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
S.N.G.N. ROMGAZ S.A.
STATEMENT OF COMPREHENSIVE INCOME
1
Note
Year ended
December 31, 2023
Year ended
December 31, 2022
'000 RON
'000 RON
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
These financial statements were endorsed by the Board of Directors on March 22, 2024.
Răzvan Popescu
Gabriela Trânbițaș
Chief Executive Officer
Chief Financial Officer
S.N.G.N. ROMGAZ S.A.
STATEMENT OF FINANCIAL POSITION
2
Note
December 31, 2023
December 31, 2022
'000 RON
'000 RON
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
S.N.G.N. ROMGAZ S.A.
STATEMENT OF FINANCIAL POSITION
3
Note
December 31, 2023
December 31, 2022
'000 RON
'000 RON
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
These financial statements were endorsed by the Board of Directors on March 22, 2024.
Răzvan Popescu
Gabriela Trânbițaș
Chief Executive Officer
Chief Financial Officer
S.N.G.N. ROMGAZ S.A.
STATEMENT OF CHANGES IN EQUITY
4
Share
capital
Legal
reserve
Geological
quota
reserve**)
Development
fund reserve
Reinvested
profit
reserve
Other
reserves
Retained
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
S.N.G.N. ROMGAZ S.A.
STATEMENT OF CASH FLOW
5
Year ended
December 31, 2023
Year ended
December 31, 2022
'000 RON
'000 RON
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
S.N.G.N. ROMGAZ S.A.
STATEMENT OF CASH FLOW
6
Year ended
December 31, 2023
Year ended
December 31, 2022
'000 RON
'000 RON
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
These financial statements were endorsed by the Board of Directors on March 22, 2024.
Răzvan Popescu
Gabriela Trânbițaș
Chief Executive Officer
Chief Financial Officer
S.N.G.N. ROMGAZ S.A.
NOTES TO THE FINANCIAL STATEMENTS
7
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.
S.N.G.N. ROMGAZ S.A.
NOTES TO THE FINANCIAL STATEMENTS
8
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);
S.N.G.N. ROMGAZ S.A.
NOTES TO THE FINANCIAL STATEMENTS
9
• Amendments to IAS 1 “Presentation of Financial Statements” and IFRS Practice Statement 2: Disclosure of
Accounting policies (effective for annual periods beginning on or after January 1, 2023);
• Amendments to IAS 8 “Accounting policies, Changes in Accounting Estimates and Errors” – Definition of
Accounting Estimates (effective for annual periods beginning on or after January 1, 2023);
• IFRS 17 “Insurance Contracts” including Amendments to IFRS 17 (effective for annual periods beginning on or
after January 1, 2023). The Company does not issue contracts in scope of IFRS 17, thus the financial
statements are not be impacted by this standard.
The adoption of these amendments, interpretations or improvements to existing standards has not led to changes
in the Company's accounting policies. The Company’s management has reviewed the disclosures of accounting
policies through the lens of IAS 1 Amendments and concluded no significant changes are required.
Standards and interpretations issued by IASB not yet endorsed by the EU
At present, IFRS endorsed by the EU do not significantly differ from IFRS adopted by the IASB except for
the following standards, amendments or improvements to the existing standards and interpretations, which were
not endorsed for use in the EU as at date of publication of financial statements:
• Amendments to IAS 7 Statement of Cash Flows and IFRS 7 Financial Instruments: Disclosures: Supplier
Finance Arrangements (effective for annual periods beginning on or after January 1, 2024);
• Amendments to IAS 21 The Effects of Changes in Foreign Exchange Rates: Lack of Exchangeability (applicable
to annual periods beginning on or after 1 January 2025).
The Company is currently evaluating the effect that the adoption of these standards, amendments or
improvements to the existing standards and interpretations will have on the financial statements of the Company
in the period of initial application.
Standards and interpretations issued by IASB and adopted by the EU, but not yet effective
At the date of issue of the financial statements, the following standards were adopted by the EU, but not yet
effective:
• Amendments to IAS 1 “Presentation of Financial Statements” – Classification of Liabilities as Current or Non-
current; Classification of Liabilities as Current or Non-current - Deferral of Effective Date; Non-current
Liabilities with Covenants (effective for annual periods beginning on or after January 1, 2024);
• Amendments to IFRS 16 “Leases” – Lease liability in a sale and leaseback (applicable to annual periods
beginning on or after 1 January 2024).
The Company did not adopt these standards and amendments before their effective dates. The Company does not
expect these amendments to have a material impact on the financial statements.
Segment information
The information reported to the chief operating decision maker for the purposes of resource allocation and
assessment of segment performance focuses on the upstream segment, electricity production and distribution, and
other activities, including headquarter activities. The Directors of the Company have chosen to organize the
Company around differences in activities performed.
Specifically, the Company is organized in the following segments:
• upstream, which includes exploration activities, natural gas production and trade of gas extracted by
Romgaz or acquired from domestic production or import, for resale; these activities are performed by the
head office, and Mediaș and Mureș branches;
• electricity production and distribution activities, performed by Iernut branch;
• other activities, such as technological transport, operations on wells and corporate activities.
Gas and electricity deliveries between Company’s segments are accounted for at market prices or at regulated
prices, as the case may be. All other transactions between Company’s segments are at cost.
Considering the insertion of separate and consolidated financial statements in a single annual financial report, the
Company does not disclose segment information in the separate financial statements.
S.N.G.N. ROMGAZ S.A.
NOTES TO THE FINANCIAL STATEMENTS
10
Revenue recognition
a) Revenue from contracts with customers
The Company recognizes customer contracts when all of the following criteria are met:
• the parties to the contract have approved the contract and are committed to perform their respective
obligations;
• the Company can identify each party’s rights regarding the goods or services to be transferred;
• the Company can identify the payment terms;
• the contract has commercial substance;
• it is probable that the Company will collect the consideration to which it will be entitled in exchange for
the goods delivered or the services provided.
Revenue from contracts with customers is recognized when, or as the Company transfers the goods or services to
the customer, respectively, the client obtains control over them.
Depending on the nature of the goods or services, revenues are recognized over time or at a point in time.
Revenue is recognized over time if:
• the customer receives and consumes simultaneously the benefits provided by obtaining the goods and
services as the Company performs the obligation;
• the Company creates or enhances an asset that the customer controls as the asset is created or enhanced;
• the Company’s performance does not create an asset with an alternative use to the Company.
All other revenues that do not meet the above criteria are recognized at a point in time.
For revenue to be recognized over time, the Company assesses progress towards meeting the execution obligation,
using output methods or input methods, depending on the nature of the good or service transferred to the client.
Revenues are recognized only if the Company can reasonably assess the result of the execution obligation or, if it
cannot be estimated, only at the level of the costs it is expected to recover from the customer.
Revenue from contracts with customers mainly relates to gas sales and related services, electricity supply and
related services. Revenue from these contracts are recognized at a point time on the basis of the actual quantities
at the prices fixed in the contracts concluded.
Contracts concluded by the Company do not contain significant financing components.
b) Other revenue
Rental revenue for operating lease contracts where the Company operates as lessor is recognized on an accrual
basis in accordance with the substance of the relevant agreements.
Interest income is recognized periodically and proportionally as the respective income is generated, on accrual
basis.
Dividends are recognized as income when the legal right to receive them is established.
Contract liabilities
Contract liabilities are an obligation to transfer goods or services to a customer for which the Company has
received consideration (or an amount of consideration is due) from the customer. If a customer pays
consideration, or the Company has a right to an amount of consideration that is unconditional (ie. a receivable),
before the Company transfers the good or service to the customer, the Company presents the contract as a
contract liability when the payment is made or the payment is due (whichever is earlier).
Exploration expenses
The costs of seismic exploration, geological, geophysical and other similar exploration activities are recognized as
exploration expenses in the statement of comprehensive income in the period in which they arise.
Exploration expenses also include the carrying value of exploration assets that have not identified gas resources
and have been written-off.
S.N.G.N. ROMGAZ S.A.
NOTES TO THE FINANCIAL STATEMENTS
11
Foreign currencies
The functional currency is the currency of the primary economic environment in which the Company operates and
is the currency in which the Company primarily generates and expends cash. The Company operates in Romania
and it has the Romanian Leu (RON) as its functional currency.
In preparing the financial statements of the Company, transactions in currencies other than the functional
currency (foreign currencies) are recorded at the exchange rates prevailing at the dates of the transactions. At
each reporting date, monetary items denominated in foreign currencies are retranslated at the rates prevailing at
the reporting date.
Exchange differences are recognized in the statement of comprehensive income in the period in which they arise.
Non-monetary items that are measured in terms of historical cost in a foreign currency are not re-translated.
Employee benefits
Benefits granted upon retirement
In the normal course of business, the Company makes payments to the Romanian State on behalf of its employees at
legal rates. All employees of the Company are members of the Romanian State pension plan. These costs are recognized
in the statement of comprehensive income together with the related salary costs.
Based on the Collective Labor Agreements applicable within the Company, the Company is liable to pay to its
employees at retirement a number of gross salaries, according to the years worked in the gas industry/electrical
industry, work conditions etc. To this purpose, the Company recorded a provision for benefits upon retirement.
This provision is updated annually and computed according to actuary methods based on estimates of the average
salary, the average number of salaries payable upon retirement, on the estimate of the period when they shall be
paid and it is brought to present value using a discount factor based on interest related to a maximum degree of
security investments (government securities).
As the benefits are paid, the provision is reduced together with the reversal of the provision against income.
Gains or actuarial losses, are recognized in other comprehensive income. These are changes in the present value
of the defined benefit obligation as a result of statistical adjustments and changes in actuarial assumptions. Any
other changes in the provision are recognized in the result of the year.
The Company does not operate any other pension scheme or post-retirement benefit plan and, consequently, has
no obligation in respect of pensions.
Employee participation to profit
The Company records in its financial statements a provision related to the fund for employee participation to
profit in compliance with legislation in force.
Liabilities related to the fund for employee participation to profit are settled in less than a year and are measured
at the amounts estimated to be paid at the time of settlement.
Provisions
Provisions are recognized when the Company has a present legal or constructive obligation as a result of past
events, when it is probable that an outflow of resources embodying economic benefits will be required to settle
the obligation, and a reliable estimate of the amount of the obligation can be made.
Greenhouse gas provisions
The Company recognizes a provision for the deficit between actual CO
2
emissions and certificates held, measured
at the best estimate of expenditure required to settle the obligation.
CO
2
certificates bought during the year CO
2
emissions occurred that will be included in the Unique Registry of
Greenhouse Gas Emissions are recorded as current assets at the amount paid. Until the date certificates are included
in the Unique Registry, the Company records a current liability for this obligation at the amount paid when said
certificates were bought. At the date the certificates are included in the Unique Registry, the asset and liability are
derecognized.
S.N.G.N. ROMGAZ S.A.
NOTES TO THE FINANCIAL STATEMENTS
12
Provisions for decommissioning of wells
Liabilities for decommissioning costs are recognized due to the Company’s obligation to plug and abandon a well,
dismantle and remove a facility or an item of plant and to restore the site on which it is located, and when a
reliable estimate of that liability can be made.
The Company recorded a provision for decommissioning wells.
This provision was computed based on the estimated future expenditure determined in accordance with local
conditions and requirements and it was brought to present value using the interest rate on long term treasury
bonds. The rate and the estimated costs for decommissioning are updated annually.
The decommissioning provision is based on the economic life of the fields wells are located on, even if this is
longer than the period of the related concession agreements, as it is considered the period may be extended.
A corresponding item of property, plant and equipment of an amount equivalent to the provision is also
recognized. The item of property, plant and equipment is subsequently depreciated as part of the asset.
The Company applies IFRIC 1 “Changes in Existing Decommissioning, Restoration and Similar Liabilities” related to
changes in existing decommissioning, restoration and similar liabilities.
The change in the decommissioning provision for wells is recorded as follows:
a. subject to b., changes in the liability are added to, or deducted from, the cost of the related asset in the
current period;
b. the amount deducted from the cost of the asset does not exceed its carrying amount. If a decrease in the
liability exceeds the carrying amount of the asset, the excess is recognized immediately in the statement of
comprehensive income;
c. if the adjustment results in an addition to the cost of an asset, the Company considers whether this is an
indication that the new carrying amount of the asset may not be fully recoverable. If it is such an
indication, the Company tests the asset for impairment by estimating its recoverable amount, and accounts
for any impairment loss.
Once the related asset has reached the end of its useful life, all subsequent changes of debt are recognized in the
income statement in the period when they occur.
The periodical unwinding of the discount is recognized in the comprehensive income as a finance cost, as it occurs.
Taxation
Income tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported in
the statement of comprehensive income because it excludes items of income or expense that are taxable or
deductible in other periods and it further excludes items that are never taxable or deductible. The Company’s
liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the end of
the reporting period.
Deferred tax
Deferred tax is recognized on the differences between the carrying amounts of assets and liabilities in the
financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted
for using the balance sheet liability method.
Deferred tax liabilities are generally recognized for all taxable temporary differences, and deferred tax assets are
generally recognized for all deductible temporary differences to the extent that it is probable that taxable profits
will be available against which those deductible temporary differences can be utilized. Such assets and liabilities
are not recognized if the temporary difference arises from goodwill or from the initial recognition (other than in a
business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the
accounting profit.
Deferred tax liabilities are recognized for taxable temporary differences associated with investments in associates
and interests in joint ventures, except where the Company is able to control the reversal of the temporary
difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax
assets arising from deductible temporary differences associated with such investments and interests are only
recognized to the extent that it is probable that there will be sufficient taxable profits against which to utilize the
benefits of the temporary differences and they are expected to reverse in the foreseeable future.
S.N.G.N. ROMGAZ S.A.
NOTES TO THE FINANCIAL STATEMENTS
13
The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that
it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be
recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which
the liability is settled or the asset realized, based on tax rates and tax laws that have been enacted or
substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets
reflects the tax consequences that would follow from the manner in which the Company expects, at the reporting
date, to recover or settle the carrying amount of its assets and liabilities.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets
against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the
Company intends to settle its current tax assets and liabilities on a net basis.
Current and deferred tax for the period
Current tax for the period is recognized as an expense in the statement of comprehensive income. Deferred tax for
the period is recognized as an expense or income in the statement of comprehensive income, except when they
relate to items credited or debited directly to equity, in which case the tax is also recognized directly in equity, or
where it arises from the initial accounting for a business combination. In the case of a business combination, the
tax effect is taken into account in calculating goodwill or in determining the excess of the acquirer’s interest in
the net fair value of the acquirer’s identifiable assets, liabilities and contingent liabilities over cost.
Property, plant and equipment
(1) Cost
(i) Property, plant and equipment
Property, plant and equipment are stated at cost, less accumulated depreciation and accumulated impairment
losses. The initial cost of an asset comprises its purchase price or construction cost, any costs directly attributable
to bringing the asset into the location and condition necessary for it to be capable of operating in the manner
intended by management and the initial estimate of any decommissioning obligation. The purchase price or
construction cost is the aggregate amount paid and the fair value of any other consideration given to acquire the
asset.
(ii) Gas cushion
This is a quantity of natural gas constituted as a reserve at the level of gas storages, physically recoverable, which
ensures the optimum conditions necessary to maintain their technical-productive flow characteristics.
(iii) Development expenditure
Expenditure on the construction, installation and completion of infrastructure facilities such as platforms,
pipelines and the drilling of development wells, including the commissioning of wells, is capitalized within
property, plant and equipment and is depreciated from the commencement of production as described below in
the property, plant and equipment accounting policies.
(iv) Maintenance and repairs
The Company does not recognize within the assets’ costs the current expenses and the accidental expenses for that
asset. These costs are expensed in the period in which they are incurred.
The costs for current maintenance are mainly labor costs and consumables and also small inventory items. The purpose
of these expenses is usually described as “repairs and maintenance” for property, plant and equipment.
The expenses with major activities, inspections and repairs comprise the replacement of the assets or other
asset’s parts, the inspection cost and major overhauls. These expenses are capitalized if an asset or part of an
asset, which was separately depreciated, is replaced and is probable that they will bring future economic benefits
for the Company. If part of a replaced asset was not considered as a separate component and, as a result, was not
separately depreciated, the replacement value will be used to estimate the net book value of the asset which is
replaced and is immediately written-off. The inspection costs associated with major overhauls are capitalized and
depreciated over the period until next inspection.
The costs for major overhauls for wells are also capitalized and depreciated using the unit of production
depreciation method.
All other costs with the current repairs and usual maintenance are recognized directly in expenses.
S.N.G.N. ROMGAZ S.A.
NOTES TO THE FINANCIAL STATEMENTS
14
(2) Depreciation
The depreciable amount of a tangible asset is the cost less the residual value of the asset. The residual value is
the estimated value that the Company would currently obtain from the disposal of an asset, after deducting the
estimated costs associated with the disposal if the asset would already have the age and condition expected at the
end of its useful life.
For directly productive tangible assets (ie. wells), the Company applies the depreciation method based on the unit
of production in order to reflect in the statement of comprehensive income, an expense proportionate with the
production obtained from the total natural gas reserve certified at the beginning of the period. According to this
method, the value of each production well is depreciated according to the ratio of the natural gas quantity
extracted during the period compared to the proved developed reserves at the beginning of the period.
Assets representing gas cushion are not depreciated, as the residual value exceeds their cost.
For indirectly productive tangible assets and other assets, depreciation is computed using the straight-line method
over the estimated useful life of the asset as follows:
Asset Years
Specific buildings and constructions 10 - 50
Technical installations and machines 3 - 20
Other plant, tools and furniture 3 – 30
Land is not depreciated as it is considered to have an indefinite useful life.
Properties in the course of construction for production, rental or administrative purposes, or for purposes not yet
determined, are carried at historical cost, less any recognized impairment loss. Depreciation of these assets, on
the same basis as other property assets, commences when the assets are ready for their intended use.
Items of tangible fixed assets that are disposed of are eliminated from the statement of financial position along
with the corresponding accumulated depreciation and impairment. Any gain or loss resulting from such retirement
or disposal is included in the result of the period.
For items of tangible fixed assets that are retired from use, but not written off by reporting date, an impairment
adjustment is recorded for the carrying value at the time of retirement.
(3) Impairment
Non-current assets must be recognized at the lower of the carrying amount and recoverable amount. If and only if
the recoverable amount of an asset is less than its carrying amount, the carrying amount of the asset should be
reduced to be equal to its recoverable amount. Such a reduction represents an impairment loss that is recognized
in the result of the period.
Thus at the end of each reporting period, the Company assesses whether there is any indication of impairment of
assets. If such indication is identified, the Company tests the assets to determine whether they are impaired.
Company’s assets are allocated to cash-generating units. The cash-generating unit is the smallest identifiable asset
group that generates independent cash inflows to a large extent from cash inflows generated by other assets or
asset groups. The Company considers each commercial field as a separate cash-generating unit.
All gas storages held by the Company leased to Depogaz are considered as part of a single cash-generating unit, as
the tariffs are set by analyzing the storage activity as a whole, not every single storage.
In 2023, the Company conducted an impairment test in the Upstream segment (ie. onshore operations), as the
conditions existing when the previous test was conducted changed; the assumptions are presented in note 12. The
results of the impairment test are considered to be immaterial and were not recognized.
No impairment indicators were identified related to the investment in Romgaz Black Sea Limited.
Recoverable amount is the largest of the fair value of an asset or a cash-generating unit less costs associated with
disposal and its value in use. Considering the nature of the Company's assets, it was not possible to determine the
fair value of the cash-generating units, being determined only the value in use of the assets.
Assets held for disposal
Non-current assets classified as held for disposal are non-current assets whose carrying amount will be recovered
through a disposal rather than through continuing use. They are measured at the lower of its carrying amount and
fair value less costs to dispose.
S.N.G.N. ROMGAZ S.A.
NOTES TO THE FINANCIAL STATEMENTS
15
Immediately before the initial classification of the assets as held for disposal, the carrying amounts of the assets
are measured in accordance with applicable IFRSs.
Non-current assets classified as held for disposal are no longer depreciated.
In the 2023 financial statements, assets held for disposal are the assets used in the storage activity which will be
transferred to increase Depogaz’ share capital.
Exploration and appraisal assets
(1) Cost
Natural gas exploration (other than seismic, geological, geophysical and other similar activities), appraisal and
development expenditure is accounted for using the principles of the successful efforts method of accounting.
Costs directly associated with an exploration well are initially capitalized as an asset until the drilling of the well
is complete and the results have been evaluated. These costs include employee remuneration, materials and fuel
used, drilling costs and payments made to contractors. If potentially commercial quantities of hydrocarbons are
not found, the exploration well is eliminated from the statement of financial position, by recording an
impairment, until National Agency for Mineral Resources (Agenția Națională pentru Resurse Minerale – ANRM)
approvals are obtained in order to be written off. If hydrocarbons are found and, subject to further appraisal
activity, are likely to be capable of commercial development, the costs continue to be carried as an asset. Costs
directly associated with appraisal activity, undertaken to determine the size, characteristics and commercial
potential of a reservoir following the initial discovery of hydrocarbons, including the costs of appraisal wells where
hydrocarbons were not found, are initially capitalized as an asset. All such carried costs are subject to technical,
commercial and management review at least once a year to confirm the continued intent to develop or otherwise
extract value from the discovery. When this is no longer the case, an impairment is recorded for the assets, until
the completion of the legal steps necessary for them to be written off. When proved reserves of natural gas are
determined and development is approved by management, the relevant expenditure is transferred to property,
plant and equipment other than exploration assets.
(2) Impairment
At each reporting date, the Company's management reviews its exploration assets and establishes the necessity for
recording in the financial statements an impairment loss in these situations:
• the period for which the Company has the right to explore in the specific area has expired during the period
or will expire in the near future, and is not expected to be renewed;
• substantive expenditure on further exploration for and evaluation of gas resources in the specific area is
neither budgeted nor planned;
• exploration for and evaluation of gas resources in the specific area have not led to the discovery of
commercially viable quantities of gas resources and the Company has decided to discontinue such activities
in the specific area;
• sufficient data exist to indicate that, although a development in the specific area is likely to proceed, the
carrying amount of the exploration and evaluation asset is unlikely to be recovered in full from successful
development or by sale.
Elements similar to the above are also considered when determining impairment losses for producing assets.
Intangible assets
(1) Cost
Licenses for software, patents and other intangible assets are recognized at acquisition cost.
Intangible assets are not revalued.
(2) Amortization
Patents and other intangible assets are amortized using the straight-line method over their useful life, but not
exceeding 20 years. Licenses related to the right of use of computer software are amortized over a period of 3
years.
S.N.G.N. ROMGAZ S.A.
NOTES TO THE FINANCIAL STATEMENTS
16
Inventories
Inventories are recorded initially at cost of production, or acquisition cost, as the case may be. The cost of finished
goods and production in progress includes materials, labor, expenses incurred in bringing the finished goods at the
location and in the existent form and related indirect production costs. Write down adjustments are booked
against slow moving, damaged and obsolete inventory, when necessary.
At each reporting date, inventories are measured at the lower of cost and net realizable value. The net realizable
value is estimated based on the selling price less any completion and selling expenses. The cost of inventories is
assigned by using the weighted average cost formula.
Financial assets and liabilities
The Company’s financial assets include cash and cash equivalents, trade receivables, other receivables, loans
granted, bank deposits and bonds with a maturity from acquisition date of over three months and other
investments in equity instruments.
Financial liabilities include interest-bearing bank borrowings and overdrafts and trade and other payables.
For each item, the accounting policies on recognition and measurement are disclosed in this note.
Cash and cash equivalents include petty cash, cash in current bank accounts and short-term deposits with a
maturity of less than three months from the date of acquisition.
The Company recognizes a financial asset or financial liability in the statement of financial position when and only
when it becomes a party to the contractual provisions of the instrument. Upon initial recognition, financial assets
are classified at amortized cost or measured at fair value through profit or loss. The classification depends on the
Company's business model for managing the financial assets and their contractual cash flows.
The Company does not have financial assets measured at fair value through other comprehensive income.
On initial recognition, financial assets and financial liabilities are measured at fair value plus or minus, in the case
of assets measured at amortized cost, transaction costs that are directly attributable to the acquisition or issue of
the financial asset or financial liability.
Receivables resulting from contracts with customers represent the unconditional right of the Company to a
consideration. The right to a consideration is unconditional if only the passage of time is required before payment
of the consideration is due. These are measured at initial recognition at the transaction price.
The amortized cost of a financial asset or financial liability is the amount at which the financial asset or financial
liability is measured at initial recognition minus principal repayments plus or minus cumulative depreciation using
the effective interest method for each difference between the initial amount and the amount at maturity and, for
financial assets, adjusted for any loss allowance impairment.
Any difference between the initial amount and the amount at maturity is recognized in the statement of
comprehensive income for the period of the borrowings using the effective interest method.
Financial instruments are classified as liabilities or equity in accordance with the nature of the contractual
arrangement. Interest, dividends, gains and losses on a financial instrument classified as a liability are reported as
expense or income. Distributions to holders of financial instruments classified as equity are recorded directly in
equity.
Financial instruments are offset when the Company has a legally enforceable right to offset and intends to settle
either on a net basis or to realize the asset and discharge the obligation simultaneously.
Impairment of financial assets
Financial assets, other than those at fair value through profit and loss, are assessed for impairment at each
reporting period.
Except for trade receivables, the Company measures the loss allowance for a financial instrument at an amount
equal to the lifetime expected credit losses if the credit risk associated with the financial instrument, has
increased significantly since initial recognition. If, at the reporting date, the credit risk for a financial instrument
has not increased significantly since the initial recognition, the Company measures the loss allowance for that
financial instrument at a value equal to 12 month expected credit losses.
The loss allowance on trade receivables resulting from transactions that are subject to IFRS 15 is measured at an
amount equal to lifetime expected credit losses. The Company considers the risk or probability of a default
occurring, reflecting the possibility of a default to occur or not to occur, even if the possibility of a credit loss is
very low.
S.N.G.N. ROMGAZ S.A.
NOTES TO THE FINANCIAL STATEMENTS
17
The Company measures the expected credit losses of a financial instrument in a manner that reflects reasonable
and supportable information that is available without undue cost or effort at the reporting date about past events,
current conditions and forecasts of future economic conditions.
The carrying amount of the financial asset, other than those at fair value through profit or loss, is reduced through
the use of an allowance account.
De-recognition of financial assets and liabilities
The Company derecognizes a financial asset only when the contractual rights to the cash flows from the asset
expire, or it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to
another entity.
The Company derecognizes financial liabilities when, and only when, the Company’s obligations are discharged,
cancelled or they expire.
Reserves
Reserves include:
• legal reserves, which are used annually to transfer to reserves up to 5% of the statutory profit, but not more
than 20% of the statutory share capital of the Company;
• development fund reserves, which represent allocations from profit in accordance with Government
Ordinance no. 64/2001, paragraph (g);
• reserves from reinvested profit, set up based on the Fiscal Code. The amount of profit that benefited from
tax exemption under the fiscal legislation less the legal reserve, is distributed at the end of the year by
setting up the reserve;
• geological quota reserve, non-distributable, set up until 2004. Geological quota reserve set up after 2004 is
distributable and presented in retained earnings. Development quota set up after 2004 is allocated together
with the profit allocation, as approved by the General Meeting of Shareholders, based on depreciation,
respectively write-off of the assets financed using the development quota;
• other non-distributable reserves, set up from retained earnings representing translation differences
recorded at transition to IFRS. These reserves are set up in accordance with MOF 2844/2016.
Grants
Grants are non-reimbursable financial resources given to the Company with the condition of meeting certain
criteria. In the category of grants are included grants related to assets and grants related to income.
Grants related to assets are government grants for whose primary condition is that the Company should purchase,
construct, or otherwise acquire long-term assets.
Grants related to income are government grants other than those related to assets.
Grants are not recognized until there is reasonable assurance that:
(a) the Company will comply with the conditions attaching to it; and
(b) grants will be received.
Grants related to assets are presented in the statement of financial position as “Deferred revenue”, which is then
recognized in profit or loss on a systematic basis over the useful life of the asset.
Grants related to income are recognized in the statement of profit or loss under "Other income", as the related
expenses are recorded. Until the time the expense occurs, the grant received is recognized as “Deferred
revenue”.
If a government grant becomes receivable as compensation for expenses or losses incurred in a previous period,
the Company recognizes such grant in the profit or loss of the period in which it becomes receivable.
Use of estimates
The preparation of the financial information requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the end of
reporting date, and the reported amounts of revenue and expenses during the reporting period. Actual results
could vary from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognized in the period in which the estimate is revised, if the revision
affects only that period, or in the period of the revision and future periods if the revision affects both current and
future periods.
S.N.G.N. ROMGAZ S.A.
NOTES TO THE FINANCIAL STATEMENTS
18
The following are the critical estimates that the management has made in the process of applying the Company’s
accounting policies, and that have the most significant effect on the amounts recognized in the financial
statements.
Estimates related to grants related to income
Government Emergency Ordinance no. 27/2022 as subsequently amended (GEO 27) includes the obligation of the
Company to sell at a regulated price of RON 450/MWh the electricity it produces. According to GEO 27, electricity
producers must calculate a contribution to the Energy Transition Fund. If the value of the CO
2
certificates related
to the energy sold at RON 450/MWh exceeds the contribution to the Energy Transition Fund, electricity producers
are entitled to receive the excess. Until December 2023, the legislation did not provide for the mechanism to
request these amounts from the Romanian State nor the competent authority for the settlement of such requests.
As such, the right to receive the grant is not enforceable.
The government does not act as a shareholder or a client of the Company in this matter. As such, the relevant
standard considered in the accounting of the grant is IAS 20.
By December 31, 2023 the Company should receive RON 167,743 thousand. Income recognized in previous financial
statements released by the Company in 2023 was reversed by December 31, 2023. Until the amount becomes a
receivable, the Company discloses the grant as a contingent asset.
Estimates related to impairment losses on trade receivables
At each period end, the Company evaluates the risks attached to current and overdue receivables and the
probability of such risks to materialize. The Company’s receivables are generally due in maximum 30 days from the
date of issue. Based on the information available at period end and previous experience, the Company estimates
the lifetime expected credit loss of receivables, both current and overdue, and records appropriate impairment
losses (note 16).
Estimates related to the exploration expenditure on undeveloped fields
If field works prove that the geological structures are not exploitable from an economic point of view or that they
do not have hydrocarbon resources available, an impairment is recorded. The impairment assessment is performed
based on geological experts’ technical expertise (note 7).
Estimates related to developed proved reserves
The Company applies the depreciation method based on the unit of production in order to reflect in the income
statement an expense proportionate with the production obtained from the total natural gas reserve at the
beginning of the period. According to this method, the value of each production well is depreciated according to
the ratio of the natural gas quantity extracted during the period compared to the gas reserve at the beginning of
the period. The gas reserves are updated annually according to internal assessments that are based on
certifications of ANRM (note 7).
Estimates related to the decommissioning provision
Liabilities for decommissioning costs are recognized for the Company’s obligation to plug and abandon a well,
dismantle and remove a facility or an item of plant and to restore the site on which it is located, and when a
reliable estimate of that liability can be made.
This provision is computed based on the estimated future expenditure determined in accordance with local
conditions and requirements and it is brought to present value using the interest rate on long term treasury bonds.
The rate and estimated decommissioning costs are updated annually (note 18).
Estimates related to the retirement benefit obligation
Under the Collective Labor Agreements applicable within the Company, the Company must pay its employees when
they retire a multiplicator of the gross salary, depending on the seniority within the gas industry/electricity
industry, working conditions etc. This provision is updated annually. It is calculated based on actuarial methods to
estimate the average wage, the average number of employees to pay at retirement, the estimate of the period
when they will be paid and is brought to present value using a discount factor based on interest on investments
with the highest degree of safety (government bonds) (note 18).
The Company does not operate any other pension plan or retirement benefits, and therefore has no other
obligations relating to pensions.
S.N.G.N. ROMGAZ S.A.
NOTES TO THE FINANCIAL STATEMENTS
19
Contingencies
By their nature, contingencies end only when one or more uncertain future events occur or not. In order to
determine the existence and the potential value of a contingent element, is required to exercise the professional
judgment and the use of estimates regarding the outcome of future events (note 32).
Fair value of financial instruments
Management believes that the estimated fair values of financial instruments approximate their carrying amounts.
Comparative information
For each item of the statement of financial position, the statement of comprehensive income and, where is the
case, for the statement of changes in equity and for the statement of cash flows, for comparative information
purposes is presented the value of the corresponding item for the previous period ended, unless the changes are
insignificant. In addition, the Company presents an additional statement of financial position at the beginning of
the earliest period presented when there is a retrospective application of an accounting policy, a retrospective
restatement, or a reclassification of items in the financial statements, which has a material impact on the
Company.
3. REVENUE AND OTHER INCOME
Year ended
December 31, 2023
Year ended
December 31, 2022
'000 RON
'000 RON
Revenue from gas sold - own production
7,747,762
11,260,645
Revenue from gas sold – other arrangements
28,628
58,153
Revenue from gas acquired for resale
19,542
14,654
Revenue from electricity
406,996
1,330,630
Revenue from services
242,522
224,970
Revenue from sale of goods
61,977
70,461
Other revenues from contracts
708
459
Total revenue from contracts with customers
8,508,135
12,959,972
Revenues from rental activities (see below)
111,151
111,997
Total revenue
8,619,286
13,071,969
Other operating income
122,126
78,503
Total revenue and other income
8,741,412
13,150,472
The decrease in revenue is generated by the application of GEO 27. In 2023, the Company sold 86.43% of gas at
regulated prices, while in 2022 it sold 33.3% of gas under GEO 27. Over 90% of electricity in 2023 was sold under
GEO 27 at a price of RON 450/MWh; no such obligation was in force in 2022.
Revenue from contracts with customers is recognized as or when the Company satisfies a performance obligation
by transferring a promised good or service to a customer. A good or service is transferred when the customer
obtains control of that good or service. The transfer of control of goods sold by the Company usually coincides with
title passing to the customer and the customer taking physical possession.
Revenues from gas and electricity are recognized when the delivery has been made at the prices fixed in the
contracts with customers.
In measuring the revenue from gas and electricity, the Company uses output methods. According to these
methods, revenues are recognized based on direct measurements of the value to the customer of the goods or
services transferred to date relative to the remaining goods or services promised under the contract. The Company
recognizes the revenue in the amount it has the right to charge.
The Company does not disclose information about the remaining performance obligations, applying the practical
expedient in IFRS 15, as contracts with customers are generally signed for periods of less than one year and the
revenues are recognized at the amount which the Company has the right to charge.
Revenues from rental activities mainly includes the revenue from renting the fixed assets used in the storage
activity by Depogaz and Depomureș.
S.N.G.N. ROMGAZ S.A.
NOTES TO THE FINANCIAL STATEMENTS
20
4. INVESTMENT INCOME
Year ended
December 31, 2023
Year ended
December 31, 2022
'000 RON
'000 RON
Income from dividends
50,247
13,583
Interest income
222,780
174,821
Total
273,027
188,404
Interest income is derived from the Company’s investments in bank deposits and government bonds. Interest rates
saw a significant increase in 2023, leading to higher income.
5. COST OF COMMODITIES SOLD, RAW MATERIALS AND CONSUMABLES
Year ended
December 31, 2023
Year ended
December 31, 2022
'000 RON
'000 RON
Consumables used
59,704
49,788
Technological consumption
30,392
48,951
Cost of gas acquired for resale, sold
20,291
14,654
Cost of electricity imbalance
85,477
167,405
Cost of other goods sold
1,292
1,515
Other consumables
4,761
3,587
Total
201,917
285,900
6. OTHER GAINS AND LOSSES
Year ended
December 31, 2023
Year ended
December 31, 2022
'000 RON
'000 RON
Forex gain
25,676
41,862
Forex loss
(32,528)
(45,000)
Net gain/(loss) on disposal of non-current assets
(4,501)
(451)
Net allowances for other receivables (note 16 c)
4,029
(599)
Net write down allowances for inventory (note
15)
(4,568)
(4,814)
Losses from trade receivables
(2)
-
Other gains and losses
(1,063)
(1,793)
Total
(12,957)
(10,795)
7. DEPRECIATION, AMORTIZATION AND IMPAIRMENT EXPENSES
Year ended
December 31, 2023
Year ended
December 31, 2022
'000 RON
'000 RON
Depreciation and amortization
348,759
321,268
out of which:
- depreciation of property, plant and equipment
341,355
315,708
- amortization of intangible assets (note 14 a)
5,920
4,649
- amortization of right-of use assets (note 14 b)
1,484
911
Net impairment of non-current assets
84,632
140,157
Total depreciation, amortization and
impairment
433,391
461,425
S.N.G.N. ROMGAZ S.A.
NOTES TO THE FINANCIAL STATEMENTS
21
8. EMPLOYEE BENEFIT EXPENSE
Year ended
December 31, 2023
Year ended
December 31, 2022
'000 RON
'000 RON
Wages and salaries
855,202
808,084
Social security charges
30,735
28,091
Meal tickets
34,814
24,621
Other benefits according to collective labor
contract
29,922
26,655
Private pension payments
10,295
10,227
Private health insurance
10,318
6,393
Total employee benefit costs
971,286
904,071
Less, capitalized employee benefit costs
(152,079)
(135,045)
Total employee benefit expense
819,207
769,026
9. FINANCE COSTS
Year ended
December 31, 2023
Year ended
December 31, 2022
'000 RON
'000 RON
Interest expense *)
43,748
5,565
Unwinding of the decommissioning provision
(note 18 a)
18,165
21,668
Total
61,913
27,233
*) The increase in interest expense is due to the loan taken to finance the acquisition of the shares of ExxonMobil
Exploration and Production Romania Limited, currently Romgaz Black Sea Limited (note 28).
10. OTHER EXPENSES. TAXES AND DUTIES
a) Other Expenses
Year ended
December 31, 2023
Year ended
December 31, 2022
'000 RON
'000 RON
Energy and water expenses
23,507
26,915
Expenses for capacity booking and gas
transmission services
171,197
158,591
(Net gain)/Net loss from provisions movement
(note 18)
(163,671)
35,347
Gas storage services
33,342
52,028
Other operating expenses *)
785,634
331,233
Total
850,009
604,114
*) In 2023 Romgaz resumed the works on the new Iernut power plant with the former contractor. Disputes between
Romgaz and the contractor were settled through a transaction agreement approved by Romgaz’ shareholders. The
agreement stipulates the reimbursement by Romgaz of the performance guarantee executed in 2021 when the
former works contract was terminated. The amount paid by Romgaz was of RON 114,628 thousand and is included
in other operating expenses.
Other operating expenses also include the cost of CO
2
certificates acquired during the year (RON 470,926
thousand; 2022 RON 169,638 thousand). In 2023, the Company acquired the CO
2
certificates related to the year.
The certificates related to 2022 were also acquired in 2023; the cost of the 2022 certificates was offset against the
provision released to income.
S.N.G.N. ROMGAZ S.A.
NOTES TO THE FINANCIAL STATEMENTS
22
b) Taxes and duties
Year ended
December 31, 2023
Year ended
December 31, 2022
'000 RON
'000 RON
Royalties *)
583,516
1,625,800
Windfall tax (gas) *)
889,799
4,903,849
Energy transition fund/windfall tax (electricity)
**)
(1,546)
403,801
Other taxes and duties
6,654
6,607
Total
1,478,423
6,940,057
*) According to GEO 27, gas sold at regulated prices is not subject to windfall tax. Royalties paid on this gas are
calculated at the level of the regulated price, instead of the reference price communicated by ANRM. As
quantities of gas sold under GEO 27 were significantly higher in 2023 (note 3), the cost of royalties and windfall
tax paid on gas decreased. In October 2023 royalty rates were increased by approximately 20%; Romgaz calculated
the royalties at the new rates.
**) In 2022 GEO 27 introduced a windfall tax on electricity later replaced by a contribution to the Energy
Transition Fund. Electricity sold at RON 450/MWh is not subject to the contribution. As over 90% of electricity was
sold at this price in 2023, the contribution decreased compared to 2022. The negative level of the expense is
determined by the recomputation of the windfall tax related to 2022 based on actual CO
2
certificates costs, which
were acquired in 2023; in 2022 the windfall tax was calculated based on an estimate of the CO
2
certificates cost.
11. INCOME TAX
Year ended
December 31, 2023
Year ended
December 31, 2022
'000 RON
'000 RON
Current tax expense (note 11 a)
668,410
520,955
Deferred income tax (income)/expense (note 11
a)
5,200
68,204
Solidarity contribution (note 11 b)
1,687,371
1,002,790
Income tax expense
2,360,981
1,591,949
December 31, 2023
December 31, 2022
'000 RON
'000 RON
Current income tax liability
75,797
169,083
Solidarity contribution (note 11 b)
1,686,919
1,002,790
Current tax liability
1,762,716
1,171,873
a) Current and deferred income tax
The tax rate used for the reconciliations below for the year ended December 31, 2023, respectively year ended
December 31, 2022 is 16% payable by corporate entities in Romania on taxable profits.
S.N.G.N. ROMGAZ S.A.
NOTES TO THE FINANCIAL STATEMENTS
23
The total charge for the period can be reconciled to the accounting profit as follows:
Year ended
December 31, 2023
Year ended
December 31, 2022
'000 RON
'000 RON
Accounting profit before tax (after solidarity
contribution)
3,322,886
3,121,104
(Profit)/loss activities not subject to income tax
-
4,790
Accounting profit subject to income tax
3,322,886
3,125,894
Income tax expense calculated at 16%
531,662
500,143
Effect of income exempt of taxation
(97,647)
(105,545)
Effect of expenses that are not deductible in
determining taxable profit
362,264
220,398
Effect of current income tax reduction, due to
tax facilities
(91,132)
(64,388)
Effect of tax incentive for reinvested profit
(11,773)
(5,092)
Effect of the benefit from tax credits, used to
reduce current tax expense
21,416
23,367
Effect of deferred tax relating to the origination
and reversal of temporary differences
8,199
49,761
Effect of the benefit from tax credits, used to
reduce deferred tax expense
(49,486)
(29,485)
Effect of income tax expense related to previous
years
107
-
Income tax expense
673,610
589,159
Components of deferred tax (asset)/liability:
December 31, 2023
December 31, 2022
Cumulative
temporary
differences
Deferred tax
(asset)/ liability
Cumulative
temporary
differences
Deferred
tax (asset)/
liability
'000 RON
'000 RON
'000 RON
'000 RON
Provisions
(625,976)
(100,156)
(430,452)
(68,873)
Property, plant and equipment
(55,318)
(8,851)
(297,761)
(47,642)
Exploration assets *)
(513,724)
(82,196)
(494,982)
(79,197)
Financial investments
(182)
(29)
(977)
(156)
Inventory
(40,676)
(6,508)
(34,956)
(5,593)
Receivables and other assets
(97,576)
(15,612)
(97,576)
(15,612)
Total
(1,333,452)
(213,352)
(1,356,704)
(217,073)
Assets held for disposal
165,182
26,429
151,676
24,268
Liabilities directly associated with
assets held for disposal
(41,266)
(6,603)
(27,666)
(4,427)
Total for assets held for disposal and
associated liabilities
123,916
19,826
124,010
19,841
Total General
(1,209,536)
(193,526)
(1,232,694)
(197,232)
Change, out of which:
(3,706)
(70,459)
- In current year’s result
(5,200)
(68,204)
- in other comprehensive
income
1,494
(2,255)
*) According to the Fiscal Code applicable in Romania, expenses related to location, exploration, development or
any preparatory activity for the exploitation of natural resources, which, according to the applicable accounting
regulations, are recorded directly in the result, are recovered in equal rates for a period of 5 years, starting with
the month in which the expenses are incurred. Also, for fixed assets specific to the exploration and production of
gas resources, the carrying tax value of fixed assets written off is deducted using the tax depreciation method
used before their write-off for the remaining period. All of these costs are treated as assets only from a tax point
of view and generate a deferred tax asset.
S.N.G.N. ROMGAZ S.A.
NOTES TO THE FINANCIAL STATEMENTS
24
b) Solidarity contribution
In 2022, a solidarity contribution was introduced in Romania as a result of Council Regulation (EU) 2022/1854 on an
emergency intervention to address high energy prices. The temporary solidarity contribution is calculated in the
fiscal years 2022 and 2023 at a rate of 60% of taxable profits, as determined under national tax rules, which are
above a 20% increase of the average of the taxable profits of the four fiscal years starting on or after 1 January
2018. The contribution for 2023 is of RON 1,686,919 thousand. The tax is due for payment in June, 2024.
S.N.G.N. ROMGAZ S.A.
NOTES TO THE FINANCIAL STATEMENTS
25
12. PROPERTY, PLANT AND EQUIPMENT
Land and
land
improvements
Buildings
Gas
properties
Plant,
machinery
and
equipment
Fixtures,
fittings and
office
equipment
Storage
assets
Tangible
exploration
assets
Capital
work in
progress
Total
'000 RON
'000 RON
'000 RON
'000 RON
'000 RON
'000 RON
'000 RON
'000 RON
'000 RON
Cost
As of January 1, 2023
97,428
718,294
7,181,827
999,680
105,136
213,387
336,494
2,027,403
11,679,649
Additions
377
10
110,100
-
-
-
50,747
545,413
706,647
Transfers
1,163
47,584
505,052
73,066
16,846
-
(6,249)
(637,462)
-
Disposals
-
(1,132)
(278,028)
(19,428)
(12,084)
(186)
(40,831)
(27,373)
(379,062)
As of December 31, 2023
98,968
764,756
7,518,951
1,053,318
109,898
213,201
340,161
1,907,981
12,007,234
Accumulated depreciation
As of January 1, 2023
-
329,168
4,890,092
715,794
84,125
7,767
-
-
6,026,946
Depreciation *)
-
18,656
291,231
52,382
7,029
19
-
-
369,317
Disposals
-
(578)
(100,061)
(19,356)
(12,005)
296
-
-
(131,704)
As of December 31, 2023
-
347,246
5,081,262
748,820
79,149
8,082
-
-
6,264,559
Impairment
As of January 1, 2023
3,180
51,964
651,677
86,425
1,174
2,097
161,509
307,619
1,265,645
Charge
-
28,598
91,030
1,782
494
491
25,311
57,296
205,002
Transfers
-
-
38,882
1,252
-
-
-
(40,134)
-
Release
-
(514)
(269,895)
(70)
(82)
(990)
(42,146)
(43,751)
(357,448)
As of December 31, 2023
3,180
80,048
511,694
89,389
1,586
1,598
144,674
281,030
1,113,199
Carrying value
As of January 1, 2023
94,248
337,162
1,640,058
197,461
19,837
203,523
174,985
1,719,784
4,387,058
As of December 31, 2023
95,788
337,462
1,925,995
215,109
29,163
203,521
195,487
1,626,952
4,629,477
*) The amounts include depreciation of tangible assets used in the production of other fixed assets, capitalized in their cost, amounting to RON 27,963 thousand.
S.N.G.N. ROMGAZ S.A.
NOTES TO THE FINANCIAL STATEMENTS
26
Land and
land
improvements
Buildings
Gas
properties
Plant,
machinery
and
equipment
Fixtures,
fittings and
office
equipment
Storage
assets
Tangible
exploration
assets
Capital
work in
progress
Total
'000 RON
'000 RON
'000 RON
'000 RON
'000 RON
'000 RON
'000 RON
'000 RON
'000 RON
Cost
As of January 1, 2022
96,815
708,494
7,146,398
970,774
107,694
213,387
335,940
1,969,733
11,549,235
Additions
37
2,381
1,175
-
5
-
96,504
351,229
451,331
Transfers
576
8,265
252,661
48,895
2,609
-
(24,311)
(288,695)
-
Disposals
-
(846)
(218,407)
(19,989)
(5,172)
-
(71,639)
(4,864)
(320,917)
As of December 31, 2022
97,428
718,294
7,181,827
999,680
105,136
213,387
336,494
2,027,403
11,679,649
Accumulated depreciation
As of January 1, 2022
-
310,320
4,652,369
681,169
83,096
7,767
-
-
5,734,721
Depreciation *)
-
19,096
262,236
54,315
6,107
-
-
-
341,754
Disposals
-
(248)
(24,513)
(19,690)
(5,078)
-
-
-
(49,529)
As of December 31, 2022
-
329,168
4,890,092
715,794
84,125
7,767
-
-
6,026,946
Impairment
As of January 1, 2022
3,180
50,109
649,714
82,794
1,183
2,101
161,085
304,760
1,254,926
Charge
-
2,468
50,668
3,033
91
-
66,466
79,558
202,284
Transfers
-
4
43,787
956
-
-
-
(44,747)
-
Release
-
(617)
(92,492)
(358)
(100)
(4)
(66,042)
(31,952)
(191,565)
As of December 31, 2022
3,180
51,964
651,677
86,425
1,174
2,097
161,509
307,619
1,265,645
Carrying value
As of January 1, 2022
93,635
348,065
1,844,315
206,811
23,415
203,519
174,855
1,664,973
4,559,588
As of December 31, 2022
94,248
337,162
1,640,058
197,461
19,837
203,523
174,985
1,719,784
4,387,058
*) The amounts include depreciation of tangible assets used in the production of other fixed assets, capitalized in their cost, amounting to RON 26,047 thousand.
S.N.G.N. ROMGAZ S.A.
NOTES TO THE FINANCIAL STATEMENTS
27
Impairment of property, plant and equipment
Note 2 contains information on the conditions under which impairment losses for individual assets are recognized.
Impairment of assets in the Upstream segment
Based on the current market conditions (decrease in prices, higher royalty rates), the Company considered there are
changes in the assumptions used in the previous impairment test on upstream assets.
Based on its assessment, the Company considered each commercial field a separate cash-generating unit. The
infrastructure common to several gas fields (e.g. compression stations, drying stations) was allocated to each field
according to the quantities processed for each field served.
The impairment test took into account the economic life of the fields, according to the latest studies approved by
the National Agency of Mineral Resources or submitted for approval, but no later than 2043, this being the limit year
of the concession agreements, according to the legislation in force.
Following the impairment test, no additional impairment was recorded and there was no decrease of previously
recognized impairment losses.
In the impairment test the following assumptions were used:
• Weighted average cost of capital: 12.75%;
• The inflation rate for the years 2024-2026 was the one reported by the National Commission for Strategy
and Prognosis in the 2023-2027 forecast. For the 2028-2043 period a constant inflation rate of 2.6% was
used;
• Average estimated price for the period was RON 156.99/MWh.
13. EXPLORATION AND APPRAISAL FOR NATURAL GAS RESOURCES
The following financial information represents the amounts included within the Company’s totals relating to activity
associated with the exploration for and appraisal of natural gas resources.
Year ended
December 31, 2023
Year ended
December 31, 2022
'000 RON
'000 RON
Exploration assets written off
3
16
Seismic, geological, geophysical studies
83,048
59,053
Exploration expenses
83,051
59,069
Net movement in exploration assets’ impairment
(net income)/net loss
23,361
66,447
Net cash used in exploration investing activities
(50,746)
(96,500)
December 31, 2023
December 31, 2022
'000 RON
'000 RON
Exploration assets (note 12)
195,487
174,985
Liabilities
(13,342)
(13,218)
Net assets
182,145
161,767
S.N.G.N. ROMGAZ S.A.
NOTES TO THE FINANCIAL STATEMENTS
28
14. INTANGIBLE ASSETS. RIGHT OF USE ASSETS
a) Intangible assets
2023
2022
'000 RON
'000 RON
Cost
As of January 1
122,546
167,141
Additions
1,409
9,098
Disposals
(7,150)
(53,693)
As of December 31
116,805
122,546
Accumulated amortization
As of January 1
102,811
151,878
Charge
5,920
4,649
Disposals
(7,149)
(53,716)
As of December 31
101,582
102,811
Carrying value
As of January 1
19,735
15,263
As of December 31
15,223
19,735
b) Right of use assets
2023
2022
'000 RON
'000 RON
Cost
As of January 1
9,918
9,019
Effects of rent index updates
1,169
380
New contracts
4,303
578
Terminated contracts
-
(59)
As of December 31
15,390
9,918
Accumulated amortization
As of January 1
3,132
2,280
Charge
1,484
911
Terminated contracts
-
(59)
As of December 31
4,616
3,132
Carrying value
As of January 1
6,786
6,739
As of December 31
10,774
6,786
S.N.G.N. ROMGAZ S.A.
NOTES TO THE FINANCIAL STATEMENTS
29
15. INVENTORIES
December 31, 2023
December 31, 2022
'000 RON
'000 RON
Spare parts and materials
248,787
203,094
Finished goods (gas)
90,594
129,190
Other inventories
694
700
Inventories at third parties
16,695
-
Write-down allowance for spare parts and
materials
(62,925)
(58,437)
Write-down allowance for other inventories
(96)
(16)
Total
293,749
274,531
16. ACCOUNTS RECEIVABLE
a) Trade and other receivables
December 31, 2023
December 31, 2022
'000 RON
'000 RON
Trade receivables
1,604,362
1,471,250
Allowances for expected credit losses (note 16 c)
(740,085)
(724,386)
Accrued receivables
473,160
587,299
Total
1,337,437
1,334,163
Trade receivables from gas deliveries are generally due within 30 days of invoice issue. These must be guaranteed
by customers through bank letters of guarantee. If customers do not provide such a guarantee, they must ensure
that natural gas is paid in advance.
Trade receivables from the sale of electricity are generally due within 7 days of the date of invoice delivery. These
must be guaranteed by customers through bank letters of guarantee. If customers do not provide such a guarantee,
they must ensure that electricity is paid in advance.
b) Other assets
December 31, 2023
December 31, 2022
'000 RON
'000 RON
Loans to subsidiaries *)
531,727
27,359
Interest on loans to subsidiaries
17,983
363
Total other assets (long term)
549,710
27,722
Advances paid to suppliers
10
-
Joint operation receivables
7,974
10,550
Other receivables
20,541
36,921
Allowance for expected credit losses other
receivables (note 16 c)
(169)
(172)
Other debtors
46,823
58,487
Allowance for expected credit losses for other
debtors (note 16 c)
(46,029)
(50,055)
Prepayments
13,579
9,829
VAT not yet due
7,415
3,072
CO
2
certificates acquired
208,617
Other taxes receivable
8
182,290
Total other assets (short term)
258,769
250,922
*) Romgaz signed two loan agreements of RON 247,500 thousand (in 2022, increased in 2023) and RON 2,100,000
thousand (in 2023) with subsidiary Romgaz Black Sea Limited to support its operations and the investment in the
S.N.G.N. ROMGAZ S.A.
NOTES TO THE FINANCIAL STATEMENTS
30
offshore block Neptun Deep. The interest rate on both loan agreements is 12M ROBOR + 1.74%. The loans are
repayable on June 30, 2028 and December 31, 2029, respectively.
c) Changes in the allowance for expected credit losses for trade and other receivables and other assets
2023
2022
'000 RON
'000 RON
At January 1
774,613
981,497
Charge in the allowance for other receivables
(note 6)
204
1,831
Charge in the allowance for trade receivables
109,200
124,247
Write-off against trade receivables *)
(41,847)
(262,649)
Release in the allowance for other receivables
(note 6)
(4,233)
(1,232)
Release in the allowance for trade receivables
(51,654)
(69,081)
At December 31
786,283
774,613
*) In 2023, the Company wrote-off receivables of RON 41,847 thousand representing receivables from clients
undergoing bankruptcy procedures. The write-off had no impact on the 2023 results, as those receivables were
already impaired.
As of December 31, 2023, the Company recorded allowances for expected credit losses, of which Interagro RON
41,808 thousand (December 31, 2022: RON 68,141 thousand), CET Iasi of RON 10,882 thousand (December 31,
2022: RON 46,271 thousand), Electrocentrale Galati with RON 168,620 thousand (December 31, 2022: RON 168,620
thousand), Liberty Galați with RON 113,665 thousand (December 31, 2022: RON 85,261 thousand), Electrocentrale
Bucuresti with RON 242,687 thousand (December 31, 2022: RON 243,547 thousand), G-ON EUROGAZ of RON 14,848
thousand (December 31, 2022: RON 14,848 thousand), Electrocentrale Constanta of RON 38,027 thousand
(December 31, 2022: RON 38,027 thousand), Termo Ploiești of RON 72,857 thousand (December 31, 2022: RON 0
thousand) due to existing financial conditions of these clients as well as ongoing litigating cases related to these
receivables or exceeding payment terms.
d) Credit risk exposure for trade and other receivables
December 31, 2023
Gross carrying amount
Expected credit loss
rate
Lifetime expected
credit losses
'000 RON
%
‘000 RON
Current receivables, including
accrued receivables
1,320,745
0.00%
14
less than 30 days overdue
44,579
64.93%
28,944
30 to 90 days overdue
53,832
98.07%
52,795
90 to 360 days overdue
24,998
99.86%
24,964
over 360 days overdue
633,368
100.00%
633,368
Total trade receivables
2,077,522
740,085
December 31, 2022
Gross carrying amount
Expected credit loss
rate
Lifetime expected
credit losses
'000 RON
%
‘000 RON
Current receivables, including
accrued receivables
1,333,424
0.00
13
less than 30 days overdue
6,130
91.24
5,593
30 to 90 days overdue
32,362
99.96
32,348
90 to 360 days overdue
73,501
99.73
73,300
over 360 days overdue
613,132
100.00
613,132
Total trade receivables
2,058,549
724,386
S.N.G.N. ROMGAZ S.A.
NOTES TO THE FINANCIAL STATEMENTS
31
17. SHARE CAPITAL
December 31, 2023
December 31, 2022
‘000 RON
‘000 RON
385,422,400 fully paid ordinary shares
385,422
385,422
Total
385,422
385,422
The shareholding structure as at December 31, 2023 is as follows:
No. of shares
Value
Percentage (%)
‘000 RON
The Romanian State through the
Ministry of Energy
269,823,080
269,823
70.01
Legal persons
95,343,630
95,344
24.73
Physical persons
20,255,690
20,256
5.25
Total
385,422,400
385,422
100
All shares are ordinary and were subscribed and fully paid as at December 31, 2023. All shares carry equal voting
rights and have a nominal value of RON 1/share (December 31, 2022: RON 1/share).
In December 2023 the Extraordinary General Meeting of Shareholders approved Romgaz’ share capital increase
through the incorporation of reserves of RON 3,468,802 thousand by issuing 3,468,801,600 shares with a nominal
value of RON 1/share, each shareholder registered on the Registration Date being entitled to 9 free shares for each
share held. The increase was registered in January 2024 at the Trade Register.
18. PROVISIONS
December 31, 2023
December 31, 2022
'000 RON
'000 RON
Decommissioning provision (note 18 a)
336,648
186,778
Retirement benefit obligation (note 18 c)
177,721
158,934
Total long term provisions
514,369
345,712
Decommissioning provision (note 18 a)
27,670
22,046
Litigation provision (note 18 b)
18,839
6,620
Other provisions *) (note 18 b)
65,098
284,201
Total short term provisions
111,607
312,867
Total provisions
625,976
658,579
*) On December 31, 2023, other provisions of RON 65,098 thousand include the provision for employee’s
participation to profit of RON 42,364 thousand (December 31, 2022: RON 38,094 thousand), the provision for taxes
of RON 6,514 thousand (December 31, 2022: RON 10,207 thousand), the provision for CO
2
certificates of RON 0
thousand (December 31, 2022: RON 228,126 thousand) and a provision of RON 4,666 thousand for the variable
remuneration of the board of directors and officers with a mandate contract to which they will be entitled if they
meet the key performance indicators approved by shareholders (December 31, 2022: RON 0 thousand). In 2023 the
Company acquired the CO
2
certificates for the year, thus no provision is required at December 31, 2023.
S.N.G.N. ROMGAZ S.A.
NOTES TO THE FINANCIAL STATEMENTS
32
a) Decommissioning provision
(i) Decommissioning provision movement for non-current assets
2023
2022
'000 RON
'000 RON
At January 1
208,824
398,039
Additional provision recorded against non-current
assets
106,922
1,175
Unwinding effect (note 9)
16,194
19,834
Recorded in profit or loss
33,398
(75,471)
Change recorded against non-current assets
(1,020)
(134,753)
At December 31
364,318
208,824
The Company makes full provision for the future cost of decommissioning natural gas wells on a discounted basis
upon installation. The provision for the costs of decommissioning these wells at the end of their economic lives has
been estimated using existing technology, at current prices or future assumptions, depending on the expected
timing of the activity, and discounted using a rate of 6.23% (year ended December 31, 2022: 8.19%). While the
provision is based on the best estimate of future costs and the economic lives of the wells, there is uncertainty
regarding both the amount and timing of these costs.
The increase with 1 percentage point of the discount rate would decrease the decommissioning provision
(including the decommissioning provision for assets held for disposal) with RON 62,650 thousand. The decrease
with 1 percentage point of the discount rate would increase the decommissioning provision (including the
decommissioning provision for assets held for disposal) with RON 81,201 thousand.
The increase with 1 percentage point of the inflation rate would increase the decommissioning provision (including
the decommissioning provision for assets held for disposal) with RON 83,103 thousand. The decrease with 1
percentage point of the inflation rate would decrease the decommissioning provision (including the
decommissioning provision for assets held for disposal) with RON 64,871 thousand.
(ii) Decommissioning provision movement for assets held for disposal
2023
2022
'000 RON
'000 RON
At January 1
27,666
39,598
Additional provision recorded against assets held
for disposal
11,308
149
Unwinding effect (note 9)
1,971
1,834
Recorded in profit or loss
365
(158)
Change recorded against assets held for disposal
(43)
(13,757)
At December 31
41,267
27,666
b) Other provisions
Litigation provision
Other provisions
Total
‘000 RON
‘000 RON
‘000 RON
At January 1, 2023
6,620
284,201
290,821
Additional provision in the period
18,762
155,713
174,475
Provisions used in the period
(4,025)
(369,311)
(373,336)
Unused amounts during the period,
reversed
(2,518)
(5,505)
(8,023)
At December 31, 2023
18,839
65,098
83,937
S.N.G.N. ROMGAZ S.A.
NOTES TO THE FINANCIAL STATEMENTS
33
Litigation provision
Other provisions
Total
‘000 RON
‘000 RON
‘000 RON
At January 1, 2022
3,554
204,441
207,995
Additional provision in the period
4,124
316,565
320,689
Provisions used in the period
(948)
(211,893)
(212,841)
Unused amounts during the period,
reversed
(110)
(24,912)
(25,022)
At December 31, 2022
6,620
284,201
290,821
The movement in other provisions refers mainly to the CO2 certificates.
c) Retirement benefit obligation
Movement of the retirement benefit obligation
2023
2022
'000 RON
'000 RON
At January 1
158,934
144,880
Interest cost
12,392
7,044
Current service cost
10,127
8,921
Payments during the year
(13,070)
(9,484)
Actuarial (gain)/loss of the period
9,338
(14,096)
Past service cost
-
21,669
At December 31
177,721
158,934
Except for actuarial gains/losses, all movements in the retirement benefit obligation are recognized in the result
of the period.
In determining the retirement benefit obligation, the following significant assumptions were used:
• No layoffs or restructurings are planned;
• Average discount rate: 5.9% (2022: 8.1%);
• Average inflation rate: 4.8% in 2024; 3.5% in 2025; 3.0% in 2026; 2.5% in 2027-2031 period, following a
decreasing trend in the next years (2022: 16.3% in 2022; 11.2% in 2023; 6.1% in 2024; 3.6% in 2025; 2.5% in the
2026-2031 period, following a decreasing trend in the next years).
Sensitivity analysis
The discount rate has a significant effect on the obligation. Isolated change in assumptions with 1 percentage
point would have the following effect on the obligation:
Increase of 1% in assumptions
Decrease of 1% in assumptions
'000 RON
'000 RON
Average discount rate
(15,499)
17,826
Salaries’ growth rate
17,636
(15,620)
Maturity analysis of payment cash flows
Benefit payments
'000 RON
Up to 1 year
16,351
1-2 years
8,190
2-5 years
45,986
5-10 years
124,933
Over 10 years
503,046
S.N.G.N. ROMGAZ S.A.
NOTES TO THE FINANCIAL STATEMENTS
34
19. DEFERRED REVENUE
December 31, 2023
December 31, 2022
'000 RON
'000 RON
Amounts collected from NIP (see below)
276,519
230,169
Other deferred revenue
133
145
Other amounts received as subsidies
97
105
Total long term deferred revenue
276,749
230,419
Other amounts received as subsidies
7
7
Other deferred revenue
-
4
Total short term deferred revenue
7
11
Total deferred revenue
276,756
230,430
National Investment Plan (“NIP”)
In Government Decision no. 1096/2013 approving the mechanism for free allocation of greenhouse gas emission
allowances to electricity producers for the period 2013-2020, Annex no. 3 "National Investment Plan", Romgaz is
included with the investment "Combined Gas Turbine Cycle".
For this investment, in 2017 Romgaz signed a financing agreement with the Ministry of Energy, whereby the
Ministry of Energy undertakes to grant a non-reimbursable financing of RON 320,912 thousand, representing a
maximum of 25% of the total value of eligible expenditure of the investment. By December 31, 2023 the Company
collected RON 276,519 thousand. Amounts received under this contract will be transferred to income based on the
depreciation rate of the investment.
As per Government Decision no. 1118/November 16, 2023 the completion and commissioning period of investments
financed from the National Investment Plan was extended until December 31, 2024 and the reimbursement period
until June 30, 2025.
20. TRADE AND OTHER CURRENT LIABILITIES
December 31, 2023
December 31, 2022
'000 RON
'000 RON
Accruals
60,934
20,688
Trade payables
48,062
40,868
Payables to fixed assets suppliers
30,737
25,347
Total trade payables
139,733
86,903
Payables related to employees
36,226
56,624
Royalties
170,255
142,651
Contribution to Energy Transition Fund
38
11,931
Social security taxes
30,270
34,896
Other current liabilities
218,961
11,635
VAT
4,284
19,048
Dividends payable
1,453
1,225
Windfall tax
29,420
-
Other taxes
2,650
1,787
Total other liabilities
493,557
279,797
Total trade and other liabilities
633,290
366,700
*) Other current liabilities include the Company’s obligation to include the CO2 certificates acquired in 2023 for the year’s
emissions in the Unique Registry of Greenhouse Gas Emissions (note 16 b).
S.N.G.N. ROMGAZ S.A.
NOTES TO THE FINANCIAL STATEMENTS
35
21. FINANCIAL INSTRUMENTS
Financial risk factors
The Company’s activities expose it to a variety of financial risks: market risk (including currency risk, inflation
risk, interest rate risk), credit risk, liquidity risk. The Company’s overall risk management program focuses on the
unpredictability of financial markets and seeks to minimize potential adverse effects on the Company’s financial
performance within certain limits. However, the use of this approach does not prevent losses outside of these
limits in the event of more significant market movements. The Company does not use derivative financial
instruments to hedge certain risk exposures.
(a) Market risk
(i) Foreign exchange risk
The Company is exposed to currency risk as a result of exposure to various currencies. Foreign exchange risk arises
from future commercial transactions and recognized assets and liabilities.
The Company is mainly exposed to currency risk generated by EUR against RON as a result of the interest-bearing
loan described in note 28.
As of December 31, 2023, the official exchange rate was RON 4.9746 to EUR 1 (December 31, 2022: RON 4.9474 to EUR
1).
EUR
GBP
USD
RON
December 31, 2023
1 EUR =
4.9746
1 GBP =
5.57225
1 USD =
4.4958
1 RON
Total
'000 RON
'000 RON
'000 RON
'000 RON
'000 RON
Financial assets
Cash and cash equivalents
6,816
1
4
512,010
518,831
Loans to subsidiaries
-
-
-
549,710
549,710
Other financial assets
-
-
-
2,325,284
2,325,284
Trade and other receivables
-
-
-
864,277
864,277
Total financial assets
6,816
1
4
4,251,281
4,258,102
Financial liabilities
Trade payables and other
payables
(31)
(43)
(8)
(78,717)
(78,799)
Lease liability
(7,396)
-
-
(5,077)
(12,473)
Borrowings
(1,131,722)
-
-
-
(1,131,722)
Total financial liabilities
(1,139,149)
(43)
(8)
(83,794)
(1,222,994)
Net
(1,132,333)
(42)
(4)
4,167,487
3,035,108
S.N.G.N. ROMGAZ S.A.
NOTES TO THE FINANCIAL STATEMENTS
36
EUR
GBP
USD
RON
December 31, 2022
1 EUR =
4.9474
1 GBP =
5.5878
1 USD =
4.6346
1 RON
Total
'000 RON
'000 RON
'000 RON
'000 RON
'000 RON
Financial assets
Cash and cash equivalents
77,760
3
8
1,789,799
1,867,570
Loans to subsidiaries
-
-
-
27,722
27,722
Trade and other receivables
-
-
-
746,864
746,864
Total financial assets
77,760
3
8
2,564,385
2,642,156
Financial liabilities
Trade payables and other payables
(18)
-
(25)
(66,172)
(66,215)
Lease liability
(3,584)
-
-
(4,523)
(8,107)
Borrowings
(1,447,115)
-
-
-
(1,447,115)
Total financial liabilities
(1,450,717)
-
(25)
(70,695)
(1,521,437)
Net
(1,372,957)
3
(17)
2,493,690
1,120,719
The Company is mainly exposed to currency risk generated by EUR against RON. The table below details the
sensitivity of the Company to a 5% increase/decrease in the EUR exchange rate against the RON. The 5% rate is the
rate used in internal reports to management on foreign currency risk and represents management's assessment of
reasonable changes in the exchange rate. Sensitivity analysis includes only monetary items denominated in foreign
currency in the balance sheet, and considers the transfer at the end of the period to a modified rate of 5%.
December 31, 2023
December 31, 2022
‘000 RON
‘000 RON
RON weakening – loss
(56,618)
(68,648)
RON strengthening - gain
56,618
68,648
(ii) Inflation risk
The official annual inflation rate in Romania for 2023 was 10.4% as provided by the National Institute of Statistics. The
cumulative inflation rate for the last 3 years was under 100%. This factor, among others, led to the conclusion that
Romania is not a hyperinflationary economy.
(iii) Interest rate risk
The Company is exposed to interest rate risk, due to retirement benefit obligations, the decommissioning provision and
interest-bearing loans. The Company’s sensitivity to changes in the discount rate is detailed in note 18.
An increase of 1% in the interest rate on the borrowings would lead to an increase of the interest expense in 2024 of RON
10,269 thousand.
Bank deposits and treasury bills bear a fixed interest rate.
(b) Credit risk
Financial assets, which potentially subject the Company to credit risk, consist principally of trade receivables. The
Company has policies in place to ensure that sales are made to customers with low credit risk. Also, sales have to be
secured, either through advance payments, either through bank letters of guarantee. The carrying amount of accounts
receivable, net of loss allowances, represents the maximum amount exposed to credit risk. The Company has a
concentration of credit risk in respect of its top three clients, which amounts to 46.66% of net trade receivable balance
at December 31, 2023 (its top 3 clients: 89.72% as of December 31, 2022).
Although collection of receivables could be influenced by economic factors, management believes that there is no
significant risk of loss to the Company beyond the loss allowance already recorded.
S.N.G.N. ROMGAZ S.A.
NOTES TO THE FINANCIAL STATEMENTS
37
(c) Capital risk management
The Company’s objectives when managing capital are to safeguard the Company’s ability to continue as a going
concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an
optimal capital structure to minimize the cost of capital.
In order to maintain or adjust the capital structure, the Company may adjust the dividend policy, issue new shares
or sell assets to reduce debt.
The Company’s policy is to only resort to borrowing if investment needs cannot be financed internally.
The Company’s capital management aims to ensure that it meets financial covenants attached to the interest-
bearing loans. Breaches in meeting the financial covenants would permit the bank to immediately call borrowings.
There have been no breaches of the financial covenants of interest-bearing loans in the current period.
(d) Fair value estimation
Carrying amount of financial assets and liabilities is assumed to approximate their fair values.
Financial instruments in the balance sheet include trade receivables and other receivables, cash and cash
equivalents, loans, other financial assets, trade and other payables, interest-bearing borrowings. The estimated
fair values of these instruments approximate their carrying amounts. The carrying amounts represent the
Company’s maximum exposure to credit risk for existing receivables.
e) Maturity analysis for financial assets and financial liabilities at amortized cost
The table below shows financial assets and financial liabilities of the Company on contractual maturities. The
amounts represent non-discounted future cash flows generated by financial assets and financial liabilities.
December
31, 2023
Due in
less than
a month
Due in
1-3 months
Due in
3 months
to 1 year
Due in
1-5 years
Due in over
5 years
Total
‘000 RON
‘000 RON
‘000 RON
‘000 RON
‘000 RON
‘000 RON
Deposits
391,521
1,238,763
695,000
-
-
2,325,284
Loans to
subsidiaries
-
-
-
369,204
459,956
829,160
Trade
receivables
863,544
733
-
-
-
864,277
Total
1,255,065
1,239,496
695,000
369,204
459,956
4,018,721
Trade
payables
(74,001)
(4,796)
(2)
-
-
(78,799)
Borrowings
-
(92,343)
(272,306)
(853,610)
-
(1,218,259)
Lease
liabilities
(137)
(575)
(1,311)
(5,854)
(4,596)
(12,473)
Total
(74,138)
(97,714)
(273,619)
(859,464)
(4,596)
(1,309,531)
Net
1,180,927
1,141,782
421,381
(490,260)
455,360
2,709,190
December
31, 2022
Due in
less than
a month
Due in
1-3 months
Due in
3 months
to 1 year
Due in
1-5 years
Due in over
5 years
Total
‘000 RON
‘000 RON
‘000 RON
‘000 RON
‘000 RON
‘000 RON
Loans to
subsidiaries
-
-
-
-
46,448
46,448
Trade
receivables
557,735
127,111
-
-
-
684,846
Total
557,735
127,111
-
-
46,448
731,294
Trade
payables
(54,096)
(12,119)
-
-
-
(66,215)
Borrowings
-
(84,892)
(253,397)
(1,152,132)
-
(1,490,421)
Lease
liabilities
(77)
(191)
(748)
(2,962)
(4,129)
(8,107)
Total
(54,173)
(97,202)
(254,145)
(1,155,094)
(4,129)
(1,564,743)
Net
503,562
29,909
(254,145)
(1,155,094)
42,319
(833,449)
S.N.G.N. ROMGAZ S.A.
NOTES TO THE FINANCIAL STATEMENTS
38
f) Liquidity risk management
Ultimate responsibility for liquidity risk management rests with the Company’s management, which has established
an appropriate liquidity risk management framework for the management of the Company’s short, medium and
long-term funding and liquidity management requirements. The Company manages liquidity risk by maintaining
adequate reserves, by continuously monitoring forecast and current cash flows and by matching the maturity
profiles of financial assets and liabilities.
22. RELATED PARTY TRANSACTIONS AND BALANCES
i. Sales of goods and services
Year ended
Dec 31, 2023
Year ended
Dec 31, 2022
'000 RON
'000 RON
Subsidiaries *)
134,343
136,278
Associates
22,055
24,368
Total
156,398
160,646
*) Of RON 134,343 thousand representing revenue obtained from transactions with subsidiaries, RON 101,122
thousand relate to rental revenues (2022: RON 103,351 thousand).
The Company is controlled by the Ministry of Energy, on behalf of the Romanian State (note 17). As such, all
companies over which the Ministry of Energy has control or significant influence are considered related parties of
the Company. No other ministry or agency of the Romanian State has control or significant influence over the
Company, therefore companies over which the Romanian State has control or significant influence through
organizations other than the Ministry of Energy are not considered related parties of the Company.
The table below shows the transactions of the Company with companies over which the Ministry of Energy has
control or significant influence:
Year ended
Dec 31, 2023
Year ended
Dec 31, 2022
'000 RON
'000 RON
Companies controlled by the Ministry of Energy
Electrocentrale Constanța SA
119,734
110,748
Electrocentrale București SA
1,115,191
1,549,292
Companies significantly influenced by the
Ministry of Energy
OMV Petrom SA
44,953
430,287
Engie România SA
1,932,803
2,581,062
E.On Energie România SA
2,309,541
1,883,418
Total
5,522,222
6,554,807
ii. Purchase of goods and services
Year ended
Dec 31, 2023
Year ended
Dec 31, 2022
'000 RON
'000 RON
Subsidiaries
33,342
52,028
Total
33,342
52,028
S.N.G.N. ROMGAZ S.A.
NOTES TO THE FINANCIAL STATEMENTS
39
iii. Interest and dividend income
Year ended
Dec 31, 2023
Year ended
Dec 31, 2022
'000 RON
'000 RON
Subsidiaries – interest income
17,643
363
Subsidiaries – dividend income
50,247
13,583
Total
68,230
13,946
iv. Trade receivables
December 31, 2023
December 31, 2022
'000 RON
'000 RON
Subsidiaries
11,217
16,018
Total
11,217
16,018
v. Net lease investment
December 31, 2023
December 31, 2022
'000 RON
'000 RON
Subsidiaries
315
374
Total
315
374
vi. Loans granted
December 31, 2023
December 31, 2022
'000 RON
'000 RON
Subsidiaries
549,710
27,359
Total
549,710
27,359
vii. Trade payables
December 31, 2023
December 31, 2022
'000 RON
'000 RON
Subsidiaries
1,950
3,861
Total
1,950
3,861
23. INFORMATION REGARDING THE MEMBERS OF THE ADMINISTRATIVE, MANAGEMENT AND SUPERVISORY BODIES
The remuneration of executives and directors
The Company has no contractual obligations on pensions to former executives and directors of the Company.
During the years ended December 31, 2023 and December 31, 2022, no loans and advances were granted to
executives and directors of the Company, except for work related travel advances, and they do not owe any
amounts to the Company from such advances.
Year ended
December 31, 2023
Year ended
December 31, 2022
'000 RON
'000 RON
Salaries paid to executives (gross)
27,578
21,361
of which, bonuses (gross)
1,259
2,298
Remuneration paid to directors (gross)
1,934
1,670
of which, variable component (gross)
-
-
S.N.G.N. ROMGAZ S.A.
NOTES TO THE FINANCIAL STATEMENTS
40
December 31, 2023
December 31, 2022
'000 RON
'000 RON
Salaries payable to executives
581
644
Salaries payable to directors
96
87
In addition to the above, on December 31, 2023 the Company recorded a provision for bonuses for executives and
directors of RON 4,666 thousand (December 31, 2022: RON 0 thousand).
24. INVESTMENTS IN SUBSIDIARIES AND ASSOCIATES
a) Investment in subsidiaries
Subsidiaries’ name
Main activity
Country of
residence and
operations
Percentage of interest held (%)
December 31, 2023
December 31, 2022
SNGN ROMGAZ SA –
Filiala de
Înmagazinare Gaze
Naturale DEPOGAZ
Ploiesti SRL
Natural gas storage
Romania
100
100
Romgaz Black Sea
Limited
Gas exploration and
production
Country of
incorporation –
Bahamas
Country of
operations –
Romania
100
100
Cost at
December 31, 2023
Cost at
December 31, 2022
’000 RON
’000 RON
SNGN ROMGAZ SA – Filiala de Înmagazinare Gaze
Naturale DEPOGAZ Ploiesti SRL
66,056
66,056
Romgaz Black Sea Limited
5,118,995
5,118,995
Total
5,185,051
5,185,051
b) Investment in associates
Name of associate
Main activity
Place of
incorporation and
operation
Proportion of interest held (%)
December 31, 2023
December 31, 2022
SC Depomures SA
Tg.Mures
Storage of natural
gas
Romania
40
40
SC Agri LNG Project
Company SRL
Feasibility projects
Romania
25
25
Name of
associate
Gross
carrying
value
as of
December
31, 2023
Impairment
as of
December
31, 2023
Carrying
value as of
December
31, 2023
Gross
carrying
value
as of
December
31, 2022
Impairment
as of
December
31, 2022
Carrying
value as of
December
31, 2022
’000 RON
’000 RON
’000 RON
’000 RON
’000 RON
’000 RON
SC Depomures
SA Tg.Mures
120
-
120
120
-
120
SC Agri LNG
Project
Company SRL
182
(182)
-
977
(977)
-
Total
302
(182)
120
1,097
(977)
120
S.N.G.N. ROMGAZ S.A.
NOTES TO THE FINANCIAL STATEMENTS
41
25. OTHER FINANCIAL INVESTMENTS
Other financial investments are reclassified at fair value through profit or loss.
Except for the investment in Patria Bank, which is classified as level 1 instrument in the fair value hierarchy, all
other investments are included in level 3 category, according to IFRS 13.
Company
Principal activity
Place of
incorporation and
operation
Proportion of ownership interest and voting
power held (%)
December 31, 2023
December 31, 2022
Electrocentrale
București S.A.
Electricity and thermal
power producer
Romania
2.49
2.49
Patria Bank S.A.
Other activities –
financial
intermediations
Romania
0.02
0.02
Mi Petrogas
Services S.A.
Services related to oil
and natural gas
extraction, excluding
prospections
Romania
10
10
Lukoil
association
Petroleum exploration
operations
Romania
12.2
12.2
Electricity
Producers
Association-
HENRO
Non-governmental, non-
profit, independent
association
Romania
33.33
33.33
Company
Fair value as of
December 31, 2023
Fair value as of
December 31, 2022
’000 RON
’000 RON
Electrocentrale București S.A. *)
-
-
Patria Bank S.A.**)
79
79
Mi Petrogas Services S.A.
60
60
Lukoil association
5,227
5,227
Electricity Producers Association-HENRO
250
250
Total
5,616
5,616
*) The fair value of the investment in Electrocentrale Bucuresti was reduced to zero after entering into insolvency.
The investment in Electrocentrale Bucuresti is not quoted. The company concluded the restructuring plan in
February 2023, however its current financial position does not justify a modification of its value. These financial
statements do not include any adjustments related to this event.
**) In 2016, the Company's shareholders decided to withdraw Romgaz from the bank's shareholders, as a result of
the merger process in which Patria Bank was involved. In 2021, the approval of the National Bank of Romania was
obtained for the partial redemption of the shares that the Company holds in Patria Bank. The shares of Patria Bank
S.A. are listed, but following the merger process, the price at which the redemption of the shares held by the
shareholders who requested the withdrawal from the shareholding was set to a fixed value. Thus, the investment
is measured at this redemption value.
26. CASH AND CASH EQUIVALENTS
December 31, 2023
December 31, 2022
'000 RON
'000 RON
Current bank accounts *)
135,125
106,252
Petty cash
39
45
Term deposits
381,761
1,759,683
Restricted cash **)
1,901
1,584
Amounts under settlement
5
6
Total
518,831
1,867,570
*) Current bank accounts include overnight deposits.
**) At December 31, 2023 restricted cash refers to bank accounts used only for dividend payments to shareholders,
according to stock market regulations.
S.N.G.N. ROMGAZ S.A.
NOTES TO THE FINANCIAL STATEMENTS
42
27. OTHER FINANCIAL ASSETS
Other financial assets represent deposits with a maturity of over 3 months, from acquisition date. The Company
did not identify any risk of loss for these assets, therefore it did not record any impairment.
December 31, 2023
December 31, 2022
'000 RON
'000 RON
Bank deposits
2,325,284
-
Accrued interest receivable on bank deposits
19,065
8,481
Total other financial assets
2,344,349
8,481
28. INTEREST BEARING BORROWINGS
Interest rate
Maturity
December 31,
2023
December 31,
2022
'000 RON
'000 RON
EUR 325,000 thousand bank borrowing
EURIBOR 3M +
0.05% p.a.
June 30, 2027
1,131,722
1,447,115
Total
1,131,722
1,447,115
In March 2022, Romgaz signed a EUR 325 million financing deal with Raiffeisen Bank S.A. to finance part of the
purchase price of the shares of ExxonMobil Exploration and Production Romania Limited (now Romgaz Black Sea
Limited) that holds 50% of the rights and obligations for the Neptun Deep block.
In June 2022, an addendum to the facility contract was signed between Romgaz acting as borrower and Raiffeisen
Bank S.A. and Banca Comerciala Romana S.A. as lenders.
The facility’s final maturity is in five years from utilization. There are no borrowing costs other than interest. The
loan is repayable in quarterly installments. The loan is not secured.
The fair value of the loan approximates its carrying value as it carries a variable rate of interest.
29. ASSETS HELD FOR DISPOSAL AND RELATED LIABILITIES
As of April 1 2018, natural gas storage was transferred from Romgaz to SNGN ROMGAZ SA – Filiala de Înmagazinare
Gaze Naturale DEPOGAZ Ploiesti SRL.
The transfer of activity occurred as a result of the Company's legal obligation to achieve separation of natural gas
storage activity from natural gas production and supply in accordance with Directive 2009/73 / EC of the European
Parliament and of the Council of July 13, 2009 and the provisions of art. 141 align (1) of Law 123/2012.
The transfer involved the transfer of the license to the storage subsidiary, transfer of employees and the transfer
of the unfinished acquisitions until 31 March 2018. The transfer did not involve a sale. As a result of the transfer of
activity, the fixed assets were not transferred and they were leased to Depogaz.
At the end of 2018, the shareholders of the Company approved, in principle, to increase the share capital of
Depogaz with the assets used in the storage activity. Based on this decision, in 2019 the Company’s assets were
measured in order to determine the value of the share capital increase. In December 2019, the Company’s
majority shareholder called for a meeting to take a final decision on the increase; the final decision was taken in
January 2020. Based on the call of the majority shareholder in December 2019, the assets to be transferred,
according to the Company’s Board of Directors’ decision in February 2020, together with other related assets and
liabilities were classified as held for disposal as of December 31, 2023 and December 31, 2022. The transfer of
assets has not been completed by the date of approval of these financial statements, as all legal formalities have
not been completed.
The major classes of assets and liabilities classified as held for disposal are:
December 31, 2023
December 31, 2022
'000 RON
'000 RON
Property, plant and equipment
687,438
677,619
Other intangible assets
15
15
Assets held for disposal
687,453
677,634
S.N.G.N. ROMGAZ S.A.
NOTES TO THE FINANCIAL STATEMENTS
43
December 31, 2023
December 31, 2022
'000 RON
'000 RON
Provisions
41,266
27,666
Deferred tax liabilities
19,828
19,841
Liabilities directly associated with the assets
held for disposal
61,094
47,507
Net assets directly associated with the disposal
group
626,359
630,127
30. COMMITMENTS UNDERTAKEN
December 31, 2023
December 31, 2022
'000 RON
'000 RON
Endorsements and collaterals granted
273,425
312,689
Total
273,425
312,689
In 2023, Romgaz signed an addendum to the credit agreement with BCR SA representing a facility for issuing
letters of guarantee and opening letters of credit for a maximum amount of RON 500,000 thousand. On December
31, 2023 are still available for use RON 229,515 thousand.
As of December 31, 2023, the Company’s contractual commitments for the acquisition of non-current assets are of
RON 704,601 thousand (December 31, 2022: RON 181,936 thousand).
31. COMMITMENTS RECEIVED
December 31, 2023
December 31, 2022
'000 RON
'000 RON
Endorsements and collaterals received
2,593,693
2,124,357
Total
2,593,693
2,124,357
Endorsements and collateral received represent letters of guarantee and other performance guarantees received
from the Company’s clients.
32. CONTINGENCIES
(a) Litigations
The Company is subject to several legal actions arisen in the normal course of business. The management of the
Company considers that they will have no material adverse effect on the results and the financial position of the
Company.
On December 28, 2011, 27 former and current employees of Romgaz were notified by DIICOT regarding an
investigation related to sale contracts signed with one of the Company’s clients for allegedly unauthorized
discounts granted to this client during the period 2005-2010. DIICOT mentioned that this may have resulted in a
loss of USD 92,000 thousand for the Company. On that sum, an additional burden to the state budget consists of
income tax in amount of USD 15,000 thousand and VAT in amount of USD 19,000 thousand. The internal analysis
carried out by the Company’s specialized departments concluded that the agreement was in compliance with the
legal provisions and all discounts were granted based on Orders issued by the Ministry of Economy and Finance and
decisions of the General Shareholders’ Board and Board of Directors. The management of the Company believes
the investigation will not have a negative impact on the financial statements, to justify the registration of an
adjustment. The Company is fully cooperating with DIICOT in providing all information necessary. On March 18
2014, Romgaz received an address from DIICOT, by which the investigators ordered an accounting expertise,
indicating the objectives of the expertise.
Romgaz was notified that, as injured party, it may submit comments relating to objectives of the expertise
(additions/changes), and may appoint an additional expert to participate in the expertise.
Thus, Romgaz proceeded to identify and appoint an expert with accounting and financial expertise that can
participate to the expertise. After the report was completed, the parties could submit objections by November 2,
2015.
S.N.G.N. ROMGAZ S.A.
NOTES TO THE FINANCIAL STATEMENTS
44
On March 16, 2016, DIICOT – Central Structure informed the persons involved in the cause about the start of legal
actions against them. At the request of investigators, the Company announced that in case of a prejudice being
established during the investigation, the Company will join the case as civil party.
In November 2016, DIICOT informed the Company the prejudice established in amount of RON 282,630 thousand.
Following this request, Romgaz announced that will join the case as a civil party for the amount of RON 282,630
thousand to recover this amount from the respective client and any other person that may be found guilty for
causing the prejudice.
In June 2017, DIICOT issued a press release announcing the referral to court of several persons involved in the
case. In January 2018, the High Court of Cassation and Justice ruled that the indictment prepared by DIICOT was
not legal. The Court issued a decision in December, 2022 stating there is no offence and the civil complaint filed
by Romgaz was left unresolved. Romgaz appealed the decision. A final decision was not yet issued by the court.
(b) Taxation
The Romanian taxation system is undergoing a process of consolidation and harmonization with the European Union
legislation. However, there are still different interpretations of the fiscal legislation. In various circumstances, the
tax authorities may have different approaches to certain issues, and assess additional tax liabilities, together with
late payment interest and penalties. In Romania, tax periods remain open for fiscal verification for 5 years. The
Company’s management considers that the tax liabilities included in these financial statements are fairly stated.
(c) Environmental contingencies
Environmental regulations are developing in Romania and the Company has not recorded any liability at December
31, 2023 for any anticipated costs, including legal and consulting fees, impact studies, the design and
implementation of remediation plans related to environmental matters, except the amount of RON 405,585
thousand (December 31, 2022: RON 236,490 thousand), representing the decommissioning liability.
(d) Contingencies related to grants related to income
Government Emergency Ordinance no. 27/2022 as subsequently amended (GEO 27) includes the obligation of the
Company to sell at a regulated price of RON 450/MWh the electricity it produces. According to GEO 27, electricity
producers must calculate a contribution to the Energy Transition Fund. If the value of the CO
2
certificates related
to the energy sold at RON 450/MWh exceeds the contribution to the Energy Transition Fund, electricity producers
are entitled to receive the excess. Until December 2023, the legislation did not provide for the mechanism to
request these amounts from the Romanian State nor the competent authority for the settlement of such requests.
As such, the right to receive the grant is not enforceable.
By December 31, 2023 the Company should receive RON 167,743 thousand.
33. JOINT ARRANGEMENTS
In January 2002, Romgaz signed a petroleum agreement with Amromco for rehabilitation operations in order to
achieve additional production in 11 blocks, namely: Bibeşti, Strâmba, Finta, Fierbinți-Târg, Frasin-Brazi, Zătreni,
Boldu, Roșioru, Gura-Șuții, Balta-Albă and Vlădeni. For the base production, Romgaz holds a share of 100% and for
the additional production, Romgaz owns a share of 50% and Amromco Energy SRL - 50%. As the agreement was
signed to execute rehabilitation operations to obtain additional production, the mandatory work program is in
accordance with the studies approved by ANRM. Accordingly, the annual work program, which includes both works
provided in the studies and other works necessary and proposed by the partners, is approved annually by the Board
of the joint arrangement before the start of each year. The duration of the joint arrangement is in line with the
time frame of each individual concession agreements of the 11 perimeters stated above, which differs for each
block.
34. AUDITOR’S FEES
The fee charged by the Company’s statutory auditor, S.C. Ernst & Young Assurance Services S.R.L. for the
statutory audit of the 2023 annual financial statements is RON 377 thousand.
The fees charged for other assurance services in 2023 are RON 205 thousand.
35. EVENTS AFTER THE BALANCE SHEET DATE
In December 2023 the Extraordinary General Meeting of Shareholders approved Romgaz’ share capital increase
through the incorporation of reserves of RON 3,468,802 thousand by issuing 3,468,801,600 shares with a nominal
value of RON 1/share, each shareholder registered on the Registration Date being entitled to 9 free shares for each
share held. The increase was registered in January 2024 at the Trade Register. The share capital increased to RON
3,854,224 thousand. The Extraordinary General Meeting of Shareholders approved the date of May 30, 2024 as the
date of distribution of the free shares.
S.N.G.N. ROMGAZ S.A.
NOTES TO THE FINANCIAL STATEMENTS
45
36. APPROVAL OF FINANCIAL STATEMENTS
These financial statements were endorsed by the Board of Directors on March 22, 2024.
Răzvan Popescu
Gabriela Trânbițaș
Chief Executive Officer
Chief Financial Officer
