Okay, thank you very much. My name is Valentina Dinu. I am with the investor relations department at SEK. This conference call addresses the financial statements for the 1st quarter of 2023. The presentation is going to be delivered by Mr. Dan Niculaie-Faranga. He's CEO of the company. After the presentation, we can go to questions and answers. Dan, the floor is yours. Thank you very much.
Hello. Good afternoon, everyone. Thank you for participating in this presentation. Today, I'm going to present individual interim financial statements as at end for the period of three months ended March 31, 2023, basically the 1st quarter of this year. The presentation will include a presentation of the A short presentation of the financial statements, starting with the profit and loss statement. As you can see from this slide, the quantity of energy sold in the 1st quarter of this year was almost identical with the one in the quarter of 2022. Small variation. The sales of electricity was including thermal energy, was about 2.09 billion RON, higher than the one in Q1 2022. The operating expenses were higher than the one in 2022.
For this reason, the EBITDA and the net profit is slightly less than the one in 2022. The reason why the revenue is higher, it's based on the fact that we were able to sell almost 50% of our eligible quantity at higher than prices, average prices than RON 450 per MW. In terms of operating expenses, we have a significant impact on this, we call it contribution to the Energy Transition Fund. I will present the detailed impact in a later slide. In terms of the breakdown of this net result, you'll see here that in 2023 1st quarter compared to the 1st quarter of 2022, we have a significant increase in windfall tax contribution.
It's almost RON 400 million impact, higher Energy Transition Fund contribution. Increase in personal costs is a relatively small amount. Increase in sales from increase of electricity with a positive impact of RON 150 million. We managed to derive a good financial result with a net impact of RON 104 million. In terms of balance sheet position, nothing significant changed here. We have a small increase in current assets, mainly coming from the fact that we've invested profitably in long-term bonds issued by a local bank, CEC bank, with a fixed annual interest of 7.5%. We granted some loans to our subsidiaries.
In terms of current assets, of course, we have an increase of 15%, mainly derived from the increase in cash and cash equivalents, and increase in trade receivables by 37% because of the fact that we managed to sell half of our, almost half of our quantity at higher than anticipated prices. A small decrease in our loan with Euratom. Of course, an increase in our current liabilities, mainly because of the fact that we are paying this contribution to the Energy Transition Fund in April, so therefore we have a payable. Equity, the corresponding impact, the result of the pro-profit being carried forward. The next slide presents a detailed picture of income statement.
The highlights were presented in the slides, in the 1st slides. However, what I wanted to point out in this financial highlight income statement is the fact that we managed to sell almost the same quantity of energy for a higher revenues compared to the 1st quarter of 2022. It's almost with RON 50 million more than as anticipated in our 3-month budget. In terms of operating expenses, you'll see that we have a significant impact from the contribution to the Energy Transition Fund, higher than the budgeted, and of course, much higher than the one in the 1st quarter of 2022.
Another good news is that we managed not to purchase electricity because we managed to keep the reactors almost uninterrupted in this three months beginning. Therefore, the cost of traded electricity is insignificant compared to the budgeted value. EBITDA almost RON 1 billion, RON 956 million, which is higher than the budget. The net profit is similar. It's almost 38% higher than the budgeted amount. The next slide presents a breakdown of the impact on sales. You'll see that with this green shadow, you'll see the positive effect on our electricity sales evolution. With the other colors, you'll see the negative impact.
In terms of more detailed analysis of our electricity sales evolution, I will point you to the next slide, where you'll see that we managed to sell 44.41% of our electricity within this MACEE mechanism, which allows the sale of electricity at 250 RON per MW. The rest of the energy was sold mainly on the competitive market, about 43.6% at an average price of RON 1,100 per MW hour, which is much better than the same average price in the 1st quarter of 2022.
On the spot market, about 11.7% of the total, the average was still very good, RON 613 per MW, which it's lower than what we managed to obtain in Q1 2022. In terms of OpEx, you'll see on top of the page, the main elements. Of course, the 1st element, the windfall tax expense, RON 840 million , and then the personal expenses. Technological and non-technological water and energy depreciation amortization. I'll go through, let's say, the 1st four or five. The windfall, you may remember that this is, we are impacted by a special legislation providing that we need to pay a contribution to the Energy Transition Fund.
Basically, we have to, 1st of all, We are taxed at the level of 80% to the additional income resulting from the difference between the average monthly selling price of electricity and the regulated fixed price of RON 450. Because of this taxation, we derive this RON 840 million cost. In the 1st quarter of 2023, there was the legislation changed, then we are taxed at 100%, not 80% as in 2022. Therefore, we have this higher windfall tax expense cost. Personal expenses, weekly number of employees, we have increased some of the salaries, and we have recorded a quota for the employees' participation to profit.
Technological and non-technological water and energy, a 10% increase because, mainly because of higher utility prices. Depreciation amortization, slightly the same. Cost of uranium fuel, almost the same. The contribution to ANRE for decommissioning, the same, no notable variation. The electricity transmission expenses, a significant increase of almost 70% with the increase of the level of the transmission tariff into the grid as compared to 2022. Cost of traded electricity, it's a significant decrease of 72.3% because in the 1st quarter, we haven't had any unplanned outage. We were lucky enough not to be forced to buy electricity on the competitive market.
In terms of CapEx, we budgeted for the entire year about RON 1.3 billion of investment, out of which RON 1.1 billion was for ongoing investments, RON 111 million for investment made on tangible assets, and the rest for equipment. In terms of completion, we've managed to invest so far about RON 73 million, but we're catching up for, I believe. By the end of the year, I'm confident that we'll achieve our target CapEx. Okay, in terms of the main projects, you'll probably know all about these projects. The Unit 1 refurbishment is one of the largest in terms of value. Of course, it's extremely important for us.
We are working, we are collaborating with SNC-Lavalin Group, basically with their Candu subsidiary in order to progress with this project. We're signing engineering contracts in order to substantiate the production of long lead materials and other elements required for this refurbishment project. With regards to the other big project of the company, the development of two new reactors by our subsidiary, EnergoNuclear. You probably know that on March, at the end of March, the parliament and then our president adopted law number 74 for the approval of the signing of the support agreement between the Romanian state and Nuclearelectrica. This is a milestone for the development of the project because it includes a host of measures for the...
In support of the development of the project, including the issuance of sovereign guarantees for 100% of the value of the debt, the implementation of a contract for difference mechanisms and a lot of regulatory, administrative, urbanistic and other type of support. In terms of small modular reactors, we are working with our partners in order to progress the projects. You may remember that we have the support of the U.S. government in terms of subsidizing part of the engineering costs. The project is progressing as anticipated. In terms of radioactivity emissions, nothing very good performance. Nothing really to report on that. The same with nuclear fuel burn up factor.
In terms of capacity factor, we had this exceptional three months with 98.91% capacity factor, which is confirming the fact we are running on one of the best nuclear power plants in the world. And that's about it. The next event will be the publication of the 1st half-year report, which is due, and the conference is due on 14th of August, 4:00 P.M. as usual. Up until then, thank you very much. I'm here to listen to any questions.
Hi, good afternoon. A question from Iuliana Cepara here. On windfall tax, can you clarify how that's calculated? I mean, in the 2nd quarter, you're probably going to see significant costs with the electricity bought because you've already started the works on one of the reactors. How would those be treated? I mean, How would you take them into account in the windfall tax? Are you going to take them into account in some way?
I think we're not anticipating any change in the calculation of the windfall tax because the retechnologization process will start on 1st of January, 2027.
No, no.
So-
From the work from the maintenance. From closing one of the reactors-
Ah.
due to maintenance.
The standard outage?
Yeah, exactly.
Yes. unfortunately, given the formula which is applied for this computation of this, of the tax. No, sorry. The energy for the outage is computed in the tax. The energy for unplanned closure is not computed in the tax, if that was the question.
The energy that you need to buy for the outage is accounted for in the tax? Yes?
Uh.
I mean, you basically are allowed to use those.
Yes. The formula allows us.
To use that, then.
Basically, our strategy, we have not sold the capacity of the reactor which is under outage. Therefore, we are not forced to buy on the market the energy in order to complement what was... What we sold.
Uh-
There is no impact.
Okay. Okay. You don't anticipate basically to buy significant volumes-
No.
like you did in the previous years. Okay.
No.
Okay, thank you. Also, on the CapEx plan, you didn't start, but you're probably going to start deploying significant CapEx towards the refurbishment, the one starting in 2027. You already provided an estimate for the total CapEx. If I remember correctly, it's somewhere around EUR 1.9 billion. Are you going to reanalyze that, revise those figures? How would it work? Because you're five, four years away right now, and I guess that costs have changed in the last year. How would that, how would you know what the final costs are? Have you contracted anything?
We have contracted some of the pre-engineering contracts. We will of course revise the budget in direct relation with the value of the contract that we're concluding. We will know the actual and the total value of the project.
Mm-hmm.
once 1st of all the contracts will have been concluded, and 2nd, we'll see what will be the final value of the works at the end of the project.
Do you expect to have an update, an updated estimate for the cost?
Well, I think we.
You'll know when you conclude the contract.
We will know with a greater accuracy the budget for the retechnologization somewhere in mid-2026.
Okay.
We are slowly but surely contracting the necessary engineering and the works and the materials in order to complete the project.
How much of the costs should be deployed before 2027? I mean, we can see what have you included in the budget because you build the budget for... You include also estimates for 2024, 2025, but how much in total would need to be spent before 2027?
I think it will be in the region of EUR 300 million, but we'll know for sure when we conclude the contracts.
EUR 300 million, around EUR 300 million would be capital advance.
Yes, basically. We will buy some long-lead materials. We'll invest in engineering. Long-lead materials are the components with a long production cycle that we need to order so that, you know, 1st of January 2027, everything it's deployed on the site waiting for the reactor be closed and the start of the works on the reactor.
I see in the budget that you booked much more than that. I mean, you booked RON 700 million already in 2023, RON 963 million in 2024, and RON 1.6 billion in 2025.
These are all estimates. It's, as I mentioned before, we'll know for sure when we sign the contracts, and we are currently in discussions with our partners.
I mean, for the amount for this year, for example, RON 721 million.
Mm.
like... Yes, please. How likely is that to happen? That's already significant. I mean, it's EUR 150 million.
We think that it's very highly likely to happen because it relies on either soon to be signed contracts or by the end of the last quarter to be signed and paid advances.
Okay. You're a bit less unsure in 2024, 2025. It's possible that CapEx for retubing would be lower than what you've included in the budget.
It all depends on the cash curve, negotiated with our partners. If... This is something that is still under discussion.
Okay. Thank you. One more thing, if I may. Are you allowed to conclude forward contracts now? I mean, can you sell energy forward?
We are under the current mechanism. We have to sell whatever is not already sold, the unknown.
Mm-hmm.
They call it in the legislation. The non-contracted quantities, we are bound to sell on under the market mechanism with OPCOM as a counterparty.
whatever is not contracted, you have to sell on the centralized market?
Yes. You know, there is this mechanism of 80% of the-
Mm-hmm. Mm-hmm. Yes.
Of the quantity that was not sold, that we need to sell in the, with OPCOM, and the rest may be sold on forward contracts, but basically using stock exchange prices and mechanisms.
You mean when you say via, you have to sell them via OPCOM, you mean you can sell them forward via the market, but not necessarily on the centralized market, so not necessarily at RON 450. That's what I'm trying to understand. I mean.
Basically, this year, if the mechanism is implemented as anticipated, about 50% of our energy will be sold at RON 450, and the rest will be sold at the average price, which is indicated basically in our budget. This year we are lucky that we managed in 2022 to sell almost half of our available quantity at very good prices.
You don't anticipate going forward, as well, you don't anticipate be selling much on the day-ahead market. You sold around 12%, if I remember correctly, on the day-ahead market in the 1st quarter. That's probably going to be the same in the following quarters, right? Do I understand correctly?
At the end of the year, we'll have about 50/50. 50% RON 450-
Mm-hmm.
The rest will be sold at a higher price. We'll see what will be the average, but it'll be considerably higher than the last year.
And, uh, for- Mm-hmm. For 2024, you won't have, at that time, any more forward contracts, I guess, or the forward contracts would be very small.
Exactly.
Next year you'll be selling 80% on the centralized market and the rest probably on the day-ahead market, right? Is this how this would work?
Yes. We'll see how this mechanism will apply next year, but I assume that 80% will be here to north, and we'll be required to serve this quantity.
Thank you. What's the next step, Peter? No other questions from the other participants. What would be the next step for unit three and four? I mean, what needs to happen next?
For unit 3 and 4?
Yes.
We will be contracting the engineering works.
Uh-
-part of the engineering works. The initial elements, let's put it this way.
Re-engineering basically, right?
Yes.
What would be the cost involved?
This is not sure at the moment. It's going to be negotiated with our partners. Of course it's going to be competitively procured.
The Support Agreement is basically like a framework, but then all the details about contract for difference, who assumes the risks, when... If probably if you go over the budget, etc. Those details fall to be set. They're not included in the Support Agreement, right?
Of course. Yes. The support agreement is a framework. It's...
When would more details come out regarding CFD, etc.?
It's-
When do you think these would be?
the decision of the Ministry of Energy, who's implementing a similar mechanism for the renewable market. We are working closely with the ministry in order to progress this mechanism also.
Via the support agreement, payout is limited at 50%, right? If I remember correctly.
Yes.
Do you plan to pay 50%?
Of course, if it's valid.
Yeah, the support agreement limits the payout at 50%. The maximum would now 50%, if I understand correctly, via the support agreement. Is that right?
Yes. We have certainty on our payout ratio, and it's set at 50%.
Okay.
Of the net distributable profit.
Okay.
Hello. If there are no more questions, I would like to ask something. Going back to the sales structure analysis for the forecast these three months. I see that on the three month 2023 budgeted, it's on the spot market, it's 85,800. The actual for the three months is... Yeah, it's a pretty big difference of 325. Do you have, could you give some details, a bit of color, what drove this difference? If you have, as a follow-up question, if you have, for instance, a prognosis for the next three-month forecast? Thank you.
Unfortunately, I don't have a forecast on this, even if I had, I wouldn't be allowed to. It's a competitive information. The 1st question was that, was in regards of? If you could please repeat.
Yes. What drove the difference between the budgeted three months for three months budgeted and actual?
In terms of quantity or value?
The value, yeah.
In terms of value of the sales, we had sales of electricity at RON 2.09 billion, and the budgeted was at RON 2.04 billion. Money-wise. A slight difference of 2.5%.
Okay. Okay. Thank you.
Okay. If there are no more questions, thank you very much for taking part in this conference call. As usual, I'm going to send you all the presentation and the audio file. You can also find them on our website on the investor relations page. Thank you very much. Have a good afternoon and a great weekend.
Thank you. You too.
Thank you.