REG - Hellenic Petroleum - Half-year Report <Origin Href="QuoteRef">HEPr.AT</Origin>

HELLENiQ ENERGY Holdings SAAnnouncement

25/08/2016 15:45

RNS Number : 1775I
Hellenic Petroleum S.A.
25 August 2016
PRESS RELEASE
25 August 2016
Second quarter / first half 2016 financial results
Improved results as increased production, productivity and sales offsetweaker benchmark refining margins 
Significant increase in Net Income
2Q16 HELLENIC PETROLEUM Group Adjusted EBITDA was 156m, +20% vs 2Q15(130m), leading 1H16 Adjusted EBITDA to 326m, despite the significant drop of Med benchmark FCC and hydrocracking refining margins by 35% and 12% respectively and weaker domestic market demand.
Increased operational profitability of refineries due to high availability of production units, higher output and improved overperformance, higher petrochemical sales, increased domestic retail market shares, as well as sales volumes mitigated the negative impact of weaker benchmark margins and domestic demand decline; As a result, 1H16 Group Net Income amounted to 104m, 57% higher vs 1H15, with Adjusted Net Income at 108m, improving net equity position and balance sheet.
Export growth, diversification of crude sourcing, new agreements
The doubling of exports in 2Q16 (2.3m MT vs 1.1m MT in 2Q15), that led their total sales contribution to 60%, a record high, as well as the benefits from crude optimization opportunities in international markets positively affected results. 
The implementation of the commercial agreement with NIOC, in line with the prevailing international framework and the continuous diversification of key crude suppliers, with an agreement with Rosneft, which is already effective, being the most important, supported increased optionality in crude supply and the optimisation of processing mix, with positive impact on results. 
Repayment of 400m Eurobond, lower finance costs
Financial position was further strengthened, as the $400m bond issued by HPF plc was repaid, on 16 May 2016, and the harmonization process of covenants of the outstanding Eurobonds and commercial bank term facilities was successful. Interest expense is reported 5% down vs 2Q15, and the refinancing of outstanding bonds maturing in 2017 is in progress, something that will lead to further reduction of financing cost.
Recovery of crude oil price, weaker benchmark margins
During 2Q16, reduced crude supply, due to production disruptions in Canada and Nigeria, combined with the sustained global demand increase, led to a partial recovery in international crude oil prices. Brent price averaged $47/bbl in 2Q16, recording a 30% increase compared to the beginning of the year, while US dollar was marginally lower vs 1Q16, with EURUSD rate averaging 1.13.
Increased crude oil supply in the Med, especially for the heavier grades, aided by the return of Iran to international markets, kept the Brent-Urals spread at $1.7/bbl, a 5-year high. This supported the profitability of complex refineries like Elefsinaand Aspropyrgos, that have the ability to process heavy crude grades. Benchmark Med FCC margins averaged $4.7/bbl, lower compared with last year ($7.3/bbl) with Hydrocracking margin at $5.1/bbl ($5.8/bbl).
Demand decline in domestic fuels marketin 2Q16
Domestic fuels demand, according to official market data, dropped by 3.9% in 1H16, while in 2Q16 decline was lower (-0.4%), with total consumption volume at 1.6 million tones; Aviation & Bunkering market was also lower by 3.1% in 1H16.
Auto-fuels demand recorded a decline in 2Q16, driven by a 5% drop in gasoline, while diesel demand was 1% higher. It should be noted that the comparison with last year is affected by the capital controls imposition that increased consumption in June 2015. Similarly, comparability is expected to be affected in 3Q16, due to the weaker demand in July - August 2015.
Strong operating results 
The increased mechanical availability and production of the Group's refineries was the key driver of operational profitability improvement compared to last year. All Group refineries recorded higher production and a further increase in over-performance vs benchmarks; Aspropyrgos and Elefsina have recently completed turnaround schedules, while Thessaloniki refinery is scheduled to shut-down for a full turnaround in 4Q16.
Higher availability and output of the Aspropyrgos splitter unit contributed to increased sales and improved Petrochemicals results.
Weaker auto-fuels demand in domestic market and lower margins in some Balkan markets, affected Fuels Marketing profitability in Greece and the international retail subsidiaries.
On 16 May 2016 the Group repaid its $400m bond and on June 2016 proceeded to the harmonisation of financial ratios definitions across the 2017 and 2019 Eurobonds, as well as other outstanding commercial bank term facilities that include similar definitions. During 2016 and subject to market conditions, the Group plans the refinancing of its 2017 Eurobond. 
The balance sheet of the Group is also improved, with Net Debt at 1.7bn, mainly due to the normalization of crude supply payables and capex levels, as well as the initial payments to NIOC.
Regarding the sale of 66% of DESFA share capital to SOCAR and relevant regulatory approval process, no significant development has taken place.
Key highlights and contribution for each of the main business units in 2Q16 were:
REFINING, SUPPLY & TRADING
- Refining, Supply & Trading 2Q16 Adjusted EBITDA at 107m, 35% higher vs 2Q15.
- Production amounted to 3.7 million tonnes, with sales at 3.9m tonnes and a doubling of exports to 2.3m tonnes.
- White products' yield at 84%. 
PETROCHEMICALS
- Higher PP production and sales volumes, led Adjusted EBITDA to 25m, despite weaker benchmark margins. 
MARKETING
- Marketing Adjusted EBITDA in 2Q16 amounted to 25m, vs 27m LY.
- Market share gains in retail, aviation and bunkering. Lower sales volumes in C&I, due to PPC and weaker auto-fuel demand affected Domestic Marketing profitability, with Adjusted EBITDA at 14m. 
- International Marketing was impacted by lower margins in the Bulgarian market, with Adjusted EBITDA at 14m.
ASSOCIATED COMPANIES
- DEPA Group contribution to consolidated Net Incomecame in at 7m, with higher volumes, on increased demand from gas-fired electricity generators.
- Elpedison EBITDA at 6m on higher production. The new flexibility remuneration mechanism, replacing CAC, came into force on May 2016.
Key consolidated financial indicators (prepared in accordance with IFRS) for 2Q16 are shown below:
 million
2Q15
2Q16
% 
1H15
1H16
% 
P&L figures
Refining Sales Volumes ('000 )
2,950
4,006
36%
6,565
7,449
13%
Sales 
1,785
1,693
-5%
3,664
2,940
-20%
EBITDA
144
205
42%
299
334
12%
Adjusted EBITDA 1
130
156
20%
335
326
-3%
Net Income
49
72
47%
66
104
57%
Adjusted Net Income 1
39
38
-2%
93
108
17%
Balance Sheet Items
Capital Employed
2,947
3,607
22%
Net Debt
1,115
1,688
51%
Debt Gearing (ND/ND+E)
38%
47%
-
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
30 June 2016
31 December 2015
ASSETS
Non-current assets
Property, plant and equipment
11
3.327.125
3.385.270
Intangible assets
12
112.620
117.062
Investments in associates and joint ventures
674.377
678.637
Deferred income tax assets
191.734
239.538
Available-for-sale financial assets
3.493
523
Loans, advances and other receivables
59.308
85.022
4.368.657
4.506.052
Current assets
Inventories
13
748.794
662.025
Trade and other receivables
14
785.352
752.142
Derivative financial instruments
11.540
-
Cash, cash equivalents and restricted cash
15
1.412.704
2.108.364
2.958.390
3.522.531
Total assets
7.327.047
8.028.583
EQUITY
Share capital
16
1.020.081
1.020.081
Reserves
17
465.178
443.729
Retained Earnings
327.371
220.506
Capital and reserves attributable to owners of the parent
1.812.630
1.684.316
Non-controlling interests
102.686
105.954
Total equity
1.915.316
1.790.270
LIABILITIES
Non-current liabilities
Borrowings
18
1.287.643
1.597.954
Deferred income tax liabilities
43.167
45.287
Retirement benefit obligations
105.786
95.362
Provisions for other liabilities and charges
6.869
6.405
Other long term liabilities
256.740
22.674
1.700.205
1.767.682
Current liabilities
Trade and other payables
19
1.885.488
2.795.378
Derivative financial instruments
-
34.814
Current income tax liabilities
8.777
6.290
Borrowings
18
1.816.596
1.633.033
Dividends payable
665
1.116
3.711.526
4.470.631
Total liabilities
5.411.731
6.238.313
Total equity and liabilities
7.327.047
8.028.583
Group Consolidated statement of comprehensive income
For the six month period ended
For the three month period ended
Note
30 June 2016
30 June 2015
30 June 2016
30 June 2015
(not reviewed)
(not reviewed)
Sales
2.939.810
3.664.022
1.692.809
1.784.524
Cost of sales
(2.517.486)
(3.250.207)
(1.444.397)
(1.579.993)
Gross profit
422.324
413.815
248.412
204.531
Selling and distribution expenses
(143.996)
(161.405)
(74.594)
(85.050)
Administrative expenses
(62.751)
(54.516)
(35.589)
(26.175)
Exploration and development expenses
(2.185)
(674)
(113)
(319)
Other operating income / (expenses) - net
5
17.079
8.190
12.875
3.875
Operating profit / (loss)
230.471
205.410
150.991
96.862
Finance (expenses) / income - net
6
(98.251)
(100.440)
(49.822)
(50.570)
Currency exchange gains / (losses)
7
10.871
(20.682)
(585)
18.252
Share of net result of associates
8
2.360
10.962
3.078
2.861
Profit / (loss) before income tax 
145.451
95.250
103.662
67.405
Income tax (expense) / credit
9
(41.753)
(29.017)
(31.561)
(18.335)
Profit / (loss) for the period
103.698
66.233
72.101
49.070
Other comprehensive income:
Items that will not be reclassified to profit or loss:
Actuarial gains / (losses) on defined benefit pension plans
17
(5.300)
-
(5.300)
-
(5.300)
-
(5.300)
-
Items that may be reclassified subsequently to profit or loss:
Fair value gains / (losses) on available-for-sale financial assets
(4.990)
(174)
(60)
(159)
Fair value gains / (losses) on cash flow hedges 
17
13.269
8.074
16.425
3.950
Derecognition of gains / (losses) on hedges through comprehensive income
17
19.642
28.609
19.642
28.609
Other movements and currency translation gains / (losses)
(1.273)
(479)
(545)
(476)
26.648
36.030
35.462
31.924
Other comprehensive (loss) / income for the period, net of tax
21.348
36.030
30.162
31.924
Total comprehensive (loss) / income for the period
125.046
102.263
102.263
80.994
Profit attributable to:
 Owners of the parent
106.865
66.274
74.457
47.985
 Non-controlling interests
(3.167)
(41)
(2.356)
1.085
103.698
66.233
72.101
49.070
Total comprehensive income attributable to:
 Owners of the parent
128.314
102.500
104.589
79.952
 Non-controlling interests
(3.268)
(237)
(2.326)
1.042
125.046
102.263
102.263
80.994
Basic and diluted earnings per share
(expressed in Euro per share)
10
0,35
0,22
0,24
0,16
Group Consolidated statement of cash flows
For the six month period ended
Note
30 June 2016
30 June 2015
Cash flows from operating activities
Cash generated from operations
20
(419.209)
299.511
Income and other taxes paid
(1.964)
(25.410)
Net cash generated (outflow)/inflow operating activities
(421.173)
274.101
Cash flows from investing activities
Purchase of property, plant and equipment & intangible assets
(48.986)
(78.856)
Proceeds from disposal of property, plant and equipment & intangible assets
354
198
Interest received
2.411
4.387
Dividends received
1.119
18.277
Proceeds from disposal of available for sale financial assets
-
771
Net cash generated (outflow)/inflow investing activities
(45.102)
(55.223)
Cash flows from financing activities
Interest paid
(95.766)
(103.461)
Dividends paid to shareholders of the Company
(473)
(64.004)
Proceeds from borrowings
272.800
396.023
Repayments of borrowings
(405.658)
(95.151)
Net cash generated (outflow)/inflow financing activities
(229.097)
133.407
Net (decrease) / increase in cash, cash equivalents and restricted cash
(695.372)
352.285
Cash,cash equivalents and restricted cash at the beginning of the period
15
2.108.364
1.847.842
Exchange gains / (losses) on cash, cash equivalents and restricted cash
(288)
9.612
Net (decrease) / increase in cash, cash equivalents and restricted cash
(695.372)
352.285
Cash, cash equivalents and restricted cash at end of the period
15
1.412.704
2.209.739
Parent Company Statement of Financial Position
As at
Note
30 June 2016
31 December 2015
ASSETS
Non-current assets
Property, plant and equipment
10
2.736.204
2.774.026
Intangible assets
11
8.378
8.371
Investments in subsidiaries, associates and joint ventures
651.626
656.326
Deferred income tax assets
124.157
177.639
Available-for-sale financial assets
3
3.017
50
Loans, advances and long-term assets
12
19.034
16.654
3.542.416
3.633.066
Current assets
Inventories
12
673.299
580.747
Trade and other receivables
13
960.980
1.001.818
Derivative financial instruments
3
11.540
-
Cash, cash equivalents and restricted cash
14
1.208.209
1.839.156
2.854.028
3.421.721
Total assets
6.396.444
7.054.787
EQUITY
Share capital
15
1.020.081
1.020.081
Reserves
16
462.822
438.818
Retained Earnings
(88.803)
(234.008)
Total equity
1.394.100
1.224.891
LIABILITIES
Non- current liabilities
Borrowings
17
1.312.187
1.536.414
Retirement benefit obligations
85.488
77.500
Provisions for other liabilities and charges
3.336
3.000
Other long term liabilities
246.560
12.400
1.647.571
1.629.314
Current liabilities
Trade and other payables
18
1.810.405
2.744.965
Derivative financial instruments
3
-
34.814
Borrowings
17
1.543.725
1.419.687
Dividends payable
643
1.116
3.354.773
4.200.582
Total liabilities
5.002.344
5.829.896
Total equity and liabilities
6.396.444
7.054.787
Parent Company Statement of Comprehensive Income
For the six month period ended
For the three month period ended
Note
30 June 2016
30 June 2015
30 June 2016
30 June 2015
(not reviewed)
(not reviewed)
Sales
2.641.400
3.357.750
1.531.488
1.658.395
Cost of sales
(2.348.533)
(3.079.131)
(1.354.112)
(1.534.155)
Gross profit
292.867
278.619
177.376
124.240
Selling and distribution expenses
(41.292)
(59.231)
(21.808)
(31.478)
Administrative expenses
(39.653)
(33.828)
(23.014)
(15.273)
Exploration and development expenses
(151)
(670)
(73)
(315)
Other operating income / (expenses) - net
5
8.700
1.921
7.438
1.626
Dividend income
38.348
32.659
38.348
32.526
Operating profit / (loss)
258.819
219.470
178.266
111.326
Finance (expenses) / income -net
6
(81.236)
(82.442)
(41.008)
(42.340)
Currency exchange gains / (losses)
7
11.305
(20.180)
(304)
17.134
Profit / (loss) before income tax 
188.888
116.848
136.954
86.120
Income tax expense
8
(43.683)
(28.311)
(31.883)
(18.239)
Profit / (Loss) for the period
145.205
88.537
105.071
67.881
Other comprehensive income:
Items that will not be reclassified to profit or loss: 
Acruarial gains / (losses) on defined benefit pension plans
16
(3.914)
-
(3.914)
-
(3.914)
-
(3.914)
-
Items that may be reclassified subsequently to profit or loss:
Fair value gains/(losses) on available-for-sale financial assets
16
(4.993)
-
(70)
-
Fair value gains/(losses) on cash flow hedges
16
13.269
8.073
16.425
3.949
Derecognition of gains/(losses) on hedges through comprehensive income
16
19.642
28.609
19.642
28.609
27.918
36.682
35.997
32.558
Other Comprehensive income/(loss) for the period, net of tax
24.004
36.682
32.083
32.558
Total comprehensive income/(loss) for the period
169.209
125.219
137.154
100.439
Basic and diluted earnings per share
(expressed in Euro per share)
9
0,48
0,29
0,34
0,22
Parent Company Statement of Cash flows
For the six month period ended
Note
30 June 2016
30 June 2015
Cash flows from operating activities
Cash inflow / (outflow) from operations
19
(445.237)
272.986
Income tax paid
-
(15.933)
Net cash inflow / (outflow) from operating activities
(445.237)
257.053
Cash flows from investing activities
Purchase of property, plant and equipment & intangible assets
10,11
(36.800)
(68.470)
Dividends received
37.684
23.159
Interest received
6
6.783
10.308
Participation in share capital increase of affiliated companies
(2.000)
(850)
Net cash inflow / (outflow) from investing activities
5.667
(35.853)
Cash flows from financing activities
Interest paid
(90.439)
(69.833)
Dividends paid
(473)
(64.004)
Proceeds from borrowings
287.500
354.398
Repayments of borrowings
(387.689)
(150.252)
Net cash inflow / (outflow) from financing activities
(191.101)
70.309
Net (decrease) / increase in cash, cash equivalents and restricted cash
(630.671)
291.509
Cash, cash equivalents and restricted cash at beginning of the period
14
1.839.156
1.593.262
Exchange gains / (losses) on cash, cash equivalents and restricted cash
(276)
9.629
Net (decrease) / increase in cash, cash equivalents and restricted cash
(630.671)
291.509
Cash, cash equivalents and restricted cash at end of the period
14
1.208.209
1.894.400

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