Strategic Plan 2022–2025 of AB “Ignitis grupė” has been approvedThe Supervisory Board of AB “Ignitis grupė” (hereinafter – the Group) approved the Strategic Plan 2022–2025 of the Group (hereinafter – the Strategic Plan), which establishes the Group’s ambition to work towards decarbonisation and focus on investments into the Green Generation and Networks (modernisation, resilience and digitalisation) segments. The Strategic Plan describes the implementation of priorities and directions of the long-term strategy, which was announced in June 2020, for the period of 2022–2025. - The Group’s adjusted EBITDA in 2025 is expected to reach EUR 370–410 million and grow by 11–23% compared to 2021.
- Average adjusted ROCE level for the period of 2022–2025 is expected to reach 5.5–6.5%.
- The Group’s planned CAPEX for 2022–2025 is EUR 1.7–2.0 billion. EUR 0.8–1.0 billion of the investments will be directed towards the Green Generation segment, and EUR 0.8–0.9 billion of investments – towards the Networks. Planned increase of Green Generation installed capacity to 2.0-2.2 GW in 2025 and to 4 GW in 2030. The asset rotation programme is to launch in 2022.
- The Group seeks to reduce its GHG emissions by around 23 % by 2025 and by around 47 % by 2030 (compared to 2020).
- The Group will ensure at least 3% annual dividend growth translating into a 6.0–6.6 % dividend yield* for the 2022–2025 period.
- The Group’s net debt and adjusted EBITDA ratio in 2022–2025 is expected to be below 5x, while an investment-grade rating of ‘BBB’ and above will be maintained.
Objectives promoting sustainable growth The Group’s planned CAPEX for 2022–2025 is EUR 1.7–2.0 billion. Over 90% of investments in 2022–2025 will be sustainable, and 85–95% of them are directed towards the implementation of the projects which are directly or indirectly related to the United Nations Sustainable Development Goals. Around 50% (or EUR 0.8–1.0 billion) of the investments will be directed towards the Green Generation segment – this will allow to increase the Green Generation installed capacity to 2.0–2.2 by 2025. The current Green Generation installed capacity of the Group amounts to 1.2 GW. The Group is planning to implement an asset rotation programme and sell up to 49% of each Green Generation project, thus, reinvesting capital into new projects and capturing premium. The programme will launch in 2022. The Strategic Plan also establishes targets to ensure the digitalisation of the networks as well as to increase the service quality, network efficiency and resilience, which will support the energy transition. The investments into the Networks segment makes up 45% of the total estimated CAPEX of the Group for 2022–2025, which amounts to EUR 0.8–0.9 billion. Estimated regulated asset base growth in Networks segment to 1.6-1.7 EURbn in 2025. By the end of 2025, we aim to install smart meters for all business customers and households, consuming >1,000 kWh/year. It is estimated that by 2025 there will be 1.1–1.2 million smart meters installed. Investments in the Networks segment will be directed towards replacing overhead electricity distribution lines with underground cables, facilitating grid connections and empowering prosumers. Investments in network efficiency will boost the distribution network resilience, resulting in an expected decline of the SAIFI indicator in 2022–2026 by 10%, compared to 2016–2020, and the SAIDI indicator – by 15%. The remaining share of investments of up to 5% will be directed towards the Flexible Generation and the Customers & Solutions segments. The Customers & Solutions segment will aim to develop electricity supply services in the region, utilise synergies with the Green Generation segment as well as contribute to our customers' environmental goals by developing and expanding innovative energy solutions and platforms, including e-mobility, remote generation and prosumers, increasing the green electricity share in our supply portfolio, which is estimated to exceed 50% by 2025. The compound annual growth rate (CAGR) of electricity retail sales volumes is estimated to reach 5.8% for 2022-2025. The Flexible Generation segment will aim to remain the leader in the ancillary services market in Lithuania as well as to contribute towards the synchronisation with the electricity network system of Continental Europe. Progress in creating a sustainable future When considering business plans and targets set out in the Strategic Plan, the Group also took into account the environmental, social, governance (hereinafter – ESG) aspects relevant to its operations. The Group has committed to create a sustainable future and is pursuing its goals under the four main pillars: climate action, preserving natural resources, ensuring future-fit employees and a robust organisation. The first two pillars include green generation development, greenhouse gas (hereinafter – GHG) emissions reduction, promoting circular economy and preserving ecosystem and biodiversity. The Strategic Plan sets out the Group’s GHG emissions reduction pathway of 23% by 2030 and around 47% by 2050 (compared to 2020 baseline). This pathway is in line with the Group’s emission reduction targets validated in 2021 by ‘Science Based Targets initiative’ and a long-term net-zero goal. The Group takes care of its employees and intends to focus on occupational health and safety, growing a diverse and inclusive organisation, improving employee experience. Transparent and ethical conduct, business resilience and sustainable value creation are also among our top priorities. The Group will continue to monitor its progress in accordance with the evaluation results of international rating agencies Sustainalytics and MSCI, which asses ESG risk management, as well as CDP, a globally recognised environmental disclosure organisation. Financial discipline and returns to shareholders The updated Strategic Plan sets out a commitment to maintain a strong financial position of the Group. The Group’s adjusted EBITDA in 2025 is expected to reach EUR 370–410 million, and the sustainable share of adjusted EBITDA should amount to 70% or above. EBITDA growth in 2022–2025 is estimated at 11–23%, compared to 2021, and will be mostly affected by the development of Green Generation and Networks segments. Average return on capital employed (ROCE) over the period of 2022–2025 is estimated to reach 5.5–6.5%. Ignitis Group also plans to maintain a solid investment-grade ‘BBB’ or above rating over the period of 2022–2025. The net debt and adjusted EBITDA ratio is expected to be below 5x. The Group is committed to its shareholders to ensure at least 3% annual dividend growth from a EUR 85 million baseline for the 2020 financial year. Dividends for 2021 amount to EUR 87.6 million. Minimum dividend per share (DPS) in 2025 should be equal to or exceed EUR 1.35, and, during the period of 2022–2025, translates into dividend yield of 6.0–6.6%*. Earnings call On 28 February 2022, Monday, the Group will present the Strategic Plan 2022–2025 to investors and analysts. The earnings call will start at 1pm (Vilnius time)/11am (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:
Lithuania, Vilnius: +370 5 214 0081
The United Kingdom, London: +44 20 7192 8338
The United States, New York: +1 (646) 7413-167 Event Passcode: 7228658 All questions can be directed in advance to the Group Investor Relations team, when registering for the earnings call or live during the presentation. Presentation slides will be available prior to the presentation: https://ignitisgrupe.lt/en/reports-and-presentations Strategic Plan 2022–2025 and previous strategic plans are available on our website: https://ignitisgrupe.lt/en/strategy
Group’s 4-year strategic plan is published every year. * Estimated annual dividend yield during the period of 2022–2025 is calculated based on the share price of AB “Ignitis grupė” of EUR 20.5. For additional information please contact Communications
Artūras Ketlerius
+370 620 76076
arturas.ketlerius@ignitis.lt Investor relations
Ainė Riffel-Grinkevičienė
+370 6 431 4925
aine.riffel@ignitis.lt
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