REG - Soc EnergElectricaSA - 1st Quarter Results

Societatea Energetica Electrica SAAnnouncement

15/05/2023 18:45

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RNS Number : 4834Z  Societatea Energetica Electrica SA  15 May 2023

Executive summary - 3M 2023

§ At consolidated level, EBITDA is positive in the first quarter of 2023 in
amount of RON 170 million as compared to the negative EBITDA in amount of RON
51 million recorded in the previous period

§ Electrica Group recorded revenues and other operating income in the amount
of RON 3.512 million in the first quarter of 2023, compared to RON 3.258
million in the same period of 2022, which represents an increase of approx.
RON 254 million, or 7.8%

§ At consolidated level, the net profit of Electrica Group, in the first
quarter of 2023, recorded a loss in the amount of 66.6 million RON,
respectively a significant reduction compared to a loss of 157.8 million RON
in the first quarter

§ The net profit on the supply segment, in Q1 2023, is 24 million RON and
positive EBITDA in the amount of 70 million RON

In the first quarter of 2023, EBITDA at the level of the Electrica Group
registered an increase of RON 220 million, reaching a positive value of RON
170 million, compared to the negative value of RON 51 million achieved in Q1
2022. The impact was generated mainly, by the operational performance of the
distribution segment, due to the implementation of the  centralized purchase
mechanism  MACEE, which determined a significant decrease in the costs
incurred with the purchase of electricity for own technological consumption.

According to the Emergency Ordinance no. 153/2022, between 01 January 2023 and
31 March 2025, the mechanism for the centralized purchase of electricity is
established, with OPCOM being designated as the sole purchaser. The
distribution operators buy from OPCOM, through an annual/monthly mechanism,
75% of the quantity forecasted and validated by ANRE at the price of 450
lei/MWh, and the producers will sell to OPCOM, through an annual/monthly
mechanism, 80% of the quantity forecasted and validated by ANRE and
Transelectrica at the price of 450 lei/MWh.

Considering that the increased tariffs approved by ANRE for the distribution
segment, enter into force on 01 April 2023, they are not reflected in the
performance of the distribution segment in Q1 2023. The tariffs will be
increased by approximately 20% (26.1% North Muntenia area, 21.5% North
Transylvania area and 10.9% South Transylvania area) as a result of GEO
28/2023 and will have an impact between 01 April 2023 and 31 March 2024. We
mention that the first capitalized asset for the additional costs of
purchasing electricity for the NL coverage was registered on 30.09.2022 for
the period January-September 2022 according to OMFP 3900/2022 and began to be
amortized from the fourth quarter of 2022 and the second capitalized asset was
registered on 31.12.2022 for the period October-December 2022 and began to be
amortized from the first quarter of 2023, while the recovery through increased
tariffs of the electricity price difference for NL only started on 01 April
2023, which impacts the net result on the distribution segment.

Statement of Alexandru Chirita, CEO of Electrica S.A.: "The financial
performance of Electrica Group in the first quarter of this year attests to
our corporate robustness and our commitment to operational optimization and
strategic adaptation in the context of fluctuating economic and legislative
landscapes. This upward trajectory, achieved in an energy market still under
the sign of unpredictability, underlines the commitment we have at team level
to the sustainable evolution of the Group.

 

As we shape our future plans, our strategy will continue to be underpinned by
this agile approach, which will help us adapt our operations to market
conditions. At the same time, we will focus on promoting the sustainable
growth of each business entity, our objective being to strengthen financial
stability and increase operational efficiency in all business divisions, thus
strengthening the existing portfolio and ensuring stable prospects for the
Electrica Group".

 

                                                       Q1 2023    Q1 2022    Q1 2021
 Financial results*                                    (RON mn.)  (RON mn.)  (RON mn.)
 Operating revenues, out of which:                     3.533      3.258      1.729
   Revenues from subsidies                             987        632        -
   Income from the production of intangible assets**   21         -          -
 Operating expense                                     (3.428)    (3.433)    (1.652)
 (Loss)/Operating profit                               (7)        (175)      78
 EBITDA                                                170        (51)       199
 (Loss)/Profit net                                     (67)       (158)      58

*Amounts are rounded to the nearest whole value

**Income from the production of intangible assets representing the
capitalization of additional costs with the purchase

of electricity.The first capitalized asset for the additional costs of
purchasing electricity for the NL coverage was registered on 30.09.2022 for
the period January-September 2022 according to OMFP 3900/2022 so in Q1 2022 we
have no comparative value.

Source: Electrica

 

Supply segment:

Ø Revenues from the supply of electricity and natural gas decreased by RON
169 million, or 7.6%, to RON 2,039 million, from RON 2,208 million in the
first quarter of 2022, being mainly generated by the net effect of increasing
retail prices on the retail market by 3% and reducing the amount of energy
supplied to the retail market by 9.4%.

Ø The revenues from subsidies amount to RON 987 million in Q1 2023, increase
by RON 355 million compared to the same period of the previous year, as a
result of the increase in the electricity purchase prices and the application
of the capping mechanism according to GEO 119/2022.

Ø The cost of purchased electricity (including transmission system services)
increased by RON 286 million, or 13.1%, to RON 2,465 million in Q1 2023, from
RON 2,179 million recorded in Q1 2022.

Ø The net profit on the supply segment in Q1 2023 is RON 24 million (compared
to RON 151 million in Q1 2022) and positive EBITDA of RON 70 million (compared
to RON 187 million in Q1 2022).

Distribution segment:

Ø During the three months period ended 31 March 2023, revenues from the
electricity distribution segment increased by RON 97 million, or 12.8%, to RON
857 million, from RON 760 million in the same period of the previous year, as
a result of the following factors:

o  favorable impact of approx. RON 32 million, mainly from the rise in the
distribution tariffs by an average of  4% 1  (#_ftn1) (see above the mention
of tariffs increase starting with April 1, 2023 by aprox. 20%), compared to
the first three months of 2022, positive effect reduced by the decrease in the
volumes of electricity distributed by approx. 9%;

o  favorable impact from the evolution of revenues recognized in accordance
with IFRIC 12 - the revenues from electricity distribution segment are
influenced by the recognition of investments into the network under concession
agreements, these revenues increasing in Q1 2023 by RON 65 million, compared
to the same period last year. The impact was generated by the increase in
CAPEX achieved in Q1 2023 vs Q1 2022.

Ø The revenues from the capitalization of own technological consumption
amounted to RON 21 million, representing the additional NL calculated as the
difference between the net cost with the purchase of electricity and the cost
of own technological consumption included in the regulatory tariff, for the
period 01 January - 31 March 2023. Starting with 30 September 2022, Electrica
Group applies the provisions of GEO no. 119/2022, through which the additional
costs with the purchase of electricity, realized between 01 January 2022 and
31 March 2025, in order to cover their own technological consumption, compared
to the costs recognized in the regulated tariffs are capitalized quarterly and
remunerated with 50% of the regulated rate of return (RRR) approved by ANRE.

Ø The cost of electricity purchased to cover losses in the network decreased
by RON 316 million, or 46%, to RON 377 million, from RON 693 million, the
evolution being generated by a significant decrease in the electricity
acquisition prices as a result of the implementation of the MACEE centralized
acquisition mechanism, according to which the producers have the obligation to
sell 80% of the available energy at a price of 450 RON/MWh, impact subsided by
the increase of the electricity volumes necessary to cover the losses in the
network.

Ø The net result in the distribution segment reached in Q1 2023 represents a
net loss of RON 93 million and positive EBITDA of RON 112 million (vs RON 221
million negative EBITDA in Q1 2022). The net result will improve significantly
with the entry into force of the increased distribution tariffs, starting with
01 April 2023.

OTHER IMPORTANT INFORMATION

Ø The Electrica Group distributed, in Q1 2023, approximately 4.26 TWh (down
9% compared to the same period in 2022) to a number of approximately 3.9
million users;

Ø In Q1 2023, the Electrica Group supplied to the retail market approximately
2.09 TWh  to a number of approximately 3.5 million places of consumption;

Ø According to the latest ANRE report from December 2022, Electrica Furnizare
was the market leader with a share of 17.96%. At the same time, the company
was also a leader on the SoLR (suppliers of last resort) market, with a share
of 31.21%, on the competitive market with a share of 12.79%;

Ø Electrica Group continues to pursue the expansion of its portfolio in the
field of electricity production, especially from renewable sources.

 

The results presented in this release are based on the condensed consolidated
interim financial statements prepared in accordance with the Order of the
Minister of Public Finance no. 2844/2016 for the approval of the Accounting
Regulations compliant with the International Financial Reporting Standards.

For more information about the financial results of the Electrica Group in
2022, please see the following link:
https://www.electrica.ro/en/investors/results-and-reports/financial-results/financial-statements-for-q1-2023/

 

 

Contact details:

Electrica Investor Relations

E-mail: ir@electrica.ro (mailto:ir@electrica.ro)

 

Chief Executive
Officer

Alexandru-Aurelian
Chirita

 

 

Disclaimer

This report does not represent a recommendation/ offer/ invitation to contract
or buy shares. This report contains information regarding preliminary
key-operational indicators of Electrica Group's companies, so this
forward-looking information is neither guarantees for future performance nor a
forecast for the real data or otherwise, being risky or uncertain. The real
results could differ significantly from the data in this report.

Therefore, Electrica undertakes no responsibility/liability for any damages
that may occur from using this forward-looking information. The data in this
report are selective and may requires updates, revisions and changes in the
certain circumstances. Electrica assumes no obligation or commitment to
publish any update, revision or modification of any information contained in
this report, unless required by the applicable law.

 1  Percentage value unaffected by inflation

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