Romgaz S Regulatory News (SNGR)

QUARTERLY REPORT

REGARDING THE ECONOMIC-FINANCIAL ACTIVITY

OF ROMGAZ GROUP

ON SEPTEMBER 30, 2019 (January 01, 2019 - September 30, 2019)

IDENTIFICATION DETAILS ON REPORT AND ISSUER

ROMGAZ GROUP1 PERFORMANCES

Romgaz operational and financial performance during the 9-month period ended on September 30, 2019 remains high, confirming the path the Company chose to follow.

During the first nine months of 2019, estimations show that national gas consumption decreased by approx. 5.7%, while Romgaz deliveries, consisting of deliveries to customers, CET Iernut consumption and technological consumption, decreased by 5.4% as compared to the similar period of the previous year. Romgaz market share, representing the participation of deliveries from the Company's internal production to the domestic natural gas national consumption, increased by approximately 7% as compared to the similar period of the previous year, reaching approximately 59%.

Natural gas production was 3,950 million m3, by 28 million m3 higher than the production of the same period in the previous year (+0.7%) and by 0.3% lower than scheduled.

Electricity production was 292.11 GWh, lower than in the similar period of 2018 (750.65 GWh). With this production, Romgaz has a 0.66%2 market share.

Margins of main profitability indicators: net profit (31.3%), EBIT (36.0%) and EBITDA (51.7%) confirm the high profitability of Romgaz Group.

Relevant Financial Results

*RON million*

The figures in the table above are rounded, therefore small differences might result upon reconciliation.

Note 1: Revenues and Expenses do not include in-house works capitalised as non-current assets.

Note 2: periods relating to 2018 have been restated. For additional information, please refer to Note 14 of the consolidated condensed interim financial statements attached to this report.

Also for January-September 2019, the Group recorded an increase of the main indicators as compared to the similar period of 2018, namely: revenue +10.1%, EBIT+18.4%, EBITDA +25.4%, confirming the previous trend. The relating profitability rates have also significant value. 

A brief overview of the Group's main indicators during the reporting period is:

Ø Total income is higher by RON 409.5 million, recording an increase of 11.6% while total expenses increased by 9.0%.

Ø Gross result is higher by 17.0% as compared to the previous year due to the following influential factors: 

·; 10.1% higher revenue as compared to the similar period of 2018 following an increase of gas sales, both from internal production and from gas purchased for resale (+12.92%);

·; the positive effect triggered by the increased revenue reflected on the profit was affected by the increased windfall tax (+50.4% representing an increase of RON 186.4 million) and by the 2% contribution of electricity and gas licence titleholders from the revenue recorded from activities that relate to the licences granted by ANRE (National Regulatory Authority in the field of Energy) (RON 62.8 million).

Ø Net profit is by RON 188.5 million higher than in the previous period due to increase of income and influenced by increase of expenses as previously shown (+18.9%);

Ø Labour productivity increased by 8.69% as compared to the previous period from RON 561.29 thousand revenue/employee to RON 610.05 thousand revenue/employee;

Ø Net Profit, EBIT and EBITDA rates are higher in comparison with the similar period of 2018 due to the increase of revenue;

Ø EPS is RON 3.1, by 18.9% higher.

Operational Results

Gas production was in line with the expected parameters when preparing the 2019 production schedule, the achieved level representing 99.70% of the schedule.

Romgaz natural gas production during the first 9 months of 2019 was 3,950 million m3, by 28 million m3 (0.71%) more than the volume produced during the same period of the previous year.

The high production was supported by:

ü Continued rehabilitation projects on the most important mature gas reservoirs which arrested the production decline of these reservoirs;

ü Well workover operations which resulted in reactivating several wells with significant flow rates;

ü Relocation of compressors to optimise production at some gas reservoirs;

ü Implementation of production and valorisation phase in case of positive geological exploration results by streaming into production new commercial gas discoveries.

The decrease of produced electricity as indicated in the table below is in close connection with the investment performed at CTE Iernut, works restricting the operation of power units belonging to the old power plant. Therefore, during Q2 and Q3 of 2019, electricity was not produced because of works performed at:

·; the external power station;

·; the primary cooling water circuits, works which are common with the existing power plant;

·; the existing primary cooling circuits of the plant (hydro-technical dam, cooling water pumps, cooling towers, mixing chamber etc.), to be used also at the new investment, works which could only be performed when the plant was not in operation.

*MWh*

1 Romgaz Group consists of S.N.G.N. Romgaz S.A. ("The Company"/"Romgaz") as parent company, Filiala de Înmagazinare Gaze Naturale Depogaz Ploiești SRL ("Depogaz") the subsidiary 100% owned by Romgaz and its associates SC Depomureş 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 Quarterly Report on the Economic-Financial Activity of Romgaz Group on September 30, 2019 (January - September 2019) and the Consolidated Condensed Interim Financial Statements (not audited) for the nine-month and three-month periods ended September 30, 2019 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/3948T_1-2019-11-14.pdf