Annual report 2022: strong financial and strategic performance dominated by Green Generation growth

Ignitis Grupe AB

28/02/2023 07:18

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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
(https://www.globenewswire.com/Tracker?data=lHWAcbyDpICGZYIcqaJH-OgsDzX5EIAWP165qA_ecmplgMhrOvTNhXOuZQcMEcK5RznCtaNrYy44aBCvCqAVKmdp6lNafu1t8OfRwcQf7K6BH8Z2fn06gqnimgTB7G64zPMu_iDI-iQecNHErRyLw-HZqPfeaNbbTMZbDB8gF0GP5PP8bQdbuN1YDEqtRKCmXpowYR3OhzLM5lED0lq3xrkOrNw0ACUkS9u433QOUiE=),
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.

Profit distribution

In line with the Dividend Policy
(https://www.globenewswire.com/Tracker?data=zZauIj1mPdxfvgjog3PUpKsli77qW1Y9iTkCxVTLrJ9mSDjHkvaPRuLHcrjkid66EQDiNCZrEZfT2UB6ao0k9UkpoJ-_J7-jRMoJfWfzdSE=),
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
(https://www.globenewswire.com/Tracker?data=yS3mKz7TgQIyclceWHalrGBSYJ7PB78Fen5MPUBbaMBLcSiYGEKvK58BLqwfXa5IljIH_JRWqKGCXmLzqo5BxSdDyI0U7FQDH5ybIXo2fy5iBOkkHlGFSAJhr6gneUUqouQ-OhY0Yco9WKW8GNhNPUw2eJHN9QoBRfC8lxoUS18=)in
Q4 2022, will be reinvested into building new energy infrastructure in
Lithuania to contribute to ensuring Lithuania’s energy security and green
transition.

Business development

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.

Sustainability

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 6(th) decile rank among utility peers in
managing the most significant ESG risks.

2023 outlook

For 2023 we expect Adjusted EBITDA to be in a range of EUR 430–480 million.
 

Key financial indicators (APM(1))

 EUR, millions                        2022         2021 (2)     
 EBITDA APM                           539.7        343.2        
 Adjusted EBITDA APM                  469.3        332.7        
 Green Generation                     252.4        107.5        
 Networks                             164.5        145.4        
 Flexible Generation                  34.6         37.2         
 Customers & Solutions                15.6         40.6         
 Other (3)                            2.2          2.0          
 Adjusted EBITDA margin APM           10.9%        17.6%        
 Net profit                           293.4        160.2        
 Adjusted net profit APM              256.0        162.8        
 Investments (4)APM                   521.8        234.9        
 FFO APM                              484.1        299.4        
 FCF APM                              17.3         (240.6)      
 ROE APM                              14.7%        8.7%         
 Adjusted ROE APM                     12.9%        8.9%         
 ROCE APM                             13.1%        7.3%         
 Adjusted ROCE APM                    10.7%        7.9%         
 EPS (Basic) APM                      4.04         2.16         
 DPS APM                              1.24         1.19         
                                      31 Dec 2022  31 Dec 2021  
 Net debt APM                         986.9        957.2        
 Net working capital APM              443.3        438.7        
 Net debt/Adjusted EBITDA, times APM  2.10         2.88         
 FFO/Net debt APM                     49.1%        31.3%        

(1) All, except net profit are Alternative Performance Measures (APMs).
Formulas of the financial indicators are available in our Annual report 2022
(https://www.globenewswire.com/Tracker?data=v0Xxu2d3u-tQhvLWykJusDQ2EB_-kbmAI31NRLbv1JxuQgnUg4v9fcIRH8m8vMXMOkhKHEIQii6vel8gpDSNdYRwZHdFJbVoYImzuS0Au4QZSVwbE8RyrQH1cG5a5mvK)
or our website
(https://www.globenewswire.com/Tracker?data=rxYCj9gUeN02snyaKvqT4evwrIZN6sPQMIzKp5dz8r-WHKwxzwltjjVAHsdu6c84kH6uz4accrn8s8ok_fD2O1G7ieZ9g4vf9Ey8SdHfIhsEYxSQiM8P1Qh7CFvOKiHU).
(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
(https://www.globenewswire.com/Tracker?data=v0Xxu2d3u-tQhvLWykJusOiEP9X4G_yPb_t-YU4-QbiXtfD89tVTNYpcLO8D8qA8ImrqaTTOb8T67QljFNXPXKgLJl9_4Bn7iMOtK1AcnJwsXerW661UsvQUYBz_CVDf)).
(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
(https://www.globenewswire.com/Tracker?data=v0Xxu2d3u-tQhvLWykJusHyG9wu17LLK1GgI6-2dKFSUtshH_lENwUcxqI6SZrAYXcBUxFH7c2SdPpkOqc6TQ1nv4IryR9aqlBEufGkA3gUG7YOItJDo7ZOiooR5DflP).

(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
(https://www.globenewswire.com/Tracker?data=v0Xxu2d3u-tQhvLWykJusPPBYOCdZoyhCB-XpMuJ6TZ3j98MDvaBXAqrfAJiTYPhlzn2nwLHSTllMOVceOdcMzOARNtUplpzNfP9702WU_BUzscNxyVtiM_bLFxM4LZl)
or our website
(https://www.globenewswire.com/Tracker?data=rxYCj9gUeN02snyaKvqT4QqbQEhslp5vEs_AB4i8HKvyI6tGISn7rmMytgN3x6RDdItIh725KLvCch-BzBGsVb80g7GTl96rBO7_KBCxQhVPjxHe4KZRJKPLg6heaV10).

Earnings call

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
(https://www.globenewswire.com/Tracker?data=RtLTsOPCEdcBzmGONcaQLH8xGgwoG-6yzijVb7bAbKN0sGTeEBQQTVVDJW8Xle3l-fqllnwt9RKPSOD3w-uWfnLgq5g2Nxl_xNaHue65WxK7mT7RZGahT-dsAOTCVJMaZexV07eNNWnPm3RKXgoktw==).
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:

https://ignitisgrupe.lt/en/reports-and-presentations

The Annual report and other related documents, including fact sheet (in
Excel), are also available for download 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-grinkeviciene@ignitis.lt

Attachments
*     Independent Auditor’s Report
(https://ml-eu.globenewswire.com/Resource/Download/76281549-ea31-43e4-96bf-ad7e5b726958)
  
*     abignitisgrupe-2022-12-31-en
(https://ml-eu.globenewswire.com/Resource/Download/7034c4c8-6c06-43cc-af45-50ebb2f0227a)