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S.N. NUCLEARELECTRICA S.A. - SNN

2017 Q3 report

Release Date: 11/13/2017 8:00:05 AM

IRIS Code: 9AE2B

 Report date: 13.11.2017

Name of the issuing entity: Societatea Nationala NUCLEARELECTRICA S.A.

Registered office: 65, Polona street, District 1, Bucharest

Phone/fax number: 021-203.82.00 / 021 – 316.94.00

Sole Registration Code with the Trade Register Office: 10874881

Order number in the Trade Register: J40/7403/1998

Subscribed and paid share capital: RON  3.015.138.510  Lei

Regulated market on which the issued securities are traded: Bucharest Stock Exchange

 

 

To:                 Bucharest Stock Exchange

Financial Supervisory Authority

Ref:                Current Report in compliance with the provisions of Law no. 24/2017 regarding issuers of financial instruments and market operations, and the Regulation No. 1/2006 of the Romanian National Securities Commission regarding the issuers and securities operations, as subsequently amended

 

 

 

Important event to be reported :

The Quarterly report regarding the economic-financial activity as at and for the period Junuary 1st-September 30th, 2017

 

 

Societatea Nationala Nuclearelectrica S.A. (“SNN”) informs its shareholders and investors on the publication of the Quarterly Report regarding the economic-financial activity as at and for the period January 1st-September 30th, 2017, prepared in compliance with art. 67 of Law 24/2017 regarding the issuers of financial instruments and market operations and with CNVM Regulation no. 1/2006 regarding the issuers and security operations.  

 

The Quarterly report comprises:

 

-          The main activities of the company during the reporting period;

-          The Individual Interim Condensed Unaudited Financial Statements as at and for the 9-month period ended on September 30th, 2017;

-          The Quarterly Report of the Board of Directors on the administration activity for the period January 1st-September 30th, 2017.

 

 

I.       The Financial results

In the 9-month period ended on September 30th, 2017, SNN registered a net profit of  225.285 thousand lei. The main results are presented below and are excerpted from the individual interim condensed unaudited financial statements as at and for the period ended on September 30th, 2017:

Thousand Lei

9-month period ended on September 30th, 2017 (unaudited)

 

9-month period ended on September 30th, 2017 (unaudited, restated)

 

Variation

Production (GWh)*

7.760

7.589

2,3%

Operating revenues, out of which

1.401.689

1.194.443

17,4%

Revenues from electricity sale **

1.366.427

1.157.741

18,0%

Operating expenses, less depreciation and amortization

(754.588)

(727.306)

3,8%

EBITDA

647.101

467.137

38,5%

Depreciation and amortization

(370.183)

(359.948)

2,8%

EBIT

276.918

107.189

158,3%

(Expenses)/Net financial income

(3.861)

15.534

n/a

Net expense with the income tax

(47.772)

(20.326)

135,0%

Net profit

225.285

102.397

120,0%

*Electricity produced and delivered by Cernavoda NPP into the grid

 **Including income from thermal energy sale, insignificant in the total income

 

The main factors that influenced the results obtained throughout January 1-September 30, 2017 as compared to the previous period of last year:

Ø  The 38,5% increase in EBITDA compared to the same period of last year mainly as a result of  17,4% increase in operational income influenced by the 18% increase in electricity sales.  

Ø  The increase in electricity produced, respectively sold, due to a shorter planned outage of Cernavoda NPP Unit 2 in the second quarter of 2017 (26,5 days) compared to the duration of the planned outage of Unit 1 in the similar period of 2016 (51 days), of 2,3% which represented an increase of 3,7% of the sold electricity quantity.  

Ø  Changes in the sale mix on the regulated and competitive market following the reduction in energy sold on the regulated market during January 1-September 30, 2017 (56% lower compared to the same period of last year) in the context of the gradual liberalization of the electricity market. SNN  sold 15% more energy on the competitive market at an weighted average price 9,5% higher than the price of electricity on the regulated market. Due to market stabilization and an increase in traders’ appetite for safety, SNN sold 43% more energy on the competitive market of bilateral contracts and 26% more energy on the spot market (where the prices continued to stay significantly higher-57%), the important factors in directing the sale strategy beeing SNN’s baseload production and the importance of concluding predictible contracts on longer time periods.

Ø  3,8% increase in  operational expenses during January 1-September 30, 2017 due to an increase in expenses with purchased energy in order to totally meet contractual obligations to deliver energy during the planned outage of  Cernavoda NPP Unit 2.

Ø  2,8% increase in depreciation and amortization expenses compared to the same period of last year, determined by the increase in amortization expenses relating to commissioning investments in the period subsequent to the 3rd quarter of 2016.

Ø  Net financial expenses determined by currency exchange differences, mainly EUR, CAD and USD, which during January 1-September 30, 2017 negatively impacted the net result, unlike the same period of last year when net financial income was registered. 

 

II.                     Financial position on September 30, 2017

 

Thousand Lei

September 30, 2017

(unaudited)

December 31, 2016

(audited, restated)

Variation

Non-current assets

7.033.594

7.330.813

-4,1%

Current assets

2.235.379

2.014.607

11,0%

Total assets

9.268.973

9.345.420

-0,8%

 

 

 

 

Non-current liabilities

1.284.419

1.420.338

-9,6%

Current liabilities

495.990

450.313

10,1%

Total liabilities

1.780.409

1.870.651

-4,8%

 

 

 

 

Shareholders’ equity

7.488.564

7.474.769

0,2%

Total shareholders’ equity and liabilities  

9.268.973

9.345.420

-0,8%

 

Non-current assets registered a slight decrease compared to the level registered on December 31, 2016, mainly due to a decrease in the net value of the tangible assets by acknowledging the amortization relating to the period January 1-September 30, 2017. The impact of the amortization during this period was partially compensated by the achieved investments related to Cernavoda NPP Units 1 and 2. 

 

Current assets registered an increase of 11% compared to December 31, 2016 mainly due to 17,4% increase in cash (cash, cash equivalents, bank deposits with maturity larger than 3 months), partially compensated by the 29% reduction in commercial receivables and other receivables, influenced by the contractual stipulations (payment in advance vs post-delivery payment).

 

Non-current liabilities decreased by 9,6% compared to the values registered on December 31, 2016. The decrease is determined by the reduction of the long-term portion of the credits contracted by the company from Societe Generale and EURATOM for the completion and commissioning of Cernavoda NPP Unit 2 following the reclassification of the maturity rates from the long-term portion into the short-term portion reported to credits maturity decrease. This reduction was partially compensated by the increase in long-term obligations regarding employees’ benefits. 

 

Current liabilities increased by 10,1% compared to the values registered on December 31, 2016. The increase is mainly determined by the increase in commercial debt and other debt by 15,7% following the debt increase regarding dividends to be paid due to distributing 110 million lei as supplementary dividends in compliance with art. II and III of EGO no. 29/2017, from “other reserves representing funds for own sources of financing”, as per GMS resolution no. 8/28.09.2017, compensated by the decrease with 34,9% of other current liabilities.  Simultaneously, short-term income in advance increased following the conclusion of electricity delivery contracts with payment in advance for electricity deliveries in subsequent periods, and also due to registering the due profit tax relating to the 3rd quarter of 2017. The 6,9% decrease in the current portion of the long-term borrowings partially counterbalanced the aforementioned increases. 

 

 

III. Electricity production 

The gross electricity production of the 2 operational Cernavoda NPP units was 8.464.905 MWh during January 1-September 30, 2017 (out of which 2.945.266 MWh in the 3rd quarter of 2017).  Out of this gross production, the technological consumption of the 2 units during operation, as well as during outages was  705 thousand MWh during January 1-September 30, 2017 (out of which 251 thousand MWh in the 3rd quarter of 2017).  

 

Thus, the electricity produced and delivered into the National Energy System (“NES”) was 7.760.368 MWh during January 1-September 30, 2017, compared to the similar period of last year  (7.588.901 MWh), representing an increase of  2,26%. In the 3rd quarter of 2017, the quantity of electricity produced and delivered into the NES was  2.694.681 MWh, decreasing  3,25% compared to the quantity registered in the 3rd quarter of 2016 of  2.785.084 MWh.

 

The capacity factor, registered for each operational unit in the 3rd quarter of 2017, as well as cumulated since the commissioning of the 2 units (Unit 1-december 2nd, 1996 and Unit 2-November 1st, 2007), was as follows:

 

Cernavoda NPP Unit

Cumulated 1st semester 2017

July 2017

August 2017

September 2017

Cumulated

2017

Cumulated since commissioning

Unit 1

96,16%

97,03%

96,40%

97,51%

96,43%

90,59%

Unit 2

84,73%

88,70%

90,20%

98,53%

87,32%

94,22%

 

The lower value of the capacity factor of Cernavoda NPP Unit 2 reflects the impact of the planned outage with an effective duration of 26,5 days (635,6 hours), initiated on May 6, 2017 and completed on June 2nd, 2017.  

 

IV.  Sale income and price evolution

 

Electricity sales (quantities, prices and values) during January 1-September 30, 2017

Sales by type

Quantities in MWh

%
from total sales

Average price
[lei/MWh with transportation fee included)

Sale income

[lei]

Contracts on the regulated market

529.174

6,69%

160,32

84.837.025

Sales on the competitive market (bilateral contracts and sales on Day-Ahead Market and Intra-day market), out of which:

7.355.497

93,03%

174,77

1.285.548.444

- Sales on contracts on PCCB - LE, PCCB - NC, PCSU and supply contracts  

5.474.603

69,24%

163,54

895.292.647

- Sales on Day-Ahead Market and Intra-day Market

1.880.894

23,79%

207,48

390.255.797

Positive unbalances on the Balancing Market *)

22.397

0,28%

184,57

4.133.855

Total  sales during January 1-September 30, 2017

7.907.068

100%

173,83

1.374.519.324

*) Note: 43.313 lei out of the presented value represents redistributed income resulted from system balancing based on ANRE Order 51/2016.

 

Income related to energy deliveries during January 1-September 30, 2017 is of 1.374.519.324 lei (out of which 43.313 lei represents  redistributed income resulted from system balancing based on ANRE Order 51/2016.), 10,56% higher than the income budgeted for this period and respectively 16,52% higher than the similar period of last year.

 

The weighted average price for the electricity sold (without the balancing market), resulted in the period January 1-September 30, 2017) is 173,80 lei/MWh (including Tg).  In the same period of 2016, the weighted average price for the quantities sold (without the balancing market), was 155,05 lei/MWh (including Tg).

 

The quantities of energy sold by SNN on contracts concluded on the regulated market are in compliance with ANRE Decision 1960/14.12.2016.  In the process of eliminating the regulated tarriffs, compared to 2016, ANRE reduced the regulated quantities from 14,42% (in compliance with ANRE Decision  2562/16.12.2015) to 5,85%  of the production programmed at Cernavoda NPP. The regulated quantities for SNN during January 1-September 30, 2017 represent 6,90%  of the programmed production of Cernavoda NPP for this period, compared to the same period of last year when the percentage was 16,43%.

 

ANRE established for SNN through Decision 1960/14.12.2016 a regulated price of  159,57 lei/MWh (without Tg), for 2017,  1,93% lower than the regulated price established by ANRE through Decision  2562/16.12.2015 for 2016, respectively 162,71 lei/MWh (without Tg). Later on, through ANRE Decision  861/13.06.2017, applicable since July 1, 2017, the average regulated price was reduced by 1,65% from 159,57 lei/MWh down to 156,93 lei/MWh, due to a decrease in the average cost of nuclear fuel throughout 2017, compared to the average nuclear fuel cost considered when establishing the average regulated price for 2017.

 

The quantities of energy sold on the competitive market of bilateral contracts represented during January 1-September 30, 2017, 69,24% out of the total volume of the sold electricity. The average price for the bilateral contracts during January 1-September 30, 2017 was 163,54 lei/MWh (Tg included), registering a decrease of 1% compared to the average price during January 1-September 30, 2016, of  165,42 lei/MWh  Tg included), given the fact that the transportation fee during January 1-September 30, 2016 was 2,70 lei/MWh higher.

 

On the spot market, during January 1-September 30, 2017, SNN sold a quantity of energy representing 23,79%  of the total volume of sales compared to 33,54% in the same period of 2016.  The average price on the spot market achieved by SNN in this period was 207,48 lei/MWh ( Tg included), compared to 134,32 lei/MWh ( Tg included) in the same period of 2016.

 

 V.     The investment program on September 30, 2017

The total value of the investment program for 2017 is 231.593 thousand lei (without the component allocated to the debt service payment related to the long-term borrowings), program approved by SNN GMS resolution 1/29.03.2017.

 

The situation of the investments execution (value and percentage) during January 1-September 30, 2017 is presented in the figure below:

 

 

Year

Investment program value
[thousand lei]

Executed

(01.01 - 30.09)
[thousand lei]

Execution degree

(01.01 - 30.09)
(%)

Execution degree

(01.01    - 30.06)

( %)

2017

231.593

61.836

26,7%

21,0%

 

As in the previous years,  long-term investments (ongoing) have the largest weight within the investment program.  This is due to the modernization/replacement/upgrading necessities, economic necessities-reduction in specific consumption, the improvement of certain parameters specific to related processes with positive impact on efficiency, or legal necessities-implementation of nuclear safety, environmental protection and labor security related improvements, representing requirements from the regulatory authorities (CNCAN and the Ministry of Environment). 

 

The investment program for 2017 was drafted from a value point of view, considering the ongoing contractual obligations, the estimations regarding investment objectives which will be carried out in the following year, includind the amounts allocated to investment projects which imply the fulfilment of certain requirements outside of SNN’s control (for example: preliminary approvals issued by regulatory authorities, legal deadlines related to the unfolding of procurement procedures including litigations, obtaining the necessary approvals from SNN corporate bodies etc), in order to allow the implementation of these projects within the approved budgets.

 

In analysing the value of the investment program, we must take into consideration the fact that it may differ from the degree of physical completion: thus, if the investment project was completed succesfully, the degree pf physical completion is of 100% but the degree of value completion may be subunitary, respecitvely lower than 100%, if the project was implemented at a cost lower than the budgeted amounts; these savings represent benefits for the company, because the same benefits of the project are obtained with less resources.

 

The main investments are related to the operation of Units 1 and 2 and are acknowledged  in the investment category only those expenses that fullfil the criteria of acknowledgement as asset; with the exception of the capitalized expenses, the annual and multi-annual preventive and corrective maintenance programs involve the allocation of the necessary funds which are to be found in the operation expenses of the period in which they appear (example: repairs and maintenance, spare parts, etc).

 

For any details please contact us at: investor.relations@nuclearelectrica.ro 

 

  

 

Cosmin Ghita

 

Director General

 

 

 

 

 



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