REG - Hellenic Petroleum - Fourth Quarter/ Full Year 2016 Financial Results <Origin Href="QuoteRef">HEPr.AT</Origin>

HELLENiQ ENERGY Holdings SAAnnouncement

24/02/2017 07:05

RNS Number : 7364X
Hellenic Petroleum S.A.
23 February 2017
PRESS RELEASE
23 February 2017
Fourth quarter / Full year 2016 financial results
Reported Net Income at record high of 329m, despite weaker benchmark refining margins by 25% 
HELLENIC PETROLEUM Group announced its FY16 results, according to IFRS. In FY16, the Group achieved significantly higher profitability, for the second consecutive year, following losses in 2013 and 2014, despite a 25% drop in benchmark refining margins, reporting the strongest reported results on record; Reported EBITDA came in at 836m, while Net Income amounted to 329m, vs NI of 45m in FY15 and -329m in FY14. Adjusted results, removing the effect of 102m of inventory gains, due to the recovery of international oil prices, were sustained for the second year at historical highs, with Adjusted EBITDA at 731m and Adjusted Net Income at 265m, vs losses of 117m in 2013 and marginal profit of 2m in 2014.
Record high production and exports
Group refineries reported a 16% production growth in FY16, at 14.8m MT, the strongest performance on record, fully capturing the high availability of unitsand crude optionality, recording over performance vs benchmark margins. Exports reached a historical high, at 8.6m MT, representing 56% of total sales. All Group activities reported positive results, with Petchems increasing contribution to 100m, also with higher sales. Fuels Marketing Adjusted EBITDA amounted to 100m, with most of our subsidiaries increasing their share in respective markets.
Stronger financial position, lower interest expense and stronger cash flows
During 2016 the Group, for the second consecutive year, achieved strong operating cash flows (Adjusted EBITDA - Capex) of 605m, higher vs 2015 (593m) and significantly increased vs those of 2014 (281m) and 2013 (66m), further improving and de-risking Group balance sheet.
Strong operating cash flows and the improved position of the Group in financial markets, following successful negotiation and harmonisation in financial ratios and debt covenants in eurobonds and bank facilities, enabled the decrease of gross debt by 389m, which came in at 2,842m in FY16, with obvious benefits for the Group, reaffirmed by the successful issue of the new 5-year, 375m Eurobond, with a 4.875% coupon.
Furthermore, improved liquidity, combined with the agreements for direct supply from national oil companies of Iran, Iraq, Saudi Arabia and Egypt, enabled the realization of opportunities in the Med crude pricing, with significant benefits for the Group in its financial performance, operations and security of supply.
Following the improvement of balance sheet structure, total equity increased by 352m, to 2,142m. FY16 Net Debt amounted to 1,759m, with gearing ratio at 45% and capital employed at 3,903m, reflecting an improved balance sheet structure.
Increased market share in the domestic market, despite marginally lower demand 
Domestic fuels demand was marginally higher by 0.26% in FY16 (ground fuels consumption lower by 0,81%, vs marine & aviation market higher by 0,91%), amounting to 10,424k MT, vs 10,451k MT in 2015. 
Domestic Fuels Marketing total sales increased by 7.8%, at 3.538k MT; market share was also higher in all products ranging between 0.3% and 8.1%, with total increase of 2.4%. The development of company controlled network was also significant in 2016, with both EKO and BP penetrating the market, with high value consumer proposition in products and services.
Key strategic developments
In the context of an international tender process, HELLENIC PETROLEUM was announced as preferred bidder for the award of hydrocarbons exploration and exploitation rights in offshore "block 10" in Kyparissiakos Gulf area.
Regarding the sale process of 66% of DESFA share capital to SOCAR, it did not materialise to a transaction. The Group, in cooperation with the HRADF will assess their next steps.
Furthermore, following a tender process conducted by RAE in December 2016 for the construction of PV projects with a total capacity of 40 MW, the Group submitted successful offers for all its 3 projects, with total installed capacity of 8,6 MW. The Group will proceed with the development of these projects in the next few months.
Dividend Distribution
On the basis of the positive 2016 results and the improved financial position of the Group, the BoD of HELLENIC PETROLEUM decided to propose to the AGM the distribution of 0,20/share.
4Q16 Results - key developments
Recovery of crude oil prices
OPEC's decision to reduce crude oil production and exports led to the recovery of international crude oil prices, with Brent averaging $51/bbl, the highest since 3Q15.
A heavier refinery maintenance schedule in 4Q16 affected products' supply-demand balances, leading to the recovery of key product cracks q-o-q, supporting Med benchmark refining margins, with FCC averaging $5.4/bbl, vs $4,7/bbl in 4Q15 and Hydrocracking at $5.5/bbl vs $6.6/bbl last year. On a FY16 basis the two key benchmark margins came in at $5.0/bbl, $1.5/bbl lower (-25%) vs 2015.
4Q16 Results
Adjusted EBITDA amounted to 215m (+17%), with Adjusted Net Income at 82m (+27%). Higher refining contribution, on account of operational performance and strong refining margins, as well as improved performance in Petchems and Marketing were the key results drivers. Thessaloniki refinery safely and successfully completed a planned 4-week, full turnaround program, in line with schedule. The refinery was back in operation during 4Q16, with improved financial contribution.
Reported results benefited significantly from inventory gains of 82m, due to crude oil price recovery and the agreement for an insurance compensation of HELLENIC PETROLEUM relating to the post start-up operational issues of the flexicoker unit at Elefsina refinery during the 2013-14 period, with Reported Net Income at 145m.
The Group recorded another quarter of strong cash flow, with operating cash flows (Adjusted EBITDA - capex) at 171m, sustaining the balance sheet de-resking process. 
Key highlights and contribution for each of the main business units in 4Q16 were:
REFINING, SUPPLY & TRADING
- Refining, Supply & Trading 4Q16 Adjusted EBITDA at 169m.
- Production amounted to 3.7 million tonnes, affected by the lower utilisation at Thessaloniki refinery, due to maintenance, with white products' yield at 84%
- Exports amounted to 2m MT, slightly lower vs last year, accounting for 53% of total sales of 3.8m MT.
PETROCHEMICALS
- Despite weaker PP benchmark margins, Petchems profitability was sustained at high levels, with Adjusted EBITDA at 25m, while sales were 8% higher at 64k tonnes. 
MARKETING
- Marketing Adjusted EBITDA in 4Q16 amounted to 20m, vs 17m LY (+17%).
- Market share gains were the key driver of Domestic Marketing profitability, with Adjusted EBITDA at 9m. 
- International Marketing was affected by lower margins in Bulgaria and Serbia, with Adjusted EBITDA at 11m.
ASSOCIATED COMPANIES
- DEPA Group contribution to consolidated Net Incomecame in at 15m, due to significant demand increase from gas-fired electricity generators and weather conditions.
- Elpedison EBITDA at 11m in 4Q16.
Key consolidated financial indicators (prepared in accordance with IFRS) for 4Q16 are shown below:
 million
4Q15
4Q16
% 
FY15
FY16
% 
P&L figures






Refining Sales Volumes ('000 )
4,070
3,830
-6%
14,258
15,618
10%
Sales 
1,803
1,873
4%
7,303
6,680
-9%
EBITDA
31
303
-
444
836
88%
Adjusted EBITDA 1
184
215
17%
758
731
-
Net Income
-60
145
-
45
329
-
Adjusted Net Income 1
65
82
27%
268
265
-1%
Balance Sheet Items






Capital Employed



2,913
3,903
34%
Net Debt



1,122
1,759
57%







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 6 countries.
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 2016
31 December 2015
ASSETS



Non-current assets



Property, plant and equipment
6
3.302.923
3.385.270
Intangible assets
7
108.294
117.062
Investments in associates and joint ventures
8
689.607
678.637
Deferred income tax assets
17
100.973
239.538
Available-for-sale financial assets
3
1.626
523
Loans, advances and long term assets
9
91.131
85.022


4.294.554
4.506.053
Current assets



Inventories
10
929.164
662.025
Trade and other receivables
11
868.331
752.142
Derivative financial instruments
21
15.192
-
Cash, cash equivalents and restricted cash
12
1.081.580
2.108.364


2.894.267
3.522.531
Total assets

7.188.821
8.028.583




EQUITY



Share capital
13
1.020.081
1.020.081
Reserves
14
469.788
443.729
Retained Earnings

549.891
220.506
Capital and reserves attributable to owners of the parent

2.039.760
1.684.316




Non-controlling interests

101.875
105.954




Total equity

2.141.635
1.790.270




LIABILITIES



Non- current liabilities



Borrowings
16
1.456.204
1.597.954
Deferred income tax liabilities
17
42.736
45.287
Retirement benefit obligations
18
110.912
95.362
Provisions for other liabilities and charges
19
9.306
6.405
Trade and other payables
20
259.644
22.674


1.878.802
1.767.682
Current liabilities



Trade and other payables
15
1.777.909
2.795.378
Derivative financial instruments
21
-
34.814
Current income tax liabilities

3.534
6.290
Borrowings
16
1.386.299
1.633.033
Dividends payable

642
1.116


3.168.384
4.470.631
Total liabilities

5.047.186
6.238.313
Total equity and liabilities

7.188.821
8.028.583
Group Consolidated statement of comprehensive income


For the year ended

Note
31 December 2016
31 December 2015




Sales

6.679.923
7.302.939
Cost of sales

(5.672.795)
(6.608.357)
Gross profit

1.007.128
694.582




Selling and distribution expenses

(279.912)
(339.901)
Administrative expenses

(128.828)
(118.328)
Exploration and development expenses
23
(2.167)
(536)
Other operating (expenses) / income- net
24
30.050
9.427




Operating profit

626.271
245.244
Finance income
25
5.129
8.797
Finance expense
25
(205.909)
(209.842)
Currency exchange gains / (losses)
26
20.773
(26.753)
Share of profit of investments in associates and joint ventures
8
19.407
21.518




Profit before income tax 

465.671
38.964




Income tax (expense) / credit
27
(136.936)
6.063
Profit for the year

328.735
45.027
Other comprehensive income:



Items that will not be reclassified to profit or loss:



Actuarial gains/(losses) on defined benefit pension plans

(7.776)
1.615
Share of other comprehensive income of associates
14
(869)
-


(8.645)
1.615
Items that may be reclassified subsequently to profit or loss:



Changes in the fair value on available-for-sale financial assets
14
(6.267)
(255)
Transfer of available-for-sale reserve to operating profit
14, 24
6.414
-
Fair value gains / (losses) on cash flow hedges
14
15.862
(4.802)
Derecognition of gains/(losses) on hedges through comprehensive income
14
19.642
24.548
Currency translation differences and other movements

(1.076)
(603)


34.575
18.888




Other comprehensive income for the year, net of tax

25.930
20.503




Total comprehensive income for the year

354.665
65.530
Profit / (loss) attributable to:



 Owners of the parent

329.760
46.684
 Non-controlling interests

(1.025)
(1.657)


328.735
45.027
Total comprehensive income attributable to:



 Owners of the parent

355.819
67.239
 Non-controlling interests

(1.154)
(1.709)


354.665
65.530
Basic and diluted earnings per share
(expressed in Euro per share)
28
1,08
0,15
Group Consolidated statement of cash flows


For the year ended

Note
31 December 2016
31 December 2015
Cash flows from operating activities



Cash generated from operations
30
(317.366)
494.359
Income tax paid

(16.159)
(34.648)
Net cash generated (used in) / from operating activities

(333.525)
459.711




Cash flows from investing activities



Purchase of property, plant and equipment & intangible assets

(125.719)
(165.253)
Acquisition of subsidiary, net of cash acquired

(350)
-
Proceeds from disposal of property, plant and equipment & intangible assets

2.168
828
Expenses paid relating to share capital increase of subsidiary

-
(772)
Grants received

1.431
1.182
Interest received

5.129
8.797
Dividends received
8
1.139
18.289
Participation in share capital (increase)/ decrease of associates
8
-
18
Proceeds from disposal of available for sale financial assets

-
771
Net cash generated from / (used in) investing activities

(116.202)
(136.140)




Cash flows from financing activities



Interest paid

(190.479)
(200.793)
Dividends paid to shareholders of the Company

(473)
(64.004)
Dividends paid to non-controlling interests

(2.925)
(2.770)
Movement in restricted cash
12
(1.969)
44.444
Proceeds from borrowings

507.732
420.924
Repayments of borrowings

(900.799)
(226.690)
Net cash generated from / (used in) financing activities

(588.913)
(28.889)




Net (decrease) / increase in cash and cash equivalents 

(1.038.640)
294.682




Cash and cash equivalents at the beginning of the year
12
1.952.808
1.647.842
Exchange gains / (losses) on cash and cash equivalents 

9.887
10.284
Net (decrease)/ increase in cash and cash equivalents

(1.038.640)
294.682
Cash and cash equivalents at end of the year
12
924.055
1.952.808
Parent Company Statement of Financial Position


As at

Note
31 December 2016
31 December 2015
ASSETS



Non-current assets



Property, plant and equipment
6
2.718.798
2.774.026
Intangible assets
7
6.490
8.371
Investments in subsidiaries, associates and joint ventures
8
655.265
656.326
Deferred income tax assets
17
38.839
177.639
Available-for-sale financial assets

1.017
50
Loans, advances and long-term assets
9
35.109
16.654


3.455.518
3.633.066




Current assets



Inventories
10
839.306
580.747
Trade and other receivables
11
1.036.420
1.001.818
Derivative financial instruments
21
15.192
-
Cash, cash equivalents and restricted cash
12
888.783
1.839.156


2.779.701
3.421.721
Total assets

6.235.219
7.054.787




EQUITY



Share capital
13
1.020.081
1.020.081
Reserves
14
469.754
438.818
Retained Earnings

100.315
(234.008)
Total equity

1.590.150
1.224.891




LIABILITIES



Non-current liabilities



Borrowings
16
1.460.281
1.536.414
Retirement benefit obligations
18
88.521
77.500
Provisions for other liabilities and charges
19
6.829
3.000
Trade and other payables
20
246.405
12.400


1.802.036
1.629.314
Current liabilities



Trade and other payables
15
1.691.973
2.744.965
Derivative financial instruments
21
-
34.814
Borrowings
16
1.150.418
1.419.687
Dividends payable

642
1.116


2.843.033
4.200.582
Total liabilities

4.645.069
5.829.896
Total equity and liabilities

6.235.219
7.054.787
Parent CompanyStatement of Comprehensive Income


For the year ended

Note
31 December 2016
31 December 2015




Sales

5.992.446
6.584.471




Cost of sales

(5.291.281)
(6.202.430)




Gross profit

701.165
382.041




Selling and distribution expenses

(68.559)
(123.818)
Administrative expenses

(81.516)
(74.609)
Exploration and development expenses
23
(283)
(890)
Other operating income/(expenses) - net
24
31.081
(185)
Dividend income

38.348
32.659




Operating profit

620.236
215.198




Finance income
25
13.541
20.663
Finance expense
25
(189.015)
(187.235)
Finance (expenses)/income - net

(175.474)
(166.572)




Currency exchange gains / (losses)
26
21.462
(25.901)
Profit before income tax 

466.224
22.725




Income tax
27
(131.901)
4.816
Profit for the year

334.323
27.541




Other comprehensive income:



Items that will not be reclassified to profit or loss: 



Actuarial (losses)/gains on defined benefit pension plans
14
(4.568)
917


(4.568)
917
Items that may be reclassified subsequently to profit or loss:



Changes in the fair value on available-for-sale financial assets
14,24
(6.414)
-
Transfer of available-for-sale reserve to operating profit
14
6.414
-
Fair value gains / (losses) on cash flow hedges
14
15.862
(4.802)
Derecognition of gains/(losses) on hedges through comprehensive income
14
19.642
24.548
Other Comprehensive income for the year, net of tax

30.936
20.663
Total comprehensive income for the period

365.259
48.204
Basic and diluted earnings per share
(expressed in Euro per share)
28
1,09
0,09
Parent CompanyStatement of Cash flows


For the year ended

Note
31 December 2016
31 December 2015
Cash flows from operating activities



Cash (used in) / generated from operations
30
(395.355)
436.769
Income tax paid

(1.279)
(16.993)
Net cash (used in) / generated from operating activities

(396.634)
419.776




Cash flows from investing activities



Purchase of property, plant and equipment & intangible assets

(91.161)
(134.691)
Proceeds from disposal of property, plant and equipment & intangible assets

82
812
Grants received

-
1.182
Dividends received

38.348
32.659
Interest received
25
13.541
20.663
Participation in share capital increase of subsidiaries & associates

(9.711)
(3.500)
Net cash used in investing activities

(48.901)
(82.875)




Cash flows from financing activities



Interest paid

(180.425)
(186.577)
Dividends paid

(474)
(64.011)
Movement in restricted cash

(1.969)
44.444
Repayments of borrowings

(839.789)
(326.743)
Proceeds from borrowings

505.968
475.892
Net cash used in financing activities

(516.689)
(56.995)




Net (decrease) / increase in cash and cash equivalents

(962.224)
279.906




Cash and cash equivalents at the beginning of the year
12
1.683.600
1.393.262
Exchange gains / (losses) on cash and cash equivalents

9.882
10.432
Net (decrease) / increase in cash and cash equivalents

(962.224)
279.906
Cash and cash equivalents at the end of the year
12
731.258
1.683.600

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