Good afternoon, everyone. Today is a holiday in Romania, 21st of May. The Holy Constantine and Helena are celebrated today. If any of you are named Elena or Constantine, please receive our many happy returns, happiness, and all the best. The same best wishes, and thank you for being present on behalf of our Director General, Mr. Ion Sterian, for the fact that you are present today for the presentation of the interim financial statements for the first quarter of 2024, unaudited. A very nice results. We are very happy that Transgaz team managed in the first trimester to obtain such performances. The team present today here, the undersigned, Elisabeta Ghidiu, Director of the Strategy and Corporate Management Department.
Cătălin Tuță, Head of the Investors Relations and Sustainability Unit; Lăcrămioara Ciolpan, Head of the Investors Relations Department; Edith Malcea, our colleague from the Investors Relations. The translation into Romanian is ensured by our colleagues, Anca Cojoc and Alina Vereș, from the International Relations Department, and the presentation of the financial results shall be performed by Mrs. Elena Sasu, Director of the Finance and Budget Unit Director, as Mr. Marius Lupean, our Financial Director, is on a business trip. As organization, Mrs. Sasu shall present the part related to the economic financial statements, and the strategic project part shall be presented by myself. We will answer your questions related to the investment projects carried out by Transgaz. Thank you very much. I would like to invite Mrs. Elena Sasu to present the financial statements in the first quarter of 2024. Elena, you have the floor. Yes.
Hello. Good afternoon. As Mrs. Ghidiu said, I will start by the presentation of the consolidated financial statements interim for the three months period, and then 31st of May... of March 2024, unaudited financial statements, where Transgaz managed to obtain exceptional results. Profit before taxation, higher by 94% as compared to the similar period of the previous year, as higher by RON 142 million, a net profit higher by 93%, respectively, RON 1,017 million lei, mainly due to the increase in the revenue for the balancing exploitation and balancing before the construction activity by RON 186 million lei, an increase in the financial revenues of RON 10 million lei, an increase of the operating expenses before the balancing and the construction activity by RON 60 million lei, and the decrease in the financial revenue by RON 5 million lei.
In the following slides, I will present in detail the main factors that determine such increase. Mainly, the revenues from the operation increased based on the transmission, domestic transmission activity, higher by RON 12 million as compared to the same period of 2023, mainly due to the following factors: The capacity booking tariff, higher by RON 1.84 per MW, a positive influence, RON 191 million. Booked capacity, lower by 1,600,000 MWh , with a negative influence of RON 4.617 million. The revenues from capacities exceeding, higher by RON 13 million, the revenue from the capacity exceeding registered on the 31st of March 2023 being RON 36 million, and the recorded value in 31st of March 2024 being RON 49 million.
The revenue from auction premium were lower as a result of the capacity booking auctions performed according to the common interconnection points. The revenue from the auction premium in 2023 was RON 20 million, and this year, as of March 21, was RON 12 million. A positive influence as well were the revenues from the commodity component, higher by RON 20 million, mainly due to the commodity tariff, higher by 0.52 MWh, with a positive influence of RON 20 million. The quantity of gas transported was lower, but insignificantly lower by 57,000 MWh, with a negative influence of RON 26 million... and the division by the categories of consumers is presented in the financial statements and in the presentation posted on Transgaz website.
As you know, at the end of 2013, the legacy contract related to the Transit 3 pipeline was ended. The validity of the legacy contract between Transgaz and Gazprom was ended in 2023, and as of 2024, Transgaz did not record any revenues from the international transmission activity. Other revenues from operation increased by approximately RON 2 million. The revenues from the balancing activity decreased by RON 135 million on account of the following such factors: a trading price lower by RON 134.46 per MWh, with a negative influence of RON 82 million and a lower quantity by 279,304 MWh, with a negative influence of RON 53 million.
The revenues from the construction activity were higher by RON 213 million, being recorded according to IFRIC 12. The financial revenues had a positive influence of approximately RON 10 million. The operating expenses before the balancing and construction activity increased by 17% as compared to the similar period of 2023, their level being by approximately RON 60 million higher. The company made savings mainly on account of the following expenses. The consumption of gas in the transmission system in the amount of RON 16 million due to the following factors: The quantity of gas destined for consumption in the NTS, lower by 40,000 MWh, with a positive influence of RON 8,087.
The average purchase price in 2024, March 31, was lower as compared to the one achieved in the same period of the previous year by 49.45 MWh , with a positive influence of RON 7,620. Other operating expenses made savings of about RON 7 million, mainly due to the adjustment of the depreciation of current premiums. Transgaz recorded exceedings in the following expenses: personnel expenses, RON 5,000; expenses on the provision of risk and expenses, RON 1,500 thousand lei; royalty expenses, RON 68,000. The depreciation expenses, approximately RON 5,000, on account of the completion and the commissioning of investment projects. Auxiliary material expenses, approximately RON 2 million, and tax expenses, one million.
The financial expenses recorded a decrease by RON 5 million, and the gross profit, as I said before, registered an increase of 94% as compared to the profit in 31st of March 2023, by 142 million RON higher. As compared to the revenue and expense budget... Just one moment to show you also the slide. As compared to the revenue and expense budget, Transgaz registered an increase in the gross profit, estimated gross profit of 66%, and an increase in the net profit of 46%.
Mainly, the increase was due to the revenues from transmission by RON 13 million due to a booked capacity higher, with a positive influence of approximately RON 15 million, of a gas quantity transmitted lower, with a negative influence of RON 26 million, and a decrease in other revenues from operation by RON 5 million. The financial revenues, compared to the revenues estimated in the revenue and expense budget, recorded an increase of RON 26 million, mainly due to the adjustment of the inflation rate on 31st of March 2024 of the assets recorded in the regulated asset base. Savings were also recorded in the expenses element of 17%, their level being RON 83 million lower than the level provided for in the budget.
Savings of RON 86 million were recorded, mainly into the following expense elements: personnel expenses, RON 26 million, gas consumption in the NTS, RON 12 million lei, expenses on auxiliary materials and other material expenses, RON 13 million lei, maintenance and transmission, RON 5 million lei, expenses on taxes, RON 12 million lei, depreciation expenses, RON 2 million, and other operating expenses, RON 14 million lei. Financial expenses are higher, but not significantly higher, as compared to the one provided for in the revenue and expense budget. The gross profit is by RON 117 lei higher than the one provided for in the revenue expense budget. If you have any questions, please feel free to ask. Just one moment. Until the questions section, please come back to the slide number 17, where projects are presented.
I would like to mention just one thing here. Slide 17, this is the slide of the major projects. In the current presentation, in the part related to the investment projects of Transgaz, you will find in surplus as to what you knew before in the 2022 plan approved by ANRE. We added an additional column in slide 18, and you will see further below the description.
I would like to draw your attention to the fact that the projects in the revised plan approved by ANRE and the proposal that Transgaz, and the proposal that Transgaz had for the ten-year development plan, 2024-2033, is a draft, is in public consultation on our company's site, and is in public consultation for 30 days, as of May 17, on Friday. We tried to include here also the project, so as to see what was provided for before in the plan and which are the perspective related to the projects in the following ten years, provided for in the following edition of the plan. This is why we added here some further information.
Thank you very much for everything, and we are looking forward to your questions.
Hello. Congratulations for your results. I'd like to ask you, Miss, Mrs. Ghidiu, about this initiatives of gas transmission in the south-north direction, and the way... How do you see the association with Greece and Bulgaria? These are very interesting initiatives with capacity to change... Thank you very much.
Of course, I noted that. I will come back, but, first of all, I wanted to say something about the financial results. I also am glad to hear you. We have often discussed before. Of course, we can say something which is public. The initiative, the Vertical Corridor, which is the initiative of Transgaz, promoted by Mr. Director General Ion Sterian, was supported since 2016. The last memorandum of understanding signed has already arrived to nine countries as compared to the initial one, starting from Bulgaria, Bulgaria, Greece, DESFA, Gastrade, Bulgaria, Bulgartransgaz, Romania Transgaz, Hungary, Slovakia, Eustream, Ukraine, the Republic of Moldova.
To create this alternative route for the transmission of gas from the Caspian Sea, it is very important because we all know the investment Transgaz made in the development of the gas transmission infrastructure to ensure and enhance energy security of the country and of the entire region. All the countries in the area are involved in the Vertical Corridor, and Transgaz trusts very much the force of this corridor to support the energy security of the region. It's very important, this initiative, which belongs to Transgaz, and is supported by the other countries, and have been supported since 2016, when Mr. Sterian made the first demarches for the achievement of the Vertical Corridor, which is extremely important for gas transmission.
Even gas from the Black Sea, because we see the need to decrease the dependence on the Russian gas. The Tuzla off shore pipeline, which you know, and is in execution, has a completion deadline in 2025, but it will be completed at the end of this year. Following that, at the beginning of the year, to have the technological tests performed and to make all the other actions to become operational. We will discuss also the diversification part, because BRUA is also part of the Vertical Corridor, and is necessary for the transmission of the gas to come in Romania from the Caspian Sea, from the LNG terminals in Greece. The LNG terminals are a strategic element for increasing and ensuring the security of supply.
This opening towards the LNG terminals comes as an element for enhancing energy security. This is a summary for your reply, Mr. Caius. Thank you very much. I also wanted to ask about what happens with the booking capacity, which I think it was lower. I mean, the tariff was higher, but the capacity was lower. I wanted to ask you what is the reason behind this? I am asking this in the context in which there were certain specific aspects on the electricity market determined by the regulatory changes. The spot compared to March, it was changed, and so on, and I wanted to know if at balancing there was some problems.
I wanted to know if you were faced with the same situation of a slightly different market as compared to last year due to the regulatory changes. We don't think that this decrease of book capacity comes from the regulatory changes, but I think that we would better give you an answer in writing so that we can be kept on the safe side. These are data which come from the operating department, and in order to have a correct answer, we come with this opportunity to give you a reply in writing. It's not a problem. I wanted to make an upgrade to the model, and this is why I asked this question. I know that you are a very professional person. Mrs. Sasu is the director representing the financial...
the economic department, and we want to have a correct information with relevant information from the operating division. I will prepare a list and send it to you by email. Yes, it's okay, because I saw somewhere an analysis on elements. Thank you very much, Mrs. Ghidiu. Thank you, Mr. Caius. Mrs. Andrei would like to ask a few questions. I saw that you updated the plan. Is this new revised investment plan containing projects which came to be FID and not differently. Thank you very much for your question. It is very important that you ask this, and your interest for the plan. You see here the total for the FID projects and their value, and meaning that we have projects with a final investment decision taken.
At EUR 4.1 billion, we have all these projects for gas transmission without hydrogen, without the hydrogen part. If we go to slide 20, you can find there the FID projects with a final investment decision taken, and that the progress of the projects, we have those projects which already have this investment decision taken. For the other projects, the value was changed, and not necessarily the change of the progress from FID. No, the value and the deadline were changed. At this moment of the public consultation, later in the following year, they will be changed, but for the moment, we speak about the value and the deadline. In the list of major projects regarding hydrogen transmission, how can we see those projects, the progress of those projects?
They are projects included, in summary, in this table, so that you can see that they are included in our development plan. Each project has a short presentation sheet. As you can see, the repurposing of the structure. You can see from item 16, slide 21, up to position 23, we have projects for the repurposing of the gas transmission pipeline for hydrogen transmission in a mixture with gas transmission, and the last two ones are for the possibility to transmit hydrogen. So the first ones are with mix hydrogen gas, and last ones are only for hydrogen. We propose them in the plan, and they are, in this moment, at the progress mentioned regarding the following gas year. Or the, to...
At the end of May, the tariffs will the regulated revenue will be published for the following period. Yes, the regulatory authority has seen analysis, Transgaz substantiation, and this regulated revenue will be, will be approved, very soon, and, after approval, we will publish the information according to Order 41. Would you tell me the RAB value at the end of the first quarter? I can tell you what the RAB published on the website is, RON 6.3 billion. I also have a question about the results in this year, which were very good, supported by the increase of the regulated revenue. But compared to the budget, I saw some operating costs a little lower.
I wanted to see if they are sustainable over the entire year, or should we consider the budget for the whole year? Do we expect to have an increase of the costs over the following period of time? And I mean the cost of personnel, which were significantly higher in the budget. If you take the revenue and expense budget, you cannot be wrong. According to Order 26, the cost of personnel is a limit included as a limit in the revenue and expense budget and cannot be exceeded. The salary costs constitutes a limit which cannot be exceeded at the end of the year. So, the budget was constructed in a preventive way.
The budget is an estimation based on certain data we have at a certain time. For the commodity component, which was the volume considered? And, how about the sustainability question over the entire year? These quantities in the budget were estimated by the operating division based on some assumptions existing at the substantiation moment, and on contracts concluded for capacity booking. These were the assumptions when the quantity in the budget was estimated. How do you see the volumes this year, not taking into account the budget? We will reply to you in answer after we will ask data from the operating division. These data are technical ones, and we believe that it's easier for us to go to this operating department, this division. If you agree, we will...
We'll come back with an answer in writing. Thank you very much. Thank you very much. Mrs. Popov? Thank you for your presentation. I wanted to ask something about the budget. Considering these good results, do you expect to exceed the budget for the part of the revenue? As you can see, for quarter one, this revenue increased. The same is valid for the profit. We had an increase of 46% compared to the revenue and expense budget. We don't make estimations. These estimations are made by journalists, in part based on the achievements in quarter one. We proposed the estimations in the budget at this moment. Does quarter one... Is quarter one consistent to the budgeted values? Revenue increased in quarter one by 1%.
The operating costs decreased by 70%, which led to a result with 66% higher, and a net result with 46% higher. Regarding the development plan, which is in public consultation, I noticed that the total estimated value for the Tuzla offshore project was increased. Is this value included in the budget, or do you expect higher investment costs for this project? As presented before, the CapEx for the Black Sea for 2024 is somewhere about RON 1 billion. Thank you very much. If there are any other questions, please. Mrs. Daniela?
Good afternoon, and thank you for the presentation. Daniela Mândru speaking. I would like to mention that, another Daniela spoke before, and, so as to make a difference between us, related to the budget as well, you for quarter one budgeted RON 165 million net profit. If I'm not mistaken, I do not cover Transgaz. I intend to resume, the coverage, related to Transgaz, an initiation report. I was looking at the budget for 2024. The estimated profits is RON 173 million. Is that correct?
Yes. Yes, I think so. Yes.
How come in quarter one you budgeted RON 165 million, and on the entire year, RON 173 million? Yes, in the summer periods, you budgeted everything in quarter one, 165. There are about RON 7 million RON profit for the following three trimesters. Let's say RON 10 million. Yes, they were estimated, as I said. These were the estimates based on the program substantiated by our colleagues, specialists, for each program, based on the information we had at the moment of the substantiation from operation for revenues, based on the volumes and capacities booked. Yes, they were estimated at that moment. Yes, but it's a little bit awkward to budget for one trimester, RON 165 million, and for the entire year, RON 173 million.
This is my opinion anyway. And then we will... Mrs. Ghidiu speaking. We will check. We will put down this aspect as well, and as we will request the volumes for our colleagues from the operation department, we will request such information as well. Yes, thank you. It appears to be an error, or so as it seems to me at the first view. All I can say is that we will check this aspect as well, and we will come back to you with an answer. We put down your question, and we'll make sure you receive an answer. Another question: I did not see in the presentation, and it has a significant impact, the expenses for balancing, gas balancing.
They brought a plus of RON 135 million to the gross profit. The decrease in the expenses of RON 135 million comes both from volumes and from the price. Can you please provide more details in this respect? First of all, I would like to say that the balancing activity is neutral from a financial point of view. That is, in correspondence with the expenses related to balancing, we have the same revenues from balancing activity. Yes, but in English, expenses with balancing is not from the balancing activity. In quarter one, 2024, such expenses were RON 63,062,887. Yes, and in correspondence, such expenses, we have also the revenues from the balancing activity with the same amount. Yes, yes, that's correct. I, I thought you were speaking about other expenses.
Yes, now I see. You're correct. I do not know the procedure within Transgaz, the answers to the analysts' questions, because we are interested in receiving the answers. I suppose you will post the answers to the questions on the website. Of course, we receive questions from everyone, and we will post also the questions and the answers. If you are interested in somebody else's questions, you can see the answer provided to him as well. Yes, and I've also noted sometimes before, just a suggestion for us as analysts. It's a little bit complicated, and it takes more time.
Maybe if you could provide us with the revenue from the booking capacity, you put in the increase in the tariff or a decrease in the volumes, and we have to calculate the tariff, we have to calculate the volumes, we have to make some rules. It's complicated for us. Maybe it would be more useful for us and for you as well, not to explain that the tariff increased, to provide the tariff specifically, and the capacity or the volume as well, to provide clear figures: the revenues from the capacity booking, the revenues from the balancing activity as well, where I have to calculate... I have to calculate the volumes, I have to calculate the tariffs. It's difficult for me. It would be better if you could provide us with the tariff and the volume.
It would be easier for us. We can deduct or we can calculate, but it takes a lot of time for us, and the figures we come up with are not precise. I would like to have the exact figures. I do not know if you understood my question. The tariffs from transmission approved by ANRE are public. They are approved by an order of ANRE, 68/2023, for the gas year 2023-2024. For volume as specifically. You can provide us with the volume or. It's just a suggestion. Daniela, we appreciate your suggestion. We can analyze and see what we can do about it. Maybe it can be improved.
We will consider your suggestion, but we have to discuss it internally and to come up with a result, a solution. Because the reports you draw up for Transgaz is proactive. It helps us as well, it helps you as well. It's easier to interpret data if we read your reports. So as to be more flexible and to be easier for both sides, we put down your suggestion. I will discuss it with my colleagues and see how we can improve it. Thank you for your suggestion. And one more suggestion, maybe... Please excuse me, maybe some questions are far-fetched, but I did not deal with Transgaz for 10 years now. I'm a little bit far behind. I'm not updated to what happens with the company.
My colleague, Cosmina, left, and now I am in charge with your company. Yes. Maybe my questions are the questions of a man who is not updated to what happens currently with Transgaz. I'm looking in the budget, and I see that you provided for a tariff. Just one moment. I want to be more specific. At the substantiation of the revenues, the average transmission tariff, for example, in 2024, is 10.71 MWh. I cannot find it. I do not know how to calculate this tariff, who is closer to 10 point. This tariff is calculated by dividing the value of the revenues to the quantity estimated to be transmitted in 2024. For the revenues from the transmission activities divided by the quantity estimated to be transported in 2024.
If I divide to quarter one, I have RON 1.63, the transmission tariff. I have the transmission tariff. I cannot see the transport tariff. Daniela, I would like to provide a clarification. I wanted to clarify this as a suggestion as well. You said that you want to cover Transgaz again. There are a lot of elements arising, and so as not to monopolize the discussions, please, write them in an email. Put down all the clarification requests, all your questions, because there are a lot of elements, you have to know, you have to be updated, so as you, you have the database necessary to cover Transgaz.
I would like to suggest, if I may, to write an email and put down all your questions, and we will answer them one by one, so as you will have a database that related to tariffs, to budget, everything you have clarifications requests, and maybe they are useful to some other colleagues of yours as well. Yes, I agree. I do not want to monopolize your conference with my questions, beginners questions. I agree. Thank you very much for your suggestion. Thank you. We are looking forward to your email, and we will make sure you receive an answer as soon as possible, so as you can have a database related to Transgaz. I put down your request, and my colleague, Elena, put it down as well. Thank you very much. I'm very glad you came back, and you're covering Transgaz again.
Thank you. From the other participants attending, please, if you have any other questions? Yes, we have questions in the Q&A section. In the Q&A section, Mrs. Sasu. Yes, I saw the question of Mr. Cristian Petre. Yeah, he asks if a new reevaluation with inflation of the regulated assets will follow, or related to the methodology to Order 41 of 2019 of ANRE, the threshold is inflated in the beginning of every calendar year. And the following questions related to the new regulatory period, which are the expectations related to regulatory rate of return? ANRE published an estimate of the RRR of 75% for the following regulatory period. There was a meeting at ANRE with the market, where the regulatory authority discussed such aspects.
All the operators made their own estimates, which were higher than those made by ANRE.
... It is possible that in the near future for ANRE to consider the observations on the market and to make some amendments, some positive amendments to the regulated rate of return, but we do not have any other information apart from that. There are negative corrections or positive for the full period. The corrections, as I said, the regulated revenue will be approved soon by ANRE, and the information will be made public as soon as they are approved. Another question. If there are increasing costs in the next quarters compared to the first trimester, and what CapEx do you expect this year? The level of the expenses from investment substantiated by the revenue and expense budget... Just one second. Just one second, I have to check.
RON 2.25 billion, this was the CapEx estimated in the revenue and expense budget. Mrs. Ioana Andrei?
Sorry. I think I raised my hand earlier, but I have no other questions. Yes, I have another question. Can you hear me?
Yes, yes, yes, we can hear you. Related to the inflation. The inflation related to RAB is performed with the rate at the end of the period of the average rate related to the period. The average rate of the period and in May is made each trimester, each quarter. Yes, it's made each quarter. Thank you. Are there any other questions? I'd like to come back to the inflation adjustment question.
The inflation with which you adjust the regulated asset base, is, the one published by certain authorities, like the National Forecast Commission, or is, the one communicated by National Bank of Romania or the Institute of Statistics? Normally, the achieved inflation is taken into consideration. But if there is no achieved inflation, it is taken into consideration, the one published by the National Forecast Commission. There was significant differences between the published inflation and the one published by the National Forecast Commission, and other companies reevaluated the inflation. So you don't see a probability to have a significant re-evaluation over the following period of time due to these differences? According to the methodology, we have a inflation variation to be calculated over the next year, depending on the achieved inflation.
Thank you very much, and I congratulate you for the results. Are there any other questions? Please, if you have any question. It seems that there are no other questions. So in this case, before ending this conference call, now, on behalf of Mr. Sterian, our Director General, thank you very much for being here at the presentation of our results for the first quarter of this year, which are extraordinary results, a joint effort. Thank you very much because you are actively by us. We remain open to your questions and we are waiting for you to send us emails with these questions. Following that, we obtain the technical data from the operating division. We also expect any other questions for which you would like to have any clarification.
Please send us to our well-known emails so that we can have an exchange and provide you with the necessary data to prepare your report regarding Transgaz. Thank you very much. We wish you the best, and we hope to see you well at the next weekend web meeting. Thank you very much. Goodbye.