chair and the CEO have been elected. 3 out of 5 are members from the previous term of the Management Board, including the Chair and CEO, thus allowing to comfortably continue the Group’s development. In terms of diversity, the Supervisory Board has four female and three male members, and the Management Board has one female and four male members.
Key financial indicators (APM) for 20211,2
|Customers & Solutions||40.6||26.7||52.1%|
|Adjusted EBITDA margin||17.6%||21.7%||(4.1 pp)|
|Net profit||153.9||170.6||(9.8%) |
|Adjusted net profit||163.1||95.5||70.8% |
|Adjusted ROE ||8.9%||6.0%||2.9 pp|
|ROCE ||7.1%||9.1%||(2.0 pp)|
|Adjusted ROCE ||7.9%||5.4%||2.5 pp|
|Net debt/Adjusted EBITDA LTM, times||2.88||2.44||18.0%|
|FFO LTM/Net debt||30.5%||51.5%||(21.0 pp)|
1 All, except net profit are Alternative Performance Measures. Formulas of the financial indicators are available in our Annual report 2021.
2 Due to Networks Methodology update, change in accounting policy and reclassifications as well as reduction of management adjustments, all financial indicators were recalculated retrospectively for the year 2020 (for more information, see Annual report 2021 section’s ‘3.1 Annual results’ part 'Significant changes in reporting period of 2021’).
3 Other – other activities and eliminations (consolidation adjustments and related party transactions), including financial results of the parent company. More information about it is disclosed in the Annual report 2021 section ‘6.2 Parent company’s financial statements’.
4 For the calculation of 2020 DPS measures, number of shares after IPO (number of nominal shares – 74,283,757) were used in order to have comparable measures. EPS for 2020 would be EUR 2.89, DPS EUR 1.44, if 2020 number of shares (weighted average number of nominal shares before and after IPO – 59,037,855) were used.
In relation to the announcement of the Annual report 2021, an earnings call will be held on 28 February 2022 at 11:00 am at 1:00 pm Vilnius / 11:00 am London time.
To join the earnings call, please register at: https://edge.media-server.com/mmc/p/mxmysdqv
Alternatively, you can join the earnings call through the dial-in numbers below:
United Kingdom, London: +44 20 7192 8338
Lithuania, Vilnius: +370 5 214 0081
United States, New York: +1 (646) 7413-167
Event Passcode: 7228658
Questions can be directed in advance to the Group’s IR, after registering for the earnings call or live during the call.
Presentation slides will be available prior to the call:
The Annual report, including version in XHTML format, using Inline XHBRL specifications set out in Annex III of Regulation 2018/815, is also available for download at:
Fact sheet (in Excel) is available for download at:
For additional information, please contact:
+370 620 76076
+370 643 14925