Integrated Annual Report 2023: guidance beat, all time high investments and the largest renewable energy projects in the Baltics secured

AB “Ignitis grupė” (hereinafter – the Group) publishes its Integrated Annual Report 2023, which is attached to this notice, and announces that the Group’s Adjusted EBITDA amounted to EUR 484.7 million (3.3% YoY) and exceeded the full-year guidance range (EUR 430–480 million). Adjusted EBITDA growth was recorded across all business segments except Green Generation. Despite this, the Green Generation segment remains the largest contributor to Adjusted EBITDA (45.9% of the Group’s Adjusted EBITDA).

The Group’s Investments increased by 79.6% YoY and reached a record high level of EUR 937.1 million, out of which 73.3% were directed to Lithuania. Overall growth was driven by Investments in new Green Generation segment’s projects, mainly onshore wind farms, and higher Investments in the Networks segment.

The Group’s leverage metrics remained strong. Our FFO/Net Debt ratio remained at a solid level of 29.4% (compared to 49.1% as of 31 December 2022). The balance sheet strength was also supported by the affirmation of ‘BBB+’ (stable outlook) credit rating by S&P Global Ratings.

Business development

Since the beginning of 2023, the Group’s Green Generation Portfolio increased to 7.1 GW (from 5.1 GW), Secured Capacity to 2.9 GW (from 1.6 GW), and Installed Capacity to 1.3 GW (from 1.2 GW).

We achieved a number of significant milestones in the expansion and development of our Green Generation Portfolio, including:
– the Group, together with its partner Ocean Winds, were confirmed as the winners of the 700 MW Lithuanian offshore wind tender;
– the Group, together with its partner Copenhagen Infrastructure Partners, secured the seabed sites (Liivi 1 & 2) for the expected capacity of 1–1.5 GW in the Estonian offshore wind tenders;
– Mažeikiai WF (63 MW) has reached COD in August 2023;
– Vilnius CHP biomass unit reached partial COD for the capacity of 50 MWe and 149 MWth (out of 73 MWe, 169 MWth) in December 2023;
– Silesia WF I (50 MW) in Poland supplied the first power to the grid;
– the Group made Final Investment Decisions on the Latvian solar portfolio I (239 MW) and Kruonis PSHP expansion project (110 MW);
– the Group signed the largest external 10-year corporate PPA with Umicore Poland Sp. Z o. o. It covers a substantial part of the expected electricity production of Silesia WF II (137 MW);
– Moray West offshore wind project (882 MW) has reached the financial close.

On the Networks front, the WACC methodology was updated in July 2023, which entered into force from 2024. For 2024, this update has resulted in an electricity WACC increase to 5.09% (from 4.17% in 2023) and a natural gas WACC increase to 5.03% (from 3.99% in 2023). In addition, we successfully continued network maintenance and expansion works, including the smart meter roll-out with the total number of installed smart meters exceeding 700 thousand (out of 1.1–1.2 million smart meters to be installed).

In Customers & Solutions, we approved a plan to invest up to EUR 115 million in the development of an EV charging network in the Baltics over 3–5 years.

Sustainability

The Group continues decarbonisation initiatives to minimise its environmental impact. In turn, our Green Share of Generation (electricity) amounted to 85.0% and Taxonomy-aligned share of Adjusted EBITDA to 61.4%.

In 2023, the Group’s Scope 1 and Scope 2 GHG emissions decreased by 1.8% and 15.6% respectively, while total emissions amounted to 5.29 million t CO2-eq and increased by 2.5% YoY.

The GHG emissions intensity from power generation, it increased by 27 g CO2-eq/kWh YoY to 228 g CO2-eq/kWh due to the start of operations of Vilnius CHP biomass unit and higher generation in Reserve Capacities segment.

Occupational health and safety (OHS) of our employees and contractors is one of our top priorities this year. Accordingly, at the beginning of 2023 we launched an OHS education programme, “Is it safe?”. In 2023, our total recordable injury rate for employee was 0.79, for contractors – 0.93, both well below the targeted level. eNPS remained high at 57.5%.

Shareholder returns and 2024 outlook

In line with the Dividend Policy, we intend to distribute a dividend of EUR 1.286 per share for 2023, corresponding to EUR 93 million and a yield of 6.8–6.9% for ordinary registered shareholders and global depositary receipt holders (based on year-end closing prices). A total dividend per share for 2023 comprises of a dividend of EUR 0.643 paid for H1 2023 and a proposed dividend of EUR 0.643 for H2 2023, which is subject to the decision of our Annual General Meeting of Shareholders to be held on 27 March 2024.

For 2024, we expect Adjusted EBITDA to be in the range of EUR 440–470 million and Investments in the range of EUR 850–1,000 million. 

Key financial indicators (APM¹)

EUR, millions	2023	2022	Change
EBITDA	507.4	539.7	(6.0%)
Adjusted EBITDA	484.7	469.3	3.3%
Green Generation	222.6	252.4	(11.8%)
Networks	180.0	164.5	9.4%
Reserve Capacities	49.9	34.6	44.2%
Customers & Solutions	30.4	15.6	94.9%
Other activities and eliminations2	1.8	2.2	(18.2%)
Adjusted EBITDA Margin	19.2%	10.9%	8.3 pp
Net Profit	320.2	293.4	9.1%
Adjusted Net Profit	286.6	256.0	12.0%
Investments	937.1	521.8	79.6%
Green Generation	542.7	226.2	139.9%
Networks	346.8	268.1	29.4%
Reserve Capacities	4.9	15.0	(67.3%)
Customers & Solutions	25.0	6.8	267.6%
Other activities and eliminations2	17.7	5.7	210.5%
FFO	387.4	484.1	(20.0%)
FCF	(212.4)	17.3	n/a
ROE	14.6%	14.7%	(0.1 pp)
Adjusted ROE	13.1%	12.9%	0.2 pp
ROCE	10.5%	13.1%	(2.6 pp)
Adjusted ROCE	9.8%	10.7%	(0.9 pp)
Basic earnings per share	4.42	4.04	9.4%
Dividends per share	1.29	1.24	4.0%
	31 Dec 2023	31 Dec 2022	Change
Net Debt	1,317.5	986.9	33.5%
Net Working Capital	175.2	443.3	(60.5%)
Net Debt/Adjusted EBITDA, times	2.72	2.10	29.5%
FFO/Net Debt	29.4%	49.1%	(19.7 pp)

¹ All, except Net Profit, are Alternative Performance Measures (APMs). Definitions and formulas of the financial indicators are available on our website.
² Other activities and eliminations – includes consolidation adjustments, related-party transactions, and the financial results of the parent company.


Earnings call

In relation to the announcement of the full-year 2023 results, an earnings call will be held on Tuesday, 28 February 2024, 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/vcomygto
 
It will be also possible to join the earnings 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 in automatically as the earnings call starts.

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

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

The interim report, including fact sheet (in Excel), will be available for download at:
https://ignitisgrupe.lt/en/reports-and-presentations

For additional information, please contact:

Communications
Artūras Ketlerius
[phone]
[e-mail]

Investor Relations
Ainė Riffel-Grinkevičienė
[phone]
[e-mail]

Attachments

• abignitisgrupe-2023-12-31-en
• Independent Auditor's Report