Hi, everyone. My name is Valentina Dinu. I think it is already 4 o'clock, so we can start the conference call for the financial results for the first nine months of 2023, the Q3 of this year. We are going to go ahead as usual. First, my colleague Dan Niculaie, the CFO of the company, is going to deliver the presentation, then we can go ahead to questions and answers. So hoping that everyone can hear me, I would have to kindly, kindly ask you to mute your telephone, laptop during the presentation, so can everyone hear the presentation? This being said, thank you all. Dan, you have the floor. Thank you.
Hello. Thank you very much. Welcome to the presentation. So today, as presented by my colleague, we are going to talk about the individual interim financial statements as at and for the nine-month period ended September 30, 2023. So the presentation will include, as the first section, the financial highlights, and then a discussion about sales of electricity, OpEx, CapEx, subsequent events, technical performances, and at the end, a small recapitulation of SNN details. So in terms of, financial results, quantity sold, Q3 2023, compared to Q3 2022, roughly the same quantity. However, the sales of electricity increased by roughly 15.3% in, representing an increase of, 748 million RON. In terms of OpEx, we are talking about a decrease of roughly 20%-22%.
This excludes the windfall, which was higher than the windfall paid and computed for the last nine months in 2022. We are having here a large increase of 135, almost 136%, representing RON 1.1 billion. Even though we incurred this substantial windfall tax cost, our EBITDA is roughly similar, with a decrease of less than 5% as compared to the first nine months of 2022, leading to overall, because of a better performance in the financial result, to a net profit of RON 1.9 billion, similar to RON 1.9 billion in 2022. And this is a rough presentation.
I will enter into details in the following slide, in which you will see what elements contributed to the financial performance. So, as mentioned, the net profit is a little bit higher than the net profit for the first nine months in 2022. The positive impact generated from an increase in sales of electricity, similar quantity, but higher electricity prices, decrease in traded electricity costs because we managed to have less unplanned outage hours and increase in the financial results. The negative impact stemmed from significant increase in windfall tax, the RON 1.1 billion that we spoke about, an increase in personnel cost , a smaller impact of roughly RON 70 million . On the next slide, we have a detailed breakdown of the OpEx cost.
As you can see, a large decrease with respect to the decommissioning fund. And then, roughly the same elements. So in terms of financial costs, we framed financial revenues income. We managed to extract a net gain, which led to this good financial performance. In terms of financial highlights, balance sheet, non-current assets increasing by 4%, mainly from purchase of long-term bonds, increase in financial investment in subsidiaries, and a small impact on depreciation. Current assets increasing by 7.7% because we managed to generate more cash. Non-current liability is a little bit lower because we switched, we've computed the Euratom loan, we switched it to the short-term accounting treatment.
Current liability is a bit higher, as a result of the increase in windfall tax for September, which is usually paid in about 25 days, roughly in October, and increased accounts payables from a general increase in prices. Equity, of course, with the increased, with the results carried forward from the profit of 2022. In terms of sales of electricity, you probably know that we've managed to sell, roughly half of our electricity at the regulated price of 450 RON per megawatt. On the competitive market, we managed to obtain a higher price, 50.5%.... However, the quantity was, 51.4% lower because we sold it on the restricted market, on the regulated MACE mechanism.
Spot market, a significant decrease in price with a small increase in quantity sold, and the balancing market, again, a decrease in price with a similar quantity sold. The next slide presents a more detailed presentation of the, of, what I've indicated in the previous slide. With, as mentioned, company sold electricity on competitive market at higher prices, generating additional performance. The quantities are sold on the MACE mechanism, representing 34% of the total volume of electricity sold. And on the competitive market, we sold the difference, which is roughly 42%, which is a decrease from the last year when we managed to sell on the competitive market, 86%. However, because of this positive mix, we...
The average selling price was 939, roughly RON 939 per MWh without TG, which represents a 50% increase as compared to the last year average price, which was RON 624 per MWh. On the spot market, quantity is similar, representing 13.7% of the total volume. The average price on the spot market, RON 516 per megawatt, which was of course, lower from, as compared to the spot market prices last year, when the entire market was in crisis mode. In terms of OpEx, you'll see here a detailed breakdown. The largest item, of course, is the windfall. The explanation for the increase in the windfall tax is, first of all, the amount that is taxed.
Last year, we were taxing 80% of the additional revenue above RON 450 per megawatt. In the first nine months, we and 100% of whatever was above RON 450 was taxed. So therefore, and in addition to the fact that we had an average price on the competitive market, which was higher, led to this increase in the windfall tax. Personal expenses in line with our budget, increase, slight increase in the number of employees, increase in salaries, and participation of such employees to the profit of the company. We have an increase of 32.3% due to higher utility prices for technological and non-technological water and energy.
An increase in cost of uranium fuel due to increase in the weighted average cost of fuel bundles. On the ANDR contribution for the decommissioning, no notable variation. We have an electricity transmission expense. We have an increase of 60, almost 68% to the increase of the level in transmission tariff integrated. That's it. We couldn't influence this cost. Cost of traded electricity, significant decrease of almost 92%. Our operational performance was excellent this year. We haven't had significant unplanned outages, and, in addition, we had lower cost reading balances, which led to this, significant decrease of cost. The contribution to the, to the local energy regulator, a significant increase percentage-wise, but no, no big impact. In terms of CapEx, our revised investment program is, zero point seven billion lei.
The first nine months, we achieved RON 456 million investment, which is a similar degree of completion compared to the last year, similar period. You have a breakdown on types of investments, so you'll see that ongoing investments for the large projects represent the largest of the investments, and then we have some smaller investments on tangible assets and equipments. In the next slides, we'll talk a little bit about our our CapEx our main investments and long-term strategic projects. Unit 1 refurbishment, Unit 3 and Unit 4, small modular reactors, and of course, the CTRF project, the detritiation facility project.
In terms of Unit 1 refurbishment, we've signed a pre-project engineering contract in March for about CAD 65 million with our counterpart, SNC-Lavalin, with a division CANDU of member of the SNC-Lavalin group, which is now called AtkinsRéalis. In October 2023, we signed one of the most important contract for the technologization. Basically, the contract for the supply of reactor components and the required tools. This contract will enter into force the moment when we are going to receive the corporate approvals. Basically, the shareholders approvals from both of our shareholders and the Canadian Commercial Corporation, which is part of the consortium with CANDU in this country.
With regards to Unit 3 and Unit 4, in March 2023, the Romanian State and Nuclearelectrica signed a support agreement, providing a lot of support measures for the development of the project, including the provision of sovereign guarantees, contract for difference mechanism, a lot of administrative and regulatory support. Of course, this is a presentation of the impact of such support agreement. We've made significant progress in moving to obtain Article 41 of the Euratom Treaty notification. In terms of financing, the Canadian government finally showed their support for development of the project by providing a commitment of CAD 3 billion to be deployed through EDC. Small nuclear reactors, we are receiving a lot of support from the project.
On May 20, 2023, the U.S. announced the interest of various investors in the project with $175 million and including support measures from U.S. EXIM, which is the U.S. ECA, for about $99 million under the EXIM Engineering Multiplier Program. In addition, U.S. EXIM and DFC issued cumulatively about $4 billion letters of commitment for the financing. The project company is progressing with the development of project by signing memorandum of understanding with the reputable international potential EPC developers such as Samsung, Fluor Enterprises. We are also attracting the interest from private investors with DSPE Korean Investment Fund being interested to provide EUR 75 million equity contribution for the development of the second phase of our engineering study. We call it FEED Phase II.
Of course, we are also progressing with our regulatory authorities with the confirmation of the licensing basic documentation by our National Regulatory Agency. With regards to the CTRF project, the de-tritiation facility project, you probably remember that we signed a RON 195 million engineering EPC contract with KHNP. And this contract will take about 50 months for execution. We're confident that we'll be able to achieve it in the estimated timeline. Good news, Fitch confirmed our rating. It's a BBB- with stable outlook, and this gives us comfort about the perception of the market with regards to our company. In terms of KPIs, radioactive emissions, very good. Nuclear fuel burnout factor, as anticipated, excellent.
Unit performance, the capacity factor, we are running a very very tight ship, so we are running the reactors at a very good capacity factor, cumulative nine months, almost 90%. So this is it in a nutshell. I'm here to answer any questions if needed.
Hi, good afternoon. Iuliana Ciopraga from WOOD & Company . I have a number of questions actually. So first, on the costs with the acquisition of power, you're mentioning something regarding balancing in the presentation. This is actually deducted from the Windfall Tax, right? Because I think there's a difference. So if you trade, you probably have to deduct them. You're not allowed to deduct them, but if it's balancing, you're allowed to deduct them from the Windfall Tax. Is that right?
Yes, yes, it's deducted in the computational windfall tax formulas.
Okay. Regarding the contract for retubing with CANDU , that's for CAD 65 million for pre-engineering works, not for equipment or anything else, right? I'm a bit confused on the amount.
The first one is for pre-engineering. Yes, it's basically engineering for the project.
Mm-hmm.
The second contract, it's of a larger amount, and it's for supply of the components-
But what's the value for the supply? What's the value of the second contract then?
It's up to CAD 800 million in Canadian dollar. It's going to become public knowledge at a later stage.
Okay. So it's okay. So that's the missing bit. But how do these amounts compare with the feasibility study that you released last year, I think it was? I remember you had some.
It was RON 1.85 billion,
Mm-hmm.
Euros. We are constantly analyzing the implications of any supply chain or energy impact, and we'll probably know in the next six months if we need to readjust our budget or not.
Okay. And regarding the SMRs, we saw the news that the U.S. project was canceled. So NuScale's U.S. project was canceled, and I was wondering, what would be the implications for you? You'd be basically the only one developing such technology locally. Not locally, worldwide. I mean, it proves to be quite expensive because beginning of the year, they hiked the LCOE, the costs, basically, for the projects. It seems to be quite an expensive project, where maybe in Romania it will be cheaper, I don't know. But what are your thoughts on this?
The LCOE for the carbon-free project reflects the U.S. costs embedded in the project and the financial-
Yeah, correct.
Financial structure of the project. In addition, in our understanding, the decision of the municipalities to not invest in the project anymore-
Mm-hmm
... reflects the specificity of the U.S. energy mix. And you probably know that, U.S. is producing a lot of gas at very low prices, so they need to run their numbers in order to determine which mix of energy in their portfolio is better suited to their strategic interest. And-
So at the moment, at least, you're not influenced by the decision as far as I can see. I mean, it seems that you're moving ahead with this, with NuScale. You're not changing supplier, basically. That's actually the question: Are you considering a change in technology following this?
We are trusting the SMR technology because it's suitable to replace coal producing assets. NuScale, it's the first technology which was approved through the NRC, the U.S. regulators, so we don't see a reason why to change our strategy.
I guess there are several SMR technologies approved worldwide already, right?
No. So far, with the exception of the SMR technology developed in China, there is no other SMR technology which passed the regulatory hurdles.
Okay.
NuScale, it's the first one so far, and that was one of the main reasons why we have decided to team up with NuScale for this project.
Okay. Okay. Good to know. And regarding the reactors three, reactors three and four, if I remember correctly, in the support agreement, you were supposed to call a GMS to approve it somehow. So, after the law that was passed with the support agreement, I understand that, subsequently, you needed to call a shareholders meeting to approve it. And I haven't really seen that happening. Is there... There looks to be a delay on that side. Can you provide some color here?
We are working towards convening such shareholder decision. We are focusing ourselves now to conclude the engineering contracts to support such decisions. We'll come back with news when available.
But the... So just for me to understand, so you're gonna call a GMS when you have the result of the engineering contract? 'Cause I don't think I've seen that in the support agreement. So that's actually what I'm asking.
There's a-
Why, why is the delay?
The support agreement allows us to come by the end of this year with a GMS. So-
Okay.
We'll either comply or delay. We'll see what is the best strategy.
But why haven't you concluded one yet? Why haven't you called one yet, convened one?
This is confidential information. I cannot answer to this.
Okay. So I guess you'll provide more clarity before the end of the year, just to conclude here.
Everything that is of public knowledge will be, for sure, communicated to all the investors.
Okay. That's all on my side. Thank you.
Thank you.
Any other questions, please? Okay, thank you very much for joining us. We are going to publish on our website, investor relations page, both the presentation, the audio file, and as well as the transcript. I think the transcript is going to become available starting tomorrow. As well, I would like to inform you that this conference call has been recorded for the very purpose of publishing the audio file for the interest of all our shareholders and investors. Thank you very much. Have a good evening, everyone.
Thank you. Have a nice evening.
Thank you. Bye.
Bye. Thank you.