REG - Hellenic Petroleum - Annual Financial Report

HELLENiQ ENERGY Holdings SAAnnouncement

27/02/2020 16:30

RNS Number : 4025E
  
Hellenic Petroleum S.A.
  
27 February 2020
  
 

27 February 2020




Fourth quarter / Full Year 2019 financial results




 
 
Positive results and improved outlook led to a
FY19 dividend proposal of €0.5/share
Accelerated strategy implementation
 
HELLENIC PETROLEUM Group announced its 4Q/FY19 financial results. 4Q19 Adjusted EBITDA came in at €118m, with FY19 at €572m, while FY19 Adjusted Net Income amounted to €185m. Results are satisfactory, considering increased international refining environment volatility and significant deterioration for most of 4Q19, as well as the planned 5-week turnaround at Elefsina refinery for its regular 3-year maintenance, which was safely and successfuly completed in October. Improved operation, following start-up and better performance in other business units offset the negative impact of reduced production and sales during the turnaround period.
Furthermore, at the end of November, the Asporpyrgos refinery completed the transition to its new IMO operating model, supplying Greek bunkering hubs with low-sulphur, high quality marine fuels. During December, IMO FO sales amounted to 85k tons. 
The BoD, considering the results, as well as the outlook for the Group, proposed to the AGM the distribution of a €0.25/share final dividend, resulting in a total FY19 proposed dividend of €0.5/share.
IFRS Reported Results were affected by the recovery of crude oil price in 4Q19, with an inventory gain of €4m vs losses in 4Q18, due to the material decline in crude oil prices in the respective period, with 4Q19 Reported EBITDA at €110m, vs €-19m in 4Q18. It should be noted that the results include as of 1 January 2019 the impact of new IFRS 16 on operating leases of retail fuel stations and other equipment.
 
Strategy implementation - Key developments
On 20 February 2020, the EGM of HELLENIC PETROLEUM approved a Memorandum of Understanding with the HRADF for the joint sale of the total share capital (65% HRADF - 35% ELPE) of DEPA Infrastructure, that will result from the partial spin off of gas distribution activities from DEPA Group, as well as the participation of HELLENIC PETROLEUM in the tender process for the sale of 65% of HRADF in DEPA Commercial, that will result from the restructuring of DEPA Group and will include the gas wholesale and retail activities. The agreement enables the Group to implement its straregy for divesting from gas distribution activites and minority participations, as well as grow in commercial gas activities.
In addition on 17 February 2020, the Group agreed the acquisition of a portfolio of PV projects with total installed capacity of 204MW in the Kozani area, Northern Greece from the German RES developer and contractor juwi. The project, upon completion of the construction process in 4Q21, will be the largest RES plant in Greece and among the 5 largest in Europe. The transaction accelerates the achievement of the target of 300MW of RES operating capacity earlier than scheduled.
 
Andreas Shiamishis, Group CEO, commented on results:
"2019 has been a transition year for the Group, with a number of business and organizational challenges. During the last months we proceeded with a series of initiatives that enable focus on our transformation strategy, such as the agreement with the HRADF for our participation in DEPA, the agreement for the acquisition and construction of the lagest RES project in Greece, with an effective tariff, which is lower than system energy prices, as well as the planning for the strengthening of our international trading activities. Furthermore, we recorded progress on the governance and organizational fronts, through the amendments of our articles of association and the reorganization of our business activities and management team, introducing a simpler and functional structure.
Regarding results, the Group faced, for the first time after several years, a severe deterioration of the refining environment. In such a backdrop, we responded very successfuly , improving our balance sheet and maintaining high returns for our shareholders. The issue of a 2% €500m Eurobond came at the lowest interest rate for the Group in more than 10 years and opened the international bond market for other Greek corporates. Furthermore, we updated our strategy, focusing on improving competitiveness, though operational excellence and new investments, as well as growth in new activities that will improve our environmental footprint by 50% until 2030, materializing our vision to play a key role in the energy transition in the East Med. I would like to thank all our employees for their efforts that made these achievements possible."
 
Deterioration of refining environment
International crude oil prices recovered during 4Q19, reflecting mainly macro developments and supply/demand balances, with Brent prices averaging at $62/bbl, lower vs 4Q18 ($68/bbl). Equally on a FY basis, prices moved higher from the lows recorded in January 2019, with Brent at $64/bbl, vs $72/bbl in 2018.
The US dollar maintained its strength during the quarter, with EUR/USD exchange rate at 1.11, while in FY19, euro averaged at 1.12 vs 1.18 in 2018. A stronger USD benefits our international and export oriented business model. 
The international refining environment deteriorated significantly during 4Q19. HSFO cracks declined to the lowest levels on record, with the launch to the market of the new compliant VLSFO, ahead of IMO implementation. White products cracks were lower vs 3Q19, with the exception of naphtha. Brent-Urals spread improved slightly, however remained at low levels on average. Those led to a significant deviation among refining benchmarks, with FCC margins averaging at $1.6/bbl, with Hydrocracking margins at $6.6/bbl, the highest in four years, highlighting the importance of the investment at Elefsina refinery, in view of global trends for cleaner fuels.
 
Increasing demand for domestic fuels market
Domestic fuel demand in FY19 was up 3% at 6.9m MT, the highest in the last 3 years, as both auto-fuels and heating gasoil consumption increased. Aviation and bunkering fuels grew significantly (+10%), at 4.6m MT, mainly driven by marine fuels.
 
Strong balance sheet, improved capital structure, reduction in finance costs
The new €500m Eurobond issue, combined with the partial refinancing of 2021 Eurobond through a tender offer, as well as improvements in bank loans commercial terms, strengthened our balance sheet and reduced financing costs by 21%, which is expected to continue in 2020. As a result, Net Debt stood at €1.5bn, at the lower end of the Group's target range, with gearing ratio at 40%.
 
Key highlights and contribution for each of the main business units in 4Q/FY19 were:
REFINING, SUPPLY & TRADING
-     Refining, Supply & Trading 4Q19 Adjusted EBITDA at €76m (-39%).
-  Net production amounted to 3.2m MT (-17%), with sales at 3.5m MT (-15%), with FY19 at 14.2 and 15.2 respectively.
-  Realised ELPE system margin came in at $8.6/bbl in 4Q19, a significant over performance vs benchmarks.
 
PETROCHEMICALS
-  4Q19 Adjusted EBITDA came in at €20m (-9%), as operational performance and increased integration with Aspropyrgos refinery mitigated the impact of weak benchmark PP margins.
 
MARKETING
-  In Domestic Marketing, improved performance in Retail and Aviation led 4Q19 Comparable EBITDA at €3m, with FY19 at €49m (+14%).
-  International Marketing Comparable EBITDA at €15m (+44%), on account of improved in-market operations and supply optimisation, with FY19 at €56m (+11%).
 
ASSOCIATE COMPANIES
- DEPA Group contribution to consolidated Net Income was €21m for FY19. 
- ELPEDISON EBITDA amounted to €20m in FY19, almost flat vs 2018. 
 
Key consolidated financial indicators (prepared in accordance with IFRS) for 4Q/FY19 are shown below:




€ million


4Q18


4Q19


% Δ


FY18


FY19


% Δ




P&L figures


 


 


 


 


 


 




Refining Sales Volumes ('000 ΜΤ)


4,137


3,496


-15%


16,490


15,223


-8%




Sales 


2,428


2,052


-15%


9,769


8,857


-9%




EBITDA


-19


110


-


711


574


-19%




Adjusted EBITDA 1


156


118


-24%


730


572


-22%




Net Income


-145


-4


-


215


160


-26%




Adjusted Net Income 1


57


25


-56%


296


185


-37%




Balance Sheet Items


 


 


 


 


 


 




Capital Employed


 


 


 


3,855


3,869


-




Net Debt


 


 


 


1,460


1,543


6%




Debt Gearing (Net Debt/Capital Employed)


 


 


 


38%


40%


-




 
Notes:
1. Calculated as Reported adjusted for inventory effects 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 2019


31 December 2018




ASSETS


 


 


 




Non-current assets


 


 


 




Property, plant and equipment


6


3.297.668


3.268.928




Right-of-use assets


2,7


242.934


-




Intangible assets


8


104.426


105.617




Investments in associates and joint ventures


9


384.747


390.091




Deferred income tax assets


19


59.358


64.109




Investment in equity instruments 


3


1.356


634




Loans, advances and long term assets


10


55.438


73.922




 


 


4.145.927


3.903.301




Current assets


 


 


 




Inventories


11


1.012.802


993.031




Trade and other receivables


12


748.153


776.487




Income tax receivable


29


91.391


37.466




Assets held for sale 


 


2.520


3.133




Derivative financial instruments


23


3.474


-




Cash and cash equivalents


13


1.088.198


1.275.159




 


 


2.946.538


3.085.276




Total assets


 


7.092.465


6.988.577




 


 


 


 




EQUITY


 


 


 




Share capital and share premium 


14


1.020.081


1.020.081




Reserves


15


276.972


258.527




Retained Earnings


 


964.972


1.052.164




Equity attributable to equity holders of the parent


 


2.262.025


2.330.772




 


 


 


 




Non-controlling interests


 


64.548


63.959




 


 


 


 




Total equity


 


2.326.573


2.394.731




 


 


 


 




LIABILITIES


 


 


 




Non- current liabilities


 


 


 




Interest bearing loans and borrowings


17


1.610.094


1.627.171




Lease liabilities


2,18


169.357


-




Deferred income tax liabilities


19


213.495


185.744




Retirement benefit obligations


20


180.398


163.514




Provisions 


21


25.625


38.238




Other non-current liabilities


22


28.376


28.852




 


 


2.227.345


2.043.519




Current liabilities


 


 


 




Trade and other payables


16


1.401.732


1.349.153




Derivative financial instruments


23


-


16.387




Income tax payable


29


7.147


75.119




Interest bearing loans and borrowings


17


1.022.270


1.108.785




Lease liabilities


2,18


30.537


-




Dividends payable


 


76.861


883




 


 


2.538.547


2.550.327




Total liabilities


 


4.765.892


4.593.846




Total equity and liabilities


 


7.092.465


6.988.577




 
Group Consolidated statement of comprehensive income
 




 


 


For the year ended




 


Note


31 December 2019


31 December 2018




Revenue from contracts with customers


5


8.856.965


9.769.155




Cost of sales


24


(8.051.806)


(8.769.769)




Gross profit


 


805.159


999.386




Selling and distribution expenses


24


(329.711)


(324.430)




Administrative expenses


24


(140.012)


(150.518)




Exploration and development expenses


25


(4.843)


(1.403)




 


 


 


 




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


26


10.351


(8.823)




Operating profit


 


340.944


514.212




 


 


 


 




Finance income


27


5.843


3.827




Finance expense


27


(146.303)


(149.532)




Lease finance cost 


18,27


(10.081)


-




Currency exchange gains / (losses)


28


(1.255)


2.194




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


9


17.862


(1.771)




Profit before income tax 


 


207.010


368.930




 


 


 


 




Income tax expense


29


(43.434)


(154.218)




Profit for the year


 


163.576


214.712




Profit attributable to:


 


 


 




     Owners of the parent


 


160.798


211.614




     Non-controlling interests


 


2.778


3.098




 


 


163.576


214.712




Other comprehensive income / (loss):


 


 


 




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


 


 


 




Actuarial gains / (losses) on defined benefit pension plans


20


(12.369)


(11.012)




Changes in the fair value of equity instruments


15


544


(695)




Share of other comprehensive income / (loss) of associates


15


(188)


(288)




 


 


(12.013)


(11.995)




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


 


 


 




Fair value gains / (losses) on cash flow hedges 


15


12.890


(5.006)




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


15


1.501


(14.920)




Currency translation differences and other movements


 


272


(745)




 


 


14.663


(20.671)




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


 


2.650


(32.666)




 


 


 


 




Total comprehensive income for the year


 


166.226


182.046




Total comprehensive income / (loss) attributable to:


 


 


 




     Owners of the parent


 


163.425


178.958




     Non-controlling interests


 


2.801


3.088




 


 


166.226


182.046




Εarnings per share

(expressed in Euro per share)


30


0,53


0,69




 
 
Group Consolidated statement of cash flows




 


 


For the year ended




 


Note


31 December 2019


31 December 2018




Cash flows from operating activities


 


 


 




Cash generated from / (used in) operations


32


634.718


652.291




Income tax received / (paid)


 


(148.655)


(4.918)




Net cash generated from / (used in) operating activities


 


486.063


647.373




 


 


 


 




Cash flows from investing activities


 


 


 




Purchase of property, plant and equipment & intangible assets


6,8


(241.045)


(156.713)




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


 


1.616


277




Participation in share capital increase of associates and joint ventures


 


(10.295)


-




Purchase of subsidiary, net of cash acquired


36


(5.341)


(1.298)




Settlement of consideration of acquisition of further equity interest in subsidiary


-


(16.000)




Grants received


 


439


299




Interest received


27


5.843


3.827




Prepayments for right-of-use assets


 


(717)


-




Dividends received


9


30.490


307.735




Proceeds from disposal of assets held for sale


 


1.334


-




Proceeds from disposal of investments in equity instruments


 


19


265




Net cash generated from / (used in) investing activities


 


(217.657)


138.392




 


 


 


 




Cash flows from financing activities


 


 


 




Interest paid


 


(150.411)


(140.755)




Dividends paid to shareholders of the Company


 


(153.248)


(148.767)




Dividends paid to non-controlling interests


 


(2.246)


(2.061)




Acquisition of treasury shares 


 


-


(683)




Participation of minority shareholders in share capital increase of subsidiary


 


34


17




Proceeds from borrowings


 


514.700


409.694




Repayments of borrowings


 


(625.581)


(506.358)




Payment of lease liabilities - principal


18


(30.712)


-




Payment of lease liabilities - interest


18


(10.081)


-




Net cash generated from / (used in) financing activities


 


(457.545)


(388.913)




 


 


 


 




Net increase/ (decrease) in cash and cash equivalents 


 


(189.139)


396.852




 


 


 


 




Cash and cash equivalents at the beginning of the year


13


1.275.159


873.261




Exchange gains / (losses) on cash and cash equivalents 


 


2.179


5.046




Net increase / (decrease) in cash and cash equivalents


 


(189.139)


396.852




Cash and cash equivalents at end of the year


13


1.088.198


1.275.159




 
 
 
Parent Company Statement of Financial Position
 




 


 


As at




 


Note


31 December 2019


31 December 2018




ASSETS


 


 


 




Non-current assets


 


 


 




Property, plant and equipment


6


2.693.794


2.684.237




Right-of-use assets


2,7


32.084


-




Intangible assets


8


8.704


4.799




Investments in subsidiaries, associates and joint ventures


9


1.045.138


1.032.372




Investment in equity instruments


3


965


318




Loans, advances and long-term assets


10


22.089


8.887




 


 


3.802.774


3.730.613




 


 


 


 




Current assets


 


 


 




Inventories


11


899.760


893.859




Trade and other receivables


12


791.257


643.261




Income tax receivable


29


87.616


38.294




Derivative financial instruments


23


3.474


-




Cash and cash equivalents


13


888.564


1.070.377




 


 


2.670.671


2.645.791




Total assets


 


6.473.445


6.376.404




 


 


 


 




EQUITY


 


 


 




Share capital and share premium


14


1.020.081


1.020.081




Reserves


15


283.106


262.263




Retained Earnings


 


935.648


864.333




Total equity


 


2.238.835


2.146.677




 


 


 


 




LIABILITIES


 


 


 




Non-current liabilities


 


 


 




Interest bearing loans and borrowings


17


1.607.838


1.657.598




Lease liabilities


2,18


21.264


-




Deferred income tax liabilities


19


182.065


151.873




Retirement benefit obligations


20


147.074


132.539




Provisions


21


22.797


37.858




Other non-current liabilities


20


13.620


14.810




 


 


1.994.658


1.994.678




Current liabilities


 


 


 




Trade and other payables


16


1.271.809


1.226.107




Derivative financial instruments


23


-


16.387




Income tax payable


29


5.785


76.322




Interest bearing loans and borrowings


17


875.576


915.350




Lease liabilities


2,18


9.919


-




Dividends payable


 


76.863


883




 


 


2.239.952


2.235.049




Total liabilities


 


4.234.610


4.229.727




Total equity and liabilities


 


6.473.445


6.376.404




 
 
Parent Company Statement of Comprehensive Income
 




 


 


For the year ended




 


Note


31 December 2019


31 December 2018




Revenue from contracts with customers


5


8.023.563


8.967.702




Cost of sales


 


(7.563.197)


(8.287.696)




Gross profit


 


460.366


680.006




Selling and distribution expenses


24


(104.209)


(99.248)




Administrative expenses


24


(85.966)


(95.795)




Exploration and development expenses


25


(2.289)


(875)




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


26


(6.058)


(8.356)




Operating profit


 


261.844


475.732




Finance income


27


10.510


9.442




Finance expense


27


(115.800)


(136.636)




Lease finance cost 


18,27


(967)


-




Dividend income


9


195.416


318.795




Currency exchange gains / (losses)


28


(910)


2.244




Profit before income tax 


 


350.093


669.577




Income tax expense


29


(33.734)


(146.187)




Profit for the year


 


316.359


523.390




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


15


(9.835)


(10.878)




Changes in the fair value of equity instruments


15


469


(675)




 


 


(9.366)


(11.553)




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


 


 


 




Fair value gains / (losses) on cash flow hedges


15


12.890


(5.006)




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


15


1.501


(14.920)




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


 


5.025


(31.479)




Total comprehensive income for the year


 


321.384


491.911




Earnings per share

(expressed in Euro per share)


30


1,04


1,71




 
Parent Company Statement of Cash flows
 




 


 


For the year ended




 


Note


31 December 2019


31 December 2018




Cash flows from operating activities


 


 


 




Cash generated from / (used in) operations


32


459.810


557.196




Income tax received / (paid)


 


(143.204)


2.224




Net cash generated from / (used in) operating activities


 


316.606


559.420




 


 


 


 




Cash flows from investing activities


 


 


 




Purchase of property, plant and equipment & intangible assets


6,8


(160.831)


(101.318)




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


 


1.074


-




Dividends received


 


45.416


318.795




Interest received


27


10.510


9.442




Participation in share capital increase of subsidiaries and joint ventures


9


(22.680)


(21.054)




Settlement of consideration of acquisition of further equity interest in subsidiary


9


-


(39.000)




Sale of investment in subsidiaries to related parties


 


-


7.000




Net cash generated from / (used in) investing activities


 


(126.511)


173.865




 


 


 


 




Cash flows from financing activities


 


 


 




Interest paid


 


(117.527)


(131.965)




Dividends paid


 


(150.085)


(148.767)




Loans to affiliated companies


 


-


(3.600)




Acquisition of treasury shares


14


-


(683)




Proceeds from borrowings


 


231.420


440.748




Repayments of borrowings


 


(329.168)


(491.303)




Payment of lease liabilities - principal


18


(7.694)


-




Payment of lease liabilities - interest


18


(967)


-




Net cash generated from /(used in) financing activities


 


(374.021)


(335.570)




 


 


 


 




Net increase / (decrease) in cash and cash equivalents


 


(183.926)


397.715




 


 


 


 




Cash and cash equivalents at the beginning of the year


13


1.070.377


667.599




Exchange gains / (losses) on cash and cash equivalents


 


2.113


5.063




Net increase / (decrease) in cash and cash equivalents


 


(183.926)


397.715




Cash and cash equivalents at the end of the year


13


888.564


1.070.377




 
 


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