REG - Soc EnergElectricaSA - Impact of GEO 119 on the 2022 Budget

Societatea Energetica Electrica SAAnnouncement

15/11/2022 16:30

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RNS Number : 5027G  Societatea Energetica Electrica SA  15 November 2022

To:                              Romanian
Financial Supervisory Authority (FSA)

 
Bucharest Stock Exchange (BSE)

                                    London
Stock Exchange (LSE)

Current report in compliance with the Law 24/2017 on issuers of financial
instruments and market operations, FSA Regulation no. 5/2018 on issuers of
financial instruments and market operations, and the Bucharest Stock Exchange
Code

Report date: 15 November 2022

Company name: Societatea Energetica Electrica S.A. (Electrica)

Headquarters: 9 Grigore Alexandrescu Street, 1(st) District, Bucharest,
Romania

Phone/fax no.: 004-021-2085999/ 004-021-2085998

Fiscal Code: RO 13267221

Trade Register registration number: J40/7425/2000

Subscribed and paid in share capital: RON 3,464,435,970

Regulated market where the issued securities are traded: Bucharest Stock
Exchange (BSE) and London Stock Exchange (LSE)

 

Significant events to be reported: Impact of GEO 119/2022 on the 2022
consolidated income and expenses budget approved by the GMS on 20 April 2022

Electrica informs its shareholders and investors about the following aspects:

The 2022 consolidated income and expenses budget of the Electrica Group,
approved by the AGM on 20 April 2022, is positively influenced as a result of
OMFP no. 3900/19 October 2022 (which provides additional clarifications to the
accounting regulations in force, supplementing OMFP 1802/2014 as well as OMFP
2844/2016), which provides for the financial treatment of the additional cost
of purchasing electricity for covering the network losses (NL) of the
distribution operators, as a result of the regulations issued by ANRE
regarding the way of recognizing in tariffs the additional costs with the
purchase of electricity for NL coverage, compared to the costs included in the
regulated tariffs, respectively Order no. 129/2022, approved as a result of
the publication of GEO no. 119/2022, amending and supplementing GEO no.
27/2022.

The financial impact of these regulations on the 2022 consolidated income and
expenses budget of the Electrica Group is reflected in the distribution
segment of the Group. On the supply segment, the Group does not currently
estimate a significant financial impact of the provisions of GEO no. 119/2022.

The Group estimates a positive impact on the consolidated budget, as a result
of the capitalization of the first intangible asset on 30 September 2022,
according to the accounting and legal provisions in force, in the amount of
RON 780 million, representing the capitalization of the additional cost with
the purchase of electricity incurred in the first 9 months of 2022, impact
that will be diminished by the negative effect that will be generated by the
first amortization related to this newly created intangible asset in the
amount of RON 39 million, amortization which will be recorded at 31 December
2022.

The value of 780 million RON was determined using forecasted, not actual
quantities for the first 9 months, according to the provisions of ANRE Order
no. 129/2022, using the average purchase price of 968 RON/MWh, compared to a
price of 392 RON/MWh, effectively recognized in the tariffs by ANRE, motivated
by the limitations of the tariff increase methodology.

Also, in the 4th quarter of 2022, the second intangible asset will be
capitalized, according to a similar mechanism, as mentioned for the first
intangible asset already registered by the Group in theQ3 2022 interim
consolidated simplified financial statements. This capitalization will
positively influence the consolidated budget through the registration of an
intangible asset from the capitalization of the NL costs, simultaneously with
the registration of revenue from the production of intangible assets. The
amortization related to this intangible asset will be recorded starting from 1
January 2023, without impact in 2022. The estimation of this fixed asset
depends to a great extent on the value of the average purchase price in Q4
2022, period that is not finalized yet and for which the electricity required
to cover the NL for December is still being purchased.

According to the legislation in force, the following intangible assets will be
created for the NL difference (in correspondence with revenue from the
production of intangible assets):

-      The first intangible asset - for the NL cost difference recorded
between January 2022 and September 2022 - will be recorded on 30 September
2022;

-      The second intangible asset - for the NL cost difference recorded
between October 2022 and December 2022 - will be recorded on 31 December 2022;

-      The third intangible asset - for the NL cost difference recorded
between January 2023 and March 2023 - will be recorded on 31 March 2023;

-      The fourth intangible asset - for the NL cost difference recorded
between April 2023 and June 2023 will be recorded on 30 June 2023;

-      The fifth intangible asset - for the CPT cost difference recorded
between July 2023 and August 2023 will be recorded on August 31, 2023.

The amortization related to the newly created intangible assets is determined
through the straight-line method for a period of 5 years, and the amortization
expense is recorded in the accounts starting with the quarter following the
one when the revenue from the intangible assets was recorded.

 

Contact details:

Electrica Investor Relations

E-mail: ir@electrica.ro

 

 

CEO

Alexandru - Aurelian Chirita

 

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