REG - Hellenic Petroleum - Annual Financial Report

HELLENiQ ENERGY Holdings SAAnnouncement

25/02/2021 16:45

RNS Number : 4121Q
  
Hellenic Petroleum S.A.
  
25 February 2021
  
 

25 February 2021




Fourth quarter / Full Year 2020 financial results




 
 
Positive FY20 results, despite COVID-19 crisis and worse refining environment in history. 
Significant progress in implementing an energy transition strategy.
 
HELLENIC PETROLEUM Group announced its 4Q/FY20 financial results, with Adjusted EBITDA coming in at €77m in 4Q20, with FY20 Adjusted EBITDA at €333m and Adjusted Net Income at €5m.
Overall results are considered satisfactory, as they were achieved amid the unprecedented drop in demand and benchmark refining margins, as well as successive lockdowns; impact on operating profitability over €350 million, while inventory losses, due to the drop of crude prices, exceeded €500m.
Since the beginning of the crisis, our key priorities have been the health and safety of staff and contractors, the uninterrupted supply of markets and our customers, as well as ensuring liquidity and taking advantage of market opportunities.
In this context, as early as February 2020, the Group implemented policies to protect staff, including testing with over 30,000 COVID-19 tests in total during the year and received the "CoVid-Shield" certification at Excellent level, for its facilities and offices, in all countries of operation. These measures  helped to detect and isolate COVID-19 cases amongst staff and allowed the uninterrupted operation of the refineries, tank depots and petrol stations, supporting a normal market supply. At the same time, our refineries maintained high production levels, with exports 11% higher in FY20, at a time when many refineries in the Med region and globally, were forced to either curtail or shut down production runs.
Liquidity was improved with refinancing of existing credit facilities as well as obtaining additional funding for risk management purposes and investments. Taking advantage of the international commodity markets in crude oil and products and the substantial tankage capacity, the Group entered and benefited from storage/contango trades to the order of $70m in 2H20. 
IFRS Reported Results benefited from the recovery of crude oil price in 4Q20, with inventory gains of €32m, reversing a small part of the losses recorded during the previous quarters.  4Q20 Reported EBITDA was €68m, vs €110m in 4Q19. 
Supporting the national effort and society to deal with the pandemic, was also a priority for the Group, with substantial contribution in infrastructure and advanced medical equipment for the National Health System, totaling €8m.
Furthermore, during 2H20 we completed successfully the full (5-year) maintenance turnaround and upgrade program of the Aspropyrgos refinery; the largest turnaround project in the history of the Group, amid significant challenges due to the pandemic. In addition to the financial performance uplift, the refinery will also benefit from improved environmental performance in energy efficiencies and emissions reduction (PM) by 50%, as more than €35m were invested in environmental projects.
Total capital expenditure during the year was approximately €295m, covering the entire range of activities with an emphasis on energy transition and digital transformation projects. During the year, the Group proceeded to the acquisition and development of a 204MW PV project in Kozani, a milestone for the implementation of Group's strategy in RES. It is noted that 20% of the total investments relate to sustainability and environmental improvement projects, with the corresponding share for 2021 exceeding 35%, marking the Group's gradual transition to cleaner forms of energy, while also improving the environmental footprint of its core business.
The BoD, considering the results, as well as the outlook for the Group, proposed to the AGM the distribution of a FY20 dividend of €0.10/share.
 
Strategy implementation - Key developments
During 4Q20, the construction works at Kozani PV plant commenced, according to schedule, despite the small delays due to COVID-19. Furthermore a Stakeholder Engagement Plan was introduced and implemented, in order to maximise the benefit for the local community. 
Regarding the HRADF sale process of DEPA Infrastructure and DEPA Commercial (65% HRADF - 35% HELLENIC PETROLEUM), in which the Group participates as joint seller for DEPA Infrastructure and potential buyer for DEPA Commercial, due diligence is in progress by qualified parties, with binding bids scheduled for March 2021; however delays in the process are expected due to COVID-19.
During 4Q20 the upgrade program at ELPEDISON's Thessaloniki CCGT plant was successfully completed; following the €20m project, capacity increased to 420MW, while its efficiency and flexibility were also significantly improved.
 
Recovery of crude prices, weak refining environment, stronger euro
International crude oil prices recovered during 4Q20 from multi-year lows recorded in 2Q20 due to the demand collapse, following the lockdowns, reflecting mainly the result of OPEC++ agreement for the significant reduction of production and sales. As a result, Brent prices averaged at $44/bbl, substantially weaker vs 4Q19 ($63/bbl). Equally on a FY basis, prices moved higher from the lows recorded in April 2020, with Brent averaging at $42/bbl, vs $64/bbl in 2019.
The Euro recovered during 2H20, with its exchange rate vs the USD at 1.19, the highest since 1Q18; in FY20, the Euro averaged at 1.14 vs 1.12 in 2019. A weaker USD has a negative effect on European refiners. 
The international refining environment deteriorated significantly during 2Q20, due to the sharp drop in demand, which recorded a small recovery in 2H20, remaining however materially lower vs 2019 levels. In 4Q20 main product cracks remained very weak, while the Brent-Urals spread improved slightly. Consequently, Med benchmark margins had a small recovery q-o-q, however close to historical lows, with FCC margins averaging at $1.0/bbl and Hydrocracking margins at $-0.1/bbl.
 
Significant demand drop in domestic fuels market 
Domestic fuel demand in FY20 was down 8% at 6.3m MT, as auto-fuels were 13% lower on average during the year, due to the mobility restrictions, while heating gasoil consumption increased by 15%, reflecting weather conditions and the lockdowns imposed. Aviation and bunkering fuels demand was significantly lower, by 67% and 33% respectively, as tourism declined sharply and coastal marine and cruise sectors activity was also weaker.
 
Sufficient liquidity with successful refinancing of bank loans. Finance costs at historical lows
The Group improved its liquidity, despite the adverse environment, with additional funding from international capital markets, as well as the banking system, with improved terms, during the year. In 4Q20, the refinancing of €900m credit facilities maturing in 4Q20/1H21 was completed, improving the Group's maturity profile.
The above led to a further significant reduction of finance cost, which came in at €104m, 10% lower y-o-y, having recorded an almost 50% decline in the last four years. FY20 Net Debt stood at €1.7bn, with gearing ratio at 47%.
Andreas Shiamishis, Group CEO, commented on results:
"This year was marked by COVID-19 pandemic and its consequences globally for all of us, with a particularly negative impact on the refining industry. As was the case for all, we faced significant challenges in maintaining safe operations and protect our staff; however, on top of that we had to deal with a negative impact on operating profitability in excess of €350m, driven by demand drop and the lowest ever refining margins.
In this unprecedented environment, we focused on the protection our staff and contractors, we managed to reduce the impact of the pandemic on our operations and ensured interrupted market supply. In addition, we maintained production at high levels, at a time where many refineries were reducing or even ceasing operations and increased our exports.
The safe and successful completion of the maintenance and upgrade program at Aspropyrgos refinery was a particular challenge, due to its scope and COVID-19 challenges arising from having over 2,500 people in the refinery on a daily basis. However, the economic benefit and environmental improvement are expected to be substantial from 2021.
As one of the largest companies in Greece, we considered it our duty to support the national effort to deal with the effects of the pandemic, with substantial contributions to the National Health System in Greece and in other countries where we operate.
Looking forward, strategic priorities along the clean energy transition and digitalization agenda were also progressed. Key milestones were the completion of the acquisition of the PV plant in Kozani, its financing with favorable terms with EBRD being an anchor investor, and the start of the construction during a very difficult period in the area. Investments in energy transition projects will gradually increase in the coming years, supporting our objective to improve our carbon footprint by 50% during this decade. 
Leaving a most difficult year for all behind us, we remain cautiously optimistic as we expect conditions to start improving in the coming quarters. In that context, despite an exceptionally challenging year, the BOD will propose to the AGM a dividend of 0.10 cents per share which reflects our commitment to the shareholders and the positive outlook for the medium term. 
These achievements reflect strong team effort and commitment of all our employees in the Group, which successfully responded to those exceptional operating conditions and I would like to thank them for their substantial contribution".
 
Key highlights and contribution for each of the main business units in 4Q/FY20 were:
REFINING, SUPPLY & TRADING
-     Refining, Supply & Trading 4Q20 Adjusted EBITDA at €43m (-43%).
-  Net production amounted to 3m MT (-5%), with sales at 3.2m MT (-8%), with FY20 at 13.8m MT and 14.4m MT respectively.
-  Realised HELPE system margin came in at $6.6/bbl in 4Q20, maintaining significant over-performance vs benchmarks.
 
PETROCHEMICALS
-  4Q20 Adjusted EBITDA came in at €10m (-49%), as the reduced propylene output, due to the maintenance of the splitter unit at the Aspropyrgos refinery had a negative impact on profitability.
 
MARKETING
-     In Domestic Marketing, while the implementation of the second lockdown in Greece, combined with the continuing decline in the aviation & bunkering market, led to lower volumes, improved operational performance and cost management kept 4Q20 profitability at the same level y-o-y. 4Q20 Comparable EBITDA came in at €10m and FY20 at €38m (-49%).
-     In International Marketing, weaker demand in all markets was offset by improved operation that limited profitability drop, with 4Q20 Comparable EBITDA at €16m (-3%), leading FY20 at €59m (-8%).
ASSOCIATE COMPANIES
- DEPA companies' contribution to consolidated Net Income for FY20 was €21m. 
- ELPEDISON EBITDA amounted to €44m in FY20, a significant increase vs last year, due to higher production and supply optimisation. 
 
HELLENIC PETROLEUM GROUP OF COMPANIES
 
Key consolidated financial indicators (prepared in accordance with IFRS)
for 4Q/FY20 are shown below:
 




€ million


4Q19


4Q20


% Δ


FY19


FY20


% Δ




P&L figures


 


 


 


 


 


 




Refining Sales Volumes ('000 ΜΤ)


3,496


3,224


-8%


15,223


14,397


-5%




Sales 


2,052


1,322


-36%


8,857


5,782


-35%




EBITDA


110


68


-38%


574


-253


-




Adjusted EBITDA 1


118


77


-35%


572


333


-42%




Net Income


-4


-17


-


164


-397


-




Adjusted Net Income 1


25


-8


-


185


5


-




Balance Sheet Items


 


 


 


 


 


 




Capital Employed


 


 


 


3,869


3,521


-




Net Debt


 


 


 


1,543


1,672


8%




Debt Gearing (Net Debt/Capital Employed)


 


 


 


40%


47%


-




 
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 2020


31 December 2019




ASSETS


 


 


 




Non-current assets


 


 


 




Property, plant and equipment


6


3.379.813


3.297.668




Right-of-use assets


2,7


235.541


242.934




Intangible assets


8


105.841


104.426




Investments in associates and joint ventures


9


416.542


384.747




Deferred income tax assets


19


72.161


59.358




Investment in equity instruments 


3


959


1.356




Loans, advances and long term assets


10


71.676


55.438




 


 


4.282.533


4.145.927




Current assets


 


 


 




Inventories


11


694.410


1.012.802




Trade and other receivables


12


544.795


748.153




Income tax receivable


29


37.699


91.391




Assets held for sale 


 


2.466


2.520




Derivative financial instruments


23


9.945


3.474




Cash and cash equivalents


13


1.202.900


1.088.198




 


 


2.492.215


2.946.538




Total assets


 


6.774.748


7.092.465




 


 


 


 




EQUITY


 


 


 




Share capital and share premium 


14


1.020.081


1.020.081




Reserves


15


273.959


276.972




Retained Earnings


 


492.457


964.972




Equity attributable to the owners of the parent


 


1.786.497


2.262.025




 


 


 


 




Non-controlling interests


 


62.340


64.548




 


 


 


 




Total equity


 


1.848.837


2.326.573




 


 


 


 




LIABILITIES


 


 


 




Non- current liabilities


 


 


 




Interest bearing loans and borrowings


17


2.131.371


1.610.094




Lease liabilities


2,18


170.896


169.357




Deferred income tax liabilities


19


32.572


213.495




Retirement benefit obligations


20


194.887


180.398




Provisions 


21


39.022


25.625




Other non-current liabilities


22


27.957


28.376




 


 


2.596.705


2.227.345




Current liabilities


 


 


 




Trade and other payables


16


1.546.844


1.401.732




Derivative financial instruments


23


4.635


-




Income tax payable


29


1.673


7.147




Interest bearing loans and borrowings


17


744.561


1.022.270




Lease liabilities


2,18


30.240


30.537




Dividends payable


 


1.253


76.861




 


 


2.329.206


2.538.547




Total liabilities


 


4.925.911


4.765.892




Total equity and liabilities


 


6.774.748


7.092.465




 
 
  
Group Consolidated statement of comprehensive income




 
 


 


       For the year ended




 


Note


31 December 2020


31 December 2019




 


 


 


 




Revenue from contracts with customers


5


5.781.791


8.856.965




 


 


 


 




Cost of sales


24


(5.817.773)


(8.051.806)




Gross profit / (loss)


 


(35.982)


805.159




 


 


 


 




Selling and distribution expenses


24


(319.897)


(329.711)




Administrative expenses


24


(132.920)


(140.012)




Exploration and development expenses


25


(5.526)


(4.843)




Other operating income and other gains


26


53.387


34.146




Other operating expense and other losses


26


(60.466)


(23.795)




 


 


 


 




Operating profit / (loss)


 


(501.404)


340.944




 


 


 


 




Finance income


27


5.646


5.843




Finance expense


27


(109.820)


(146.303)




Lease finance cost 


18,27


(10.914)


(10.081)




Currency exchange gains / (losses)


28


4.950


(1.255)




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


9


29.826


17.862




Profit / (loss) before income tax 


 


(581.716)


207.010




 


 


 


 




Income tax 


29


185.101


(43.434)




 


 


 


 




Profit / (loss) for the year


 


(396.615)


163.576




Profit / (loss) attributable to:


 


 


 




     Owners of the parent


 


(395.827)


160.798




     Non-controlling interests


 


(788)


2.778




 


 


(396.615)


163.576




Other comprehensive income / (loss):


 


 


 




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


 


 


 




Actuarial gains / (losses) on defined benefit pension plans


20


(7.381)


(12.369)




Changes in the fair value of equity instruments


15


(309)


544




Share of other comprehensive income / (loss) of associates


15


1.440


(188)




 


 


(6.250)


(12.013)




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


(22.008)


12.890




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


15


25.077


1.501




Currency translation differences and other movements


 


145


272




 


 


3.214


14.663




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


 


(3.036)


2.650




Total comprehensive income / (loss) for the year


 


(399.651)


166.226




Total comprehensive income / (loss) attributable to:


 


 


 




     Owners of the parent


 


(398.840)


163.425




     Non-controlling interests


 


(811)


2.801




 


 


(399.651)


166.226




 


 


 


 




Εarnings / (losses) per share  (expressed in Euro per share)


30


(1,30)


0,53




 
 
 
Group Consolidated statement of cash flows
 




 


 


For the year ended




 


Note


31 December 2020


31 December 2019




Cash flows from operating activities


 


 


 




Cash generated from operations


32


426.400


634.718




Income tax received / (paid)


29


23.133


(148.655)




Net cash generated from operating activities


 


449.533


486.063




 


 


 


 




Cash flows from investing activities


 


 


 




Purchase of property, plant and equipment & intangible assets


6,8


(288.055)


(241.045)




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


 


2.803


1.616




Participation in share capital increase of associates and joint ventures


9


-


(10.295)




Purchase of subsidiary, net of cash acquired


36


(6.475)


(5.341)




Share capital issue expenses


 


(51)


-




Grants received


 


337


439




Interest received


27


5.646


5.843




Prepayments for right-of-use assets


 


(1.035)


(717)




Dividends received


9


9.465


30.490




Proceeds from disposal of assets held for sale


 


-


1.334




Proceeds from disposal of investments in equity instruments


 


-


19




Net cash (used in) / generated from investing activities


 


(277.365)


(217.657)




 


 


 


 




Cash flows from financing activities


 


 


 




Interest paid on borrowings


 


(100.003)


(150.411)




Dividends paid to shareholders of the Company


31


(152.647)


(153.248)




Dividends paid to non-controlling interests


 


(1.401)


(2.246)




Participation of minority shareholders in share capital increase of subsidiary


 


34


34




Proceeds from borrowings


 


1.419.247


514.700




Repayments of borrowings


 


(1.167.609)


(625.581)




Payment of lease liabilities - principal


18


(33.563)


(30.712)




Payment of lease liabilities - interest


18


(10.914)


(10.081)




Net cash (used in) / generated from financing activities


 


(46.856)


(457.545)




 


 


 


 




Net increase/ (decrease) in cash and cash equivalents 


 


125.312


(189.139)




 


 


 


 




Cash and cash equivalents at the beginning of the year


13


1.088.198


1.275.159




Exchange (losses) / gains on cash and cash equivalents 


 


(10.608)


2.179




Net increase / (decrease) in cash and cash equivalents


 


125.312


(189.139)




Cash and cash equivalents at end of the year


13


1.202.901


1.088.198




 
 
  
Parent Company Statement of Financial Position
 




 


 


As at




 


Note


31 December 2020


31 December 2019




ASSETS


 


 


 




Non-current assets


 


 


 




Property, plant and equipment


6


2.766.635


2.693.794




Right-of-use assets


7


32.157


32.084




Intangible assets


8


8.094


8.704




Investments in subsidiaries, associates and joint ventures


9


1.064.566


1.045.138




Investment in equity instruments


3


587


965




Loans, advances and long-term assets


10


42.956


22.089




 


 


3.914.995


3.802.774




 


 


 


 




Current assets


 


 


 




Inventories


11


599.613


899.760




Trade and other receivables


12


489.979


791.257




Income tax receivable


29


33.830


87.616




Derivative financial instruments


23


9.945


3.474




Cash and cash equivalents


13


992.748


888.564




 


 


2.126.115


2.670.671




Total assets


 


6.041.110


6.473.445




 


 


 


 




EQUITY


 


 


 




Share capital and share premium


14


1.020.081


1.020.081




Reserves


15


279.576


283.106




Retained Earnings


 


520.475


935.648




Total equity


 


1.820.132


2.238.835




 


 


 


 




LIABILITIES


 


 


 




Non-current liabilities


 


 


 




Interest bearing loans and borrowings


17


2.064.808


1.607.838




Lease liabilities


18


21.279


21.264




Deferred income tax liabilities


19


2.773


182.065




Retirement benefit obligations


20


159.782


147.074




Provisions


21


22.287


22.797




Other non-current liabilities


20


12.685


13.620




 


 


2.283.614


1.994.658




Current liabilities


 


 


 




Trade and other payables


16


1.427.067


1.271.809




Derivative financial instruments


23


4.635


-




Income tax payable


29


450


5.785




Interest bearing loans and borrowings


17


494.675


875.576




Lease liabilities


18


9.284


9.919




Dividends payable


 


1.253


76.863




 


 


1.937.364


2.239.952




Total liabilities


 


4.220.978


4.234.610




Total equity and liabilities


 


6.041.110


6.473.445




 
 
 
Parent Company Statement of Comprehensive Income
 




 


 


For the year ended




 


Note


31 December 2020


31 December 2019




 


 


 


 




Revenue from contracts with customers


5


5.114.813


8.023.563




 


 


 


 




Cost of sales


24


(5.417.177)


(7.563.197)




 


 


 


 




Gross profit/(loss)


 


(302.364)


460.366




 


 


 


 




Selling and distribution expenses


24


(95.983)


(104.209)




 


 


 


 




Administrative expenses


24


(78.536)


(85.966)




 


 


 


 




Exploration and development expenses


25


(1.123)


(2.289)




 


 


 


 




Other operating income and other gains


 


38.444


15.592




 


 


 


 




Other operating expense and other losses


 


(37.715)


(21.650)




 


 


 


 




Operating profit/(loss)


 


(477.277)


261.844




 


 


 


 




Finance income


27


9.727


10.510




 


 


 


 




Finance expense


27


(102.724)


(115.800)




 


 


 


 




Lease finance cost 


18,27


(1.388)


(967)




 


 


 


 




Dividend income


9


51.533


195.416




 


 


 


 




Currency exchange gains/(losses)


28


4.988


(910)




 


 


 


 




Profit/(Loss) before income tax 


 


(515.141)


350.093




 


 


 


 




Income tax 


29


176.377


(33.734)




 


 


 


 




Profit/(Loss) for the year


 


(338.764)


316.359




 


 


 


 




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


(6.311)


(9.835)




Changes in the fair value of equity instruments


15


(288)


469




 


 


(6.599)


(9.366)




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


(22.008)


12.890




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


15


25.077


1.501




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


 


(3.530)


5.025




Total comprehensive income/(loss) for the year


 


(342.294)


321.384




Earnings/(Losses) per share

(expressed in Euro per share)


30


(1,11)


1,04




 
 
Parent Company Statement of Cash flows
 




 


 


For the year ended




 


Note


31 December 2020


31 December 2019




Cash flows from operating activities


 


 


 




Cash generated from operations


32


312.109


459.810




Income tax received / (paid)


 


33.170


(143.204)




Net cash generated from operating activities


 


345.279


316.606




 


 


 


 




Cash flows from investing activities


 


 


 




Purchase of property, plant and equipment & intangible assets


6,8


(208.118)


(160.831)




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


 


4.846


1.074




Dividends received


 


161.533


45.416




Interest received


27


9.727


10.510




Participation in share capital increase of subsidiaries and joint ventures


9


(12.043)


(22.680)




Net cash used in investing activities


 


(44.055)


(126.511)




 


 


 


 




Cash flows from financing activities


 


 


 




Interest paid


 


(98.323)


(117.527)




Dividends paid


31


(152.647)


(150.085)




Proceeds from borrowings


 


1.412.971


231.420




Repayments of borrowings


 


(1.342.771)


(329.168)




Payment of lease liabilities - principal


18


(10.393)


(7.694)




Payment of lease liabilities - interest


18


(1.388)


(967)




Net cash generated used in financing activities


 


(192.551)


(374.021)




 


 


 


 




Net increase / (decrease) in cash and cash equivalents


 


108.673


(183.926)




 


 


 


 




Cash and cash equivalents at the beginning of the year


13


888.564


1.070.377




Exchange (losses)/gains on cash and cash equivalents


 


(4.489)


2.113




Net increase / (decrease) in cash and cash equivalents


 


108.673


(183.926)




Cash and cash equivalents at the end of the year


13


992.748


888.564




 
 

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