Quarterly Report Regarding Economic-Financial Activity Of S.N.G.N. Romgaz On September 30, 2017

Announced Date :  Nov 14, 2017


During the nine-month period ended on September 30, 2017, the Company's operational and financial performances increased significantly in comparison with both the previous reporting periods and the schedules set in the beginning of the year.
After recording at national level a reduction of natural gas consumption of approx. 4.6% in 2015 and after a moderate increase of approx. 1.9% in 2016, 2017 experienced a consumption revival as it increased during the reporting period with approx. 12%, from 79.5 TWh during the nine-month period ended on September 30, 2016 to 89.04 TWh in the same period of 2017.

Due to the increase of the national gas consumption, Romgaz succeeded to increase its deliveries by 34.68% as compared to the similar 2016 period from 31.86 TWh to 42.91 TWh. As such, Romgaz market share on the Romanian gas delivery market reached 48.19%, by 8.12% higher than the market share held during the previous reporting period (40.08%).

Natural gas production was 3.751 million mc, higher by 717 million mc than the production recorded during the similar 2016 reporting period (+23.6%) and higher by 263 million mc than the production schedule (+7.6%).

Electricity production increased by 62.5% as compared to the production generated in the similar period of 2016, from 902.0 TWh to 1,465.5 TWh. This production placed Romgaz at a market share of 3.14% (Source: CNTEE Transelectrica SA).

The margins of the main profitability indicators: net profit (36.5%), EBIT (42.7%) and EBITDA (55.3%) confirm a high profitability of the company's activity.

Relevant Financial Results

Revenue, profit and the other indicators calculated on their basis were set based on the estimated equivalent value of delivered natural gas, due to the fact that the gas balance has not been finalised since November 2016 because of lack of clear regulations on gas deliveries to households and assimilated consumers.

In Q3 2017, the company recorded significant increase of the main indicators as compared to the similar period of 2016: revenue +54%, EBIT +127.6%, EBITDA +96% and net profit +221.2%. Also, the relating profitability rates had significant values.

Summary of main indicators for the nine-month period ended on September 30, 2017:

- Total Income, higher by RON 414.5 million, recording an increase of 14.7% while the total expenses recorded an increase of only 3.6%;

- Net Profit, higher by RON 470.4 milion, increased significantly by 65.9% as compared to the similar 2016 reporting period reaching RON 1.184 million. This positive development is generated by the increase of natural gas and electricity sales and by reduction of expenses;

- Labour productivity increased by 36.2% as compared to the previous period from RON 384.24 thousand Revenue/employee at 9M 2016 to RON 523.35 thousand in 9M 2017;

- Net Profit Rate, EBIT Ratio and EBITDA Ratio are higher than compared to the similar period of 2016 due to the significant increase of Revenue from RON 2,401.5 million to RON 3,241.6 million;

- Earnings per Share is RON 3.1, 67.6% higher than the 9M 2016 recording.

Gas production reached the 2017 production schedule, the production level being 107.56% as compared to the scheduled one.

During the first nine-month of 2017, Romgaz produced a natural gas quantity of 3,751 million mc, by 717 million mc (23.6%) higher than the production recorded in the similar period of the previous year.

The increase of electric power production by approx. 62% more than the values recorded during the similar 2016 reporting period, as indicated in the table below, is in close connection with: (1) reduced production from hydro and wind sources; (2) extended period of heatwave during summer time; (3) repair and maintenance schedules for thermal power generation groups of other producers with the scope of conditioning the equipment for the winter and (4) decrease of generation capacity due to unavailable thermal or nuclear groups.

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