S.N.G.N. ROMGAZ S.A.

SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2023

PREPARED IN ACCORDANCE WITH

MINISTRY OF FINANCE ORDER 2844/2016

CONTENTS:

PAGE:

Statement of comprehensive income

1

Statement of financial position

2

Statement of changes in equity

4

Statement of cash flow

5

Notes to the financial statements

7

1. Background and general business

7

2. Significant accounting policies

7

3. Revenue and other income

19

4. Investment income

20

5. Cost of commodities sold, raw materials and consumables

20

6. Other gains and losses

20

7. Depreciation, amortization and impairment expenses

20

8. Employee benefit expense

21

9. Finance costs

21

10. Other expenses. Taxes and duties

21

11. Income tax

22

12. Property, plant and equipment.

25

13. Exploration and appraisal for natural gas resources

27

14. Intangible assets. Right of use assets

28

15. Inventories

29

16. Accounts receivable

29

17. Share capital

31

18. Provisions

31

19. Deferred revenue

34

20. Trade and other current liabilities

34

21. Financial instruments

35

22. Related party transactions and balances

38

23. Information regarding the members of the administrative, management and

supervisory bodies

39

24. Investment in subsidiaries and associates

40

25. Other financial investments

41

26. Cash and cash equivalents

41

27. Other financial assets

42

28. Interest bearing borrowings

42

29. Assets held for disposal and related liabilities

42

30. Commitments undertaken

43

31. Commitments received

43

32. Contingencies

43

33. Joint arrangements

44

34. Auditor's fees

44

35. Events after the balance sheet date

44

36. Approval of financial statements

45

STATEMENT OF COMPREHENSIVE INCOME

Year ended

Year ended

Note

December 31, 2023

December 31, 2022

Revenue

3

8,619,286

13,071,969

Cost of commodities sold

5

(107,060)

(183,574)

Investment income

4

273,027

188,404

Other gains and losses

6

(12,957)

(10,795)

Net impairment gains/(losses) on trade

receivables

16

(57,546)

(55,166)

Changes in inventory of finished goods and work

in progress

(5,767)

(2,197)

Raw materials and consumables used

5

(94,857)

(102,326)

Depreciation, amortization and impairment

expenses

7

(433,391)

(461,425)

Employee benefit expense

8

(819,207)

(769,026)

Taxes and duties

10 b)

(1,478,423)

(6,940,057)

Finance cost

9

(61,913)

(27,233)

Exploration expense

13

(83,051)

(59,069)

Other expenses

10 a)

(850,009)

(604,114)

Other income

3

122,126

78,503

Profit before tax

5,010,258

4,123,894

Income tax expense

11

(2,360,981)

(1,591,949)

Profit for the year

2,649,277

2,531,945

Other comprehensive income

Items that will not be reclassified

subsequently to profit or loss

Actuarial gains/(losses) on post-employment

benefits

18 c)

(9,338)

14,096

Income tax relating to items that will not be

reclassified subsequently to profit or loss

11

1,494

(2,255)

Total items that will not be reclassified

subsequently to profit or loss

(7,844)

11,841

Other comprehensive income for the year net

of income tax

(7,844)

11,841

Total comprehensive income for the year

2,641,433

2,543,786

'000 RON

These financial statements were endorsed by the Board of Directors on March 22, 2024.

Răzvan Popescu

Chief Executive Officer

Gabriela Trânbițaș

Chief Financial Officer

'000 RON

Note

December 31, 2023

December 31, 2022

ASSETS

Non-current assets

Property, plant and equipment

12

4,629,477

4,387,058

Intangible assets

14

15,223

19,735

Investments in subsidiaries

24 a)

5,185,051

5,185,051

Investments in associates

24 b)

120

120

Deferred tax asset

11

213,352

217,073

Net lease investment

211

286

Other assets

16 b)

549,710

27,722

Right of use asset

14

10,774

6,786

Other financial investments

25

5,616

5,616

Total non-current assets

10,609,534

9,849,447

Current assets

Inventories

15

293,749

274,531

Trade and other receivables

16 a)

1,337,437

1,334,163

Contract costs

-

3

Other financial assets

27

2,344,349

8,481

Other assets

16 b)

258,769

250,922

Net lease investment

104

88

Cash and cash equivalents

26

518,831

1,867,570

Total current assets

4,753,239

3,735,758

Assets held for sale

29

687,453

677,634

Total assets

16,050,226

14,262,839

EQUITY AND LIABILITIES

Equity

Share capital

17

385,422

385,422

Reserves

4,834,685

3,492,228

Retained earnings

6,172,369

6,191,538

Total equity

11,392,476

10,069,188

Non-current liabilities

Retirement benefit obligation

18

177,721

158,934

Deferred revenue

19

276,749

230,419

Lease liabilities

10,450

7,090

Borrowings

28

808,373

1,125,534

Provisions

18

336,648

186,778

Total non-current liabilities

1,609,941

1,708,755

'000 RON

'000 RON

Note

December 31, 2023

December 31, 2022

Current liabilities

Trade payables

20

139,733

86,903

Contract liabilities

153,723

263,340

Current tax liabilities

11

1,762,716

1,171,873

Deferred revenue

19

7

11

Provisions

18

111,607

312,867

Lease liabilities

2,023

1,017

Borrowings

28

323,349

321,581

Other liabilities

20

493,557

279,797

Total current liabilities

2,986,715

2,437,389

Liabilities directly associated with the assets

held for disposal

29

61,094

47,507

Total liabilities

4,657,750

4,193,651

Total equity and liabilities

16,050,226

14,262,839

'000 RON

These financial statements were endorsed by the Board of Directors on March 22, 2024.

Răzvan Popescu

Chief Executive Officer

Gabriela Trânbițaș

Chief Financial Officer

'000 RON

S.N.G.N. ROMGAZ S.A.

STATEMENT OF CHANGES IN EQUITY

Geological

Reinvested

Share

Legal

quota

Development

profit

Other

Retained

capital

reserve

reserve**)

fund reserve

reserve

reserves

earnings ***)

Total

'000 RON

'000 RON

'000 RON

'000 RON

'000 RON

'000 RON

'000 RON

'000 RON

Balance as of January 1, 2023

385,422

77,084

486,388

2,543,502

365,529

19,725

6,191,538

10,069,188

Profit for the year

-

-

-

-

-

-

2,649,277

2,649,277

Other comprehensive income for the year

-

-

-

-

-

-

(7,844)

(7,844)

Total comprehensive income for the

year

-

-

-

-

-

-

2,641,433

2,641,433

Allocation to dividends *)

-

-

-

-

-

-

(1,318,145)

(1,318,145)

Allocation to development fund reserve

-

-

-

1,268,874

-

-

(1,268,874)

-

Increase in reinvested profit reserves

-

-

-

-

73,583

-

(73,583)

-

Balance as of December 31, 2023

385,422

77,084

486,388

3,812,376

439,112

19,725

6,172,369

11,392,476

Balance as of January 1, 2022

385,422

77,084

486,388

2,003,275

333,702

19,725

5,684,411

8,990,007

Profit for the year

-

-

-

-

-

-

2,531,945

2,531,945

Other comprehensive income for the year

-

-

-

-

-

-

11,841

11,841

Total comprehensive income for the

year

-

-

-

-

-

-

2,543,786

2,543,786

Allocation to dividends *)

-

-

-

-

-

-

(1,464,605)

(1,464,605)

Allocation to development fund reserve

-

-

-

540,227

-

-

(540,227)

-

Increase in reinvested profit reserves

-

-

-

-

31,827

-

(31,827)

-

Balance as of December 31, 2022

385,422

77,084

486,388

2,543,502

365,529

19,725

6,191,538

10,069,188

*) In 2023 the Company's shareholders approved the allocation of dividends of RON 1,318,145 thousand (2022: RON 1,464,605 thousand), dividend per share being RON 3.42 (2022: RON 3.8).

**) The geological quota reserve was set up until 2004 in accordance with the provisions of Government Decision no. 168/1998 on the establishment of the expense quota for the development and modernization of oil and natural gas production, refining, transportation and oil distribution. The reserve cannot be distributed.

***) Retained earnings include the geological quota reserve set up after 2004 in accordance with the provisions of Government Decision no. 168/1998 on the establishment of the expense quota for the development and modernization of oil and natural gas production, refining, transportation and oil distribution. Following the Company's transition to IFRS, the reserve existing as of December 31, 2012 was transferred to retained earnings. This result is allocated based on the depreciation, respectively write-off of the assets financed using this source, based on decision of General Meeting of Shareholders. As of December 31, 2023 the geological quota reserve available for distribution is of RON 627,612 thousand (December 31, 2022: RON 714,512 thousand).

These financial statements were endorsed by the Board of Directors on March 22, 2024.

Răzvan Popescu

Gabriela Trânbițaș

Chief Executive Officer

Chief Financial Officer

STATEMENT OF CASH FLOW

Year ended

Year ended

December 31, 2023

December 31, 2022

Cash flows from operating activities

Net profit

2,649,277

2,531,945

Adjustments for:

Income tax expense (note 11)

2,360,981

1,591,949

Interest expense (note 9)

43,748

5,565

Income from dividends (note 4)

(50,247)

(13,583)

Unwinding of decommissioning provision (note 9,

note 18)

18,165

21,668

Interest revenue (note 4)

(222,780)

(174,821)

Net loss on disposal of non-current assets (note

6)

4,501

451

Change in decommissioning provision recognized

in profit or loss, other than unwinding (note

10, note 18)

33,763

(75,629)

Change in other provisions (note 10, note 18)

(197,434)

110,976

Net impairment of exploration assets (note 7,

note 13)

23,361

66,447

Exploration projects written off (note 13)

3

16

Net impairment of property, plant and equipment

and intangibles (note 7)

61,271

73,710

Foreign exchange differences

7,382

(453)

Depreciation and amortization (note 7)

348,759

321,268

Amortization of contract costs

59

773

Net receivable write-offs and movement in

allowances for trade receivables and other

assets (note 16 c)

53,519

55,765

Other gains and losses

1,069

1,793

Net movement in write-down allowances for

inventory (note 6, note 15)

4,568

4,814

Liabilities written off

(172)

(512)

Subsidies income (note 19)

(7)

(7)

Cash generated from operations before

movements in working capital

5,139,786

4,522,135

Movements in working capital:

(Increase)/Decrease in inventory

(23,027)

19,556

(Increase)/Decrease in trade and other

receivables

(172,993)

(232,183)

Increase/(Decrease) in trade and other liabilities

236,006

(573,356)

Cash generated from operations

5,179,772

3,736,152

Interest paid

(43,183)

(5,040)

Income taxes paid

(1,757,188)

(404,171)

Net cash generated by operating activities

3,379,401

3,326,941

'000 RON

'000 RON

STATEMENT OF CASH FLOW

Year ended

Year ended

December 31, 2023

December 31, 2022

Cash flows from investing activities

Bank deposits set up and acquisition of state

bonds

(5,980,520)

(3,220,306)

Bank deposits and state bonds matured

3,655,236

3,599,005

Loans granted to subsidiaries

(504,368)

(27,359)

Interest received

194,553

179,571

Proceeds from sale of non-current assets

1,684

1,033

Dividends received

50,247

13,583

Acquisition of shares in ExxonMobil Exploration

and Production Romania Limited

-

(5,126,347)

Acquisition of non-current assets

(498,466)

(336,969)

Acquisition of exploration assets

(50,746)

(96,500)

Collection of lease payments

120

105

Net cash (used in)/generated by investing

activities

(3,132,260)

(5,014,184)

Cash flows from financing activities

Borrowings received

-

1,606,475

Repayment of borrowings

(322,775)

(158,907)

Dividends paid

(1,317,745)

(1,463,984)

Repayment of lease liability

(1,709)

(1,422)

Grants received (note 19)

46,349

-

Net cash used in financing activities

(1,595,880)

(17,838)

Net increase/(decrease) in cash and cash

equivalents

(1,348,739)

(1,705,081)

Cash and cash equivalents at the beginning of

the year

1,867,570

3,572,651

Cash and cash equivalents at the end of the

year

518,831

1,867,570

'000 RON

These financial statements were endorsed by the Board of Directors on March 22, 2024.

Răzvan Popescu

Chief Executive Officer

Gabriela Trânbițaș

Chief Financial Officer

'000 RON

  • 1. BACKGROUND AND GENERAL BUSINESS

    Information regarding S.N.G.N. Romgaz S.A. (the "Company"/"Romgaz")

    S.N.G.N. Romgaz S.A. is a joint stock company, incorporated in accordance with Romanian legislation.

    The Company's headquarter is in Mediaş, 4 Constantin I. Motaş Square, 551130, Sibiu County.

    The Romanian State, through the Ministry of Energy is the majority shareholder of S.N.G.N. Romgaz S.A. together with other legal and physical persons (note 17).

    Romgaz has as main activity:

    • 1. geological research for the discovery of natural gas, crude oil and condensate reserves;

    • 2. operation, production and usage, including trading, of mineral resources;

    • 3. natural gas production for:

      • ensuring the storage flow continuity;

      • technological consumption;

      • delivery in the transmission system.

    • 4. commissioning, interventions, capital repairs for wells equipping the deposits, as well as the natural gas resources extraction wells, for its own activity and for third parties;

    • 5. electricity production and distribution.

  • 2. MATERIAL ACCOUNTING POLICIES

    Statement of compliance

    The separate financial statements ("financial statements") of the Company are prepared in accordance with Ministry of Finance Order 2844/2016, with subsequent amendments, to approve accounting regulations in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union (MOF 2844/2016). MOF 2844/2016, with subsequent amendments, is in accordance with the IFRS adopted by the European Union.

    For the purpose of the preparation of these financial statements, the functional currency of the Company is deemed to be the Romanian Leu (RON).

    Basis of preparation

    The financial statements are prepared on a going concern basis. The principal accounting policies are set out below.

    Accounting is kept in Romanian and in the national currency. Items included in these financial statements are denominated in Romanian lei. Unless otherwise stated, the amounts are presented in thousand lei (thousand RON).

    Fair value

    Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Company takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. Fair value for measurement and/or disclosure purposes in these financial statements is determined on such a basis, except for measurements that have some similarities to fair value but are not fair value, such as net realizable value in IAS 2 "Inventory" or value in use in IAS 36 "Impairment of assets".

    In addition, for financial reporting purposes, fair value measurements are categorized into Level 1, 2 or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance to the Company of the inputs to the fair value measurement, which are described as follows:

    • level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company can access at the measurement date;

    • level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and

    • level 3 inputs are unobservable inputs for the asset or liability.

Subsidiaries

A subsidiary is an entity controlled by the Company. In establishing the existence of control, the Company analyses the following:

  • if it has authority over the invested entity;

  • if it is exposed to, or has rights to variable returns from its involvement in the invested entity;

  • if it has the ability to use its authority over the invested entity to affect these returns.

The investment in a subsidiary is recognized at cost less accumulated impairment.

Associated entities

An associate is a company over which the Company exercises significant influence through participation in decision making on financial and operational policies of the entity invested in. Investments are recorded at cost less accumulated impairment.

Joint arrangements

A joint arrangement is an arrangement of which two or more parties have joint control. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require the unanimous consent of the parties sharing control.

A joint arrangement is either a joint operation or a joint venture.

A joint operation is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the assets, and obligations for the liabilities, relating to the arrangement. Those parties are called joint operators.

A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the arrangement. Those parties are called joint ventures.

Joint operations

The Company recognizes in relation to its interest in a joint operation:

  • its assets, including its share of any assets held jointly;

  • its liabilities, including its share of any liabilities incurred jointly;

  • its revenue from the sale of its share of the output arising from the joint operation;

  • its share of the revenue from the sale of the output by the joint operation; and

  • its expenses, including its share of any expenses incurred jointly.

As joint operator, the Company accounts for the assets, liabilities, revenues and expenses relating to its interest in a joint operation in accordance with the IFRSs applicable to the particular assets, liabilities, revenues and expenses.

If the Company participates in, but does not have joint control of, a joint operation it accounts for its interest in the arrangement in accordance with the paragraphs above if it has rights to the assets, and obligations for the liabilities, relating to the joint operation.

If the Company participates in, but does not have joint control of, a joint operation, does not have rights to the assets, and obligations for the liabilities, relating to that joint operation, it accounts for its interest in the joint operation in accordance with the IFRSs applicable to that interest.

Standards and interpretations valid for the current period

The following standards and amendments or improvements to existing standards issued by the IASB and adopted by the EU have entered into force for the current period:

  • Amendments to IAS 12 "Income taxes: Deferred Tax related to Assets and Liabilities arising from a single transaction" (effective for annual periods beginning on or after January 1, 2023);

  • Amendments to IAS 12 "Income taxes: International Tax Reform - Pillar Two Model" (effective for annual periods beginning on or after January 1, 2023);

  • Amendments to IFRS 17 "Insurance Contracts: initial application of IFRS 17 and IFRS 9 - comparative information" (applicable to annual periods beginning on or after January 1, 2023);

Attachments

Disclaimer

SNGN Romgaz SA published this content on 24 March 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 25 March 2024 13:15:21 UTC.