Last checked at 14 Aug 2020 07:00
1ST HALF YEAR REPORT
REGARDING THE ECONOMIC-FINANCIAL ACTIVITY OF
ROMGAZ GROUP
AS OF JUNE 30, 2020 (January 01, 2020 - June 30, 2020)
IDENTIFICATION DETAILS ON REPORT AND ISSUER
Report based on | Law no. 24/2017 on issuers of financial instruments and market operations (Article 65) and ASF (Financial Supervisory Authority) Regulation no.5/2018 on issuers of financial instruments and market operations (Annex 14) for the six-month period ended on June 30, 2020 (HI of financial year 2020) |
Report Date | August 14, 2020 |
Name of the Company | Societatea Nationala de Gaze Naturale "ROMGAZ" SA |
Headquarters | Medias, 4 Constantin I. Motas Square, code 551130, Sibiu County |
Telephone/fax number | 0040 374 401020 / 0040 269 846901 |
Web/E-mail | www.romgaz.ro / secretariat@romgaz.ro |
Fiscal Code | RO 14056826 |
Legal Entity Identifier (LEI) | 2549009R7KJ38D9RW354 |
Regulated market where the company's shares are traded | Bucharest Stock Exchange (shares) and London Stock Exchange (GDRs) |
Subscribed and paid in share capital | RON 385,422,400 |
Shares main characteristics | 385,422,400 shares each with a nominal value of RON 1 nominative, ordinary, indivisible shares, issued dematerialised and free tradable since November 12, 2013 as SNG - for shares and SNGR - for GDRs |
ROMGAZ GROUP1 PERFORMANCES
Operational and financial performances of Romgaz Group achieved in HI 2020 continued to be high, even if decreases were recorded as compared to the previous periods.
During the first 6 months of 2020, we estimate that national gas consumption recorded a slight increase as compared to the similar period of the previous year (approx. 1.7%), while Romgaz deliveries decreased by 16% following a high consumption of import gas. As a result, Romgaz share on the gas delivery market was 36.6%, by 7.8% lower than the share held in the previous period (44.4%).
Natural gas production was 2,245.7 million m3, by 454.3 million m3 lower than the production recorded during the similar period of the previous year (-16.8%) and by 415.1 million m3 lower than scheduled (-15.6%).
Romgaz electricity production of 295.23 GWh was by 123.57 GWh higher as compared to the similar period of 2019 (+71.9%). This production placed Romgaz at a market share of 1.07%2.
Margins of the main profitability indicators for HI 2020: net profit (36.51%), EBIT (41.96%) and EBITDA (54.32%), confirm a high profitability of Romgaz Group activity recording an increase as compared to HI 2019. However, as compared to Q2 of the previous year there is a decrease as Covid 19 pandemic affected the Q2 2020 results.
Relevant Financial Results (consolidated)
*million RON*
Q2 2019 | Q1 2020 | Q2 2020 | Δ Q2 (%) | Main indicators | HI 2019 | HI 2020 | Δ HI (%) |
1,161.7 | 1,430.3 | 763.1 | -34.3 | Revenue | 2,874.8 | 2,193.4 | -23.7 |
1,229.4 | 1,413.6 | 819.8 | -33.3 | Income | 2,912.5 | 2,233.4 | -23.3 |
719.6 | 733.6 | 556.7 | -22.6 | Expenses | 1,762.3 | 1,290.3 | -26.8 |
(0.2) | 0.3 | (0.4) | 100.0 | Share of the associates' result | 1.2 | (0.1) | n/a |
509.6 | 680.3 | 262.8 | -48.4 | Gross Profit | 1,151.3 | 943.1 | -18.1 |
75.5 | 108.3 | 33.9 | -55.1 | Profit Tax | 175.4 | 142.2 | -18.9 |
434.1 | 571.9 | 228.9 | -47.3 | Net Profit | 975.9 | 800.8 | -17.9 |
496.7 | 669.3 | 251.1 | -49.4 | EBIT | 1,127.4 | 920.4 | -18.4 |
598.9 | 802.0 | 389.5 | -35.0 | EBITDA | 1,492.9 | 1,191.5 | -20.2 |
1.1 | 1.5 | 0.6 | -46.0 | Earnings per share *) (RON) | 2.5 | 2.1 | -16.0 |
37.4 | 39.98 | 30.00 | -19.8 | Net Profit Rate (% from Revenue) | 33.9 | 36.51 | 7.7 |
42.8 | 46.79 | 32.91 | -23.1 | EBIT ratio (% from Revenue) | 39.2 | 41.96 | 7.0 |
51.6 | 56.07 | 51.05 | -1.1 | EBITDA ratio (% from Revenue) | 51.9 | 54.32 | 4.7 |
6,171 | 6,240 | 6,208 | 0.6 | Number of employees at the end of the period | 6,171 | 6,208 | 0.6 |
*)EPS is calculated based on the consolidated results of SNGN ROMGAZ SA
The figures above are rounded. Therefore, small differences may result upon reconciliation.
Note: income and expenses do not include in-house works capitalized as non-current assets.
Summary of the Group's main indicators for HI 2020:
Ä Total Income is by RON 679.1 million lower, recording a 23.3% decrease while total expenses recorded a decrease of 26.8%.
Gross consolidated result of HI 2020 is by 18.1% lower as compared to the similar period of the previous year (RON -208.2 million) due to the following influential factors:
· Consolidated revenue decreased by 23.7% (RON 681.4 million) as compared to HI 2019, following a decrease in gas sales (-28.75%; RON -736.6 million); from a quantitative perspective, the deliveries in HI 2020 are by 19.3% lower. At consolidated level, electricity sales increased by 15% and storage sales increased by 46%. Please note that consolidated storage sales include revenue generated by services invoiced by Romgaz for gas withdrawn from storages sold during the reporting period, not only sales invoiced by Depogaz to its own clients, other than Romgaz; unconsolidated storage sales (revenue of Depogaz, including Romgaz) increased by 16.1%;
· Expenses decreased by 26.8% (RON -472 million) following a reduction of royalty-related expenses (RON -98.95 million), of windfall tax (RON -166.83 million), of cost of import gas for resale (RON -74.4 million) and of depreciation and amortization expenses (RON -94.3 million lei).
· Following the updated depreciation test of assets used in the gas production activity, no additional depreciation was recorded as compared to December 31, 2019.
Ä Net Profit is by RON 175.1 million lower than the profit recorded in the previous period for the reasons indicated above (-17.9%);
Ä Labour Productivity decreased as compared to the previous period from RON 465.85 thousand revenue/employee in H1 2019 to RON 353.31 thousand revenue/employee in H1 2020;
Ä EPS is RON 2.1, by 16.0% lower than in H1 2019.
Operational Results
Q2 2019 | Q1 2020 | Q2 2020 | Δ Q2 (%) | Main Indicators | HI 2019 | HI 2020 | Δ HI (%) |
1,269.8 | 1,362.3 | 883.4 | -30.4 | Gas produced (million m3) | 2,699.8 | 2,245.7 | -16.8 |
90.4 | 98.0 | 59.4 | -34.3 | Petroleum Royalty (million m3) | 193.0 | 157.4 | -18.4 |
4,321 | 6,497 | 4,748 | 9.9 | Condensate Production (tonnes) | 9,255 | 11,245 | 21.5 |
0.8 | 258.9 | 36.31 | 4.597.3 | Electricity produced (GWh) | 171.6 | 295.2 | 72.0 |
39.8 | 895.4 | 28.5 | -28.4 | Invoiced UGS gas withdrawal services (million m3) | 924.7 | 923.9 | -0.1 |
1,009.8 | 40.7 | 530.3 | -47.5 | Invoiced UGS gas injection services (million m3) | 1,047.6 | 571.0 | -45.5 |
Note: the information is not consolidated, namely it contains transactions between Romgaz and Depogaz.
During HI 2020, Romgaz produced 2,245.7 million m3 natural gas by 454.3 million m3 (-16.8%) less than the volume produced during the same period of the previous year.
The production recorded during HI 2020 was supported by:
· continuation of rehabilitation projects on the main mature gas fields;
· well workover operations whereby 70 wells with a production potential of more than 420 thousand m3/day were completed by the end of HI 2020;
· completion of investments in the development of production infrastructure and connection of new wells to this infrastructure.
Electricity production is shown in the table below and its trend was closely connected to the energy demand, price trends on competitive markets, performance of investment works at the new part of CTE Iernut, which restricted the operation of energy groups of the old CTE Iernut power plant. Therefore, CTE Iernut did not produce electricity during Q2 2020 due to:
· required creation of proper working conditions for an adequate implementation of investments in the new plant, fact which influenced the possibility to conclude long-term electricity delivery contracts;
· demand in electricity dropped upon the outbreak of COVID-19 pandemic and following the declaration of a state of emergency (because of measures required to limit the virus transmission);
· prices on the Day-Ahead Market followed a decreasing trend: the average price for the first two months was RON 227 /MWh, then in March the average price was 146.87 /MWh and in May it decreased to RON 122.08 /MWh.
*MWh*
| 2019 | 2020 | Ratio |
1 | 2 | 3 | 4=3/2x100 |
Q1 | 170,894 | 258,923 | 151.51% |
Q2 | 773 | 36,310 | 4,697.28% |
H I | 171,667 | 295,233 | 171.98% |
Notes:
1 Romgaz Group consists of S.N.G.N. Romgaz S.A. ("the Company"/"Romgaz") as parent company, Filiala de Inmagazinare Gaze Naturale Depogaz Ploiesti SRL ("Depogaz"), is the subsidiary owned 100% by Romgaz, and its associates SC Depomures SA (40% of the share capital) and SC Agri LNG Project Company SRL (25% of the share capital)
2 Source: CNTEE Transelectrica SA
The full version of the 1ST Half Year Report on the Economic-Financial Activity of Romgaz Group on June 30, 2020 (January - June 2020) and the Consolidated Condensed Interim Financial Statements for the Six-Month and Three-Month Periods Ended June 30, 2020, Prepared in Accordance with International Accounting Standard 34, with the Independent Auditor's Review Report are available on company's website www.romgaz.ro - Section Investor Relations - Interim Reports and on RNS website at:
http://www.rns-pdf.londonstockexchange.com/rns/1594W_1-2020-8-14.pdf