REG - Hellenic Petroleum - Annual Financial Report

HELLENiQ ENERGY Holdings SAAnnouncement

28/02/2019 16:15

RNS Number : 4895R
Hellenic Petroleum S.A.
28 February 2019
 


PRESS RELEASE
28 February 2019
 




Fourth Quarter / Full Year 2018 financial results




 




 
Strong profitability on record production and higher exports sales, despite weaker benchmark refining margins. Positive results and improved balance sheet led to a BoD proposal for a FY 18 dividend of €0.75/share (€229m)




 
HELLENIC PETROLEUM Group announced its 4Q and FY18 financial results. FY Adjusted EBITDA came in at €730m (-12%), with Adjusted Net Income at €296m (-20%). The Group delivered a strong set of results, as improved refineries mechanical availability and production during 2018 vs last year, partly offset the expected profitability drop due to refining environment deterioration, as evidenced by weaker Med benchmark margins and a stronger euro.
During a year which ranks as one of its best ever in terms of refining performance, the Group recorded historical highs in production and sales at 15.5m MT (+3%) and 16.5m MT (+4%) respectively, while exports grew even further at a record high of 9.4m MT, making the Group as one of the largest exporters in the country.
In terms of Reported IFRS results, Net Income amounted to €215m (-44%), reflecting the losses suffered on inventory valuation in 4Q18 due to the oil price drop, as well as a number of one-off non-operating accounting provisions. These include the impairment on the sale of DESFA, provision for deferred tax liability on the sale of DEPA, mark to market of provisions for CO2 emission rights prices, as well as other non-operating provisions.
On the back of strong results, prudent financing strategy and the completion of the sale of its stake in DESFA to "SENFLUGA Energy Infrastructure Holdings S.A.", for a cash consideration of €284m, the Group reports an improved balance sheet and a lower cost of financing.
In addition to positive operating results, during 2018 senior management focused on strategic priorities, setting the pillars for a new competitiveness improvement program. In that respect, the Group launched initiatives that will form part of its strategy for the coming years in the areas of digital transformation, energy efficiency and CO2 emissions reduction, procurement optimization (BEST) and growth in renewables.
Considering FY18 results, the stronger balance sheet, as well as the positive 2019 outlook, the BoD has approved a proposal to the AGM for a final FY18 dividend of €0.5 / share, taking the total 2018 dividend to €0.75 / share (€229m); out of the total dividend, €0.25 / share corresponds to a special distribution from DESFA sale proceeds, while the balance of the proceeds will be used for debt and finance cost reduction.
 
Significant crude oil price drop in 4Q18
Crude oil price recorded a considerable decline in 4Q18, averaging $68/bbl, with increased volatility, ranging between $50-85/bbl, on increased production, mainly in US, as well as a slow-down in global demand growth. In FY18, Brent oil prices increased materially, averaging $72/bbl.
The notable decline in gasoline cracks has negatively affected Med benchmark FCC margins, that recorded a 13% drop, averaging $4/bbl, while stronger diesel cracks led Med hydrocracking benchmarks at $5.3/bbl, flat y-o-y. Equally, in FY18, FCC benchmarks averaged $5.0/bbl (-16%), with Hydrocracking margins at $5.5/bbl (+5%).
USD strengthened further in 4Q18, with euro averaging $1.14, while for FY18 the euro was stronger vs 2017, at $1.18.
 
Auto fuels marginally higher. Aviation and marine fuels growth continued
Domestic fuels demand was 6.7 m tones, -3% vs 2017, as heating gasoil consumption declined. Contrary, auto-fuels demand recorded a small growth. Aviation fuels consumption amounted to 1.3m MT (+11%), registering an increase for the 6th consecutive year, with marine fuels also up by 4% at 2.9m MT.
 
Finance strategy objectives achieved, stronger balance
Financing costs in 2018 at €146m, recorded a cumulative drop of 32% in the last 4 years, as a result of positive performance and the successful implementation of the Group's financial strategy, with refinancing of bank loans and eurobonds at improved cost and terms. During 2018 the refinancing of bank loans totaling €900m was completed with significant benefits in cost, maturity and flexibility.
Operating cash flows (Adjusted EBITDA - Capex) were maintained at high levels in 2018, at €572m and combined with DESFA sale proceeds, led Net Debt at €1.5bn and gearing at 38%, the lowest in the last 9 years, within the target range of Group strategy.
 
Important developments
In E&P, the planned environmental studies and exploration activities at Patraikos Gulf continued in 4Q18, while respective works have commenced at offshore "Block 2", as well as onshore "Arta-Preveza" and "NW Peloponnisos".
Regarding the restructuring of DEPA activities, the acquisition of remaining 49% of EPA and EDA Attikis from Attiki Gas (subsidiary of Shell Gas BV) was completed, following regulatory approvals; together with the sale of EPA Thessaloniki and DESFA, the position of DEPA Group in Distribution and Retail is clarified.
 
Key highlights and contribution for each of the main business units in 4Q/FY18 were:
 
REFINING, SUPPLY & TRADING
-  Refining, Supply & Trading 4Q18 Adjusted EBITDA at €125m (-4%), with FY18 at €548 m (-14%).
-  4Q18 sales volumes were 6% higher at 4.1m MT, despite a small decline in production.
-  The Group continues its preparation ahead of new marine fuel specs change in 2020, in order to respond to market conditions. In that respect, new types of US crude oil were successfully tested at Aspropyrgos refinery, further differentiating crude slate.
 
PETROCHEMICALS
-  Higher vertical integration between Aspropyrgos refinery splitter unit and Thessaloniki petchems plant, as well as increased sales, led to improved operating profitability for Petchems, with 4Q18 Adj. EBITDA at €22m (+9%).
 
MARKETING
-  FY18 Marketing Adjusted EBITDA at €93m (-13%).
-  In Domestic Marketing weaker heating gasoil demand, as well as inventory losses due to the considerable oil price drop, negatively affected contribution to Group results, with 4Q18 Adjusted EBITDA at €2m (-79%).
-  In International Marketing a 4% increase in sales partly offset weak margins in Balkan markets, that led 4Q18 Adjusted EBITDA to €10m (-19%).
 
ASSOCIATED COMPANIES
-  DEPA Group participation to 4Q18 consolidated Net Income, adjusting for the impact of DESFA sale, came in at €7m.
-  The reinstatement of a flexibility remuneration mechanism for gas fired generators had a positive impact, with Elpedison 4Q18 EBITDA at €15m (+11%), despite higher cost for nat-gas and CO2 emission rights.
 
 
 
 
 
 
Key consolidated financial indicators (prepared in accordance with IFRS) for 4Q/FY18 are shown below:




€ million


4Q17


4Q18


% Δ


FY17


FY18


% Δ




P&L figures


 


 


 


 


 


 




Refining Sales Volumes ('000 ΜΤ)


3,905


4,137


6%


15,896


16,490


4%




Sales


2,106


2,428


15%


7,995


9,769


22%




EBITDA


243


-19


-


851


711


-16%




Adjusted EBITDA 1


170


156


-8%


834


730


-12%




Net Income


111


-145


-


384


215


-44%




Adjusted Net Income 1


59


57


-4%


372


296


-20%




Balance Sheet Items


 


 


 


 


 


 




Capital Employed


 


 


 


4,173


3,854


-8%




Net Debt


 


 


 


1,800


1,459


-19%




Debt Gearing (ND/ND+E)


 


 


 


43%


38%


 




 
Notes:1. Calculated as Reported adjusted for inventory effects for Refining, Supply & Trading and other non-operating items.
 
 
Further information:
V. Tsaitas, Investor Relations Officer
Tel.:      +30-210-6302399
Email:   vtsaitas@helpe.gr
 
 
 
 
 
Group Consolidated statement of financial position
 




 


 


As at




 


Note


31 December 2018


31 December 2017




ASSETS


 


 


 




Non-current assets


 


 


 




Property, plant and equipment


6


3.268.928


3.311.893




Intangible assets


7


105.617


105.684




Investments in associates and joint ventures


8


390.091


701.635




Deferred income tax assets


17


64.109


71.355




Investment in equity instruments


3


634


1.857




Loans, advances and long term assets


9


73.922


89.626




 


 


3.903.301


4.282.050




Current assets


 


 


 




Inventories


10


993.031


1.056.393




Trade and other receivables


11


821.598


791.205




Assets held for sale


 


3.133


-




Derivative financial instruments


21


-


11.514




Cash, cash equivalents and restricted cash


12


1.276.366


1.018.913




 


 


3.094.128


2.878.025




Total assets


 


6.997.429


7.160.075




 


 


 


 




EQUITY


 


 


 




Share capital and share premium


13


1.020.081


1.020.081




Reserves


14


258.527


358.056




Retained Earnings


 


1.052.164


930.522




Equity attributable to equity holders of the parent


 


2.330.772


2.308.659




 


 


 


 




Non-controlling interests


 


63.959


62.915




 


 


 


 




Total equity


 


2.394.731


2.371.574




 


 


 


 




LIABILITIES


 


 


 




Non- current liabilities


 


 


 




Interest bearing loans and borrowings


16


1.627.171


920.234




Deferred income tax liabilities


17


185.744


131.611




Retirement benefit obligations


18


163.514


133.256




Provisions


19


42.038


6.371




Trade and other payables


20


28.852


28.700




 


 


2.047.319


1.220.172




Current liabilities


 


 


 




Trade and other payables


15


1.349.153


1.661.457




Derivative financial instruments


21


16.387


-




Income tax payable


 


80.171


5.883




Interest bearing loans and borrowings


16


1.108.785


1.900.269




Dividends payable


 


883


720




 


 


2.555.379


3.568.329




Total liabilities


 


4.602.698


4.788.501




Total equity and liabilities


 


6.997.429


7.160.075




 
 
 
 
Group Consolidated statement of comprehensive income
 




 


 


For the year ended




 


Note


31 December 2018


31 December 2017




Reveue from contracts with customers


5


9.769.155


7.994.690




Cost of sales


22


(8.769.769)


(6.907.198)




Gross profit


 


999.386


1.087.492




 


 


 


 




Selling and distribution expenses


22


(324.430)


(276.182)




Administrative expenses


22


(150.518)


(133.427)




Exploration and development expenses


23


(1.403)


(212)




Other operating (expenses) / income and other gains/( losses) - net


24


(8.823)


(15.888)




Operating profit


 


514.212


661.783




Finance income


25


3.827


4.600




Finance expense


25


(149.532)


(169.653)




Currency exchange (losses) / gains


26


2.194


(8.173)




Share of profit/ (loss) of investments in associates and joint ventures


8


(1.771)


31.228




Profit before income tax


 


368.930


519.785




Income tax expense


27


(154.218)


(135.862)




Profit for the year


 


214.712


383.923




Profit attributable to:


 


 


 




     Owners of the parent


 


211.614


381.372




     Non-controlling interests


 


3.098


2.551




 


 


214.712


383.923




Other comprehensive income/ (loss):


 


 


 




Other comprehensive income that will not be reclassified to profit or loss (net of tax):


 


 


 




Actuarial losses on defined benefit pension plans


 


(11.012)


(9.589)




Changes in the fair value of equity instruments


14


(695)


6




Reduction in value of land


14


-


(1.669)




Share of other comprehensive income/ (loss) of associates


14


(288)


-




 


 


(11.995)


(11.252)




Other comprehensive income that may be reclassified subsequently to profit or loss (net of tax):


 


 


 




Fair value losses on cash flow hedges


14


(5.006)


(4.590)




Derecognition of gains/losses on hedges through comprehensive income


14


(14.920)


1.979




Currency translation differences and other movements


 


(745)


752




 


 


(20.671)


(1.859)




Other comprehensive (loss)/income for the year, net of tax


 


(32.666)


(13.111)




Total comprehensive income for the year


 


182.046


370.812




Total comprehensive income/(loss) attributable to:


 


 


 




     Owners of the parent


 


178.958


368.989




     Non-controlling interests


 


3.088


1.823




 


 


182.046


370.812




Basic and diluted earnings per share

(expressed in Euro per share)


28


0,69


1,25




 
 
 
 
Group Consolidated statement of cash flows
 




 


 


For the year ended




 


Note


31 December 2018


31 December 2017




Cash flows from operating activities


 


 


 




Cash generated from operations


30


507.847


453.311




Income tax paid


 


(4.918)


(10.375)




Net cash generated from operating activities


 


502.929


442.936




 


 


 


 




Cash flows from investing activities


 


 


 




Purchase of property, plant and equipment & intangible assets


6,7


(156.713)


(208.732)




Proceeds from disposal of property, plant and equipment & intangible assets


 


277


30




Settlement of consideration of acquisition of further equity interest in subsidiary


 


(1.298)


-




Purchase of subsidiary, net of cash acquired


34


(16.000)


-




Grants received


 


299


110




Interest received


25


3.827


4.600




Dividends received


8


307.735


19.346




Investment in associates - net


8


-


(147)




Proceeds from disposal of investments in equity instruments


 


265


8




Net cash generated from/ (used in) investing activities


 


138.392


(184.785)




 


 


 


 




Cash flows from financing activities


 


 


 




Interest paid


 


(140.755)


(160.830)




Dividends paid to shareholders of the Company


 


(148.767)


(104.115)




Dividends paid to non-controlling interests


 


(2.061)


(2.561)




Movement in restricted cash


12


144.445


11.873




Acquisition of treasury shares


 


(683)


(10.245)




Participation of minority shareholders in share capital increase of subsidiary


 


17


76




Proceeds from borrowings


 


409.694


288.000




Repayments of borrowings


 


(506.358)


(322.622)




Net cash used in financing activities


 


(244.468)


(300.424)




 


 


 


 




Net increase/ (decrease) in cash and cash equivalents


 


396.853


(42.273)




 


 


 


 




Cash and cash equivalents at the beginning of the year


12


873.261


924.055




Exchange gains / (losses) on cash and cash equivalents


 


5.046


(8.521)




Net increase/(decrease) in cash and cash equivalents


 


396.853


(42.273)




Cash and cash equivalents at end of the year


12


1.275.160


873.261




 
 
 
 
 
 
 
 
Parent Company Statement of Financial Position
 




 


 


As at




 


Note


31 December 2018


31 December 2017




ASSETS


 


 


 




Non-current assets


 


 


 




Property, plant and equipment


6


2.684.237


2.719.172




Intangible assets


7


4.799


7.042




Investments in subsidiaries, associates and joint ventures


8


1.032.372


671.622




Investment in equity instruments


3


318


1.252




Loans, advances and long-term assets


9


8.887


19.686




 


 


3.730.613


3.418.774




 


 


 


 




Current assets


 


 


 




Inventories


10


893.859


963.746




Trade and other receivables


11


680.347


989.901




Derivative financial instruments


21


-


11.514




Cash, cash equivalents and restricted cash


12


1.071.585


813.251




 


 


2.645.791


2.778.412




Total assets


 


6.376.404


6.197.186




 


 


 


 




EQUITY


 


 


 




Share capital and share premium


13


1.020.081


1.020.081




Reserves


14


262.263


360.694




Retained Earnings


 


864.333


428.448




Total equity


 


2.146.677


1.809.223




 


 


 


 




LIABILITIES


 


 


 




Non-current liabilities


 


 


 




Interest bearing loans and borrowings


16


1.657.598


909.579




Deferred income tax liabilities


17


151.873


89.959




Retirement benefit obligations


18


132.539


104.331




Provisions


19


37.858


6.058




Trade and other payables


20


14.810


15.569




 


 


1.994.678


1.125.496




Current liabilities


 


 


 




Trade and other payables


15


1.226.107


1.554.027




Derivative financial instruments


21


16.387


-




Income tax payable


 


76.322


2.769




Interest bearing loans and borrowings


16


915.350


1.704.951




Dividends payable


 


883


720




 


 


2.235.049


3.262.467




Total liabilities


 


4.229.727


4.387.963




Total equity and liabilities


 


6.376.404


6.197.186




 
 
 
 
 
 
Parent Company Statement of Comprehensive Income
 




 


 


For the year ended




 


Note


31 December 2018


31 December 2017




 


 


 


 




Revenue from contracts with customers


5


8.967.702


7.233.600




Cost of sales


 


(8.287.696)


(6.475.455)




Gross profit


 


680.006


758.145




 


 


 


 




Selling and distribution expenses


22


(99.248)


(59.045)




Administrative expenses


22


(95.795)


(81.825)




Exploration and development expenses


23


(875)


(119)




Other operating (expenses) / income and other gains / (losses) - net


24


(8.356)


(19.735)




Operating profit


 


475.732


597.421




Finance income


25


9.442


12.834




Finance expense


25


(136.636)


(153.105)




Finance (expenses)/income - net


25


(127.194)


(140.271)




Dividend income


29


318.795


33.724




Currency exchange gains/(losses)


26


2.244


(8.483)




Profit before income tax


 


669.577


482.391




Income tax expense


27


(146.187)


(136.400)




Profit for the year


 


523.390


345.991




Other comprehensive income/(loss):


 


 


 




Other comprehensive income/(loss), that will not be reclassified to profit or loss (net of tax):


 


 


 




Actuarial losses on defined benefit pension plans


14


(10.878)


(7.100)




Changes in the fair value of equity instruments


14


(675)


-




 


 


(11.553)


(7.100)




Other comprehensive income/(loss), that may be reclassified subsequently to profit or loss (net of tax):


 


 


 




Fair value gains / (losses) on cash flow hedges


14


(5.006)


(4.590)




Derecognition of gains/(losses) on hedges through comprehensive income


14


(14.920)


1.979




Other Comprehensive (loss)/income for the year, net of tax


 


(31.479)


(9.711)




Total comprehensive income for the year


 


491.911


336.280




Basic and diluted earnings per share

(expressed in Euro per share)


28


1,71


1,13




 
 
 
 
Parent Company Statement of Cash flows
 




 


 


For the year ended




 


Note


31 December 2018


31 December 2017




Cash flows from operating activities


 


 


 




Cash generated from operations


30


412.752


307.783




Income tax received / (paid)


 


2.224


(20)




Net cash generated from operating activities


 


414.976


307.763




 


 


 


 




Cash flows from investing activities


 


 


 




Purchase of property, plant and equipment & intangible assets


6,7


(101.318)


(149.930)




Dividends received


 


318.795


33.724




Interest received


25


9.442


12.834




Participation in share capital increase of subsidiaries


 


(21.054)


1.584




Settlement of consideration of acquisition of further equity interest in subsidiary


8


(39.000)


-




Sale of investment in subsidiaries to related parties


 


7.000


-




Net cash generated from / (used in) investing activities


 


173.865


(101.788)




 


 


 


 




Cash flows from financing activities


 


 


 




Interest paid


 


(131.965)


(162.494)




Dividends paid


 


(148.767)


(104.116)




Loans to affiliated companies


 


(3.600)


-




Movement in restricted cash


12


144.445


11.873




Acquisition of treasury stock


13


(683)


(10.245)




Repayments of borrowings


 


(491.303)


(279.775)




Proceeds from borrowings


 


440.748


283.606




Net cash used in financing activities


 


(191.125)


(261.151)




 


 


 


 




Net increase / (decrease) in cash and cash equivalents


 


397.716


(55.176)




 


 


 


 




Cash and cash equivalents at the beginning of the year


12


667.599


731.258




Exchange gains / (losses) on cash and cash equivalents


 


5.063


(8.483)




Net increase / (decrease) in cash and cash equivalents


 


397.716


(55.176)




Cash and cash equivalents at the end of the year


12


1.070.378


667.599




 




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