REG - Hellenic Petroleum - Fourth quarter 2015 financial results <Origin Href="QuoteRef">HEPr.AT</Origin>

HELLENiQ ENERGY Holdings SAAnnouncement

25/02/2016 17:20

RNS Number : 2108Q
Hellenic Petroleum S.A.
25 February 2016
PRESS RELEASE
25 February 2016
Fourth quarter 2015 financial results
Strong operating results reflecting strong benchmark refining margins and improved refining operations; 
marginal IFRS profits on account of falling crude oil price
HELLENIC PETROLEUM Group reported yet another strong quarter for 4Q15, with FY Adjusted EBITDA reaching 758m, the highest on record, while Adjusted Net Income amounted to 268m. Improved performance from all business units; however, Refining, Supply & Trading was the key driver, with Adjusted EBITDA more than doubling on a continuing favorable international refining environment and improved refineries operation, post the completion of the extended maintenance schedule in the second quarter of 2015 and improvements in the supply chain with positive impact on results.
Marketing companies in Greece increased sales and profitability, as the transformation program KORYFI and competitiveness improvements reduced administrative fixed costs and provided for more efficient commercial operations. International subsidiaries also recorded improved results, on the back of synergies with refining and improved local market conditions.
Petrochemicals benefited from increased vertical integration following recent investments, which combined with improved margins, led to a record high profitability.
Sales revenue and reported results, were affected by the decline in crude oil prices for a second consecutive year, with inventory losses exceeding 300m (2014: loss of 484m). Despite the challenging economic environment, Group's finance costs were reduced by 7% y-o-y, following the Eurobond issues in 2014, while Net Income came at 45m for the year (2014: loss of 369m).
Positive results strengthened the Group's financial position, allowing it to overcome the challenging domestic environment during the year, as well as to take advantage of opportunities in the market (contago trades, alternative supply crude sources). Advanced planning and effective crisis management during the bank holiday and capital controls period, ensured the smooth operation of refineries and the uninterrupted supply of the market, thus mitigating the impact on the performance of the Group.

Adjusted EBITDAper business unit (m)
http://www.rns-pdf.londonstockexchange.com/rns/2108Q_1-2016-2-25.pdf
Further crude oil price drop in 4Q15
Global oil supply surplus continued in 4Q15, while OPEC reiterated its policy to maintain production unchanged as communicated in 2014; coupled with the anticipated return of Iranian crude in the market drove prices to new lows. Brent crude oil price averaged $45/bbl, while in the first days of January prices dropped below $40/bbl, the lowest since 2004.
US dollar remained at the same level for third consecutive quarter at 1.09, significantly lower versus last year.
Crude oil oversupply, coupled with the increased global demand for gasoline and naphtha, resulted in healthy benchmark refining margins for the year, despite the fourth quarter drop. 2015 benchmark Med FCC margins averaged $6,5/bbl (2014: $3,3/bbl), with Hydrocracking margin at $6,5/bbl (2014: $3,9/bbl). It is noted that on an annual basis, Group's refineries process on average 100-110m barrels of crude oil feedstock.
Demand growth in domestic fuels market
Domestic fuels demand in 2015 amounted to 8.6 million tones, according to preliminary official market data, recording a 5% growth y-o-y, mainly on account of the significant heating gasoil demand increase (+43%). Sales of motor fuels remained at similar levels as last year, with diesel gaining 3%, offsetting corresponding losses in gasoline.
Strong operating results 
4Q15 Group Adjusted EBITDA came in at 184m, reflecting increased contribution from stronger refining margins, operations and supply optimization. Production increased, with exports growing to 2.2m tonnes, 53% of total sales. Marketing business, both in Greece and international, also improved profitability.
The continued drop in crude oil and product prices resulted in inventory losses of 148m, leading 4Q15 Reported EBITDA to 31 while Net Result amounted to -60m.
Stronger operating cashflow for another quarter allowed the increase in quantity and types of crude oil stocks, enabling further performance optimization opportunities and refineries feedstock blending. Net Debt came in at the same levels as in previous year (1.1bn), with gearing at 39%. With respect to 2016 loan maturity schedule and considering current bond markets conditions, the Group plans to repay the $400m Eurobond through cash balances and existing credit lines. Although, strong results support further deleveraging, the Group plans a return to international capital markets to secure additional capacity and funding mix optimisation as soon as conditions allow.
The regulatory approval process for the sale of 66% of DESFA shares to SOCAR, is in progress. In the context of actions for the change of transaction structure in order to become acceptable to the European regulatory authorities, a due diligence is in process from parties interested to participate in the transaction alongside SOCAR.
Exploration and Production in Greece
On 4 February 2016, following a relevant tender by the Ministry of Environment & Energy, HELLENIC PETROLEUM was selected as the preferred bidder for the lease of Arta-Preveza and NW Peloponnese areas in West Greece. As far as the West Patraikos Gulf area is concerned, geophysical studies with extended 3D seismic surveys have been completed. HELLENIC PETROLEUM is acting as operator in a JVwith Edison International SpA for this area.
Key highlights and contribution for each of the main business units in 4Q15 were:
REFINING, SUPPLY & TRADING
- Domestic Refining, Supply & Trading 4Q15 Adjusted EBITDA at 144m. 
- Production exceeded 4.2 million tonnes, on increased utilisation of all units, resulting in sales growing to 4.1 million tonnes.
- White products' yield at 89%, despite a "heavier" crude mix. 
DOMESTIC MARKETING
- Domestic Marketing Adjusted EBITDA at 3m, with significantly increased sales volumes (+14%) mainly driven by heating gasoil and bunkering fuels.
- Retail and C&I strengthened their market position and continued to gain market share, despite the economic downturn.
- The Group has agreed with BP plc to extend the right to use the BP brand for ground fuels in Greece until the end of 2020, with the option of additional 5-year renewal. 
INTERNATIONAL MARKETING
- International Marketing improved profitability with Adjusted EBITDA at 14m, mainly on the back of sales volumes growth in most markets where the Group operates.
- In 2015 the sustained increased in subsidiaries' integration with the Group refining system contributed to improved profitability.
PETROCHEMICALS
- Strong PP margins and significantly higher contribution from Thessaloniki PP plant led Adjusted EBITDA to 25m. 
ASSOCIATED COMPANIES
- DEPA Group contribution to consolidated Net Income came at 6m, with higher volumes on increased demand from gas-fired electricity generators.
- Elpedison EBITDA at 19m on increased production.


Key consolidated financial indicators (prepared in accordance with IFRS) for 4Q and FY 2015 are shown below:
 million
4Q14
4Q15
% 
FY14
FY15
% 
P&L figures






Refining Sales Volumes ('000 )
3,981
4,070
2%
13,538
14,258
5%
Sales 
2,383
1,803
-24%
9,478
7,303
-23%
EBITDA
(206)
31
-
(84)
444
-
Adjusted EBITDA 1
171
184
8%
417
758
82%
Net Income
(227)
(60)
-
(369)
45
-
Adjusted Net Income 1
53
65
24%
2
268
-
Balance Sheet Items






Capital Employed



2,870
2,913
1%
Net Debt



1,140
1,122
-2%
Debt Gearing (ND/ND+E)



40%
39%
-
Notes:
1. Calculated as Reported adjusted for inventory effects and other non-operating items. 
Note to Editors:
Founded in 1998, Hellenic Petroleum is one of the leading energy groups in South East Europe, with activities spanning across the energy value chain andpresence in 7 countries.
Further information:
V. Tsaitas, Investor Relations Officer
Tel.:  +30-210-6302399
Email: vtsaitas@helpe.gr


Group Consolidated Statement of Financial Position
As at
31 December 2015
31 December 2014
ASSETS
Non-current assets
Property, plant and equipment
3,385,270
3,398,170
Intangible assets
117,062
131,978
Investments in associates and joint ventures
678,637
682,425
Deferred income tax assets
239,538
224,788
Available-for-sale financial assets
523
1,547
Loans, advances and long term assets
85,022
86,698
4,506,052
4,525,606
Current assets
Inventories
662,025
637,613
Trade and other receivables
752,142
708,227
Cash, cash equivalents and restricted cash
2,108,364
1,847,842
3,522,531
3,193,682
Total assets
8,028,583
7,719,288
EQUITY
Share capital
1,020,081
1,020,081
Reserves
443,729
435,013
Retained Earnings
220,506
163,048
Capital and reserves attributable to owners of the parent
1,684,316
1,618,142
Non-controlling interests
105,954
110,404
Total equity
1,790,270
1,728,546
LIABILITIES
Non- current liabilities
Borrowings
1,597,954
1,811,995
Deferred income tax liabilities
45,287
40,953
Retirement benefit obligations
95,362
92,728
Provisions for other liabilities and charges
6,405
6,224
Other long term liabilities
22,674
21,861
1,767,682
1,973,761
Current liabilities
Trade and other payables
2,795,378
2,679,199
Derivative financial instruments
34,814
60,087
Current income tax liabilities
6,290
34,901
Borrowings
1,633,033
1,177,645
Dividends payable
1,116
65,149
4,470,631
4,016,981
Total liabilities
6,238,313
5,990,742
Total equity and liabilities
8,028,583
7,719,288


Group Consolidated statement of comprehensive income
For the year ended
31 December 2015
31 December 2014
Sales
7,302,939
9,478,444
Cost of sales
(6,608,357)
(9,333,608)
Gross profit
694,582
144,836
Selling and distribution expenses
(339,901)
(323,305)
Administrative expenses
(118,328)
(116,947)
Exploration and development expenses
(536)
(4,266)
Other operating (expenses) / income- net
9,427
10,770
Operating profit / (loss)
245,244
(288,912)
Finance (expenses) / income- net
(201,045)
(215,030)
Currency exchange gains / (losses)
(26,753)
(9,198)
Share of profit of investments in associates and joint ventures
21,518
28,245
Profit / (loss) before income tax
38,964
(484,895)
Income tax (expense) / credit
6,063
116,305
Profit / (loss) for the year
45,027
(368,590)
Other comprehensive income:
Items that will not be reclassified to profit or loss:
Actuarial gains/(losses) on defined benefit pension plans
1,615
(6,234)
1,615
(6,234)
Items that may be reclassified subsequently to profit or loss:
Fair value gains / (losses) on available-for-sale financial assets
(255)
375
Fair value gains / (losses) on cash flow hedges
(4,802)
(42,289)
Derecognition of gains/(losses) on hedges through comprehensive income
24,548
(3,586)
Currency translation differences and other movements
(603)
185
18,888
(45,315)
Other Comprehensive (loss) / income for the year, net of tax
20,503
(51,549)
Total comprehensive (loss) / income for the year
65,530
(420,139)
Profit / (loss) attributable to:
 Owners of the parent
46,684
(365,292)
 Non-controlling interests
(1,657)
(3,298)
45,027
(368,590)
Total comprehensive income attributable to:
 Owners of the parent
67,239
(416,881)
 Non-controlling interests
(1,709)
(3,258)
65,530
(420,139)
Basic and diluted earnings per share
(expressed in Euro per share)
0.15
(1.20)
Group Consolidated statement of cash flows
For the year ended
31 December 2015
31 December 2014
Cash flows from operating activities
Cash generated from operations
494,359
875,532
Income tax paid
(34,648)
(22,750)
Net cash generated from / (used in) used in operating activities
459,711
852,782
Cash flows from investing activities
Purchase of property, plant and equipment & intangible assets
(165,253)
(135,880)
Proceeds from disposal of property, plant and equipment & intangible assets
828
4,981
Expenses paid relating to share capital increase of subsidiary
(772)
-
Grants received
1,182
-
Interest received
8,797
8,841
Dividends received
18,289
39,221
Participation in share capital (increase)/ decrease of associates
18
(76)
Proceeds from disposal of available for sale financial assets
771
-
Net cash generated from / (used in) investing activities
(136,140)
(82,913)
Cash flows from financing activities
Interest paid
(200,793)
(196,886)
Dividends paid to shareholders of the Company
(64,004)
(363)
Dividends paid to non-controlling interests
(2,770)
(1,827)
Proceeds from borrowings
420,924
1,111,611
Repayments of borrowings
(226,690)
(827,781)
Net cash generated from / (used in) financing activities
(73,333)
84,754
Net (decrease) / increase in cash, cash equivalents and restricted cash
250,238
854,623
Cash,cash equivalents and restricted cash at the beginning of the year
1,847,842
959,602
Exchange gains / (losses) on cash, cash equivalents and restricted cash
10,284
33,617
Net (decrease) / increase in cash, cash equivalents and restricted cash
250,238
854,623
Cash, cash equivalents and restricted cash at end of the year
2,108,364
1,847,842


Parent Company Statement of Financial Position
As at
31 December 2015
31 December 2014
ASSETS
Non-current assets
Property, plant and equipment
2,774,026
2,767,874
Intangible assets
8,371
11,477
Investments in subsidiaries, associates and joint ventures
656,326
659,826
Deferred income tax assets
177,639
174,573
Available-for-sale financial assets
50
50
Loans, advances and long-term assets
16,654
142,980
3,633,066
3,756,780
Current assets
Inventories
580,747
543,783
Trade and other receivables
1,001,818
899,057
Cash, cash equivalents and restricted cash
1,839,156
1,593,262
3,421,721
3,036,102
Total assets
7,054,787
6,792,882
EQUITY
Share capital
1,020,081
1,020,081
Reserves
438,818
429,994
Retained Earnings
(234,008)
(273,388)
Total equity
1,224,891
1,176,687
LIABILITIES
Non-current liabilities
Borrowings
1,536,414
1,760,493
Retirement benefit obligations
77,500
74,495
Provisions for other liabilities and charges
3,000
3,000
Other long term liabilities
12,400
11,618
1,629,314
1,849,606
Current liabilities
Trade and other payables
2,744,965
2,614,360
Derivative financial instruments
34,814
60,087
Current income tax liabilities
-
16,901
Borrowings
1,419,687
1,010,114
Dividends payable
1,116
65,127
4,200,582
3,766,589
Total liabilities
5,829,896
5,616,195
Total equity and liabilities
7,054,787
6,792,882


Parent Company Statement of Comprehensive Income
For the year ended
31 December 2015
31 December 2014
Sales
6,584,471
8,750,184
Cost of sales
(6,202,430)
(8,873,491)
Gross profit
382,041
(123,307)
Selling and distribution expenses
(123,818)
(112,547)
Administrative expenses
(74,609)
(75,684)
Exploration and development expenses
(890)
(4,266)
Other operating income/(expenses) - net
(185)
(1,174)
Dividend income
32,659
68,974
Operating profit / (loss)
215,198
(248,004)
Finance (expenses)/income - net
(166,572)
(173,251)
Currency exchange losses
(25,901)
(5,540)
Profit / (loss) before income tax
22,725
(426,795)
Income tax
4,816
113,245
Profit / (Loss) for the year
27,541
(313,550)
Other comprehensive income:
Items that will not be reclassified to profit or loss:
Actuarial gains / (losses) on defined benefit pension plans
917
(3,939)
917
(3,939)
Items that may be reclassified subsequently to profit or loss:
Fair value losses on cash flow hedges
(4,802)
(44,773)
Derecognition of gains/(losses) on hedges through comprehensive income
24,548
(3,586)
Other Comprehensive income / (loss) for the year, net of tax
20,663
(52,298)
Total comprehensive income/(loss) for the period
48,204
(365,848)
Basic and diluted earnings per share
(expressed in Euro per share)
0.09
(1.03)


Parent Company Statement of Cash flows
For the year ended
31 December 2015
31 December 2014
Cash flows from operating activities
Cash generated from operations
436,769
691,270
Income tax paid
(16,993)
(13,440)
Net cash generated from operating activities
419,776
677,830
Cash flows from investing activities
Purchase of property, plant and equipment & intangible assets
(134,691)
(107,783)
Proceeds from disposal of property, plant and equipment & intangible assets
812
-
Grants received
1,182
-
Dividends received
32,659
48,171
Interest received
20,663
20,589
Participation in share capital increase of subsidiaries & associates
(3,500)
(13)
Net cash used in investing activities
(82,875)
(39,036)
Cash flows from financing activities
Interest paid
(186,577)
(168,930)
Dividends paid
(64,011)
(363)
Repayments of borrowings
(326,743)
(694,169)
Proceeds from borrowings
475,892
1,045,119
Net cash (used in) /generated from financing activities
(101,439)
181,657
Net increase in cash, cash equivalents and restricted cash
235,462
820,451
Cash, cash equivalents and restricted cash at beginning of the year
1,593,262
739,311
Exchange gains / (losses) on cash, cash equivalents and restricted cash
10,432
33,500
Net increase in cash, cash equivalents and restricted cash
235,462
820,451
Cash, cash equivalents and restricted cash at end of the year
1,839,156
1,593,262

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