REG - Soc EnergElectricaSA - Q3 2022 Report

Societatea Energetica Electrica SAAnnouncement

15/11/2022 16:30

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RNS Number : 5023G  Societatea Energetica Electrica SA  15 November 2022

Executive summary - 9M 2022

§ The consolidated net profit of the Electrica Group, for the first 9 months
of 2022, is RON 534 mn, an increase of RON 462 mn compared to the same period
last year

§ EBITDA recorded a value of RON 1,104 mn, an increase of RON 629 mn compared
to the first nine months of 2021

The operating revenues of Electrica Group, in the first nine months of 2022,
recorded a value of RON 10,221 mn, an increase of 5,061 million RON compared
to the same period of the previous year.

Supply segment:

o  revenues from the supply of electricity and natural gas increased by RON
1,886 mn, mainly from the net effect of the 54% increase in sales prices on
the retail market and the reduction by 9% of the amount of energy supplied on
the retail market;

o  revenues from subsidies amount to RON 2,063 mn, recorded in 2022 without
having a corresponding value in 2021, as a result of the application of the
electricity and natural gas price ceiling mechanism, the reimbursements
requests for the amounts owed being submitted in 2022 also for the differences
from 2021.

Distribution segment:

o  the electricity distribution revenues have increased by RON 536 mn,
positively influenced by the increase in the distribution tariffs starting
with 1 January 2022, by an average of 8.6% compared to 2021, followed by the
average increase in distribution tariffs by 20.3% on 1 April 2022, compared to
the first quarter of 2022, offset by the negative effect of the decrease in
distributed electricity volumes by approximately 3.2%;

o  the revenues from the production of intangible assets, worth RON 780 mn,
are recorded in 2022 without having a corresponding value in 2021 and
represent the capitalization of the additional cost with the purchase of
electricity made in 2022, in order to cover the NL (network losses), compared
to the costs included in the tariffs approved by ANRE for 2022.

In the first 9 months of this year, the Group recorded a good performance in
the supply segment, achieving a net profit of RON 239 mn and a positive EBITDA
of RON 327 mn (September 30, 2021: loss of RON 23 mn and negative EBITDA of
RON 18 mn), mainly as a result of the increase of revenues due to the increase
in electricity sales prices combined with the internal efforts to mitigate the
risks regarding the purchase of electricity needed for resale and to control
operational costs.

In the distribution segment, the result recorded in the first 9 months
represents a net profit of RON 314 mn, a significant positive impact being the
result of the capitalization of additional costs with the purchase of
electricity to cover network losses (NL), in the form of revenues from the
production of intangible assets worth RON 780 mn for the period from 1 January
2022 to 30 September 2022. The additional costs consist of the value
determined as difference between the purchase price of electricity for
covering NL versus the ex-ante purchase price recognized by ANRE in the
related regulated tariffs for 2022, multiplied with the quantity attributed to
the network losses (NL).

The capitalization of the additional cost with the purchase of electricity
made in 2022, in order to cover the NL compared to the costs included in the
approved tariffs for 2022, is provisioned in GEO no. 119/2022, for the
modification and completion of GEO no. 27/2022, and ANRE Order no. 129/2022
approving the Methodological Norms regarding the recognition in the tariffs of
additional costs with the purchase of electricity to cover network losses
compared to the costs included in the regulated tariffs published in the
Offical Gazette no. 1019/19.10.2022.

According to the relevant legislation, the capitalized costs are amortized
over a period of 5 years from the date of capitalization and are remunerated
with 50% of the regulated rate of return (RRR) approved by ANRE, applicable
during the amortization period of those costs. They are recognized as a
distinct component in the regulated tariffs, called the "component related to
additional costs with NL".

Also, as a result of GEO no. 27/2022, the distribution tariffs have registered
an increase starting with 1 April 2022 to cover the additional costs related
to NL from 2021, estimated at 363 million RON. Thus, starting from Q2 2022,
for the distribution operator within the Group (DEER), the tariffs have
increased by approximately 28%, on average, compared to 2021. Implicitly, the
revenues from electricity distribution are higher, thus covering the
difference between the price recognized in the tariffs and the one achieved in
2021, with a favorable impact on the operational performance for the
distribution segment. The tariffs applicable starting with 1 April 2022 will
not change until 1 April 2023.

The consolidated EBITDA has a positive value of RON 1,104 mn, up by RON 629 mn
compared to the value in the first 9 months of 2021. The increase in EBITDA is
mainly determined by the capitalization of NL.

Evolution of the main indicators in the first 9M of 2022:

§ EBITDA - positive, amounting to RON 1,104 mn, an increase of RON 629 mn
compared to the first nine months of 2021

§ Net result - profit of RON 534 mn, an increase of RON 462 mn compared to
the first 9 months of 2021;

§ The volume of distributed electricity decreased by 3.2% compared to the
first 9 months of 2021;

§ The volume of electricity supplied on the retail market decreased by 9%
compared to the first 9 months of 2021;

§ The revenue from the production of intangible assets in the amount of 780
million RON, representing the capitalization of additional costs with the
purchase of electricity in order to cover NL;

§ The revenue from subsidies in the amount of RON 2,063 mn, representing
amounts related to the reimbursement requests resulted from the application of
the electricity and natural gas price ceiling mechanism;

The main results are presented below and are extracted from the simplified and
unaudited interim consolidated financial statements as of and for the period
ended 30 September 2022:

 Financial Results**                                9M 2022    9M 2021    Δ

                                                                          (RON mn.)
                                                    (RON mn.)  (RON mn.)
 Operating income, out of which:                    10,221     5,160      5,061
 Revenue from subsidies                             2,063      0          2,063
 Revenue from the production of intangible assets*  780        0          780
 Operating expenses                                 (9,489)    (5,045)    (4,444)
 EBITDA                                             1.104      475        629
 Operating profit                                   732        115        617
 Net profit/loss of the period                      534        72         462

Source: Electrica

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

** Amounts are rounded to the nearest whole value

Operating expenses increased, mainly as a result of the increase in
electricity prices, the largest share being recorded in the cost of energy
purchased for the purpose of resale, for the supply segment.

OTHER IMPORTANT INFORMATION

§ Electrica Group distributed, in the first nine months of 2022,
approximately 13.4 TWh (3.2% decrease compared to the same period of 2021) to
a number of approximately 3.85 million users;

§ In the first nine months of 2022, Electrica Group supplied to the retail
market approximately 6.4 TWh (9% reduction compared to the same period of
2021) to a number of approximately 3.51 million consumption places.

Statement of Alexandru Chirita, CEO of Electrica S.A.:

"If the results recorded at the level of the Electrica Group in the first half
of the year were marked significantly by both the external context and the
changes in the domestic regulatory framework, at the end of the nine months of
2022 we are happy to be able to see that the efforts made by the whole team
are reflected in the obtained positive results, especially considering the
ongoing challenging conditions in the energy market. In this regard, I want to
thank my colleagues for the involvement, dedication and efficiency that they
have shown during this period.

Moreover, we have maintained our role as a responsible company towards our
employees, customers, shareholders and partners and, in addition to ensuring
solid prospects for the development of the companies within the Group, we have
been able to quickly respond and adapt to the challenges which continued to
appear. As a result of all these efforts, at the end of the third quarter of
the year, the values of the most important financial indicators of the
Electrica Group are above those of the similar period last year: the value of
the consolidated net profit exceeded the one recorded in 2021 by RON 462
million, reaching RON 534 million, EBIDTA increased by RON 629 million,
reaching RON 1,104 million, and the operating revenues increased by RON 5,061
million, to the value of RON 10,221 million.

These results, as well as the strong team that we have, make us confident in
the business strategy we have adopted at the Group level and in the decisions
taken, and we will continue to pursue the sustainable development objectives
of all our business segments, in parallel with maintaining a high degree of
resilience in the face of future challenges."

 

Starting on 15 November 2022, 20:00 p.m.  (Romanian time), the simplified
consolidated interim financial statements as of and for the nine-month period
ended 30 September 2022, drawn up in accordance with OMFP no. 2844/2016, for
the approval of the Accounting Regulations in accordance with the
International Financial Reporting Standards adopted by the European Union with
subsequent amendments, and the consolidated directors' report for the
nine-month period of 2022 will be accessible, both in Romanian and in English,
in electronic format, on the company's website, at www.electrica.ro, section
"Investors>Results and Reports>Financial Results", at:
http://www.electrica.ro/investitori/rezultate-si -reports/interim reports/
(http://www.electrica.ro/investitori/rezultate-si%20-reports/interim%20reports/)
..

 

All these documents may be accessed also in hardcopy, at the Company's
headquarters in Bucharest, 9 Grigore Alexandrescu Street, District 1, which is
open from Monday to Thursday between 08:00-17:00 (Romanian time), and on
Fridays between 08:00-14:30 (Romanian time), excepting the legal holidays.

The support documents for 9M 2022 results are available on Electrica's website
at this link
(https://www.electrica.ro/en/investors/results-and-reports/financial-results/financial-statements-for-q3-2022/)

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.

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