2022 1st Quarter Results

Electrica Group - Results for Q1 2022

Evolution of the main indicators in the first quarter of 2022:

§ EBITDA - negative in the amount of RON 51 mn., a decrease of RON 250 mn. compared to Q1 2021

§ Net result - loss of RON 158 mn., decrease of RON 216 mn versus Q1 2021

§ The volume of distributed electricity decreased by 1.1%

§ The volume of electricity supplied on the retail market decreased by 3.9%

The main results are presented below and are extracted from the consolidated condensed interim financial statements not reviewed nor audited as of and for the period ended 31 March 2022:

The main factors that influenced the results in the first quarter of 2022:

The operating income of the Electrica Group registered an increase of RON 1,529 mn. of which:

- the revenues from the supply of electricity and natural gas on the supply segment increased by RON 818.3 mn. mainly by the net effect of the increasing of the retail prices on the retail market by 116% and reducing the amount of energy supplied on the retail market by 3.9%;

- RON 632 mn. represents the subsidies recoverable from the Ministry of Energy by the supply subsidiary, as a result of applying the mechanism of capping the prices for electricity and natural gas approved by Order no.118/2021 with subsequent amendments and Order no.27/2022;

- increase by RON 97,5 mn. of revenues from the distribution segment, of which approx. RON 75,5 mn from the increase of distribution tariffs on average by 8.6%, compared to Q1 2021, and RON 22.0 mn. income from the recognition of network investments in connection with concession agreements.

In Q1 of this year, the Group recorded a good performance on the supply segment with a net profit of RON 151 mn. and positive EBITDA of RON 187 mn. (31.03.2021: net profit of RON 28 mn. and positive EBITDA of RON 36 mn.), mainly due to the increase in electricity sales prices (e.g.: on the retail market there was an increase of the selling price by 116%).

On the distribution segment, however, the result recorded in the first quarter is a net loss of RON 307 mn., a significant negative impact being from the average purchase price of electricity for NL with 136% higher than the value set by ANRE ex-ante in tariffs generating additional costs of RON 384 mn., costs that will be recovered in future tariffs in a period of up to 5 years after 31 March 2023 based on GEO 27/2022. Considering these aspects, the recovery of the price from the NL in the amount of RON 384 mn. also puts the distribution segment in a favorable perspective.

Statement of Corina Popescu, CEO of Electrica S.A.:

"Both internal and external situation in the energy market within last year and a half has had and continues to have a major impact on all players in the market. In the first quarter of 2022, the company's financial results continued to be influenced by the high prices for the acquisition of electricity on the OPCOM markets, as well as the successive legislative changes that generated important changes in the invoicing system, with an impact in revenues, especially on the supply area. The efforts of the Electrica Group materialized in specific measures for each area of activity, led to a financial recovery, in Q1 2022, proving that Electrica Group it remains a stable and credible player by its ability to adapt quickly to the conditions of an extremely difficult market. 

In the supply area, the company had to manage the impact of the measures granted by the authorities through the aid schemes provided by GEO 118/2021 and GEO 27/2022 regarding the capping, offsetting and exemption certain categories of consumers and finding the best ways to reduce the losses generated by the instability of the energy market.

In the distribution area, DEER continues the ambitious investment program carried out since the beginning of the previous regulatory period, aiming at modernizing the network infrastructure and accelerating the expansion of smart metering on a large scale, which also depends on the economic and geopolitical context, factors that can influence the capacity of production and delivery of equipment necessary for investments.

During the first quarter of 2022, DEER has carried out five projects with a total value of approximately 60 million euros, financed from European funds - the Large Infrastructure Operational Program, with an eligible value of approximately 49 million euros, aimed to modernize the transformation stations, digitization, implementation of smart meters and specialized informatics systems, for network assets management as well as of the measurement groups. The projects are carried out as multiannual investments, their completion being foreseen for the end of 2023.

The evolution of the energy market and the costs of purchasing energy to cover its own technological consumption have influenced, however, the financing capacity of the company both for the execution of investments and for the insurance of working capital. The fulfilment of the strategic objectives depends on the stabilization of the market and the updating of the specific legislation at national level.

In the area of services, Electrica Serv continued its efforts to achieve the Group's objective aimed at contributing to sustainable development, in the context of the European Green Deal, and implemented a series of projects representing the installation of photovoltaic plants. In the first quarter of the year, 5 photovoltaic power plants with an installed power of almost 2 MWp were completed and put into operation, and for the next period we will continue the development of this new business line.

Therefore, in a difficult context and in a period marked by volatility, we have adopted a series of measures to prepare the Electrica Group to act more agilely and resilient, on all business lines to to keep its position as a partner that constantly acts in the interest of customers and investors, regardless of the disturbances generated by factors external to the company."

Starting with 13 May 2022, 18:30 (Romanian time), the condensed consolidated interim financial statements as at and for the three-month period ended 31 March 2022 prepared in accordance with the International Accounting Standard 34 - "Interim Financial Reporting", as adopted by the European Union, and the Board of Directors' consolidated report for Q1 2022 will be available, in Romanian and English, in electronic format, on Electrica's website, at www.electrica.ro, in the "Investors > Results and Reports > Financial Results" section, at https://www.electrica.ro/en/investors/results-and-reports/financial-results/. The above-mentioned documents could be also available, in hardcopy, at the Company's headquarters in Bucharest, 9 Grigore Alexandrescu Street, District 1, which is open from Monday to Thursday between 08:00- 17:00 (Romanian time), and on Fridays between 08:00-14:30 (Romanian time), excepting the legal holidays.

\* The amounts are rounded to the nearest million

CEO

Georgeta Corina Popescu

 The report can also be consulted at the link below

http://www.rns-pdf.londonstockexchange.com/rns/5061L_1-2022-5-13.pdf