Hello, everyone. Can you hear me? Yes. Hello again. My name is Valentina Dinu. I'm IR with S.N. Nuclearelectrica S.A., T oday, this is the investor conference call for the financial results for the first quarter of 2022. As usual, I will introduce my colleague Dan Nicolae to deliver you the presentation, and then we can go straight to questions and answers. Dan, the floor is yours. Thank you. Thank you. Thank you, Val. Hello, everyone. Nice to hear you. Today we're going to present the financial statements for the period that ended on June 13th for the Nuclearelectrica consolidated with the other subsidiaries. The structure of the presentation, it's simple. We're going to go through the financial statements. Then we'll be talking about a little bit about OpEx, CapEx, technical performance. Again, the next schedule for presentation of financial statements. In terms of financial performance, I'm glad to report that this is an exceptional semester. We have managed to increase our sales up to an unprecedented level of all RON 3.1 billion, which is driven primarily by the increasing price of credit and electricity. However, with the exception of several items, operational items, we managed to keep the costs under control. In terms of operational expenses, which were not necessarily foreseen, we have the windfall tax, which is of significant value. It's almost half a billion lei. It's more than half a billion lei. We have some variations in the cost of energy acquired for the purpose of production of energy and an increase in the cost of personnel, mainly driven by the fact that we are hiring people in order to prepare for the future project of our company. Ultimately, EBITDA shows RON 1.7 billion amount, and the net profit is RON 1.2 billion, which is 35% higher than the budgeted amount and more than 200% higher than the result in June 2021. In terms of financial highlights, you'll see here the element which contributed to the net result. First of all, the main driver of all this exceptional performance is the increase in the sales of electricity, which is driven by the increase in the average price of selling of electricity. The largest negative impact is the windfall tax, which is of considerable value, and it was not fully budgeted for this year. In terms of the balance sheet position, as you can see, no big changes from the last six months. The total assets have increased mainly with the generated profit. We are quite fast reducing our indebtedness level. This year, we'll probably have zero debt. Other than that, no other big changes on the balance sheet. Okay. We're going now to present a little bit the sales evolution for the electricity. The largest impact was the increase in the price of electricity driven by the transaction performed under the competitive market. Also the spot market had a positive influence. Therefore, the sales in electricity have increased from RON 1.3 billion -RON 3.1 billion. In terms of sales structure. Now, this is a very detailed analysis. Let me give you a little bit of background. Okay. Basically, we sold almost the same quantity of electricity. However, the regulated price was much higher. The average price was much higher. We also sold the same quantity on the spot market. However, the average price on the spot market was higher, which of course generated more revenues for us. Basically the spot market sell price average was higher than RON 1,000 per MWh compared to less than RON 300 per MWh in 2021. Okay. In terms of expenses, operational expenses. On the screen you see a very detailed presentation of all the elements which contributed to the cost side of the project. The largest cost element of course was the wind farm, which was almost RON 600 million. Of course, the depreciation, amortization, the cost of traded electricity, which unfortunately was twice the amount of last year because of the increase in price of energy. The personnel expenses, as mentioned, increased on account of increased number of employees, about 11%. The cost of uranium fuel, almost the same as last year. Nothing special to report. The rest of the OpEx elements, the contribution to Cernavodă for the commissioning, with no variable changes. The rest of the items are of smaller values. I'm not going to go through these elements unless you have specific questions. The next slide about CapEx. We managed to keep our program of investments. We managed to surpass our budget, so we are glad to report that we managed to realize 52.8% of the budgeted investment. You see here the breakdown on investment made on tangible assets in eight months. Other elements related to CapEx, a lot of information. I will go quickly through this information. We are moving forward with the program to refurbish Unit 1. As you probably know, in February 2023, the shareholders of the company took the decision to move to phase II of the project, which entails an amount of EUR 1.85 billion. We have also signed the first contract with a Canadian company for the engineering bid for the project and for the engineering of the tools required for the refurbishment. In terms of Unit three, Unit four, you probably heard that yesterday our shareholders have approved our plans to move to stage one for the development of Unit three and Unit four project, conditional upon an agreement with the government to support the development of the project. Our contribution to the development of Unit three and Unit four at this moment is estimated to be in the region of EUR 185 million. Okay. Moving further. In terms of radioactive emissions, nothing really to report. We are functioning within the usual boundaries of safety. The nuclear burnup factor is well within the limits. Of course, the unit performance for Unit two, the gross capacity factor is very good. We are proud to report that we are keeping in line with our previous years. In terms of the next step, in September, there's going to be the publication of the third quarterly report, a conference call, and the conference call will happen in November 2022. That's the short presentation in a nutshell. If you have any other questions or I'm here to answer. Thank you. I'm sorry. I'm tired, evening. I'm not sure, maybe you mentioned this. I think that in the second quarter, the price on the spot market was below the average spot market from the market. Can you tell us why there was a difference? It wasn't huge, but still, there is a difference. Now, I was wondering what triggers these differences and what we should expect going forward. Also, the price, the forward price, is low in the second quarter compared with the first. And if you could let us know why that happened? As you probably know, we are selling most of our energy on the stock exchange, so I assume that this is the situation on the reflection of the supply and demand on the market. Nothing else to say about this. It's as mentioned, the first trimester was indeed exceptional in terms of the prices on the market. Can you let us know what triggered the difference in prices in the second quarter versus the first, the lower price in the second quarter versus the first? On forward market. It's the management. You on the spot market? No, no. On your forward. On the competitive market. Yeah, yeah. On the forward market, yes. Competitive. It's as mentioned, I don't know the details because I'm not really, yeah, following the day-to-day variations of the market, but I assume that was the effect of the supply and demand on the stock exchange. Normally on the forward market, I would have expected more predictability. That's why I was asking what happened in the second quarter? Nothing special to my knowledge. Can you tell us how much is on board already for 2023? I don't remember if you disclosed it or not. Oh, it's not disclosed in 2023. It's We don't have a policy to present this information because we are a large actor on the market and we don't want to influence the market. Also, if you could comment a bit on the reactors three and four and the Small Modular Reactors. As far as I understood after previous discussions with you and the IR team, you would be considering another equity partner in the project, right? We've seen the statements from Mr. Popescu, the Energy Minister, who went to the U.S. and he expects a decision from the U.S. Exim Bank sometime this month on financing of the project. It's not clear, I mean, to me at least, it's not clear who the equity partner could be in the project because they are basically agreeing to finance, but that's a loan. There must be a confusion. We are not envisaging at the moment to bring another equity partner in, EnergoNuclear, the project company. The only partners will be SNN and the government, who will bring uranium and heavy water as in-kind contribution to the financing structure of the project. The rest of the financing will be provided by export credit agencies from Canada, U.S. and Europe. Of course, we've been to U.S. and we received encouraging signs from U.S. Exim with regards to their involvement in the project. There won't be another equity partner in reactors three and four or in the SMRs? In the Unit three and Unit four, we are not envisaging at the moment another equity partner. With the SMRs, the financing structure is not yet complete. We are not excluding bringing another equity partner alongside the SNN and the owner of the land. It's too early to report on this. For reactors three and four, who would be assuming, I mean, assuming there will be delays like we've seen other project delays and the cost overruns, who would be assuming that? How would that work? The cost overrun and the abandonment scenario is under discussion with the government at the moment. We'll come back with information on the strategy we indeed respect. How soon should we expect further details on the reactors three and four? Sorry. On reactors three and four, how soon should we expect further details on this? We are reporting as soon as we progress on this project. At least every trimester, every six months. If there is anything substantial to report, of course, it will be communicated to all the interested parties. The state, I mean, they would be guaranteeing the financing as far as I see here. Basically they would be guaranteeing this loan from U.S. Ex-Im Bank, Ex-Im Bank. Is this how that would work? This is under discussion with the government. A decision has not yet been taken. Will there be an equity injection by the state directly into EnergoNuclear? No, not necessarily. When the project is really complete, the government will contribute with the uranium and heavy water from its own reserves as an in-kind contribution. I've seen, I mean, some numbers mentioned, some amounts for the project. How much would they be financing, the U.S. Ex-Im Bank? How much of the project, 80%, 90%? How much would they be. You know, as I mentioned, you are probably aware that there will be several export credit agencies involved in the project. One will be from U.S., another from Canada, because CANDU technology is a Canadian technology. There will be ECA from France and Italy for their respective for the Italian and French technology. Each, you are probably aware that this project has been developed with a mixture of technology from North America and from Europe. Each ECA will support the export of the technology from each country, from U.S.A., Canada, France, Italy, and a portion of the local cost. The exact split is to be determined because the engineering phase is not yet completed, so we don't know at this moment the exact split of country of origin technology. Okay. For the local part, who'd finance the local? I mean- The local cost will be. Will Nuclearelectrica be required to invest equity into the project? At the moment, the local cost will be financed partially by the ECA in accordance with the OECD Consensus, which allow the ECA to finance up to 50%. ECA, what's ECA? Sorry to interrupt you. The export credit agency. The U.S. Ex-Im, Export Development Canada, Bpifrance, SACE Italy. Mm-hmm. These are the same as Ex-Im Bank in Romania, export credit agency. In accordance with the OECD Consensus, which regulates the activity of these ECAs on the market, these ECAs are allowed to finance a portion of the local cost. What is not financed by the ECAs will be financed also with debt by financial institutions. At the moment, there is no clear, you don't have a very clear financing structure. How much equity would Nuclearelectrica be required to inject into EnergoNuclear, right? At the moment, as mentioned, the project is in early stage. We are as indicated on Wednesday, the government and the rest of the shareholders in Nuclearelectrica gave the go-ahead for the second phase of the project. Okay. Which is conditioned upon an agreement with the government for the support of the project, which will in turn allow Nuclearelectrica to invest up to EUR 185 million in engineering works. At the end of these engineering works, we'll know for sure what is the exact mixture of products in the project, and therefore what will be the exact mixture of financing from the Export Credit Agency, and ultimately what will be the equity to that structure. How long would that take? Because you need a support agreement with the state. How long do you think that would take? I mean, before EUR 185 million are dispersed, you need first this support agreement. How long do you think that will take? In order to keep up the project, the negotiations, I assume it will not take more than one year. At the end, you'll know, I mean, once you have the support agreement, when will you know how much money you'll need to bring as equity? When the engineering is complete, at the end of phase II, when we will have spent EUR 185 million on engineering studies. Okay. You need one year. How long would that phase last? Two years? It's almost two years, yes. Two years, okay. Basically in three years we will know exactly how much money Nuclearelectrica will need to bring into the project, right? Of course. As soon as the engineering is progressing, we'll know more about it. It's a matter of bridging the gap of knowledge. I guess that the state, the agreement with the state will include all these details. What happens if the project is delayed, cost overrun, etc., right? Or not really? Or that would happen later? This is something that will need to be discussed with the government. Because even if you were to inject just 5% in the project, it would be a substantial amount for a company of Nuclearelectrica size, so. Of course. Okay. Thank you. You're welcome. Is there one thing, just one thing. Regarding dividends, would you consider cutting off, I mean, reducing the payout below 50% in order to finance reactors three and four? I mean, is it something that the state would be considering? As you probably know, since we are a state-owned enterprise listed on the stock exchange, we are bound by the regulations governing all the state-owned enterprises. We are in close consultation with the government in order to determine the best payout ratio each year. At the moment, I do not have visibility on the payout ratio for the following years. Of course, we are advocating the need for a sensible payout ratio that will allow the company to develop all of the projects that on its pipeline. Yes, the problem is that we are looking at a very large project. In the longer run, there could be the possibility that the payout will be reduced under 50%, right? I mean, this is kind of what you're saying, because if you do need to inject significant equity into the project, then of course, there is this risk, right? We are aware of the need, of course, to retain as much as possible the free cash flow in order to develop the project. This is also acknowledged by our counterparts. Okay, the decision is probably taken more than, definitely more than one year, probably in three, right? When you know the amount. Of course, yes. Each year you probably know that we have a very strict budgeting regime. We have to report the investment that we're going to make in each year. We'll engage with our shareholders each year to determine what is the best payout ratio. Thanks a lot. Welcome. If there are no other questions, can I ask a bit more specific to the results? Sure. It's not necessary to discuss results. Actually, I was looking at the split between forward and spot. I remember we discussed before that the sales on the forward market would likely be larger in the following quarters. How do you see the split now? I mean, of course, volume sold spot were low in the second quarter, but what should we expect next? 'Cause production was also low in the second quarter, even lower than the previous year. I was wondering if that, the fact that production was or had an influence also on the split? Not dramatic, but you've probably seen the spot prices. We expect the third quarter and the fourth quarter to remain at elevated prices. How do you see the split between forward and spot sales percentage-wise? A very small allocation on the spot market because most of our energy has already been sold for 2022. Okay. Thank you. I see there are two more people that want to ask Dan questions. Mr. Dumitriu and somebody else, please go ahead. I'm not hearing anything. Sorry. Congratulations for the results. I have only one concern about the possible regulation for the price. My question is, which is the coverage of the production capacity with contracts for next year? If it will be any type of regulation, this type of contract will remain firm, and you should buy on spot market for any regulation, for example? With respect to the quantity that we are going or the price that we are going to employ for the sales next year, I cannot comment on this, of course. With regard to any negative legislation which might impact us, we'll see what happens at that moment. It's going to be if it happens, of course, we don't expect this to happen. If it happens, we'll have to really think of the commercial and legal implication of such a legislation with regards to our plans. For example, if you had some contracts in the next year, for example, I suppose there is a firm contract and you should deliver the contract? Of course, we are going to deliver on our contract. The issue is, You have to buy on spot markets for regulation? What will be our commercial strategy depending on the specific legislation? It's difficult for me to speculate at the moment on potentialities. Okay. Thank you. Welcome. Hello. Alexandru Sreila from BNP Paribas. First of all, congrats for your result. I would like to ask if you sold in the second quarter any quantities to distributors or the local grid operator for their own technological consumption. If so, if you can please share with us some figures. Because as far as I know, those quantities are exempt from the windfall tax? Yes. To my knowledge, we sold to distributors for their own technological consumption. I do not have the figure with me. I will check whether it is the practice to share this information. Okay. Can I follow up with an email to at least? Yes, please. Okay. Second, if you have any updates on the tender related to the acquisition of uranium or long-term contracts until 2025? I know that you received some offers from Cameco and Kazatomprom. I cannot really comment because it's an ongoing procedure. Yes, we are making sure that we buy all the necessary uranium from reputable sources in order to cover our production needs. Okay. The idea stands its ground, right? Sorry? The idea stands with the long-term contract until 2025? I cannot really comment. Yes, we are taking into account this solution to secure our long-term needs. Okay, thank you very much. Mr. Gabriel Dumitriu? I already asked the question. Thank you. Thank you. Hi. I have a couple of questions. Andrei Cebotari here. The first one is kind of a follow-up to the previous questions, as to can you share any information about how much of the production have you sold for this year? It's almost the entire production. Almost the entire production. Right. Okay. Got it. The second question would be regarding the personnel. Should we expect to put it directly, like, to keep the same number of employees that they have after the increase? Or should we expect the number of employees to increase in the following quarters as well? We expect the cost with the employees to increase, since we are employing more personnel in order to cater especially for the Unit one refurbishment. Secondly, we are aligning our personnel policy with the inflation. Right. Okay. I got it. With regards to cost, I was just wondering about the number of employees. Yes. The number will increase significantly. Up to 2027 or all the way through 2029? No, it's going to increase up to 2027 maximum. Got it. I'm guessing at a slightly lower pace than the increase over S 1? Yes. Okay. Got it. Thank you. The third question, sorry, would be regarding the uranium fuel, 'cause you mentioned that some of the acquisition was from the existing stock, and also acquisitions during the period. Since the cost was higher, could you give any visibility as regarding the cost for the following periods of uranium fuel? It's difficult for me to make any assumption because we are currently consuming from our own inventory, so we are basically reporting on our cost items, an historical cost. It will certainly increase because the price of uranium worldwide has increased. At the moment when our inventory will, we'll. The moment we- Will be depleted, yeah. Yes. When depleting existing inventory, we'll need to take into account a higher cost of uranium for our cost. Any kind of information with regards to the remaining stocks of fuel? Like, when would they run out and will you be dependent on acquisitions purely? No, I cannot really share this information. It's sensitive. Got it. Okay. Appreciate it. Thank you. Any other questions, please? Oh, okay. Oh, hi. Congratulations on great results. I just had a question, if you could share any progress on mining exploration activities. If I'm correct, you got the license for the concession of the activity of decommissioning greenfield mine. Is there any development that you could share? No, no big update on this. Of course, we are still in the process of taking over the assets of the former uranium production company. It is ongoing, and we have not yet advanced with regards to the mining activities to take over and to operate this mine facility that we are going to take over. In a kind of successful development, is there a possibility that you could actually turn into a fully vertical integrator, so that way you don't need to worry about the raw material? For safety reasons, we are contemplating this scenario, of course. So far, the availability of uranium on international market gives us comfort that for the future. Yeah. Okay. Great. Thank you. Sorry, just another follow-up. Coming back to what Juliana asked about the dividends. Have you had any discussions with the government with regards to the dividend payout for next year? I'm not talking about long term. I'm just talking about the payout for next year, considering the budget deficit and the whole situation that the government is in, and the availability of resources from CNIE. No, it's too early. We should see what will be the level of dividends. So far, we're paying a lot in windfall taxes, so I think that it helps our case. Yes, it does. Like, the nuclear... Like, the reactors three and four have been on the table for quite a while, and we've seen in 2017 the special dividends that were issued. I'm just wondering if you had any talks on this side so far with the government, with the authorities. No, no, of course not. We are meeting with the government the moment we know what is the value of dividends to be paid. Got it. Appreciate it. Thanks, thanks again. Cool. Can you give us a broad estimate on the cost for Units three and four? We are contemplating an amount of up to EUR 7 billion. EUR 7 billion? Of course, this depends a lot on the evolution of the raw materials, the price of energy, the price of steel. We'll know more at the moment the engineering is progressing. I was looking that you already had RON 3 billion cash, and you are generating substantial amount of cash right now anyway, so I guess you could be accumulating more. Actually, it won't be a problem for you to finance 20% equity in this project anyway, because you would have the cash flow in the three-four years' time, right? Given that you are only paying 50%. It's just that you have the refurbishment. Yes, we have the refurbishment. We have Unit three and Unit four project. We have the small modular reactor. Another, we need to keep the production stable, so we need to reinvest part of our profit in order to maintain the capacity at Unit one, Unit two. We have a lot of demand on our free cash flow, even though we're producing substantial amounts of cash flow at this moment. Okay. I have one more question regarding the windfall tax. Can you confirm if this tax is paid on the produced, or is it on the sold electricity? On the sold electricity to my understanding. On the sale. Okay. On what volume was subject to this tax, this quarter? Volume of? Volume of electricity sold subject to the windfall tax? I don't have the figures right now, but everything which is, you know, there is a complex formula which is enacted in a special piece of legislation. There is a threshold of RON 450 lei per MW. What is above that is taxed. Most everything, our average selling price is above RON 450. Most, if not all our energy has been sold above RON 450 lei per MW, and it was subject to this windfall tax. Okay, thank you very much. Welcome. Any more questions, please? Okay. If not, thank you all for taking part in this conference call. As usual, you can find both the audio file and the presentation on Nuclearelectrica IR page. For those of you who have already confirmed, I will also send it by email. Thank you once again. Have a good weekend, everyone. Thank you, everybody. Thank you. Thank you very much. Bye. Thank you. Bye.