Interim report for the first half-year 2021: Green Generation driven growth

AB “Ignitis grupė” (hereinafter – the Company) publishes that in H1 2021 Adjusted EBITDA of Ignitis Group (hereinafter – the Group) recorded 30.5% growth compared to H1 2020 and reached EUR 168.4 million.

Strong Adjusted EBITDA growth across all business segments was driven mostly by Green Generation due to the installed capacity increase as a result of Kaunas CHP and Vilnius CHP’s WtE unit launch, and better results from Kaunas HPP due to higher electricity prices. It was also affected by improved results in Customers & Solutions due favourable changes in gas market prices and higher distributed volumes’ effect in the Networks as a result of colder weather, which will level off during the year.

Outlook for 2021

Driven by robust H1 2021 financial results, the Group reiterates Adjusted EBITDA guidance of EUR 300–310 million for 2021, representing 3-6% increase compared to 2020 actual result, which is mainly supported by the growth in Green Generation segment due to the full-year result of Kaunas CHP which was launched last year, the start of commercial activities of Vilnius CHP’s WtE unit, and Pomerania WF.

Shareholder return

Subject to approval at Extraordinary General Meeting of Shareholders and in line with our dividend policy, the Group intends to pay EUR 43.75 million in dividends (or dividend per share in the range of EUR 0.589 – 0.599¹) for the first half of 2021.

Strategy delivery

During the reporting period, the Group increased its Green Generation installed capacity by 43 MW to 1,120 MW compared to H1 2020, as a result of the launch of Kaunas CHP (24 MWe, 70 MWth) in August 2020 and Vilnius CHP’s WtE unit (19 MWe, 60 MWth) in March 2021.

All remaining Green Generation projects are fully on track with exceptions for Pomerania WF (94MW) and Polish solar portfolio I (up to 170MW). In Pomerania WF all turbines are fully constructed and currently generate electricity, however, COD is expected around Q3 2021 once the generation licence is obtained. This reflects around 6-month COD delay, which resulted mainly due to COVID and other typical development project risks. In Polish solar portfolio I, agreement renegotiations with the developer (Sun Investment Group) have been initiated, as no projects were awarded CfD tariff in the last two auctions.

Additionally, after the reporting period, the Group increased its Green Generation pipeline by around 160 MW as a result of signing a conditional agreement for an acquisition of 3 early-stage wind farm development projects in Latvia.

The Group has also initiated consolidation of the Group’s renewable energy assets. This will allow to ensure a more competitive, flexible and effective implementation of Green Generation projects, strengthen the financial capacity of UAB “Ignitis Renewables”, as well as grow and broaden the competences of the area.

In the Networks segment, the Group concluded an agreement with a supplier, which will be responsible for the smart metering infrastructure, and 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). On the other hand, the Group continued the Networks expansion by connecting new customers and installing upgrades as well as maintained the grid mostly by replacing the overhead lines to underground cables.

In H1 2021, investments amounted to EUR 76.9 million and were lower by 58.9% compared to H1 2020. It is mainly due to lower investments in Vilnius CHP due to rescheduled investment timeline, Kaunas CHP as it was launched in August 2020, and Pomerania WF as it is approaching commercial operation date. That said, the decrease was partly offset by higher investments in the Networks segment.

Sustainability and governance

In H1 2021, the Group has continued to develop a GHG management plan for delivering on our commitment to net zero GHG emissions in 2050. The Group is currently working with the Science-based Targets initiative to ensure that its interim reduction targets are aligned with this ambition. We expect to publish the interim targets in Q3 2021.

As a result of the efforts to move towards ESG excellence, the Group is now ranked as a leader among global industry peers rated by MSCI, with an ESG rating of ‘AA’ (on a scale of ‘CCC-‘AAA’), which was upgraded from ‘A’ in July 2021. This upgrade is in large part due to the recognition of the Group’s continuous commitment to climate action, expansion of renewable energy portfolio, and the streamlining of key social and governance practices.

Corporate governance developments

Term of the Supervisory Board of the Company expired on 29 August 2021 and due to still ongoing selection process managed by the Majority Shareholder (Ministry of Finance of the Republic of Lithuania), no new members are assigned yet. However, it does not intend to affect performance of the Group as the new Supervisory Board is expected to be appointed in our General Meeting of Shareholders by the end of October 2021.

Key financial indicators (APM²) for the H1 2021

EUR, millions	H1 2021	H1 2020	Change
EBITDA	169.9	149.7	13.5%
Adjusted EBITDA	168.4	129.0	30.5%
Adjusted EBITDA margin	22.9%	22.7%	0.2 pp
Net profit	48.8	71.9	(32.1%)
Adjusted net profit	77.7	54.6	42.3%
Investments	76.9	187.3	(58.9%)
FCF	70.2	17.9	292.2%
ROE LTM	9.0%	7.7%	1.3 pp
Adjusted ROE LTM	9.3%	8.1%	1.2 pp
ROCE LTM	9.1%	5.8%	3.3 pp
Adjusted ROCE LTM	8.5%	5.9%	2.6 pp
EUR, millions	2021.06.30	2020.12.31	Change
Net debt/Adjusted EBITDA LTM	1.73	2.06	(16.0%)
FFO LTM/Net debt	55.8%	52.1%	3.7 pp

¹ In case the Company, based on the decision of Extraordinary General Meeting of Shareholders held on 29 July 2021, would acquire its own shares by the end of the rights accounting day, i.e. by the end of 11 October 2021 (dividend record date), dividend per share may proportionally adjust depending on the number of shares acquired by the parent company but would not exceed the maximum level of EUR 0.599 (calculated on the basis of maximum number of shares which the parent company is eligible to acquire). Despite that, the total amount of dividends or EUR 43.75 million would remain the same.
² All, except net profit are Alternative Performance Measures. Formulas of the Group’s financial indicators are available on the Group’s website (link).

Earnings call

In relation to the announcement of the interim report, an earnings call will be held on 31 August 2021 at 11:00 am Vilnius / 9:00 am London.

To join the earnings call please register at: https://edge.media-server.com/mmc/p/8nqe4aft

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 Plus Passcode: 5082919

All questions can be directed in advance to the Group’s IR, when registering for the earnings call or live during the call.

Presentation slides will be available prior to the conference call:
https://ignitisgrupe.lt/en/reports-and-presentations

The interim report will be available for download at:
https://ignitisgrupe.lt/en/reports-and-presentations

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Interim Report for the first half year 2021 is attached to this notice. The Group also published it and previous reports on its website at: https://ignitisgrupe.lt/en/reports-and-presentations

For additional information, please contact:

Communications

Artūras Ketlerius
+370 620 76076
arturas.ketlerius@ignitis.lt

Investor Relations

Ainė Riffel-Grinkevičienė
+370 643 14925
aine.riffel@ignitis.lt

Attachment

• Ignitis Group H1 2021 interim report