Annual report 2022: strong financial and strategic performance dominated by Green Generation growth
AB “Ignitis grupė” (hereinafter – the Group) publishes its Annual report 2022, which is attached to this notice, and announces that the Group’s Adjusted EBITDA amounted to EUR 469.3 million.
The Group exceeded the higher end of a full-year guidance range (EUR 420–460 million) by 2.0%, which was mainly driven by the Green Generation segment due to the launch of Pomerania wind farm in Poland and better performance of the operating assets. Green Generation Adjusted EBITDA increased more than twofold and accounts for more than half of the Group’s total result. Green share of electricity generated increased by a third to 85.1%.
In 2022, the Group made record high Investments, which more than doubled and reached EUR 521.8 million, out of which 79.0% were directed to Lithuania. Overall growth was mainly driven by the Investments made in Green Generation projects which increased more than seven times and reached EUR 226.2 million.
During Q4 2022, net working capital, net debt and in turn leverage metrics have stabilised. This was mainly the outcome of normalized price levels at the end of the year and recovered temporary regulatory differences. Compared to the numbers reported in the First nine months 2022 Interim report, the Group’s NWC level decreased more than twice to EUR 443.3 million (from EUR 1,068.7 million), which led to a significant decrease in net debt level of EUR 986.9 million (from EUR 1,512.8 million). It also helped to improve FFO/Net debt ratio to 49.1% (from 23.9%).
Despite the above, Customers & Solutions segment had a challenging year, especially on a loss making electricity B2C (EUR -23.2 million) activities. The segment’s Adjusted EBITDA deteriorated by 61.6% compared to 2021. The decline was partly offset by positive results from utilizing Lithuania's LNG terminal and securing profitable one-off deals with foreign B2B customers. Additionally, a positive inventory effect due to average accounting method has grown significantly, but towards the end of the year it was offset by natural gas inventory value write-down due to decreasing natural gas prices.
In line with the Dividend Policy, for 2022 we intend to distribute a dividend of EUR 1.248 per share, corresponding to EUR 90.3 million, and a yield of 6.6% both for ordinary registered shareholders and GDR holders (considering the year-end closing prices). It is important to highlight that the dividend of EUR 0.624 per share (out of EUR 1.248) for the second half of 2022 is subject to the decision of the Annual General Meeting of Shareholders to be held on 30 March 2023.
Additionally, the Group’s management proposes to the Annual General Meeting of Shareholders to agree on the allocation of EUR 12.0 million of additional profit earned in 2022 from Green Generation as aid to recover and reconstruct energy infrastructure of Ukraine. Based on the Group’s management assessment, additional profit earned in 2022 from Green Generation amounts to EUR 114.2 million, out of which EUR 12.0 million or around 10%, subject to the decision of the Annual General Meeting of Shareholders, could be allocated to Ukraine. The Group believes that the main cause of energy sector companies additional profits earned in 2022 is the war in Ukraine. Hence, companies should make their best efforts in supporting the country.
All the remaining additional profit earned in 2022 from Green Generation (EUR 102.2 million out of EUR 114.2 million), as committed in Q4 2022, will be reinvested into building new energy infrastructure in Lithuania to contribute to ensuring Lithuania’s energy security and green transition.
Since the beginning of 2022, our Green Generation portfolio increased more than twofold to 5.3 GW (from 2.6 GW). Our project pipeline more than tripled to 4.1 GW (from 1.3 GW) with the largest share of growth captured by the accelerated expansion of greenfield projects, which increased more than eleven times to around 2.0 GW (from 170 MW) as of report announcement date.
Implementation of project Portfolio is progressing as planned with a few exceptions. Our targets to generate the first energy on testing mode around Q1 2023 and commence full commercial operation of Vilnius CHP biomass unit (73 MWe, 169 MWth) in Lithuania during the next heating season remain unchanged. However, due to disruptions in supply chain and construction markets, there is a minor delay in the project’s COD (postponed to Q3 2023 from Q2 2023). Also, regarding our Silesia WF I (50 MW) project under construction in Poland, we expect to supply the first power to the grid as planned in Q4 2023. However, due to some constrains in supply chain as well as weather risk challenges, the projects budget was revised to around EUR 75 million (from EUR 70 million) and COD postponed to Q1 2024 (from Q4 2023). Since 9M 2022, there were no significant changes in implementation of other projects.
On the Networks side, despite the supply chain disruptions, we have successfully continued maintenance and expansion works, including the smart meter roll-out. We started the mass smart meter roll-out at the beginning of Q3 2022 and, by the end of 2022, installed over 210 thousand of smart meters (out of 1.2 million to be installed in total). Our target of finalizing the mass roll-out process by the end of 2025 remains unchanged.
During 2022, we explicitly focused on occupational health and safety (OHS), mental health and wellbeing as well as the preparation of a plan to ensure the achievement of our SBTi-approved targets as we are committed to reduce our total GHG emissions by 47% by 2030 vs. 2020 baseline.
Additionally, we progressed well on ESG side, which was well reflected in the improvement of relative ratings. In Q4 2022, CDP rated the climate change mitigation and adaptation efforts of the Group by granting a score of ‘A-’ (on a ‘D-’ to ‘A’ scale). In 2021, the Group was rated ‘B’. Also, in addition to MSCI (‘AA’, on a scale of ‘CCC’ to ‘AAA’) and Sustainalytics (a score of 20.4, on a scale of 100–0, from the highest to the lowest risk) ESG ratings, the Group was rated by an ESG corporate rating agency ISS and received a rating of ‘C’ (on a scale of ‘D-’ to ‘A+’). It places the Group in the 6th decile rank among utility peers in managing the most significant ESG risks.
For 2023 we expect Adjusted EBITDA to be in a range of EUR 430–480 million.
Key financial indicators (APM1)
Adjusted EBITDA APM
Customers & Solutions
Adjusted EBITDA margin APM
Adjusted net profit APM
Adjusted ROE APM
Adjusted ROCE APM
EPS (Basic) APM
31 Dec 2022
31 Dec 2021
Net debt APM
Net working capital APM
Net debt/Adjusted EBITDA, times APM
FFO/Net debt APM
1 All, except net profit are Alternative Performance Measures (APMs). Formulas of the financial indicators are available in our Annual report 2022 or our website.
2 Due to changes in IAS, part of financial indicators were recalculated retrospectively for the year 2021 (for more information, see note ‘6. Restatement of comparative figures due to changes in the accounting policy’ of section ‘6.1 Consolidated financial statements’ in our Annual report 2022).
3 Other – other activities and eliminations (consolidation adjustments and related party transactions), including financial results of the parent company. For more information see section ‘6.2 Parent company’s financial statements’ in our Annual report 2022.
4 The Investments formula has been adjusted retrospectively from the beginning of 2022 by including prepayments for non-current assets. Such presentation shows the amount of Investments made during the year more accurately since the number of advance payments grew significantly with the increase of renewable energy projects pipeline. For updated formula, see section ‘7.3 Alternative performance measures’ of our Annual report 2022 or our website.
In relation to the announcement of the Annual report 2022, an earnings call will be held on Tuesday, 28 February 2023, 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/vzakgnpf
It is also possible to join the earning call by phone. To access the dial-in details, please register here. After completing the registration, you will receive dial-in details on screen and via email. You will be able to dial in using the provided numbers and the unique pin or by selecting ‘Call me’ option and providing your phone details for the system to connect you automatically as the earnings call starts.
All questions can be directed in advance to the Group’s IR team, after registering for the earnings call or live during the call.
Presentation slides will be available prior to the conference call:
The Annual report and other related documents, including fact sheet (in Excel), are also available for download at:
For additional information, please contact:
+370 620 76076
+370 643 14925