Good afternoon. My name is Marius Lupian. I am the Chief Financial Officer of Transgaz. I'm glad to have you here for the presentation of the Interim Financial Statements for the first quarter of 2025, which, in our opinion, are very, very good. We have a small technical problem. There's some sort of microphone in there. I think it will be solved soon. I think the technical problem is solved. My question to you is, can you hear us well?
Yes, we can hear you.
Is it okay? Do you hear me?
Yes, we can hear you.
Yes, I can hear you also.
Good afternoon again. We are glad to have you here for the presentation of the financial statements in the first quarter of 2025. We'll start, as usual, with the presentation of the financial statements, and then we will have a session for questions and answers.
As you have seen in the information presented previously and in the presentation which was published on Transgaz's website this morning, Transgaz's results recorded pluses. The results are very good compared to the similar period of the previous year. The net profit is 87% higher compared to the previous year, and the result being almost. We'll present also the factors that lead to these results, mainly with an increase from the revenue from operating. The increase of the operating expense. You can see the details for revenue and expense compared to the previous period. The transmission revenue also increased. At the category expense, the main factor is the royalty. The higher the revenue, the higher the expense with the royalty. Revenue from operation increased by 148% compared to the previous year.
Revenue was mainly influenced by the increase of capacity booking revenue, mainly based on the capacity booking tariff, higher with RON 1.89, with a positive influence compared to the previous year. The booked capacity was higher by 9 million megawatt-hour. Revenue from capacity exceedings also increased. The capacity increase is the daily capacity booked by the transmission operators. They are considered to have a contract concluded for a daily product. Revenue from the auction premium also increased compared to the previous year. The commodity component revenue is higher based on the commodity tariff, a higher commodity tariff with a positive influence. Revenue from the balancing activity increased by more than RON 97,000. Transgaz's transmission operator does not have a profit or loss from this activity, from this balancing activity. Revenue from construction activity is lower. Also, from this construction activity, we have no profit or loss.
For this activity, we apply IFRIC 12, and it's an activity for the constructions in progress. For the operating revenue, those increased by 160% compared to last year. Our company recorded an excess of RON 66 million, mainly on the royalty, which is a percent from the transmission revenue. Gas consumption, technological gas consumption, increased by RON 2.8 million, with a higher quantity of 28,000 megawatt-hours, with a negative influence. The procurement price, the average procurement price, is lower compared to last year, with a positive influence. A very good result. We have also, for our company in the Republic of Moldova, with the profit before taxation increased, and the net profit was doubled compared to last year. As you can see, the quantity of gas increased, circulated natural gas, which is a good thing.
The technological consumption share is maintained at a low level of 0.50% of the circulated quantity of gas. This is the presentation of the results for the first quarter. If you have questions, we are pleased to answer your questions for the results of the first quarter of this year.
Hello, Marius. Hello, everyone. Thank you for the presentation. Congratulations for the result. I have two questions. First one, how do you compare the revenue obtained in the first quarter with what would have been as regulated revenue approved for the first quarter? The second question is amusing to say. It is about hydrogen. What happens with hydrogen? Which are your plans, and how do you see the hydrogen developments in the future? I do not understand exactly the potential for Transgaz of such development. Thank you very much.
Yes, thank you for your congratulations and for your questions. Yes, we can say that the delta VTP estimated for the year 2024-2025, indeed, the revenue from transmission in the first quarter of 2025 exceeded the estimation, the approved estimation by the regulatory authority. The plus for the entire year is somewhere between RON 350 million. As far as, sorry, is it recovered in the following year?
No, no, it is recovered. The proposal of Transgaz for such estimated delta, because the gas year is not finished, is estimated for a gas year. Such delta we requested to be divided and recovered in two years and not in one. When do we see a response? The response will be published at the end of May, beginning of June, because the transmission tariff has to be public, has to be made available to the public before the capacity booking auctions.
Such auctions are conducted on the first day of Monday of July. I believe it would be the 7th of July. This is when we'll have such answers.
Thank you very much.
You're welcome.
As regards hydrogen, Transgaz's plan to develop the infrastructure for hydrogen transmission is presented in our development plan 2024-2031. The information is made available to the public in the plan. The plan is public. Of course, there are intermediary stages. You see that in the plan, the projects are declared as non-fit FID, because before starting such projects, it is necessary to have the proper legislation to clarify the legislation so as to be able to implement the project. The information related to Transgaz's projects for hydrogen transmission is published in the 10-year development plan.
Thank you. Thank you very much, Marius. You're welcome.
We have on the chat some questions related to hydrogen, updated information related to Transgaz's plan for the development of the transmission infrastructure and the current state of such initiatives. Yes, so both the project and the stages are presented in the development plan of Transgaz for 2024-2033, which is public. We can make available the link where you can download such a document. I received several questions related to hydrogen. I will read the questions and reply. You can confirm the accuracy of the hydrogen transmission plan. Yes, we can confirm such a map. Another question, if the map reflects the plan, the hydrogen projects of the company, the map is from H2 Infra Platform, and it includes all the projects provided for in the national development plan, the 10-year development plan. It is clear that this is the best statement of the situation at the moment.
Is Transgaz Romania involved in the European Hydrogen Backbone Initiative? Yes, the answer is yes. Transgaz is currently involved in such an initiative related to the hydrogen backbone. It is part of the initiative of the hydrogen backbone, reunites 30 operators, and is aimed at the acceleration of the step to decarbonize European networks by defining the role of the hydrogen infrastructure for this purpose. These questions were received by chat, and I tried to cover them by answering them point by point.
Mrs. Ioana Andrei would like to ask some questions, please.
Hello. Thank you for your presentation. I would like to come back to the investment plan. Are there some new projects which are declared which have the financial investment decision in the near future, let's say this year?
Yes, the FID projects are presented in the development plan, for sure, but they are projects, but also the projects for which we obtain grants. This year, as you are well aware, the Black Sea Onshore project is being implemented. We will soon sign in July, I suppose, June, July maybe, at the same time. The pipeline for the supply of the Mintea Power Plant is also in progress. Yes, there are other projects for which a financial investment decision has been taken. The Ghercești-Jitaru pipeline. Another project, the increase of the transmission capacity of the NTS and the supply of natural gas to Ișalnița and Turceni Power Plant, the gas transmission pipeline Tetra Oravița. Mainly, these are the projects. They are projects for which grants have been obtained, and they will be implemented, for sure.
Regarding the regulatory period to start in autumn, I saw that the methodology was published. Can you please give us some ideas of the main amendments and where we can see an impact in the methodology?
Yes, the budget, when we substantiated the budget, mainly we had the main principle underlying the approval of the tariff methodology. What I may say as amendments, you know that the regulatory rate of return is higher than the previous year, is 6.4% as compared to 6.79%, the incentive of 0.5% over the value of the investments for the projects within energy efficiencies insured. Another aspect is related to the fact that the inflation of the regulated asset base is regulated with the inflation used for the substantiation of the regulated rate of return. The same inflation used when setting the regulatory rate of return of 6.94% will be applied annually.
The inflation in the regulated rate of return, the recovery of the expenses with the interest is insured for the period in which, subsequent to the capitalization, only for the period in which the financing, let's say if you have a project to finance by grants, the period in which the grant is not insured is covered. These are mainly the main amendments. There are also some amendments for salary expenses. An increase of 5% is allowed. In addition to this, as a recognition, it is a very positive thing because it is very hard to find specialists who this recognition comes in the benefit of the company to ensure the necessary specialists for the implementation of the investment projects and not only.
I wanted to ask about this framework for the regulatory period to start, which is the value of the investments forecasted to be included in the regulatory asset base.
You will see these values at the beginning of June for those to be recognized for 2025. In advance, there are other operators who publish the minimum investments submitted to the approval of the energy regulatory. The investments communicated through the investment plan, mainly for 2026-2027, is RON 1.9 billion. They will follow a cycle because for natural gas transmission, they are recognized after their implementation. Nothing is accepted in advance. For example, if RON 1.5 billion will be achieved, RON 1.5 billion will be achieved and not RON 1.8 billion. It would be useful to have a framework. We will communicate the numbers. There is also another modification imposed by the tariff-setting methodology regarding efficiency.
There is nothing remaining at the disposal of the company. Until now, we had 40%. Mainly, these are the differences. We have pluses and minuses, but we have a balanced framework regarding correction.
You mentioned RON 350 million for last year, but for the fourth regulatory period, is there a correction?
No. All the variations were recognized. Only insignificant values remain. The delta VT I told you about is a value. You can calculate yourself, compare the achieved revenue and the approved revenue. Other variations do not register significant values. Their total is at about RON 67 million.
Thank you very much.
We also have other questions on chat. If we are prepared to start the development of the Black Sea Gas and considering the regulated tariffs, what is up to us to achieve the profit?
Transgaz is prepared to transmit gas, Black Sea Gas.
The project will be Tuzla Onshore, which ensures the taking over of gas from the Black Sea and will be functional at the end of June, July. Yes, we will be prepared. We are prepared to take over Black Sea gas. Regarding the second question, please repeat again the question.
Considering the regulated tariffs, what is up to Transgaz to achieve the profit?
Transgaz showed that in a third regulatory period, made large savings at costs. The costs for the transmission activity were optimized with the returns on the fourth regulatory period. The results of Transgaz were reduced in the fourth regulatory period. To be honest, the regulated profit is given by rentability multiplied by the rate of return. An expense does not ensure additional return. Regulated profit is ensured by investments.
We have additional questions from Chudney Marius. The co-generation plant of Mintea is completely connected.
When do you estimate to deliver gas to Mintea and which will be the revenue you will obtain from this client in total revenues?
The project is in implementation and is implemented according to the schedule. The revenue obtained from this client is a regulated revenue. The investments made to connect Mintea ensures capacity bookings, additional volumes, and additional capacity bookings, which will be reflected implicitly, including by the reduction of the transmission tariff in the other entry and exit points. To tell you an impact of Mintea, I have to have a transmission contract in order to be able to make a calculation in this case. Mintea will be commissioned in stages. It will not be commissioned entirely from the first day.
This is why it is difficult to estimate now a revenue, but when we will conclude transmission contracts, we will have the ability to communicate such figures. Do you, Mrs. Laura Simeon, like to make some questions?
Hello. Thank you for taking over my questions. I have a question related to activity in Moldova. If you can give us some details regarding the revenue expected for the entire year 2025 and if the revenue in the first quarter can be projected for the entire year. I calculated that to be around 70%. What quantity of gas did you transport in the first quarter there? And how much do you estimate for the entire year 2025?
Yes, I can send you a link because they have this information public on the website of the regulatory authority. They have a regulated revenue for 2025.
The revenue published for ANRE Moldova for Vestmoldtransgaz for 2025 is MDL 980 million divided by four is approximately MDL 245 million.
In this case, you've already achieved half because there are MDL 100 million in the first quarter. This is the revenue.
Not exactly. Not half, but close to half. It is an overrun here, as in the case of Transgaz, as it was estimated for the first quarter. No, because in Moldova, the tariff is approved or the revenue for 2025 is approved. Even when the year is in progress, some five months, almost half a year has already passed from this year. It is aligned to the European rules to publish the transmission tariff, just as Transgaz and other transmission system operators do, to publish the revenue and the tariff 30 days in advance of the annual auctions.
They will have final tariff and final revenue, to say so, for 2025 in the end of May, beginning of June. To answer your question, you have to see that the revenue from transmission is not the same every month because in the first quarter, the months record the highest values because it is a cold season. This was a cold season. You cannot maintain the same rate of 70% until the end of the year because the months of summer will come. It cannot be maintained until the end of the year.
Yes, usually the first quarter and the last quarter, the results are higher. Yes, you're right. Almost half is a high figure. It was a question also related to Transgaz because you've already exceeded the budget for the entire year in terms of profit. No, in terms of revenue, no. I have to contradict you.
In terms of profit, do you consider the revision of the budget for this year?
The rectification of the budget is made only in some specific situation mentioned by the government ordinance 26, and the conditions to make a revision are not fulfilled to rectify the budget. You have seen the results are better. We are expecting them to be better than the one forecasted until the end of the year.
I have another question related to the consumption, the technological consumption.
Starting from this quarter in which we entered, you do not capitalize the additional costs anymore. For the further on quarters, we will expect the consumption, what is capitalized and what it appeared until now. This is what the technological consumption would look like in the second quarter. In the first quarter, the technological consumption is usually higher than in the second quarter.
Proportionally to the gas quantity, I calculated a price taking into account what you capitalized around RON 2,058. I calculated the megawatt hour. Yes, I have presented at the end of my presentation. Do you expect such a price to be maintained the rest of the year? Yes, we expect it to be maintained because it is regulated and the cost of capacity booking is added. Of the supplier, there are excises and other elements that supplement the cost of RON 150.
Yes, I understood. Thank you.
That was all. Thank you.
Mrs. Daniela Mădrou would also like to ask some questions. Please.
Thank you for your presentation. Thank you for giving me the opportunity to ask some questions. Only a question to clarify some things. In the delta 350, is your estimate for this year, if I understood correctly?
Yes, that is right.
From a previous period, around RON 60 million-RON 70 million. Yes, that's right. From the previous period. All these amounts together should be deducted in the following two years at your request.
Yes, you're right. Thank you.
Regarding the question with the CapEx to be included in RAB 2026-2027, it is clear this year Body Shore is included in the RAB from 1 October 2025, if I recollect correctly. Yes, you're correct. It is included. It would be the main contribution to the RAB at the end of the year. Yes. In 2026-2027, which are the projects to be taken in the RAB estimated at RON 1.9 billion? Which are the most important projects, if you can give us some figures?
I said that the investment plan was submitted to ANRE. An estimation for the project commissioned in the next year.
For 2026, the estimation is RON 1.9 billion. I mentioned the project for which grants were obtained, and mainly this will be the project which will be included in 2026.
Yes, I understand. Another question, please. The results in the first quarter. You provided the budget in April. You approved the budget in April. In April, you already knew mainly where you were with the results. I do not understand how such budgets are approved.
I'll tell you how. When they are approved in April, they are substantiated. They stay for 30 days for a general meeting of shareholders. And some weeks in advance, the data are prepared. There is a delay, a period in which between the moment when they are substantiated and the moment they are approved.
Okay.
Such revenues were mainly for short-term products, which cannot be anticipated.
We make simulation on the budget, on the concluded contracts, but with a certain level of reasonability. You do not have the possibility to estimate when a network user will come and book per day, where one day there were bookings for one day, four weeks in a row. It is a positive thing. The money is collected in Transgaz's account. It is not a problem. Indeed, there is an adjustment mechanism if they are achieved above the mechanism if they are adjusted. These are money that Transgaz uses currently to perform its activity.
Yes, I understood.
You've seen that the substantiation, you have the access to the substantiation report, and you see there the explanations and the assumptions taken into account for the substantiation of the budget.
I understand.
The delta estimation of 350, it seems that such a delta comes entirely from the first quarter. From the first quarter and from the fourth quarter, partly.
Okay, thank you.
We have questions on chat. Congratulations for results. I did not get a reply for Caius's first question. For the RON 300 million, is this amount to be received or to be returned?
It is to be returned. It was additionally achieved. It is a value that you can calculate comparing the revenue approved for a period and the revenue achieved for the relevant period, but it is to be returned to the market.
From Mr. Marius Kish, the increase from the capacity increase component from the first quarter, 2025, compared to last year was mainly made by the local clients or by the foreign clients.
I don't have a structure to be able to tell you this thing, but what I can tell you is that it is the BRUA corridor which is used. It is intensively used for internal and external gas transmission to provide gas for neighboring countries.
I would like to ask you another question. Which is the tax on constructions, which amount is this tax estimated?
Estimated this tax in the budget to a larger value because there was not clear, but for 2025, it is somewhere around RON 18 million, but it will be recovered in the transmission tariff. What do you register it in accounting, monthly or half-yearly?
We will record it as expense in advance, and you will surely see it in the half-yearly statements. If it is paid entirely, it is insured a 10% reduction according to the law. You will have it registered in the half-year statement.
Are there any other questions?
The CAPEX of RON 1.9 billion to be included in the RAB. Would it be more appropriate to expect that the majority of the investments be performed in 2027?
The estimations are per gas year for 2026-2027. Twenty-six to twenty-seven, meaning one gas year.
I understand. Thank you.
If there are no other questions, I'd like to thank you for participating in the meeting, and we hope to see each other for the next financial year presentation. Thank you for your presentation. Thank you. Goodbye.