Last checked at 11 Nov 2016 07:00
QUARTERLY REPORT REGARDING THE ECONOMIC-FINANCIAL ACTIVITY OF S.N.G.N. ROMGAZ S.A.
AS OF SEPTEMBER 30, 2016 (January 01, 2016 - September 30, 2016)
IDENTIFICATION DETAILS ON REPORT AND ISSUER
Report Basis | Article 227 of Law no. 297/2004 on capital market and Annex no. 30 of CNVM Regulation no. 1/2006 for the nine-month period ended on September 30, 2016 |
Report Date | November 10, 2016 |
Name of the Company | Societatea Nationala de Gaze Naturale "ROMGAZ" SA |
Headquarter | Medias, 4 Piata Constantin I. Motas, code 551130, Sibiu County |
Telephone/Fax number | 0040 269 201020 / 0040 269 846901 |
Web/E-mail | www.romgaz.ro / secretariat@romgaz.ro |
Fiscal Code | RO 14056826 |
Trade Registry No. | J32/392/2001 |
Subscribed and paid in share capital | RON 385,422,400 |
Number of shares | 385,422,400 each having a nominal value of RON 1 |
Regulated market where the company's shares are traded | Bucharest Stock Exchange (shares) and London Stock Exchange (GDRs) |
COMPANY PERFORMANCES
Compared to the similar period of the last year, the Company's operational and financial performances for the first nine months of 2016 have been influenced mainly by the decrease of natural gas demand on the Romanian market by approx. 6%.
Net profit, in amount of RON 713.7 million, exceeded the budget forecast (+15.5%, namely RON 617.9 million), although lower than in the similar period of 2015 (-26.8%).
The intensive exploration activities carried out deep onshore led to the largest hydrocarbon discovery of the past 30 years of about 25-27 billion cm.
The financial indicators were maintained at a very good margin: EBIT (37.5%) and EBITDA (52.3%).
Gas sales were significantly influenced by weather conditions, by the dramatic decrease of gas demand in the key sectors, by the uncertain regulatory framework related to the establishment of minimum gas stocks, by the competition against import gas, by the fiscal framework unfavourable for the competition on natural gas market.
The objective to have "0" new overdue accounts receivables is fulfilled. As a result of the company's trading policy, during this period there were no overdue accounts receivables related to deliveries to influence costs and implicitly the company's profit.
The external audit of Romgaz natural gas reserves and contingent resources has been performed in the reporting period by the American company DeGolyer&MacNaughton, resulting in a final Report sent to Romgaz on June 30, 2016. The results included in the Report confirm the evaluation of natural gas resources and reserves made by Romgaz as of December 31, 2015 and concurrently confirm the annual reserves replacement ratio for 2013-2015 at an average of 83%, higher than the target of 70%.
Relevant Financial Result
*million RON*
Q3 2015 | Q2 2016 | Q3 2016 | Δ Q3 (%) | Main Indicators | 9 months 2015 | 9 months 2016 | Δ 9 months (%) |
698.0 | 486.4 | 551.6 | -21.0 | Revenue | 2,933.1 | 2,401.5 | -18.1 |
902.3 | 594.1 | 917.1 | 1.6 | Income | 3,143.5 | 2,827.4 | -10.1 |
659.6 | 449.1 | 753.5 | 14.2 | Expenses | 1,948.7 | 1,908.9 | -2.0 |
242.6 | 145.0 | 163.5 | -32.6 | Gross Profit | 1,194.8 | 918.6 | -23.1 |
33.9 | 19.0 | 65.1 | 92.0 | Profit Tax | 219.4 | 204.9 | -6.6 |
208.7 | 125.9 | 98.4 | -52.9 | Net Profit | 975.3 | 713.7 | -26.8 |
233.2 | 138.8 | 159.1 | -31.8 | EBIT | 1,160.0 | 900.5 | -22.4 |
465.2 | 291.5 | 242.7 | -47.8 | EBITDA | 1,688.9 | 1,257.0 | -25.6 |
0.54 | 0.33 | 0.26 | -52.7 | Earnings per share (RON) | 2.53 | 1.85 | -26.8 |
29.9% | 25.9% | 17.8% | -40.3 | Net Profit Rate (% from Revenue) | 33.3% | 29.7% | -10.8 |
33.4% | 28.5% | 28.8% | -13.6 | EBIT Ratio (% from Revenue) | 39.5% | 37.5% | -5.1 |
66.6% | 59.9% | 44.0% | -33.9 | EBITDA Ratio (% from Revenue) | 57.6% | 52.3% | -9.1 |
6 351 | 6 282 | 6 250 | -1.6 | Number of employees at the end of the period | 6 351 | 6 250 | -1.6 |
The figures above are rounded and therefore small reconciliation differences may occur.
Note: income and expenses do not include in-house works capitalized as non-current assets.
Revenue, profit and the other indicators calculated on their basis were set based on the estimated equivalent value of the natural gas quantities delivered in the period May - September, because the gas balance was not finalised due to lack of clear regulations on gas deliveries to households and assimilated consumers.
Summary of main indicators:
- The Q3 2016 Sales increased by 12.5% as compared to Q2 2016 due to demand for UGS services. Either new clients were attracted (SC CET Govora S.A., SC Megaconstruct SRL) or former clients have re-entered in the company's portfolio of customers (SC Electrocentrale Bucuresti S.A., SNTGN Transgaz S.A.), although import gas had the lowest price of the period;
- Against the dramatic decrease of international gas price (-25%) as compared to the beginning of the year, Romgaz margins remained good;
- The mitigation of impact on sales was generated also by the reinvigoration of trading on the centralised markets recorded during Q3 2016. As such, in comparison with Q2 when only 30,000 MWh were traded on these markets, during Q3 1,600,000 MWh were traded on these markets out of which half is to be delivered during 2016. Romgaz became competitive against the current fiscal environment. The company succeeded to trade 1.5 TWh during the 9 month-period of 2016, which means 72.6% of the total quantity traded on the centralised markets, which makes Romgaz the main player on the Romanian centralised markets;
- Although the net profit, EBIT and EBITDA are lower as compared to the nine months period ending on September 30, 2015, the financial indicator ratios as compared to revenue are highly favourable: 29.7%, 37.5% and 52.3% (as compared to 33.3%, 39.5% and 57.6%, respectively during the same period of 2015), confirming the high profitability of the company.
Operational Results
Q3 2015 | Q2 2016 | Q3 2016 | Δ Q3 (%) | Main Indicators | 9 months 2015 | 9 months 2016 | Δ 9 months (%) |
1,358 | 823 | 836 | -38.43 | Gas Produced (million cm) *) | 4,135 | 3,034 | -26.63 |
99 | 54 | 54 | -44.9 | Petroleum Royalty (million cm) | 301 | 208 | -30.90 |
2,679 | 1,590 | 1,201 | -55.17 | Condensate Production (tonnes) | 8,191 | 4,841 | -40.90 |
691.9 | 191.8 | 391.5 | -43.42 | Electricity Production (GWh) | 1,102.1 | 902.0 | -18.16 |
0.0 | 0.0 | 0.0 |
| Invoiced UGS gas withdrawal services (million cm) | 1,190.1 | 931.0 | -21.77 |
819.0 | 373.6 | 619.9 | -24.31 | Invoiced UGS gas injection services (million cm) | 1,550.1 | 1,302.4 | -15.98 |
*) includes the gas from current production (inclusive the gas from Romgaz-Schlumberger Association) and the gas delivered to SPEE Iernut and Cojocna
The table below indicates the power quantities generated during the 9 month-period of 2016 compared with the similar period of 2015:
*MWh*
| 2015 | 2016 | Ratio |
1 | 2 | 3 | 4=3/2x100 |
Q1 | 167,007.91 | 318,720.48 | 190.84% |
Q2 | 222,680.04 | 191,846.53 | 86.15% |
Q3 | 823,248.79 | 391,472.38 | 47.55% |
9 month-period | 1,212,936.79 | 902,039.38 | 74.36% |
The decrease of generated power quantities is due to increased hydrology during Q3 2016 as compared to Q3 of 2015. This aspect led to the decrease of the price at closing of the Day Ahead Market and to a reduced access on the Balancing Market. Under these circumstances, the traded power quantity (purchased and sold) increased by 41% as compared to the same period of the past year and the revenue from ancillary services increased by 32%.
The full version of Q3 2016 Report (January - September 2016) and the Individual Interim Financial Statements (not audited) for the nine-month and three-month periods ended September 30, 2016 are available on company's website www.romgaz.ro - Section Investor Relations - Interim Reports and on RNS website:http://www.rns-pdf.londonstockexchange.com/rns/9542O_-2016-11-11.pdf