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

HELLENiQ ENERGY Holdings SAAnnouncement

01/09/2017 07:05

RNS Number : 5137P
Hellenic Petroleum S.A.
31 August 2017
PRESS RELEASE
31 August 2017
Second quarter / first half 2017 financial results
Higher production and sales, supply optimisation and stronger benchmark margins lead to improved operating performance 
HELLENIC PETROLEUM Group announced second quarter and first half financial results, with 2Q17 Adjusted EBITDA at 228m (+46%) and Adjusted Net Income at 98m, significantly up compared to last year, while 1H17 Adjusted EBITDA came to 457m (+40%) and Adjusted Net Income to 224m (vs 108m in 1H16). Refining, Supply & Trading performance was the key driver for results improvement, while Fuels Marketing also recorded improved performance.
Key factors for the improved results were stronger benchmark margins, increased over-performance vs benchmarks, mainly due to the realisation of opportunities in the Med crude supply and pricing, as well as improved operations and higher production. More specifically, production and sales increased further, with total turnover at 4.2m MT (+7%) in 2Q16 and 8.3m MT in 1H17 (vs 7.4m MT in 1H16), while exports, at 4.5m MT in 1H17 (+7%), accounted for 55% of total. Domestic market sales to aviation & bunkering, were significantly higher, up 20% and 19% respectively while sales to industrial customers were also up.
On 31 July 2017, the Group raised an additional 79m with a retap on its existing HPF plc 47/8% October 2021 notes through private placement, with a yield of 3.33%. The transaction was the first, across the major European securities exchanges, to make use of the new capital markets regulation and is in line with Group's strategy for diversification of the funding base, improvement of financial position and ultimately reduction of funding costs, which in 2Q17 amounted to 42m (-16% vs 2Q16).
In terms of Reported IFRS results, those were negatively affected by the decline in crude oil and product prices; as a result, 2Q17 Reported Net Income came in at 44m, vs 72m in 2Q16, with 1H17 NI at 168m (+62%).
Weaker crude oil prices and USD
Recovery of production in Libya, Nigeria and the US led to lower crude oil prices, despite control of output by OPEC member states; as a result Brent averaged $51/bbl in 2Q17, lower vs 1Q17 ($55/bbl), however remained higher than 2Q16.
Macro and political developments in Eurozone and the US resulted to the strengthening of the Euro vs USD, averaging 1.12.
The notable strength of fuel oil cracks, to the highest level of last years, was the key driver of Med benchmark refining margins, while diesel cracks recorded a small increase. Med FCC benchmark margins averaged $6.1/bbl, significantly higher vs 2Q16, while Hydrocracking came in at $4.4/bbl vs $5.1/bbl last year.
Increased aviation & bunkering fuels demand 
Domestic fuels demand was 3% lower in 2Q17, with total volumes at 1.5m MT. The marine & aviation market was higher, as improved market conditions in bunkering led demand up significantly (+23%), while increased tourism flows had a material positive impact on aviation fuels consumption (+12%). 
Improved balance sheet, lower finance costs, high operational cash flows
The Group's financial position remains strong with continuously improving key indicators and ratios, as per plan, following the completion of the Group's strategic investment plan. The repayment of the HPF plc 8% May 2017 notes, the reduction of gross debt to 2.6bn, its lowest levels in the last 4 years, as well as a number of renegotiations of funding cost, were the key drivers of the decrease in interest costs.
Operating cash flows (Adjusted EBITDA - Capex) amounted to 382m in 1H17, vs 277m in 1H16, enabling better management of debt obligations and working capital. Net Debt in 2Q17 was maintained at 1.8bn, unchanged vs the last two quarters. 
Key developments
In E&P, the planned exploration works at Patraikos Gulf area continued, while the Lease Agreement for onshore areas "Arta-Preveza" and NW Peloponisos" were signed on 25 May 2017, while negotiations for offshore blocks 1 and 10 are in process. Furthermore, HELLENIC PETROLEUM, through its participation to a JV with TOTAL and EXXON MOBIL, submitted an application of interest for exploration in offshore areas off Crete and a tender process from the Ministry on Energy and the Environment is expected.
Regarding the 35% participation on DESFA share capital, a sale process for the full participation of the Group and 31% owned by the State was launched, attracting interest from international companies active in the sector.
Works for repairing the damage that was reported at Elefsina refinery on 10 July 2017, as well as the extended maintenance schedule which was combined with the repair works at the same time, continue according to plan and the refinery is expected to return to normal operation during September.
Key highlights and contribution for each of the main business units in 2Q/1H17 were:
REFINING, SUPPLY & TRADING
- Refining, Supply & Trading 2Q17 Adjusted EBITDA at 180m (+69%), with 1H17 at 371m (+52%) 
- 1H17 sales came in at 8.3m MT, 11% higher.
- 2Q17 production amounted to 3.9m MT, with white products' yield at 84%, unchanged vs last few quarters.
PETROCHEMICALS
- Planned maintenance activities at Thessaloniki PP plant had a negative impact on profitability, with 2Q17 Adjusted EBITDA at 24m (-7%), while 1H17 came in at 51m (+2%). 
MARKETING
- 2Q17 Marketing Adjusted EBITDA at 26m (+4%), taking 1H17 to 40m (+8%)
- Domestic Marketing volumes were significantly higher in all markets for another quarter, leading 2Q17 Adjusted EBITDA at 12m (+6%). 
- International Marketing recorded a small increase in profitability, with 2Q17 Adjusted EBITDA at 14m.
ASSOCIATED COMPANIES
- DEPA Group participation to consolidated Net Incomecame in at 8m, due to higher DESFA contribution, which offset the impact of lower demand from gas-fired electricity generators, as well as other market segments on DEPA results.
- Elpedison's EBITDA at 1m in 2Q17, as the flexibility remuneration mechanism was not re-established for gas-fired units.
Key consolidated financial indicators (prepared in accordance with IFRS) for 2Q/1H17 are shown below:
 million
2Q16
2Q17
% 
1H16
1H17
% 
P&L figures






Refining Sales Volumes ('000 )
4,006
4,275
7%
7,449
8,284
11%
Sales 
1,693
2,018
19%
2,940
4,095
39%
EBITDA
205
152
-28%
334
378
11%
Adjusted EBITDA 1
156
228
46%
326
457
40%
Net Income
72
44
-39%
104
168
62%
Adjusted Net Income 1
38
98
-
108
224
-
Balance Sheet Items






Capital Employed



3,607
4,028
12%
Net Debt



1,688
1,799
7%
Debt Gearing (ND/ND+E)



47%
45%
-
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
30 June 2017
31 December 2016
ASSETS
Non-current assets
Property, plant and equipment
11
3,294,792
3,302,923
Intangible assets
12
107,640
108,294
Investments in associates and joint ventures
701,692
689,607
Deferred income tax assets
62,646
100,973
Available-for-sale financial assets
3
4,622
1,626
Loans, advances and long term assets
88,051
91,131
4,259,443
4,294,554
Current assets
Inventories
13
886,488
929,164
Trade and other receivables
14
900,980
868,331
Derivative financial instruments
3
-
15,192
Cash, cash equivalents and restricted cash
15
835,096
1,081,580
2,622,564
2,894,267
Total assets
6,882,007
7,188,821
EQUITY
Share capital
16
1,020,081
1,020,081
Reserves
17
388,387
469,788
Retained Earnings
717,207
549,891
Capital and reserves attributable to owners of the parent
2,125,675
2,039,760
Non-controlling interests
98,733
101,875
Total equity
2,224,408
2,141,635
LIABILITIES
Non-current liabilities
Borrowings
18
1,238,135
1,456,204
Deferred income tax liabilities
50,685
42,736
Retirement benefit obligations
119,789
110,912
Provisions for other liabilities and charges
9,791
9,306
Trade and other payables
19
173,052
259,644
1,591,452
1,878,802
Current liabilities
Trade and other payables
19
1,583,654
1,777,909
Derivative financial instruments
3
14,675
-
Derivative financial instruments
-
-
Current income tax liabilities
6,908
3,534
Borrowings
18
1,400,912
1,386,299
Dividends payable
59,998
642
3,066,147
3,168,384
Total liabilities
4,657,599
5,047,186
Total equity and liabilities
6,882,007
7,188,821


Group Consolidated Statement of Comprehensive Income


For the six month period ended

For the three month period ended

Note
30 June 2017
30 June 2016

30 June 2017
30 June 2016
Sales
4
4,095,304
2,939,810

2,017,710
1,692,809
Cost of sales

(3,592,414)
(2,517,486)

(1,799,484)
(1,444,397)
Gross profit

502,890
422,324

218,226
248,412
Selling and distribution expenses

(133,488)
(143,996)

(67,254)
(74,594)
Administrative expenses

(63,044)
(62,751)

(33,150)
(35,589)
Exploration and development expenses

(208)
(2,185)

(79)
(113)
Other operating income / (losses) - net
5
(14,698)
22,579

(7,366)
18,375
Operating profit 

291,452
235,971

110,377
156,491
Finance income
6
2,438
2,411

1,174
423
Finance expense
6
(90,538)
(100,662)

(42,887)
(50,245)
Currency exchange (losses) / gains 
7
(6,848)
10,871

(5,994)
(585)
Share of profit/ (loss) of investments in associates and joint ventures
8
30,659
(3,140)

42
(2,422)
Profit before income tax 

227,163
145,451

62,712
103,662
Income tax expense
9
(59,518)
(41,753)

(18,891)
(31,561)
Profit for the period

167,645
103,698

43,821
72,101
Other comprehensive income/ (loss) :






Items that will not be reclassified to profit or loss:






Actuarial losses on defined benefit pension plans
17
(2,219)
(5,300)

(2,219)
(5,300)


(2,219)
(5,300)

(2,219)
(5,300)
Items that may be reclassified subsequently to profit or loss:






Changes in the fair value on available-for-sale financial assets

2,125
(4,990)

2,111
(60)
Derecognition of gains on hedges through comprehensive income
17
1,979
19,642

-
19,642
Revaluation of land and buildings

(1,669)
-

-
-
Fair value (losses) / gains on cash flow hedges 
17
(21,431)
13,269

(10,031)
16,425
Currency translation differences and other movements

167
(1,273)

227
(545)
Other comprehensive (loss) / income for the period, net of tax

(21,048)
21,348

(9,912)
30,162
Total comprehensive income for the period

146,597
125,046

33,909
102,263
Profit attributable to:






 Owners of the parent

167,452
106,865

43,631
74,457
 Non-controlling interests

193
(3,167)

190
(2,356)


167,645
103,698

43,821
72,101
Total comprehensive income attributable to:






 Owners of the parent

147,178
128,314

33,798
104,589
 Non-controlling interests

(581)
(3,268)

111
(2,326)


146,597
125,046

33,909
102,263
Basic and diluted earnings per share
(expressed in Euro per share)
10
0.55
0.35

0.14
0.24


Group Consolidated Statement of Cash Flows


For the six month period ended

Note
30 June 2017
30 June 2016
Cash flows from operating activities



Cash generated from / (used in) operations
20
138,257
(419,210)
Income tax paid

(2,021)
(1,964)
Net cash generated from / (used in) operating activities

136,236
(421,174)




Cash flows from investing activities



Purchase of property, plant and equipment & intangible assets
11.12
(75,355)
(48,986)
Proceeds from disposal of property, plant and equipment & intangible assets

303
354
Interest received
6
2,438
2,411
Dividends received

318
1,119
Investments in associates - net

(147)
-
Net cash used in investing activities

(72,443)
(45,102)




Cash flows from financing activities



Interest paid

(89,891)
(95,766)
Dividends paid to shareholders of the Company

(187)
(473)
Dividends paid to non-controlling interests

(2,561)
-
Movement in restricted cash
15 
11,873
(13,081)
Proceeds from borrowings

207,530
272,800
Repayments of borrowings

(417,406)
(405,658)
Net cash used in financing activities

(290,642)
(242,178)




Net decrease in cash and cash equivalents 

(226,849)
(708,454)




Cash and cash equivalents at the beginning of the period
15
924,055
1,952,808
Exchange losses on cash and cash equivalents 

(7,762)
(288)
Net decrease in cash and cash equivalents 

(226,849)
(708,454)
Cash and cash equivalents at end of the period
15
689,444
1,244,066


Parent Company Statement of Financial Position
As at
Note
30 June 2017
31 December 2016
ASSETS
Non-current assets
Property, plant and equipment
10
2,720,182
2,718,798
Intangible assets
11
7,516
6,490
Investments in subsidiaries, associates and joint ventures
652,777
655,265
Deferred income tax assets
-
38,839
Available-for-sale financial assets
3
4,019
1,017
Loans, advances and long-term assets
18,807
35,109
3,403,301
3,455,518
Current assets
Inventories
12
793,779
839,306
Trade and other receivables
13
1,062,169
1,036,420
Derivative financial instruments
3
-
15,192
Cash, cash equivalents and restricted cash
14
691,905
888,783
2,547,853
2,779,701
Total assets
5,951,154
6,235,219
EQUITY
Share capital
15
1,020,081
1,020,081
Reserves
16
389,530
469,754
Retained Earnings
261,416
100,315
Total equity
1,671,027
1,590,150
LIABILITIES
Non-current liabilities
Borrowings
17
1,203,459
1,460,281
Deferred income tax liabilities
7,748
-
Retirement benefit obligations
95,789
88,521
Provisions for other liabilities and charges
7,133
6,829
Trade and other payables
18
159,642
246,405
1,473,771
1,802,036
Current liabilities
Trade and other payables
18
1,499,263
1,691,973
Derivative financial instruments
3
14,675
-
Current income tax liabilities
1,584
-
Borrowings
17
1,230,836
1,150,418
Dividends payable
59,998
642
2,806,356
2,843,033
Total liabilities
4,280,127
4,645,069
Total equity and liabilities
5,951,154
6,235,219


Parent CompanyStatement of Comprehensive Income


For the six-month period ended

For the three month period ended

Note
30 June 2017
30 June 2016

30 June 2017
30 June 2016
Sales

3,753,656
2,641,400

1,837,341
1,531,488
Cost of sales

(3,399,532)
(2,348,533)

(1,703,615)
(1,354,112)
Gross profit

354,124
292,867

133,726
177,376
Selling and distribution expenses

(31,771)
(41,292)

(16,203)
(21,808)
Administrative expenses

(37,148)
(39,653)

(19,331)
(23,014)
Exploration and development expenses

(66)
(151)

(28)
(73)
Other operating income / (expenses) - net
5
(21,069)
8,700

(11,902)
7,438
Operating profit

264,070
220,471

86,262
139,919
Finance income
6
6,295
6,783

3,187
2,531
Finance expense
6
(81,561)
(88,019)

(38,747)
(43,539)
Finance (expenses) / income - net
6
(75,266)
(81,236)

(35,560)
(41,008)
Dividend income

33,724
38,348

33,724
38,348
Currency exchange (losses) / gains
7
(7,024)
11,305

(6,303)
(304)
Profit before income tax 

215,504
188,888

78,123
136,955
Income tax expense
8
(54,403)
(43,683)

(12,989)
(31,883)
Profit for the period

161,101
145,205

65,134
105,072
Other comprehensive income:






Items that will not be reclassified to profit or loss: 






Acruarial losses on defined benefit pension plans
16
(1,775)
(3,914)

(1,775)
(3,914)


(1,775)
(3,914)

(1,775)
(3,914)
Items that may be reclassified subsequently to profit or loss:






Changes in the fair value on available-for-sale financial assets
16
2,130
(4,993)

2,130
(70)
Fair value gains / (losses) on cash flow hedges
16
(21,431)
13,269

(12,010)
16,425
Derecognition of gains/(losses) on hedges through comprehensive income
16
1,979
19,642

1,979
19,642


(17,322)
27,918

(7,901)
35,997
Other Comprehensive income / (loss) for the period, net of tax

(19,097)
24,004

(9,676)
32,083
Total comprehensive income for the period

142,004
169,209

55,458
137,155
Basic and diluted earnings per share
(expressed in Euro per share)
9
0.53
0.48

0.21
0.34


Parent CompanyStatement of Cash flows

For the six-month period ended

Note
30 June 2017
30 June 2016
Cash flows from operating activities
Cash inflow / (outflow) from operations
19
143,812
(445,237)
Income tax paid
(15)
-
Net cash inflow / (outflow) from operating activities
143,797
(445,237)
Cash flows from investing activities
Purchase of property, plant and equipment & intangible assets
10,11
(62,446)
(36,800)
Dividends received
318
37,684
Interest received
6
6,295
6,783
Participation in share capital increase of affiliated companies
(415)
(2,000)
Net cash inflow / (outflow) from investing activities
(56,248)
5,667
Cash flows from financing activities
Interest paid
(100,811)
(90,439)
Dividends paid
(187)
(473)
Movement in restricted cash
14
11,873
(13,081)
Proceeds from borrowings
229,634
287,500
Repayments of borrowings
(406,038)
(387,689)
Net cash outflow from financing activities
(265,529)
(204,182)
Net decrease in cash and cash equivalents
(177,980)
(643,752)
Cash and cash equivalents at the beginning of the period
14
731,258
1,683,600
Exchange losses on cash and cash equivalents
(7,024)
(276)
Net decrease in cash and cash equivalents
(177,980)
(643,752)
Cash and cash equivalents at end of the period
14
546,254
1,039,572

This information is provided by RNS
The company news service from the London Stock Exchange
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IR LLFLATDILVID