Ladies and gentlemen, thank you for standing by. The Electrica teleconference is starting now. Thank you.
Hello, I'm Raluca Kasap, Head of Investor Relations, and together with the entire Electrica management team, I'd like to thank you for joining our call today to present the Q3 financial results. Those of you who are connected only by phone, please download the presentation in PDF format available on our website under Results and Presentations section of the Investor section.
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We kindly ask you to see the disclaimers on slide three of the presentation. Now, we'll begin the presentation of the financial results, which will be followed by a questions and answers session. Should you have any questions during the presentation, you may send them either by email at iar@electrica.org through the web or audio questions. Now, at this time, I would like to turn the conference over to Mr. Chiriță, Electrica CEO, to begin the presentation. Thank you.
Dear ladies and gentlemen, on behalf of the Electrica team and myself, allow me to welcome you to the 2024 Q3 financial results presentation following the financial report released on the 15th of November, and as always, I'm happy to have such a distinguished group of professional experts and investors joining us today. As you all are familiar with the structure of our event, at the end of the presentation, we encourage you to take full advantage of this opportunity and challenge us with your questions.
The insights and perspectives you bring into discussions are much appreciated and helpful. The consolidated results for this period highlight the complexity of our economic and regulatory environment and our commitment to addressing these challenges responsibly and strategically. We have intensified investments and made significant progress in our strategy.
Our investments in modernizing the distribution infrastructure reflect our determination to provide high-quality services to nearly 4 million users. Our dedication to optimizing operations, strengthening our regulated asset base, and enhancing resilience remains unwavering. We are committed to the energy transition and have made progress in the expansion of our renewable energy portfolio.
Since our last webcast, we have made progress. Our photovoltaic park, Vulturu, is in the testing period, connected to the national energy system starting at the end of October 2024. The works for Satu Mare 2 Photovoltaic Project, with partial funding from the PNRR program, are in an advanced phase of execution, which will be completed this year. We have also secured in October 20% more of the share capital of the Crucea Wind Park project. We now own 60%, and yesterday we applied for the newly established CfD scheme.
For the Satu Mare Three and Bihor Photovoltaic Project, we are working on launching the EPC acquisitions soon, after our shareholders approved 11 days ago the investment. I take this chance to thank our shareholders for their trust. We are already working on implementing the resolutions from GMS at the beginning of this month, and I refer here to the launch of our bond program and the syndicated credit facility meant to optimize our loan.
Our most important strategic objectives are improving the performance of the managed infrastructure and accelerating the digital transformation of the business. As I said, we remain focused on our key priorities: investing in the grid, investing in renewable energy production projects, while maintaining a strong focus on implementing measures aimed at stabilizing the results and generating sustainable long-term growth. We are working tirelessly to access as many non-reimbursable funds for investments as possible.
To date, our distribution subsidy has been about RON 2.2 billion from the modernization fund, approximately 10% of the total financing already signed on the modernization fund, and has 12 more sub-projects submitted. We have also secured new financing for investments in green production and electricity storage. As to the financial results, we achieved an EBITDA of RON 1.06 billion , an operational profit of RON 623.7 million , and a consolidated net result of RON 302.4 million, in line with our original annual projection.
As in the previous quarter, the performance of the distribution segment was exceptional: 8.1% increase in revenues, due mainly to the higher volume and higher tariffs, while in the supply segment, we recorded a decrease of 15.2% compared to the first nine months of last year, due mainly to lower subsidy revenues and lower supply volume. I will now let our CFO, Ștefan, give you all the details on the financial results. Any questions will be answered at the end.
Thank you, Alexandru. Good afternoon to everybody, also from my side. I would suggest that we go to slide 13, the first slide in our deck of financial results with the summary of consolidated financials. I will pose some comments on this, so in comparison with the previous year, we have a decrease in the revenues, which is related to the decrease of the prices of energy in the market. In terms of EBITDA and EBITDA margin, I would mention that, as you see, we are at similar levels nine months 2024 compared with 2023 in terms of the value of the EBITDA and in terms of value percentage of the margin.
As net result and net result margin, there is a slight decrease compared with last year, but we have posted a solid 302 million RON net profit nine months 2024, which we believe is in line with our forecast and makes us better positioned for staying within the budgeted figures for the year. Also, on that debt, as you can see, has remained relatively stable. There is a slight decrease. We benefited from the cashing of a significant amount of subsidies in July, and we managed this liquidity until now. Nine-month position is RON 3.7 billion . Moving to the next slide, slide 14.
In terms of the consolidated EBITDA and net result evolution, the consolidated EBITDA for nine months compared with nine months 2023 has a variation of RON 125 million , which is mainly due to the following elements: a positive variation of the energy margin of RON 89 million, a negative variation of OPEX of RON 211 million. This combined gives the result of minus 125 million. In terms of the variation of the energy margin, we have a positive result from the distribution segment, which is related to two elements.
First is related to the increase of tariffs in energy distribution. Second is also an increase of the volumes of distributed energy by approximately 5.1%, and then we also have an impact related to the decrease in the energy purchase to cover network losses.
It's also related to the margin until mid-year this year, but it's also related to the performance of our team in the distribution in respect of purchasing energy to cover the network losses. On the supply segment, we have a RON 326 million negative impact in terms of the margin. This is coming from several causes. One is related to the decrease of the sales volumes and the decrease of the purchase cost.
This is also to be connected to the fact that, according to the last form of the government ordinance 27 of 2022, as you know, we have the cost-plus method. So basically, also the contract price and final price calculated to the consumer starts from the purchase cost realized, and then we add the supply component. And in this way, when the purchase cost is going down, with the supply component being stable, this is also affecting the revenues.
And then we have also an impact related to lower amounts related to subsidies from the Ministry of Energy and ANPIS in correlation also with the decrease of prices of energy. But out of this, there is also approximately RON 245 million impact, negative impact, which is related to the changes introduced by the new NRA guide from 29 July 2024 regarding the new calculation of the amounts to be recovered, especially in relation with the balancing market.
In terms of negative variation of OPEX of RON 211 million, we would comment that this is to be split in the following main elements: negative impact in terms of expenses with salaries in the distribution segment in relation with the negotiation of some increases in benefits in order to align the remunerations under the collective labor agreement.
We have also a negative impact of RON 77 million in operating expenses, which is due to the increases of expenses with penalties. In some cases, we are using also this as a financing element related to the fact that we have some delays in cashing in the subsidies from the state. And then we have also negative impact from the change of provisions for risk and expenses of RON 30 million, mainly for the supply segment.
In terms of the variation of the net result, it's nine months 2023 versus nine months 2024. It's minus 188%, which is mainly related to this variation of RON 125 million in EBITDA. And then also a negative evolution of the financial result with RON 21 million related to increase of costs with the interest as we continued to finance the support scheme.
Then the increase in amortization and depreciation of assets, RON 50 million, which is also related to the evaluation of assets that we had done at the end of last year with a small positive effect impact in profit tax. Going to the next slide, you have the highlights on the distribution segment in slide 15. They were pretty much covered in the initial slide.
What I would mention in addition in respect of the details mentioned on the initial slide is that the favorable impact of the distribution segment results is mostly related from the decrease in network losses cost by some RON 83 million net with income. So in the first nine months 2023, this cost was RON 671 million net with income. This is related to decrease also of network losses quantity with 12%, but also the decrease of the average purchase price.
In terms of net debt, on the distribution segment, we have a minor increase of RON 22 million compared with year-end 2023, which is to be put into perspective in comparison with also the increase of cash and cash equivalents. Yeah, we have RON 409 million increase of cash and cash equivalents, which were used to decrease in the overdraft. And the increase of the bank borrowings is also related to putting some of the debts which are on short term on medium term.
So basically decreasing on overdrafts and moving the debt towards longer term to match the recuperation of amortization of network losses from 2022. You have also the graph related to the evolution of EBITDA nine months 2023 versus nine months 2024. You see that the most important contribution is positive contribution is from energy revenues and network losses cost.
Then on the other elements, the other elements are relatively stable in comparison to 2023 versus 2024. On the next slide, you have the main elements of distribution segment. On slide 16, I would mention that for the first nine months of 2024, we have in realized value only RON 27 million as capitalized values for network losses. So this shows that the performance of the effective price of purchasing the energy for network losses was very, very close to the budgeted and to the exact figures. Then the next slide 17, you have the usual split and analysis that you, some of the analysts requested. Going in the initial slide, you see from the regulated asset base yield rentability to the net result.
And then, in the next slide, you have, yeah, the portion from regulated profits to the net result, and then going also with the adjustment IFRS to show the net result IFRS. And then, slide 19 shows the analysis of the regulated net result for nine months 2024. The first two slides were related to the budgets to understand the logic. Unfortunately, we cannot split that on quarters because we don't have the split of some elements of that under the NRA agreed amounts. But here also, you can see starting from the total net revenue, the amounts related to network losses realized, OPEX, and then the differences between accounting depreciation, regulated depreciation.
You can see the composition of all the costs up to the operating result, and then to the result according to the statutory OMFP 1802, and then the adjustments up to the IFRS result for the distribution for nine months. Then you have in the slides 21 and 22 the details of the operational performance for the distribution in there as a whole, and then the three regions as per the reporting that we got used to, and then some comments on the slide 24 related to the degree of realization of the commissioning of the investments, and also the evolution of the network losses and distributed energy. Slide 25, it's the summary of the supply segment.
Here on this slide, I would mention, in addition to what I have presented at the beginning of my presentation, that in terms of net profit, the net profit decreased by 438 million RON, mainly from the evolution of EBITDA, and then with the negative impact also from the financial result, 28 million RON, and also a positive element of decrease of the income tax as a result of recognition of receivables with deferred tax according to IAS 12.
In terms of net debt, net debt also decreased by 300 million RON compared with the year-end 2022, 2023, as a result of the fact that we cashed in the subsidies at the beginning of July, and this was used to repay a significant part of the overdrafts and bank borrowings.
Then slide 26 is the position, the competitive position of Electrica Furnizare on the supply market in the first half of 2024. First half, we're still the largest supplier in the market, and for July, the second largest supplier on the market. Slide 27 brings you the key aspects at quarter three in terms of the split on the market segments, competitive, universal supplier of last resort, and also evolution of the number of consumption places and volume of electricity supplied, with the key operational indicators also being presented from the evolution in the last three years on slide 28. Slide 29 and slide 30 bring some summaries related to financial impact of the electricity market in terms of changes in the legislation, evolution of the purchase cost.
As you can see in slide 30, in the graph presented there, you see the evolution of the prices on the balancing market and also the evolution of the prices in the day-ahead market. There is a certain volatility, especially on the balancing market. You can see the period that we were also mentioning in our previous investor presentation, the period until in the summer when we had significant periods with negative prices in the balancing market. At the end of July, this situation was coming down, and we saw a relatively smoother evolution of the balancing market. Also in terms of supply, slide 31, in terms of receivables, in terms of total outstanding receivables adjusted with the turnover, we have, I think, for the first time in a long period, an increase.
But this increase, which is related to the fact that, first of all, we changed the core system, and with the migration from open to SAP IS-U, there was a delay in invoicing that we started to recuperate. And also starting September, there is a recuperation of that part. And then we also had the situation where for a period, we were not able to issue disconnection notices, which we were able to restart issuing since June, and with the disconnection process starting from early July, and this is always helping with the collection. In terms of IFRS 9, the amount that we have as a debt allowance, it's RON 166 million, and it's related to historical amounts. We really don't still, we don't consider that we have a collection element related to collecting from the customers.
It's just some delay, which is, as in the previous couple of years, generated by the delay in invoicing, either related to technical elements, like it was the case now with the migration to SAP IS-U, or changing the algorithm as a result of the change of the legislation under the 27. So this is the element which might induce apparently an idea of increasing outstanding receivables, but in fact, it's not related to the payment compartment behavior of the consumers. In terms of Electrica Serv S.A., we are having net results for nine months slightly above zero, RON 0.4 million. And in terms of EBITDA, we have an increase in EBITDA reaching a value of EUR 4.5 million around, sorry. A lot of that is related to the evaluation of the fixed assets.
Also, revenues. I would mention that the revenues in nine months 2024 compared with nine months 2023 have a slightly positive evolution as a result of the increasing projects for green energy, photovoltaic projects executed in this period. In terms of production segment, slide 33, we have a decrease of EBITDA in nine months 2024, which is generated by the decrease of the prices, energy selling prices compared with previous year.
The net result is decreasing by RON 1.9 million as a result of this evolution of EBITDA, but offset by the financial result improvement of RON 2.2 million, which is related to the fact that by merging some of the companies in Electrica, the loan to those subsidiaries basically disappeared. So we don't have on the production segment that component related to interest costs.
For the new projects, for the development part, we are capitalizing the interest aspect of the legislation. This shows the improvement of the financial result related to production segments. In terms of liquidity, slide 34, we are in the best liquidity position after 2022. After we had the support scheme in place, there is 641 million RON cash position, effective cash, and then another 938 million available lines to be drawn at the end of September 2024.
This would position us, would put us in a good position to, yeah, continue to go on with the liquidity, fulfilling our obligation until the end of the year and over the horizon of the end of the year. You have also the slide with the distribution of dividends that you already know. We comment on that also on our previous investor day. I would stop here with my speech and would welcome your questions. We are prepared to answer your questions. Thank you.
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Thank you for your question. I will start with the first. Thank you, Kaius, for the remark related to results. We also thought that we will surprise in a good way the markets with the result of quarter three, which are showing our reports and are showing the approach of a portfolio of businesses. Basically, one line of business, be it the supply, is and was affected by the part related to the balancing market in the summer. We were able to post a very good performance on the distribution business.
Yes, you are right. The distribution assets, which are financed by non-reimbursable funds, by EU funds, are not considered as a part of RAB, but we are not getting the RRR on it. It's only the part which is not eligible from the project, yeah, the part which is financed by them, which is subject to the RRR, but the part which is financed by the non-reimbursable funds is not subject to RRR.
However, we should mention that there is an incentive of 0.5%, so not 1% like in the past, but 0.5%, which will be granted for investments in networks made within the projects, co-financed from non-reversible funds. Since we are at the distribution, I will also look at the next question on the distribution. So for distribution, I was wondering if you are still able to secure a significant part of the energy through MACEE or do you rely more on the spot and wholesale markets? The fact is that after in April, the MACEE became voluntary, the amounts in MACEE decreased and by mid-year, so from the summer, there are virtually no amounts in MACEE. So we are relying on the performance of our teams and purchasing energy in term contracts and also balancing market and day-ahead market.
We are happy with the performance we are achieving on that side. In terms of the supply, so do you publish any guidance in respect of the percentage of customers that under specific threshold of consumption, roughly how many are among the 100 kilowatts and so forth? Of course, we have this analysis as part of our segmentation of the customers, but it's not something that we will put on public because it's also a matter of competitive advantage knowing our customer in the supply market in front of our competitors.
However, it should be mentioned that in case of many households, yeah, there is a significant portion of households, including in the city areas, not only rural areas, which are able to stay within 100 kilowatts. Then also many of them usually for the households not exceeding 300 kilowatts.
The high demand for electricity in the last couple of months has caused high imbalances, which led to higher acquisition prices. But I was wondering if the increased sourcing costs are also affected one or another as revenue to the invoices and the final customers. Now, we have two types of capping in relation to that. First of all, I was explaining the presentation. Basically, we have the price that we are invoicing to the customer is determined under the method of cost plus.
So basically, we are starting from the acquisition price and ending the supply component. And then there is also the element related to the balancing cost. For the balancing cost, we have a specific capping, yeah, for those costs which are accepted under the government ordinance 27. The only amounts which are accepted are under the cap of 5% of the values of the energy supplied.
We have this kind of limitations. We are not able to pass this to the customer. We had this situation in the summer where we had significantly higher prices and negative prices in the balancing market. This is related to several elements, also the fact that we moved to 15 minutes balancing of the balancing market, yeah. Previously, it was one hour matching, and now we have 15 minutes matching.
And then there is also the situation related to some elements regarding legislation. So for example, obliged by the legislation to take energy from the prosumers to pay the average price on the portfolio, on the acquisition portfolio. And then if there is surplus, I will just give that energy in the energy market, in the balancing market for negative prices, being forced to generate the losses. So there is matter also about fine-tuning of legislation.
Also, since we are Supplier of Last Resort in the month when we need to take customers from the market, this is very difficult to balance. I mean, we are taking everyday customers, and we are in the situation in which, yeah, for these customers, at least in the short term, we need to cover them from balancing markets. So this is also an impact. It's a situation which affects, in fact, all the major suppliers.
In terms of the gas purchases made on this quarter, on this amount, I'll need to, yeah, we have in the financials, the portion related to purchase equity. Can we expect the quarter four consumption to be covered from the reserves as well? We had some acquisitions of gas in the Q3, but it was not significant. So it was really not significant.
It's true that the expectation was to cover it from the reserves. Okay. I understand that Vulturu project has been connected to the network. Okay. Vulturu, yeah, what does it mean? Vulturu supplies energy to the system, yeah. And currently, in this testing phase, the price of the energy supplied is determined according to the methodology of the regulator, ANRE. We expect the electricity prices to rise, but we are waiting to see exactly how the energy and gas market will be evolving after it will be liberalized after quarter one next year. How do you expect the supply price to evolve post-lifting of the caps at the end of Q1 2025? Do you see any efforts progressing in defining the vulnerable customer? Any idea of how would that work, if at all?
There are discussions about defining the vulnerable customer and how would be the mechanism, which would be the criteria, which would be the entities which will ensure the filtering and the registration of these customers, but it's not yet clarified. When this will be more, we'll have more visibility on that, we will communicate. In terms of evolution of the prices, what I know and what we know is that the authorities confirmed that they are considering an energy release program in a similar way like the gas release program under the support scheme for the gas.
This is related to the fact that after the end of the support scheme, there should be some quantities guaranteed to be provided on the forward contracts on the forward market, so that not all the quantities remain in the day-ahead market and in the balancing market.
This should, yeah, we are not looking for guaranteeing prices, but guaranteed quantities which to be also on the forward contract so that we don't have spikes in the day-ahead market and in the balancing market. Now, since we are also in this support scheme, maybe adding something to the question about recuperating from the customer. As I mentioned, the limit is 5% for the balancing cost, and then there is a limit of 700 RON per megawatt at acquisition price, which is not currently an issue under the current market prices.
For the selling at the prices under the cap price, which might be the case for some customers, we invoice the customer only if the increase of price plus the supply market or supply component of 73 RON per megawatt gets us to a lower price than the contracted price.
If the Constitutional Court does deem the windfall taxation as unconstitutional, would that impact supplier at all, including the funds still to be received for the state? I think that the impact, this is still under analysis. It's a complex issue, but this is related not necessarily to what we need to collect from the state, but it's mostly related to how the state was funding the support scheme and the payments to our assets about how the state was funding the transition energy fund.
This is still to be monitored, but in terms of the amount that we need to receive, I think this will not be impacted in terms of recuperating the respective amount. I think this should cover most of the questions if you think of it. Yeah, I think we've covered most of the questions. Yeah. If you have further questions, we are waiting for them. If not.
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Okay. As there are no more questions, we thank you again for the participation. We are always available if you have any more questions, and we are really optimistic on the future ahead. Although there are tough times, I'm sure together we will go through them. Thank you.
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