My name is Valentina Dinu. I am with the IRO department in Nuclearelectrica, and today's conference call will address the financial results for the first quarter of 2024. We are going to start this conference call with the presentation. The presentation is going to be delivered by my colleague, Vasile Dascălu, CFO of the company. Right after the presentation, you can ask him whatever is of interest to you regarding the financial statements and results and investment project or technical and operation status quo of the company for the first quarter of 2024. This being said, Vasile, the floor is yours. Thank you.
Thank you, Valentina. Hello, everybody. The presentation will include the financial position, income statement, net results evolution, income statement actual versus budget, sales of electricity structures analysis, information regarding OpEx and CapEx, and technical performance indicators. Regarding the company's financial position at the end of Q1, we may notice non-current asset position, which remains stable compared with the previous year. The current assets are reflected by decreasing in trade receivables, mainly as a result of electricity sales reduction and increasing in cash and cash equivalents. In terms of non-current liabilities, position remains stable compared with the previous year. Regarding current liabilities, this decreased by 38% because of reduction to zero of the windfall tax due at the end of Q1.
Regarding income statement, the net profit for the first three months of 2024 recorded a 26% decrease compared with the first three months of 2023, and this is mainly due to decreasing revenues from energy sales, RON 927 million, compensated by decreasing in windfall tax expense by RON 840 million. Increase in other operating expense, RON 37 million, mainly due to increase of technological water price during this period, increase in trade electricity cost resulting from higher cost balancing market, and increase in personnel cost by RON 29 million as a result of salaries increase. Also, financial results decreased by 35%, representing RON 38 million due to lower interest revenue recording during this period. Therefore, net profit at the end of Q1 is RON 563 million. Next slide is a graphic representation of the main contributing elements to the net results.
As it was mentioned earlier, the main impact is coming from decreasing of the electricity price compensated by decreasing of the windfall tax. As you probably know, the windfall tax for Q1 2023 was 100% on the revenue exceeding RON 450 . Sales structure has seen changes in the last year. This slide is presenting the information related to the quantity sold by market and average price used into the relevant markets. We can notice that electricity sold through centralized mechanism increased from 44% to 68% in total sales. Decrease on the market, competitive market, from 55% to 32%, the sales in competitive market decreased from 55% to 32%. In terms of sales price evolution, the next slide, it's showing that, the average selling price decreased by 44% from RON 752 to RON 417 per megawatt.
On the centralized electricity selling mechanism, which is representing 68% of the total electricity sold in Q1, selling price remains stable. It's an average of RON 446 per megawatt. On the competitive market, which is representing 32% of the electricity sold in Q1, the selling price dropped from RON 999-RON 351 per megawatt. The price on the spot market decreased during this period from RON 613-RON 347 per megawatt. In terms of operational expense, besides the information already presented into the previous slides, we may notice that the operational costs are lower by 14% than the budgeted ones, and this is coming mainly from the reduction of cost of traded electricity foreseen by us. It's reduction of 47%, personal expenses by 13%, and cost of uranium fuel by 35%. The comparison between the actual and the budget is continuing on the next slide.
Here we may see that revenues are in line with our expectation, with the budget, and the operational costs are 19% lower than budget. Therefore, EBITDA and net profit are higher by 16%, respectively 18% than budgeted level. With the next slides, we'll start the CapEx presentation. The investment value of this year is RON 1.6 billion, and the degree of completion is 4.2%, in line with the schedule for Q1. Main investments and long-term strategic projects are presented within the next slides where we can see Unit 1 refurbishment elements. Here we can notice that we are in the second phase of implementation, which includes the provision of financial resources and obtaining all necessary approvals and endorsements for project implementation. As you probably notice, on February 2024, SNN signed a memorandum of understanding with SACE and Ansaldo Nucleare for the same purpose, for Unit 1 refurbishment project.
Also, the company completed a framework agreement related to preparation and implementation of the Cernavoda Nuclear Power Plant Unit 1 refurbishment project with a maximum value of EUR 243,616. This was concluded with Canadian Nuclear Partners. The main activities underway in Q1 are obtaining the environmental agreement and building permit, development of the population health assessment study with a completion date in Q2 this year. Regarding Units 3 and 4, I am stressing the support agreement between Romanian State and SNN . This support agreement allows securing the project financing by issuing the state guarantees to the project financing parties, to the lenders. Implementing the Contracts for Difference, it is a type scheme that it is allowing us to sell on the market. In-kind contribution to financing of the project by increasing the share capital of EnergoNuclear, which is the company project.
Increasing the share capital by the government of Romania with heavy water, uranium octoxide, and nuclear fuel load for the first use. General shareholder meeting on 17th of April and approve an addendum to the support agreement, where the main provision aimed at updating the budget related to stage two, LNTP, the preliminary works, and updating the data related to investment decision one and two accordingly with the current implementation schedule of the project. Related to small modular reactors, you may notice that, during this time, on 9th of April, the company together with the project company SMR announced the successful implementation of the IAEA SEED and the follow-up mission, which focused on the selection of Doicești site plant site planned for the SMR development of the first small nuclear power plant in Romania.
Also, the National Regulatory Authority issued the official approval letter in August 2023 confirming the licensing basis document, which is a conformity which is in conformity with the national regulatory requirement. Regarding the tritium removal facility project, this installation is capturing the tritium from the heavy water used in the nuclear electric power plant. This will lead to an improvement in operational performance, economic financial efficiency, and increasing protection of the population, staff, and environment. To support completion of Europe's first tritium removal facility, SNN and the European Investment Bank have signed a loan agreement in value of EUR 145 million. Also, Nuclearelectrica and Korea Hydro & Nuclear Power signed on June 2023 the EPC contract, engineering procurement and construction contract for the completion of this first Europe nuclear waste disposal facility at Cernavoda nuclear power plant.
Main activity underway in Q1 for this project, it's evaluation of the documentation for long-cycle equipment. From a KPI point of view, we are in line with the limits. We keep the limits. The radioactive emissions, it's good with good results. The same results were obtained for the fuel burnout factor and also for the capacity factor, which hit 97.9% at the end of Q1 this year. The presentation, it's ended here. If you have questions, we are at your disposal, please.
Hi. Thank you very much for your presentation. Congrats for the results. I had two questions. If you could detail a little bit what happened to the balancing market in the first quarter, leading to that increasing cost, because I'm not very clear what was the cause for that. And there were some distortions, not only in your case, but in other market participants. And this is the first question. The second question is regarding what do you see now in terms of sales mix? If you can comment, we are already in the middle of the second quarter, since MACEE has become optional. So what do you see and what is your strategy in regards to the sales mix after 1st of April? If you can comment on that. Thank you so much.
We are not able to navigate the market in this moment.
What we can notice is that the market is stabilizing, and we'll see the results for the next quarter and we'll comment on it.
Yes. What about what happened in the balancing market in the first quarter? Maybe you can comment on that.
Well, yes. During the first quarter, we had to cover, you know, let's say, the variable prices that appear on the market. And the cost that we have, it was lower than the one budgeted anyway, meaning that we foreseen this variation.
Thank you.
Yes, Laura, please. Hello. Laura Simion, BRD. Thank you for the presentation. I have a follow-up question regarding sales mix. So in the first quarter, you have a higher than usual number of sales on the spot market. And if you could comment on the reasons behind it, because we know your strategy is to sell as much as possible on the long-term market. And if I remember, in the budget, you mentioned that about 43% of this year’s production was already contracted, and I assume it was on bilateral. What, and I saw, for example, in April, according to OPCOM reports, some quantities are already moving on the foreign markets. So how do you see for the rest of the year this mix between bilateral and foreign markets? Thank you.
As I had mentioned earlier, we are not able to comment on what will happen in the next period. We took all necessary measures during the Q1 to adapt to what was happening in the market.
What about the spot market in the first quarter? The quantity was higher than usual. Usually, you had up to 20%, and now you had over 30%.
Yeah. We adapted to what happened in the market in Q1, and you can see here the results.
You had additional quantities, some contracts that were canceled because the production, it's the same. You are forced this, this is the question, because the price was also lower on the spot market. You're forced to sell there?
No, we are not forced to sell there. We catch the market, where the market helps us to sell on the best price.
Yes, but why not selling on the foreign market at a higher price? The price on the spot market was lower.
This was the decision at the time, we sold this price, and we took a good decision at that moment.
The quantities that you already contracted last year for this year, can we assume that the price is RON 450?
No, 450, it's the mechanism that it's imposing us the price. And as you can see, the sales in the regulated market it's 67% of total sales.
I was referring to the quantities you mentioned in the budget that were already contracted for this year's production. And I assume if you signed this contract last year, the price should be around RON 450 . Is that correct?
No, we don't have, let's say, contractual terms at what you are referring to. We always are looking to have a long contract, but I don't get your question exactly.
So in the budget you published, you mentioned that you have, to say, free energy for this year about 57%, that the rest was already contracted last year. And I was asking, because the price on March last year was RON 450 , if we can assume that for these quantities for which you signed the contracts last year, the price is around this value.
Yeah. What I can tell you is that we don't have a long-term contract. We had contracts for quantities, and not for a long-term contract what you are looking for.
By long-term contracts, I include there all the quantities that are not sold on the spot market. So they could be, I don't know, six-month contract, contracts, one year, and so on.
Yeah. What we can do and what we are doing is that we are looking to sign contracts in advance, but we are not signing contracts for long-term period. This is a strategy that we adopt in time, seeing what is happening on the market.
Okay. I don't have any other questions.
Okay. So I believe it's my turn. And also, hi, hello. It's Andrei from KBC Securities. Thank you for the presentation. My question, so I have two questions. The first one relates to the current serious reform of the Romanian power market. I'm wondering, what are comments on this reform? I mean, is this working properly, or still there's some gaps in the system? I don't know. Do you see some further discussion on more amendments to this mechanism, or it appears that it is complete right now?
If you are talking about regulated market, where we are selling, we notice a change during this year, and we expect, as it is mentioned in the legislation, to end somewhere next year in March, at the end of March.
Mm-hmm. Okay. My second question is related to Units 3 and 4 and construction. So, what is the next key step in this project? And I don't know, when can we expect something meaningful? Yeah. That's all. Thank you. See you. Thank you.
Yeah. The company project it's working on, the following steps, and you should be informed and keep informed during the project, during the evolution of the project, and we should announce the media on the next steps and on all important next steps.
Any further questions, please? Well, if not, thank you very much for joining us in. We are going to publish both the presentation and the audio file, and my best guess is that tomorrow you are going to find as well the transcript of this conference call. Thank you all. If you have any further questions, please email us, call us, and we will be here to answer them. Thank you again. Have a good afternoon. Goodbye.