Interim / Quarterly Report • Sep 3, 2018
Interim / Quarterly Report
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Companies Registration Number 2443/06/B/86/23
THIS HALF-YEARLY REPORT HAS BEEN PREPARED IN ACCORDANCE WITH THE PROVISIONS OF ARTICLE 5, LAW 3556/2007 AND THE CAPITAL MARKET COMMISSION'S DECISION AS REFERRED TO BY THE RELEVANT LAW
ΜAROUSSI, AUGUST, 2018
| 1. | Statements of the Chairman, Managing Director and Member of the Board of Directors on the true and fair representation of the data contained within this report4 |
|---|---|
| 2. | Board of Directors Half-Yearly Report for the Six Month Period ended 30th of June 2017 (Article 5, Law No. 3556/2007) 5 |
| 2.1. Introduction 5 | |
| 2.2. Information required as per par. 6, Article 5 of Law No. 3556/2007 5 | |
| 2.2.1. Significant Events during the 1st half of 2018 and their impact on the Financial Statements 5 |
|
| 2.2.2. Review per Segment – Performance and Financial Position for the 1st Half of 2018 – Major Risks and Uncertainties in the 2nd Half of 2018 – Prospects for the 2nd half of 2018 11 |
|
| 2.2.3. Significant Related Party Transactions (Decision No. 1/434/3.7.2007 Article 3) 16 | |
| 2.3. Additional Information of the Board of Directors' Half Yearly Financial Report (article 4 of Decision No.7/448/2007) 18 |
|
| 2.3.1. Other Financial Information 18 | |
| 2.3.2. Selected Alternative Performance Measures 19 | |
| 2.3.3. Non-Financial Information 21 | |
| 3. | Certified Auditor – Accountant's Review Report regarding the Half-Yearly Report |
| 4. | Half-Yearly Financial Statements |
| 4.1. Condensed Interim Consolidated Financial Statements | |
| 4.2. Condensed Interim Financial Statements | |
| 5. | Complimentary Information and Data pursuant to the Capital Market Commission's Decision (Government Gazette Β/2092/29.10.2007) |
| 5.1. Published Summary Financial Statements | |
| 5.2. Website |
Pursuant to the provisions of article 5, par. 2c, Law No. 3556/2007, we state that to the best of our knowledge:
The half-yearly interim condensed financial information which has been prepared in accordance with applicable accounting standards (International Financial Reporting Standards), accurately reflects the assets and liabilities, equity and financial results of HELLENIC PETROLEUM S.A. and of the subsidiaries that are included in the interim consolidated financial information of the HELLENIC PETROLEUM Group.
The Board of Directors' half-yearly report accurately represents the information required under paragraph 6, article 5, Law No. 3556/2007.
Athens, 30 August 2018
The Chairman of the Board of Directors & CEO
The Deputy Chief Executive Officer & Chief Financial Officer
The General Manager Group Strategic Planning & New Activities, Executive Board Member
Efstathios Tsotsoros Andreas Shiamishis Georgios Alexopoulos
Dear Shareholders,
This Board of Directors' report covers the six-month period ending 30.06.2018. The report has been prepared in accordance with the relevant provisions of Codified Law 2190/1920, Law 3556/2007, article 5, and decision 7/448/11.10.2007 of the Hellenic Capital Markets Commission. The Consolidated and Company Financial Statements have been prepared in accordance with the International Financial Reporting Standards (IFRS), as adopted by the European Union.
This report includes selected financial information and results of the Group (HELLENIC PETROLEUM) and the parent company HELLENIC PETROLEUM SA, description of significant events that took place during the first half financial year, a description of anticipated significant risks and uncertainties for the second half financial year, a disclosure of material transactions that took place between the Company and the Group and their related parties as well as a presentation of qualitative information and estimates relating to the development of operations of the Company and the Group for the second half of the financial year.
The global economy continued on a positive trend in the first half of 2018, mainly due to investments, industrial production and international trade. The economy is expected to maintain its growth momentum in 2018, with as global GDP growth estimated to reach 3.9%, the highest since 2011, reflecting developments in both advanced and emerging economies. Significant risks to the economic outlook are the trade protectionism through the effects of the announced measures (US tariffs on imports and retaliation from China, EU, Canada and Mexico), geopolitical risks, US sanctions against Iran and the economic crisis in Turkey with potential impact on emerging economies.
In the euro area, GDP growth increased in the first quarter of the year to 2.5% and is projected to reach 2.1% in 2018, lower than last year due to trade measures and their impact on international trade as well as Brexit negotiations evolution. Employment growth is expected to remain high, leading the
1 Bank of Greece, Monetary Policy 2017-2018, July 2018
unemployment rate to the lowest level in the last decade and demand is projected to remain the key driver of growth, mainly through an increase in the contribution of the private investments.
The improvement of the Greek economy continued for the fifth consecutive quarter. More precisely, in the first quarter of 2018, real GDP grew 2.3%, the largest annual growth since 2008, with economic activity being mainly attributable to exports. In the first half of 2018, Greek banks successfully passed the stress tests, private sector deposits grew and the credit availability stabilised, while the funding of the Greek banking system via ELA was significantly reduced.
The high portfolio of the non-performing loans, unemployment, the weak foreign investments and the geopolitical developments, remain the biggest challenges for the Greek economy. According to the Bank of Greece estimates, economic activity in Greece is expected to accelerate in the medium term with GDP growth rates of 2.0% and 2.3% for the years 2018 and 2019 respectively.
The Brent price (Platt's Dated) for the first half of 2018 averaged at \$71/bbl against \$53/bbl in the comparative period of 2017, reflecting a significant increase of 34%, which was mainly attributable to the extension of the agreement between OPEC, Russia and other countries in the direction to reduce their daily oil production, as well as US inventories and the US unilateral resumption of sanctions against Iran, while the global oil demand continued to increase.
Brent Urals spread in the first half of 2018 averaged \$1.7/bbl, 27% higher vs last year.
The decline in the product cracks, with the exception of diesel that reached the highest level in the last two and a half years, was the key factor in shaping the benchmark margins for Med refineries. Based on Reuters, FCC margin averaged \$4.1/bbl in the first half of 2018 vs \$5.3/bbl in the first half of 2017, while Hydroskimmimg amounted to \$2.4/bbl vs \$3.5/bbl.
International Product Cracks (\$/bbl)2
In 2018, the EUR was stronger against USD, with the average price at \$1.21, 12% higher vs last year, led by the political and trade developments in both US and EU, as well as the monetary policy direction, with the US Central Bank proceeding to interest rate increases.
2 Based on Brent price
Global oil demand is expected to grow by 1.65 mb/d in 2018 compared to 2017, with global consumption expectations at 98.85 mb/d. Demand in both OECD member countries and North American countries is projected to increase by 0.7% and 1.2% respectively. In 2019, an additional increase in global demand is estimated at around 1.45 mb/d, exceeding 100 mb/d.
In 2018, the oil supply outside OPEC countries is estimated to increase by 2.0 mb/d vs 2017, reaching 59.54 mb/d on average in 2018. The oil supply from OPEC countries is projected at 32.2 mb/d for 2018, -1.2% vs last year.
The domestic taxed fuels demand amounted to 3.2m MT, lower by 4.2% vs last year, based on official market data, due to the milder weather conditions that affected the heating oil consumption. On the other side, transport fuels demand increased by 2%.
Tables below present the main financial and operational Group indicators for 1H 2018:
| Operational Data | 2018 | 2017 |
|---|---|---|
| Refinery sales (in million metric tons) |
8.27 | 8.20 |
| Marketing sales (in million metric tons) |
2.24 | 2.45 |
| Refinery production (in million metric tons) |
7.65 | 7.78 |
| Group employees | 3,483 | 3,519 |
3 OPEC, Oil Market Report, July 2018
| Financial Data (in million €)4 | 2018 | 2017 |
|---|---|---|
| Net sales | 4,667 | 4,066 |
| Reported EBITDA | 473 | 378 |
| Inventory effect – Loss (gain) | -150 | 57 |
| One offs | 13 | 22 |
| Adjusted EBITDA | 336 | 457 |
| Reported net income (attributable to the | ||
| owners of the Parent Company) | 225 | 168 |
| Adjusted net income | 128 | 224 |
In the first half of 2018, adjusted EBITDA amounted to €336m (2017: €457m) and adjusted Net Income to €128m (2017: €224m). The weaker refining margins and stronger euro were the key drivers of adjusted results.
The rise in crude oil prices (+ 47% vs 1Q 2017) led to significant inventory valuation gains (€150m), as well as higher sales revenue (€4.67bn, + 15%), with Reported EBITDA at €473m. (+25%) and Reported Net Income at €225m (+34%).
The refinancing of the Group's bank loans was successfully completed, with a positive impact on the interest cost and the extension of the average maturity profile. It is worth noting that the Net Finance Costs reduced by 14% compared to the first half of 2017, on a lower gearing ratio vs last year.
| Balance Sheet / Cash Flow (in million €) | 2018 | 2017 |
|---|---|---|
| Total Assets | 7,115 | 6,882 |
| Total Equity | 2,515 | 2,224 |
| Capital Employed | 4,431 | 4,028 |
| Net Debt | 1,916 | 1,799 |
| Net Cash Flows (operating & investing cash flows) |
(41) | 64 |
| Capital Investments | (62) | (75) |
| Gearing ratio – Net Debt / Capital Employed | 43% | 45% |
At the Annual General Meeting of the Shareholders of the Company, that took place on 06.06.2018, HELLENIC PETROLEUM S.A. approved a total dividend of 2017 of € 0.40 per share. Given that an interim dividend of 0.15 per share has already been paid, the final dividend amounted to 0.25 per share. Also, on Friday, 20 July 2018, sellers ELPE and TAIPED proceeded to the signing of the agreement for sale of the 66% of the share capital of the Hellenic Gas Transmission System Operator S.A. (DESFA), (31% stake owned by HRADF and 35% stake owned by HELPE) to the Preferred Investor consortium comprising of
4 The selected alternative performance measure indicators are listed in Chapter 2.3.2
the Snam S.p.A., Enagás Internacional S.L.U. και Fluxys S.A., for a total consideration of €535 million (HELPE share: €284 m.).
HELLENIC PETROLEUM Group's main segments of business activity include:
The Group's activities during the first half of 2018 and the outlook for the second half are analysed below:
Refining, Supply and Trading of petroleum products constitute the core activity of the HELLENIC PETROLEUM Group. The Group operates in the refining sector through the parent company, HELLENIC PETROLEUM S.A. In Greece, the company operates three refineries: an FCC refinery in Aspropyrgos, a Hydrocracking refinery in Elefsina, both in Attica and a Hydroskimming refinery in Thessaloniki.
| Refinery | Annual Nominal Capacity (Κbpd) |
Crude & Intermediate products processed (ΜΤ'000 |
Final & Intermediate Products output (MT'000) |
|---|---|---|---|
| Αspropyrgos | 148 | 4,462 | 4,198 |
| Thessaloniki | 93 | 1,814 | 1,762 |
| Εlefsina | 105 | 3,018 | 2,717 |
| Inter-refinery | (1,030) | (1,031) | |
| Total | 8,264 | 7,646 |
During the 1st half of 2018, the Group's refining activity is summarized below:
For the first half of 2018, production amounted to 7.65m MT, down 2%, and sales volumes reached 8.27m MT compared to 8.20m MT in 2017 (+ 1%) due to higher exports. HELPE benchmark margin stood at \$4.5/bbl, \$0.5 lower than last year, with the differential between the Realised and the Benchmark margin remaining at high levels (\$5.7/bbl).
| st 1 Half of 2018 (MΤ'000) |
st 1 Half of 2017 (MΤ'000) |
|
|---|---|---|
| Domestic Market | 2,117 | 2,414 |
| International Sales | 1,177 | 1,280 |
| Εxports | 4,972 | 4,505 |
|---|---|---|
| Total | 8,264 | 8,200 |
Refining, supply and trading results are affected by external factors such as:
With regard to the international environment, both demand and oil production are expected to increase in the second half. In the coming months, the main risk factors likely to affect the benchmark margins are developments in the supply of crude oil, the increase in global refinery capacity due to the operation of new refineries, and the level of refinery utilization both globally and regionally. The Group's refineries are expected to continue their positive contribution, based on market conditions.
HELLENIC PETROLEUM is conducting studies and implements investments with the objective of safety improvement, energy efficiency and optimisation of its refinery units. In addition, particular attention is paid to the use of all the benefits that could potentially arise from synergies between the Group's refineries, especially with the operation of Elefsina refinery. Therefore, HELLENIC PETROLEUM is constantly seeking to improve safety and the operational performance of its refineries.
The Group is active in the marketing of oil products through its subsidiary company EKO in Greece and through its subsidiary companies in the Balkans and Cyprus.
| st 1 Half of 2018 (MT' 000) |
st 1 Half of 2017 (MT' 000) |
|
|---|---|---|
| Domestic Market | 1,153 | 1,249 |
| Bunkering and Aviation, Exports | 605 | 671 |
| Domestic Marketing Sales | 1,758 | 1,920 |
| International Marketing Sales | 478 | 526 |
| Total | 2,236 | 2,446 |
During the 1st half of 2018, marketing sales were as follows:
In Greece, EKO total sales of oil products amounted to 1,758 thousand MT, in the 1st half of 2018, decreased by -8% compared to the same period last year. The number of petrol stations amounted to 1,752 versus 1,738 last year.
The decrease in sales was mainly driven by the drop in consumption of Heating Gasoil -due to the mild weather conditions compared to last year-, as well as the reduced Industrial and bunkering fuels sales. Sales of motor and aviation fuels increased while differentiated fuels sales were significantly higher.
During 1H18, the Group's domestic marketing company managed to improve its competitive position, by increasing market shares in key products (+0.6% in auto fuels) and by offering high-quality products and services to the final consumer.
In the second half of the year, Group's domestic marketing aims to further increase sales in retail fuels by developing the network of petrol stations, as well as in aviation and bunkering fuels sales as a consequence of growing tourism.
Despite the difficult conditions of the domestic fuel market, EKO will continue implementing its business plan which focuses on increasing market share while further improving operational profitability, as well as the value offered to the consumer through innovative products & high quality services at competitive prices.
The number of petrol stations in Cyprus, Montenegro, Serbia and Bulgaria amounted to 278 (against a total of 273 in 1H17). In 1H18, total sales volumes of International Marketing activities amounted to 478 thousand tones versus 526 thousand tones due to reduced wholesale volumes in Bulgaria.
For the first half of 2018, the International Trade sector maintained its profitability at the same levels. For the second half of the year, positive performance is expected to remain subject to market conditions.
The HELLENIC PETROLEUM Group operates in the Petrochemicals sector through a Propylene production unit in the Aspropyrgos refinery, as well as through its Polypropylene (PP) and Solvents production plants in Thessaloniki.
Furthermore, the Group owns a ΒΟΡΡ film production unit (through its subsidiary "DIAXON" located in Komotini) as well as a 2,800 Μ/Τ capacity vessel for the transportation of propylene from the Aspropyrgos refinery to Northern Greece.
In the first half of 2018, total Petrochemical sales volumes amounted to 136.5 thousand tones increased by 14% versus the corresponding period in 2017.
Petrochemical sales per product are as follows:
| Product | st 1 half of 2018 (ΜΤ'000) |
st 1 Half of 2017 (ΜΤ'000) |
|---|---|---|
| Polypropylene | 107.3 | 99 |
| Solvents | 14.5 | 5 |
| ΒΟΡΡ film | 12.9 | 14 |
| Traded goods/Others | 1.9 | 2 |
| Total Sales | 136.5 | 120 |
International Petrochemicals is a cyclical, capital intensive industry with capacity surplus. Petrochemicals' margins which affect the profitability of the industry are highly volatile and driven by supply/demand conditions as well as the macro environment.
During the first half of 2018, the key performance drivers were as follows:
PP margins unchanged vs 2017.
Strong export orientation with 71% of sales of polypropylene being directed to selected Mediterranean markets.
During the 2nd half of 2018, sales volumes and margins are anticipated to remain within the business plan estimates range.
HELLENIC PETROLEUM Group is also engaged in the exploration and production of Hydrocarbons sector. Its main activities are focused in Greece:
• 25% participation in a consortium with Calfrac Well Services Ltd (75%) in the Sea of Thrace Concession, North Aegean Sea, covering a total area of approximately 1,600 sq. km.
• Participation as Operator, through its 100% subsidiary company, HELPE Patraikos (50%), in an international Joint Venture, with EDISON International (50%) to the Lease Agreement with Hellenic Republic in the offshore block of Patraikos Gulf (West), covering an area of 1,892 sq. km. The Lease Agreement was ratified by the Greek parliament and has been published in the Greek Government Gazette, as Law 4299 (Official Gazette Issue A, 221/03-10-14).
On 3rd April 2018 the Lessee, entered the 2nd Exploration Phase with the commitment of drilling of one (1) exploration well. 25% of the initial Contract Area has been relinquished to the Lessor. Following the completion of a 2D and 3D seismic survey and the seismic interpretation during the First Exploration Phase, numerous prospects and leads have been identified. Environmental studies and drilling preparations are ongoing.
• HELLENIC PETROLEUM S.A. was granted rights of hydrocarbons exploration and production for the two (2) onshore blocks of 'Arta-Preveza' and 'NW Peloponnese', as Operator with 100% working interest. The final Lease Agreements texts for the two (2) blocks were signed by the Minister of Environment & Energy and the Lessee and were ratified by the Greek Parliament, as Laws (Official Gazette Issue A', 4526/16- 03-2018 & Official Gazette Issue A', 4527/16-03-2018). For the two onshore blocks, environmental and geological studies are ongoing, whilst for 'Arta-Preveza' the preparation for the seismic acquisition programme is in progress.
• In 2017, the Lease Agreement for Block 2, West of Corfu island, was signed by the Minister of Environment & Energy and the consortium of Total E&P Greece B.V. (50%, Operator) – Edison International SpA (25%) – HELPE S.A. (25%), Also, the pre-contractual audit procedure was completed by the Court of Audit and the Lease Agreement was ratified by the Greek Parliament on 15 March 2018, as Law (Official Gazette Issue A', 4525/15.03.2018). Geological and environmental studies were in progress during the first half of 2018.
For the offshore 'Block 10', in Kyparissiakos Gulf, where HELPE S.A. has been declared as Selected Applicant, the finalization of the Lease Agreement text is expected, as well as its pre-contractual audit by the Court of Audit prior to its ratification by the Greek Parliament. For the offshore 'Block 1' of the Ionian Sea, north of Corfu, where HELPE S.A. has submitted an offer (100%, Operator), it is expected that HELPE S.A. will be declared as Selected Applicant.
• On 5th March 2018, the consortium of TOTAL E&P Greece B.V. (40%, operator), ExxonMobil Exploration & Production Greece (Crete) B.V. (40%) and HELLENIC PETROLEUM S.A. (20%) has submitted an offer for granting rights of hydrocarbons exploration and production for two (2) offshore of blocks in Crete, West Crete (20,058.40 sq. km2) and Southwest Crete (19,868.37 sq. km2) and on 3 July 2018, by Ministerial Decision, it was declared as Selected Applicant for the two areas. Additionally, the consortium of Repsol Exploracion S.A. (50%, Operator) – HELLENIC PETROLEUM S.A. (50%) has submitted an offer for the offshore block 'Ionian', Western Greece. The evaluation procedure of the offers is ongoing and it is expected to be concluded in the next months.
In Patraikos Gulf (West) Lease, environmental studies and pre-drilling operations for the first exploration commitment well are ongoing.
In the onshore blocks of Western Greece, "Arta-Preveza", geological, geophysical and environmental studies are expected to be conducted. In 2019 a seismic acquisition programme is expected to commence, which is part of the contractual commitments of the Lessee. In the onshore block of 'NW Peloponnese', where HELLENIC PETROLEUM S.A. is the Operator (100%), in the second half of 2018, environmental and geological studies are expected to be carried out.
In the offshore 'Block 2', west of Corfu island, environmental and geological studies are planned to be carried out.
Relating to the offshore 'Block 10', in Kyparissiakos Gulf, the Lease Agreement is expected to be finalized and signed within the second half of 2018.
For the two (2) offshore blocks of Crete 'Southwest Crete' and 'West Crete', the Lease Agreements are expected to be finalized and signed. Respectively, the evaluation procedure for the offshore block 'Ionian' is expected to be completed with the consortium of Repsol Exploracion S.A. (50%, Operator) – HELLENIC PETROLEUM S.A. (50%) to be declared as Selected Applicant and proceed with the finalization and signing of the Lease Agreement.
The Group's power and natural gas activities relate to the Group's participations to ELPEDISSON BV (50% HELLENIC PETROLEUM S.A., 50% EDISON) and DEPA S.A. (35% HELLENIC PETROLEUM S.A., 65% Greek State) respectively.
The results of ELPEDISON BV during the first half of 2018, were decreased compared to the same period in 2017, as margins were weak, both in the production and supply of electricity.
The main drivers of the electricity market in 1H18 were: mild winter temperatures, increased use of hydroelectric plants, higher natural gas prices and a significant increase in CO2 emission rights. Also, the significant delay in the implementation of a new "Transitional Flexibility Compensation Mechanism", following the previous Mechanism, whose operation was completed in April 2017, affected negatively.
In the retail electricity market, the Company's market share slightly decreased (June 2018: 3.18% versus June 2017: 3.38%, OOEM), despite the expansion of its customer portfolio in Low and Medium Voltage (domestic and industrial customers) mainly due to the ever-increasing competition from alternative
electricity suppliers. In 1H18, Elpedison entered the liberalized market of Natural Gas supply, expanding its customer base, mainly in the regions of Attica, Thessaloniki and Thessaly.
Elpedison BV's profitability is expected to increase in the second half of 2018. In the electricity production sector, significant role will have the implementation of the Transitional Flexibility Compensation Facility, which is expected to become operational soon. In the electricity supply sector, new actions are in place and / or planned to further expand the customer base and market share, both in electricity and in the supply of Natural Gas.
In the first half of 2018, domestic Natural Gas consumption declined by 7.2% compared to the same period of 2017, mainly due to higher gas prices (mainly in the second quarter of 2018), but also due to reduced demand from electricity producers and domestic consumers. Thus, the contribution of DEPA Group to HELLENIC PETROLEUM Group's profits declined compared to the first half of 2017, mainly due to the reduced profits of DEPA Group companies (DEPA parent, DESFA, DEDA, EPA / EDA).
In the context of the process of DEPA's transformation and reformation of its position in the retail market, during the first half of 2018, DEPA reached an agreement for the sale of 51% of ZENITH's share capital to Italian Eni Gas e Luce and, at the same time, proceeded to the purchase of 49% of Attica's EPA and EDA from Attiki Gas BV (Shell). Agreements are subject to obtain approvals from the competent authorities.
During the second half of 2018, the first stage of the reorganization of DEPA's Distribution and Retail activities is expected to be completed, with the closing of the aforementioned transactions with ENI and Shell, as well as the sale of 66% of DESFA to a consortium of the European Snam SpA, Enagas and Fluxys.
The activities of the Group are focused on oil refining, as well as petrochemicals, fuels marketing and Exploration & Production, with participation in electricity generation and trading and natural gas. Therefore, the most significant risks that could affect the Group's operations in 2Η18 are the developments that shape the supply of crude oil, fluctuations in crude oil prices, oil products demand, EUR/USD exchange rate volatility, risks of fair value fluctuations due to interest rates variations, changes in refining margins as well as the changes and utilization levels of refining capacity both globally and regionally.
The interim condensed consolidated statement of comprehensive income includes transactions between the Group and related parties. Such transactions mainly comprise sales and purchases of goods and services in the ordinary course of business.
Transactions have been carried out with the following related parties:
Athens Airport Fuel Pipeline Company S.A. (EAKAA)
Public Gas Corporation of Greece S.A. (DEPA)
| For the six month period ended | ||
|---|---|---|
| 30 June 2018 | 30 June 2017 | |
| Sales of goods and services to related parties | ||
| Associates | 360.696 | 418.467 |
| Joint ventures | 340 | 191 |
| Total | 361.036 | 418.658 |
| Purchases of goods and services from related parties | ||
| Associates | 418.412 | 436.817 |
| Joint ventures | 9.650 | 3.646 |
| Total | 428.061 | 440.463 |
| As at | ||
| 30 June 2018 | 31 December 2017 | |
| Balances due to related parties | ||
| Associates | 20.199 | 3.182 |
| Joint ventures | 934 | 1.886 |
| Total | 21.133 | 5.068 |
| Balances due from related parties | ||
| Associates | 47.230 | 37.133 |
| Joint ventures | 189 | 101 |
| Total | 47.419 | 37.234 |
HELLENIC PETROLEUM S.A. has provided letters of comfort and guarantees in favour of banks as security for loans granted by them to Elpedison B.V. The outstanding amount of these as at 30 June 2018 was €84 million (31 December 2017: €88 million).
During the six-month period ended 30 June 2018, transactions and balances with the above government related entities are as follows:
| For the six month period ended | |||
|---|---|---|---|
| 30 June 2018 | 30 June 2017 | ||
| Short-term employee benefits | 2.698 | 2.285 | |
| Post-employment benefits | 552 | 585 | |
| Termination benefits | 522 | - | |
| Total | 3.772 | 2.870 |
On the 29th of June 2018, the Company's share price closed at €7.17, 6.9% lower vs the 31st of December 2017. The average price for the 1st half of 2018 amounted to €7.92, a 44.9% increase compared to the same period in 2017. The highest was €8.79 on 31.01.2018 whilst the lowest was €7.10 on 31.05.2018.
The average trading volume in the 1st half reached 114,824 shares a day, a decrease of 20.70% from the respective volume of 2017, while the average daily turnover increased by 5.66% to €908,092.
The table below shows the average of the Company's share closing price and the average daily trading volume per month in the 1st half of 2018 compared to the same period in 2017.
| Average Closing Price (€) |
Average Trading Volumes (# shares) |
|||
|---|---|---|---|---|
| 2018 | 2017 | 2018 | 2018 | |
| January | 8.17 | 4.45 | 110,960 | 71,312 |
| February | 8.14 | 4.41 | 123,997 | 89,999 |
| March | 7.93 | 4.86 | 106,418 | 133,108 |
| April | 8.24 | 5.23 | 103,642 | 90,907 |
| May | 7.77 | 6.15 | 146,587 | 230,241 |
| June | 7.33 | 7.58 | 96,800 | 237,317 |
The following chart shows the share price evolution at the daily closing and the average trading volume in the Company's shares from 01.01.2018 up until 30.06.2018:
This Report includes certain financial measures of historical financial performance, financial position, or cash flows, which are not defined or specified under IFRS ("Alternative Performance Measures"). The Group considers that these measures are relevant and reliable in assessing the Group's financial performance and position, however such measures are not a substitute for financial measures under IFRS and should be read in conjunction with IFRS financial statements.
IFRS Reported EBITDA is defined as earnings/(loss) before interest, taxes, depreciation and amortisation, as presented in the company's reported financial statements under IFRS which is calculated by adding back depreciation and amortization to operating profit.
Adjusted EBITDA is defined as IFRS Reported EBITDA adjusted for Inventory Effect (defined as the effect of the price fluctuation of crude oil and oil product inventories on gross margin) and non-recurring items, which may include but are not limited to write-downs of non-core assets and other one-off expenses, in line with the refining industry practice ("Adjusted EBITDA"). Adjusted EBITDA is intended to provide a proxy of the operating cash flow projection (before any Capex) in an environment with stable oil and products prices.
ΙFRS Reported EBITDA and Adjusted EBITDA are indicators of the Group's underlying cash flow generation capability. The Group's management uses this information as a significant factor in determining the Group's earnings performance and operational cash flow generation both for planning purposes as well as past performance appraisal.
Adjusted Net Income is defined as the IFRS Reported Net Income as derived from HELLENIC PETROLEUM's reported financial statements under IFRS, adjusted for post-tax inventory effect (calculated as Inventory Effect times (1- statutory tax rate in Greece) and other post-tax non-recurring items at the consolidated Group financial statements.
Adjusted Net Income is presented in this report because it is considered by the Group and the Group's industry as a key measure of its financial performance.
Net Debt is calculated as total borrowings (including "current and non-current borrowings" as shown in the statement of financial position of the relevant financial statements and excluding debt from associates) less "Cash & cash equivalents and restricted cash" and "Available-for-Sale financial assets", as shown in the relevant financial statements.
Capital Employed is calculated as "Total Equity" as shown in the statement of financial position of the relevant financial statements plus Net Debt.
The tables below illustrate how the selected alternative performance measures presented in this financial report are reconciled to their most directly reconcilable line item in the financial statements for the corresponding period.
| Calculation of EBITDA, Adjusted EBITDA, Adjusted Profit after tax | ||
|---|---|---|
| $l$ million $\epsilon$ | 1H 2018 | 1H 2017 |
| Operating Profit | 379.3 | 291.5 |
| Depreciation & Amortization | 93.7 | 88.0 |
| IFRS Reported EBITDA | 473.0 | 377.6 |
| Inventory effect | $-149.7$ | 57.0 |
| Other One-off expenses* | 13.0 | 22.3 |
| Adjusted EBITDA | 336.3 | 456.9 |
| Profit After Tax | 225.2 | 167.6 |
| Taxed Inventory effect | $-106.3$ | 40.4 |
| Taxed other one-off expenses** | 9.2 | 15.9 |
| Adjusted Net Income | 128.1 | 223.9 |
| Calculation of Net Debt, Capital Employed and Gearing ratio | ||
|---|---|---|
| $l$ million $\epsilon$ | 1H 2018 | 1H 2017 |
| Borrowings LT | 1,739.0 | 1,238.1 |
| Borrowings ST | 1,087.2 | 1,400.9 |
| Cash & Cash equivalents and Restricted Cash | 909.3 | 835.1 |
| Available for sale financial assets | 1 በ | 4.6 |
| Net Debt | 1.,15.9 | 1,799.4 |
| Equity | 2,515.0 | 2.224.4 |
| Capital Employed | 4,430.9 | 4,023.8 |
| Gearing ratio (Net Debt / Capital Employed) | 43% |
* Main items include, a) for 1Η18 €10m regarding the amended prices on the CO2 emission allowances and €3m for other non-recurring items, b) for 1H17, €14m for expenses related to legal cases, €5m for valuation adjustments on balance sheet items and €3m for other non-recurring items
** Includes all one-offs post effect of applicable tax rate
HELLENIC PETROLEUM Group has adopted a Sustainable Development strategy in all of its activities and expressed its commitment through related policies. The key themes of this strategic decision are safety without accidents, financially sustainable operation, respect for the environment and society. The Group promotes the awareness of social stakeholders by publishing an annual Sustainable Development & Corporate Social Responsibility report, which refers to the performance in the areas of sustainable development and social responsibility.
Health and safety across its activities is the most important priority of the HELLENIC PETROLEUM Group. Therefore, we take all necessary safety and security measures for our employees, partners and visitors in all facilities.
The Group continuously invests in health and safety to ensure compliance with the highest standards at a national and European level. All of the Group's facilities set targets to control, measure and improve the performance in Health and Safety, with regular periodic assessments against the targets set.
During 1H18, in the framework of the Health, Safety, Environment & Sustainable Development Policy, the security inspections of all sites as well as training of personnel in fire drills, remedial measures to prevent accidents and unsafe conditions, improving instructions and safety procedures and other activities were carried out.
The diagram below shows the evolution of AIF (All Injures Frequency) and PSER (Process Safety Event Rate) indices in recent years compared to the European average (CONCAWE) as well as LWIF (Lost Workday Injury Frequency) και LWIS (Lost Workday Injury Severity).
Regarding the management of environmental issues (air emissions, liquid and solid waste), the process of reviewing the Environmental Terms of Operation of the three refineries is under way (the file for the amendment / renewal of the Environmental Terms Approval Decisions has been submitted to the relative ministry of Environment and Energy), while the implementation of interventions to comply with the new Emissions Constraints of the REF BAT Conclusions is continued.
HELLENIC PETROLEUM, steadily oriented towards circular economy, the primary objective is to reduce the production of liquid and solid waste at source, to maximize recycling and the re-use in the production process for waste streams and then to manage them in the best possible way for the environment and public health.
Regarding the participation of the refineries in the Emissions Trading System (ETS) (Phase 3, 2013-2020), the first half of 2018 successfully completed all the procedures for participation (emission verification and delivery of emissions permits for the year 2017) of the refineries, while the submission of the Improvement Reports of the monitoring plan has been launched and is expected to be completed by 30/09 according to the latest guidelines of ministry of Environment and Energy.
The carbon dioxide (CO2) emissions from the three refineries (Aspropyrgos, Elefsina and Thessaloniki), for the first half of 2018, amounted to 1.82 million tons.
The liquid waste index "gr of hydrocarbons per tn of throughput" for January - June 2018 for the Group's refineries was 3.22 gr / tn throughput, which is 13% lower than the corresponding index associated with the applicable regulatory limit (Saronic Gulf and Thermaikos Gulf). It is noted that the increase of the index (+ 35%) compared to the first half of 2017 is mainly due to the Thessaloniki refinery values, which is related to the investment project of upgrading and further improvement of the wastewater treatment plant.
The Company continued to monitor all critical developments with reference to the new European environmental legislation and to formulate new regulatory documentation and directives through its active participation in technical working groups of CONCAWE (European Union for the Environment, Health and Safety of petroleum companies) and Fuels Europe (European Oil Association).
At the national level, the Company is actively involved in the work of the SEV's Sustainable Development Council with the aim of effectively consulting the state on matters of law, as well as other relevant activities of the Association related to the Environment and Sustainable Development.
The industry in which the Group operates, requires specialized skills, training and experience. As a result, the ability to attract and retain the right human resources is an important factor in the Group's normal operation.
Any inability to find and employ competent personnel, especially highly skilled and in middle and senior management, can adversely affect the Group's operations and financial position.
The provision of a safe working environment, which in addition motivates employees and treats them with respect, giving equal opportunities to all, is a Group priority.
Relations with the employees are based on the equal treatment principle. Both the integration and the progress of each employee within the Group are judged on the basis of an employee's qualifications, performance and ambitions, without any distinction.
The internal operation of the Group's business units is based on specific principles and rules, so that there is consistency and continuity, key building blocks that guarantee successful and developmental progress. In this context, the Code of Conduct summarizes the principles governing the internal operation of the Group's Companies and determines how it operates, while the Internal Labour Regulation defines the rules governing the relationships between the Company and its staff.
As mentioned, the safety of the Group's facilities is one of the most important priorities. In occupational risk management, an emphasis is placed on prevention in order to anticipate and control all possible health and safety risks in accordance with the criteria of Greek law (Law 3850/2010), European and international codes and best practices.
In addition, safeguarding the health of our employees and ensuring for a safe working environment are core values which are crystallized through the Health Surveillance Process. Periodic medical examinations of workers take place taking into account work descriptions, age group and gender.
Employee training is another important area in a way that each employee understands the Group's strategic goals. Employee training also enables employees to define their role more effectively and develops their skills.
The Group monitors all relevant labor law (national, European, ILO), including reports on child labor, respect for human rights and working conditions, and is in full compliance with all collective and relevant international conventions.
The Group has an understanding of the impact of its activity on society, especially in areas that are adjacent to its facilities. Consequently, our communication and co-operation with the wider community and especially neighboring local communities is multidimensional, including actions concerning infrastructure projects and supporting local economic activity (with a more specific emphasis on vulnerable social groups and the younger generation). This is supported by continuous dialogue with all social partners and surveys used to identify the key issues associated with the Group's activities, as well as periodic customer satisfaction surveys, annual public opinion surveys, public debates and other forms of communication.
The results of these actions are evaluated and redefined in order to take into account and to meet the needs and expectations of stakeholders.
The Code of Conduct summarizes the principles governing the internal operation of the Group in Greece and abroad, which specify the way it operates to achieve its business goals. This serves the best interests of the stakeholders, minimizing additional risks regarding compliance and reputation of the Group. The Code summarizes the principles, according to which each individual employee who participates in the production process of the companies of the Group and all collective bodies must act within the scope of their duties, constituting a guide for everyone, and third parties cooperating with ELPE.
The procedure of accepting and reaffirming the commitment by employees is made periodically by the General Directorate of Human Resources and Administrative Services of the Group and the Code is translated into all the languages of the countries where the Group operates, as well as in English.
Since the implementing of the Code of Conduct in 2011, systematic education and training of executives and employees of companies of the Group has taken place, in the content of the Code and its applications.
ERNST & YOUNG (HELLAS) Certified Auditors – Accountants S.A. 8B Chimarras str., Maroussi 151 25 Athens, Greece
Tel: +30 210 2886 000 Fax:+30 210 2886 905 ey.com
We have reviewed the accompanying interim condensed consolidated statement of financial position of "Hellenic Petroleum S.A." and its subsidiaries ("the Group") as of 30 June 2018, and the related interim condensed consolidated statements of comprehensive income, changes in equity and cash flows for the six-month period then ended and the selected explanatory notes, that comprise the interim condensed consolidated financial information and which form an integral part of the six-month financial report required by Law 3556/2007. Management is responsible for the preparation and presentation of this interim financial information in accordance with International Financial Reporting Standards, as they have been endorsed by the European Union and applied to interim financial reporting (International Accounting Standard "IAS 34"). Our responsibility is to express a conclusion on this interim condensed consolidated financial information based on our review.
We conducted our review in accordance with the International Standard on Review Engagements 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity". A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Based on our review, nothing has come to our attention that causes us to believe that the accompanying interim condensed consolidated financial information is not prepared, in all material respects, in accordance with IAS 34.
Our review has not identified any inconsistency between the other information contained in the six-month financial report prepared in accordance with article 5 of Law 3556/2007 and the accompanying interim condensed consolidated financial information.
Athens, 30 August 2018 THE CERTIFIED AUDITOR ACCOUNTANT
CHRISTIANA PANAYIDOU S.O.E.L. R.N. 62141 ERNST & YOUNG (HELLAS) CERTIFIED AUDITORS ACCOUNTANTS S.A. Chimarras 8B Maroussi, 151 25, Greece COMPANY S.O.E.L. R.N. 107
ERNST & YOUNG (HELLAS) Certified Auditors – Accountants S.A. 8B Chimarras str., Maroussi 151 25 Athens, Greece
Tel: +30 210 2886 000 Fax:+30 210 2886 905 ey.com
We have reviewed the accompanying interim condensed statement of financial position of "Hellenic Petroleum S.A."("the Company") as of 30 June 2018, and the related interim condensed statements of comprehensive income, changes in equity and cash flows for the six-month period then ended and the selected explanatory notes, that comprise the interim condensed financial information and which form an integral part of the six-month financial report required by Law 3556/2007. Management is responsible for the preparation and presentation of this interim financial information in accordance with International Financial Reporting Standards, as they have been endorsed by the European Union and applied to interim financial reporting (International Accounting Standard "IAS 34"). Our responsibility is to express a conclusion on this interim condensed financial information based on our review.
We conducted our review in accordance with the International Standard on Review Engagements 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity". A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Based on our review, nothing has come to our attention that causes us to believe that the accompanying interim condensed financial information is not prepared, in all material respects, in accordance with IAS 34.
Our review has not identified any inconsistency between the other information contained in the six-month financial report prepared in accordance with article 5 of Law 3556/2007 and the accompanying interim condensed financial information.
Athens, 30 August 2018 THE CERTIFIED AUDITOR ACCOUNTANT
CHRISTIANA PANAYIDOU S.O.E.L. R.N. 62141
ERNST & YOUNG (HELLAS) CERTIFIED AUDITORS ACCOUNTANTS S.A. Chimarras 8B Maroussi, 151 25, Greece COMPANY S.O.E.L. R.N. 107
30 JUNE 2018
INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTH PERIOD ENDED 30 JUNE 2018 (All amounts in Euro thousands unless otherwise stated)
| Page | ||
|---|---|---|
| I. | Company Information | 3 |
| II. | Interim Condensed Consolidated Statement of Financial Position | 4 |
| III. | Interim Condensed Consolidated Statement of Comprehensive Income | 5 |
| IV. | Interim Condensed Consolidated Statement of Changes in Equity | 6 |
| V. | Interim Condensed Consolidated Statement of Cash Flows | 7 |
| VI. | Notes to the Interim Condensed Consolidated Financial Statements | 8 |
INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTH PERIOD ENDED 30 JUNE 2018 (All amounts in Euro thousands unless otherwise stated)
| Directors | Efstathios Tsotsoros - Chairman of the Board & Chief Executive Officer (From 17/04/2018) Andreas Shiamishis - Deputy Chief Executive Officer Ioannis Psichogios - Member Georgios Alexopoulos - Member Theodoros-Achilleas Vardas - Member Georgios Grigoriou - Member Georgios Papakonstantinou - Member (From 06/06/2018) Theodoros Pantalakis - Member Spiridon Pantelias - Member Κonstantinos Papagiannopoulos - Member Dimitrios Kontofakas - Member Vasileios Kounelis - Member Loudovikos Kotsonopoulos - Member (From 17/04/2018) |
|---|---|
| Other Board Members during the year |
Grigorios Stergioulis - Chief Executive Officer (Until 17/04/2018) Panagiotis Ofthalmides - Member (Until 06/06/2018) |
| Registered Office | 8A Chimarras Str GR 151 25 - Marousi |
| Registration number | 2443/06/B/86/23 |
| General Commercial Registry |
000296601000 |
| Audit Company | ERNST & YOUNG (HELLAS) Certified Auditors - Accountants S.A. 8B Chimarras Str 151 25 Marousi Greece |
| As at | ||||
|---|---|---|---|---|
| Note | 30 June 2018 | 31 December 2017 | ||
| ASSETS | ||||
| Non-current assets | ||||
| Property, plant and equipment | 10 | 3.281.051 | 3.311.893 | |
| Intangible assets | 11 | 106.135 | 105.684 | |
| Investments in associates and joint ventures | 691.632 | 701.635 | ||
| Deferred income tax assets | 70.773 | 71.355 | ||
| Investment in equity instruments | 2,3 | 957 | 1.857 | |
| Loans, advances and long term assets | 88.493 | 89.626 | ||
| 4.239.041 | 4.282.050 | |||
| Current assets | ||||
| Inventories | 12 | 1.049.322 | 1.056.393 | |
| Trade and other receivables | 2,13 | 904.069 | 791.205 | |
| Derivative financial instruments | 3 | 13.396 | 11.514 | |
| Cash, cash equivalents and restricted cash | 14 | 909.323 | 1.018.913 | |
| 2.876.110 | 2.878.025 | |||
| Total assets | 7.115.151 | 7.160.075 | ||
| EQUITY | ||||
| Share capital and share premium | 15 | 1.020.081 | 1.020.081 | |
| Reserves | 16 | 270.964 | 358.056 | |
| Retained Earnings | 1.161.551 | 930.522 | ||
| Capital and reserves attributable to owners of the parent | 2.452.596 | 2.308.659 | ||
| Non-controlling interests | 62.412 | 62.915 | ||
| Total equity | 2.515.008 | 2.371.574 | ||
| LIABILITIES | ||||
| Non-current liabilities | ||||
| Borrowings | 17 | 1.738.995 | 920.234 | |
| Deferred income tax liabilities | 174.232 | 131.611 | ||
| Retirement benefit obligations | 137.942 | 133.256 | ||
| Provisions for other liabilities and charges | 5.694 | 6.371 | ||
| Trade and other payables | 26.218 | 28.700 | ||
| 2.083.081 | 1.220.172 | |||
| Current liabilities | ||||
| Trade and other payables | 18 | 1.293.905 | 1.661.457 | |
| Income tax payable Borrowings |
17 | 60.979 1.087.218 |
5.883 1.900.269 |
|
| Dividends payable | 74.960 | 720 | ||
| 2.517.062 | 3.568.329 | |||
| Total liabilities | 4.600.143 | 4.788.501 | ||
| Total equity and liabilities | 7.115.151 | 7.160.075 |
| E. Tsotsoros | A. Shiamishis | S. Papadimitriou |
|---|---|---|
| Chairman of the Board & Chief Executive Officer |
Deputy Chief Executive Officer & Chief Financial Officer |
Accounting Director |
| For the six month period ended | For the three month period ended | |||||
|---|---|---|---|---|---|---|
| Note | 30 June 2018 | 30 June 2017 | 30 June 2018 | 30 June 2017 | ||
| Sales | 4 | 4.666.909 | 4.065.702 | 2.498.523 | 1.999.949 | |
| Cost of sales | (4.071.307) | (3.562.812) | (2.126.620) | (1.781.723) | ||
| Gross profit | 595.602 | 502.890 | 371.903 | 218.226 | ||
| Selling and distribution expenses | (154.463) | (133.488) | (79.988) | (67.254) | ||
| Administrative expenses | (66.393) | (63.044) | (34.264) | (33.150) | ||
| Exploration and development expenses | (29) | (208) | 97 | (79) | ||
| Other operating income/(expenses) and other gains/(losses)- | ||||||
| net | 5 | 4.646 | (14.698) | 2.623 | (7.366) | |
| Operating profit | 379.363 | 291.452 | 260.371 | 110.377 | ||
| Finance income | 1.750 | 2.438 | 775 | 1.174 | ||
| Finance expense | (77.766) | (90.538) | (38.258) | (42.887) | ||
| Currency exchange gains/ (losses) | 6 | 4.528 | (6.848) | 6.646 | (5.994) | |
| Share of profit of investments in associates and joint | ||||||
| ventures | 7 | 15.083 | 30.659 | 1.188 | 42 | |
| Profit before income tax | 322.958 | 227.163 | 230.722 | 62.712 | ||
| Income tax expense | 8 | (97.785) | (59.518) | (79.769) | (18.891) | |
| Profit for the period | 225.173 | 167.645 | 150.953 | 43.821 | ||
| Other comprehensive income/ (loss) : | ||||||
| Items that will not be reclassified to profit or loss: | ||||||
| Actuarial losses on defined benefit pension plans | 16 | - | (2.219) | - | (2.219) | |
| Changes in the fair value of equity instruments | 2, 16 | (442) | 2.125 | (324) | 2.111 | |
| Reduction in value of land | - | (1.669) | - | - | ||
| (442) | (1.763) | (324) | (108) | |||
| Items that may be reclassified subsequently to profit or loss: |
||||||
| Derecognition of (losses) / gains on hedges through comprehensive income |
16 | (14.920) | 1.979 | - | - | |
| Fair value gains /(losses) on cash flow hedges | 16 | 16.256 | (21.431) | (548) | (10.031) | |
| Currency translation differences and other movements | 16 | (357) 979 |
167 (19.285) |
(232) (780) |
227 (9.804) |
|
| Other comprehensive income/(loss) for the period, net | ||||||
| of tax | 537 | (21.048) | (1.104) | (9.912) | ||
| Total comprehensive income for the period | 225.710 | 146.597 | 149.849 | 33.909 | ||
| Profit attributable to: | ||||||
| Owners of the parent | 223.613 | 167.452 | 149.341 | 43.631 | ||
| Non-controlling interests | 1.560 | 193 | 1.612 | 190 | ||
| 225.173 | 167.645 | 150.953 | 43.821 | |||
| Total comprehensive income attributable to: Owners of the parent |
224.152 | 147.178 | 148.298 | 33.798 | ||
| Non-controlling interests | 1.558 | (581) | 1.551 | 111 | ||
| 225.710 | 146.597 | 149.849 | 33.909 | |||
| Basic and diluted earnings per share | ||||||
| (expressed in Euro per share) | 9 | 0,73 | 0,55 | 0,49 | 0,14 |
| Attributable to owners of the Parent Non |
|||||||
|---|---|---|---|---|---|---|---|
| Share | Retained | Controling | Total | ||||
| Note | Capital | Reserves | Earnings | Total | interests | Equity | |
| Balance at 1 January 2017 | 1.020.081 | 469.788 | 549.891 | 2.039.760 | 101.875 | 2.141.635 | |
| Changes of the fair value of equity investments | 16 | - | 2.127 | - | 2.127 | (2) | 2.125 |
| Currency translation gains/(losses) and other movements | 16 | - | 177 | - | 177 | (10) | 167 |
| Reduction in value of land | 16 | - | (907) | - | (907) | (762) | (1.669) |
| Actuarial losses on defined benefit pension plans | 16 | - | (2.219) | - | (2.219) | - | (2.219) |
| Fair value losses on cash flow hedges | 16 | - | (21.431) | - | (21.431) | - | (21.431) |
| Derecognition of gains on hedges through comprehensive income | 16 | - | 1.979 | 1.979 | - | 1.979 | |
| Other comprehensive losses | - | (20.274) | - | (20.274) | (774) | (21.048) | |
| Profit for the period | - | - | 167.452 | 167.452 | 193 | 167.645 | |
| Total comprehensive (loss)/ income for the period | - | (20.274) | 167.452 | 147.178 | (581) | 146.597 | |
| Tax on intra-group dividends | - | (136) | (136) | - | (136) | ||
| Dividends to non-controlling interests | - | - | - | - | (2.561) | (2.561) | |
| Dividends | - | (61.127) | - | (61.127) | - | (61.127) | |
| Balance at 30 June 2017 | 1.020.081 | 388.387 | 717.207 | 2.125.675 | 98.733 | 2.224.408 | |
| Balance at 31 December 2017 as originally presented | 1.020.081 | 358.056 | 930.522 | 2.308.659 | 62.915 | 2.371.574 | |
| Change in accounting policy | 2 | - | 166 | (3.418) | (3.252) | - | (3.252) |
| Restated total equity as at 1 January 2018 | 1.020.081 | 358.222 | 927.104 | 2.305.407 | 62.915 | 2.368.322 | |
| Changes of the fair value of equity investments | 16 | - | (444) | - | (444) | 2 | (442) |
| Derecognition of losses on hedges through comprehensive income | 16 | - | (14.920) | - | (14.920) | - | (14.920) |
| Fair value gains on cash flow hedges | 16 | - | 16.256 | - | 16.256 | - | 16.256 |
| Currency translation losses and other movements | 16 | - | (353) | - | (353) | (4) | (357) |
| Other comprehensive income/(loss) | - | 539 | - | 539 | (2) | 537 | |
| Profit for the period | - | - | 223.613 | 223.613 | 1.560 | 225.173 | |
| Total comprehensive income for the period | - | 539 | 223.613 | 224.152 | 1.558 | 225.710 | |
| Share based payments | 16 | - | (73) | (970) | (1.043) | - | (1.043) |
| Acquisition of treasury shares | 16 | - | (511) | - | (511) | - | (511) |
| Issue of treasury shares to employees | 16 | - | 1.042 | - | 1.042 | - | 1.042 |
| Tax on intra-group dividends | - | - | (123) | (123) | - | (123) | |
| Dividends to non-controlling interests | - | - | - | - | (2.061) | (2.061) | |
| Dividends | 16 | - | (88.335) | 11.927 | (76.408) | - | (76.408) |
| Transfer of grant received to tax free reserves Balance at 30 June 2018 |
16 | - | 80 | - | 80 | - | 80 |
| 1.020.081 | 270.964 1.161.551 | 2.452.596 | 62.412 | 2.515.008 |
| For the six month period ended | |||
|---|---|---|---|
| Note | 30 June 2018 | 30 June 2017 | |
| Cash flows from operating activities | |||
| Cash generated from operations | 19 | 31.448 | 138.257 |
| Income tax received/(paid) | 2.572 | (2.021) | |
| Net cash generated from operating activities | 34.020 | 136.236 | |
| Cash flows from investing activities | |||
| Purchase of property, plant and equipment & intangible assets | 10,11 | (60.531) | (75.355) |
| Proceeds from disposal of property, plant and equipment & intangible assets | 40 | 303 | |
| Settlement of consideration of acquisition of further equity interest in subsidiary | 24 | (16.000) | - |
| Purchase of subsidiary, net of cash acquired | 24 | (1.298) | - |
| Grants received | 80 | - | |
| Interest received | 1.750 | 2.438 | |
| Dividends received | - | 318 | |
| Investments in associates - net | - | (147) | |
| Proceeds from disposal of investments in equity instruments | 266 | - | |
| Net cash used in investing activities | (75.693) | (72.443) | |
| Cash flows from financing activities | |||
| Interest paid | (69.941) | (89.891) | |
| Dividends paid to shareholders of the Company | (214) | (187) | |
| Dividends paid to non-controlling interests | (2.061) | (2.561) | |
| Movement in restricted cash | 14 | 144.445 | 11.873 |
| Acquisition of treasury shares | 16 | (511) | - |
| Proceeds from borrowings | 407.810 | 207.530 | |
| Repayments of borrowings | (407.272) | (417.406) | |
| Net cash generated from/ (used in) financing activities | 72.256 | (290.642) | |
| Net increase/(decrease) in cash and cash equivalents | 30.583 | (226.849) | |
| Cash and cash equivalents at the beginning of the period | 14 | 873.261 | 924.055 |
| Exchange gains/(losses) on cash and cash equivalents | 4.272 | (7.762) | |
| Net increase/(decrease) in cash and cash equivalents | 30.583 | (226.849) | |
| Cash and cash equivalents at end of the period | 14 | 908.116 | 689.444 |
INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTH PERIOD ENDED 30 JUNE 2018 (All amounts in Euro thousands unless otherwise stated)
Hellenic Petroleum S.A. (the "Company" or "Hellenic Petroleum") is the parent company of the Hellenic Petroleum Group (the "Group"). The Group operates in the energy sector predominantly in Greece, South Eastern Europe and the East Mediterranean. The Group's activities include refining and marketing of oil products, production and marketing of petrochemical products and exploration for hydrocarbons. The Group also provides engineering services. Through its investments in DEPA and Elpedison B.V. the Group also operates in the natural gas sector and in the production and trading of electricity power.
The interim condensed consolidated financial statements are prepared in accordance with International Accounting Standard 34 (IAS 34) – Interim Financial Reporting, and present the financial position, results of operations and cash flows of the Group on a going concern basis. Management has concluded that the going concern basis of preparation of the accounts is appropriate.
The interim condensed consolidated financial statements have been prepared in accordance with the historical cost basis, except for the following:
Where necessary, comparative figures have been reclassified to conform to changes in the presentation of the current period.
These interim condensed consolidated financial statements do not include all information and disclosures required for the annual consolidated financial statements and should be read in conjunction with the annual consolidated financial statements for the year ended 31 December 2017, which can be found on the Group's website www.helpe.gr.
The interim condensed consolidated financial statements for the six month period ended 30 June 2018 have been authorised for issue by the Board of Directors on 30 August 2018.
The preparation of the interim condensed consolidated financial statements, in accordance with IFRS, requires the use of certain critical accounting estimates and assumptions. It also requires management to exercise its judgment in the process of applying the Group's accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the interim condensed consolidated financial statements are disclosed where considered necessary. Estimates and judgements are discussed in detail in the annual consolidated financial statements for the year ended 31 December 2017, are continuously evaluated and are based on historical experience and other factors, including expectations of future events as assessed to be reasonable under the present circumstances.
The accounting principles and calculations used in the preparation of the interim condensed consolidated financial statements are consistent with those applied in the preparation of the consolidated financial statements for the year ended 31 December 2017 and have been consistently applied in all periods presented in this report except for the following IFRS's which have been adopted by the Group as of 1 January 2018. The Group applies for the first time, IFRS 15 Revenue from Contracts with Customers and IFRS 9 Financial Instruments. As required by IAS 34, the nature and effect of these changes are disclosed below. Several other amendments and interpretations apply for the first time in 2018 but do not have a significant impact on the interim condensed consolidated financial statements of the Group for the six month period ended 30 June 2018.
IFRS 9 Financial Instruments: The standard introduces new requirements for classification and measurement, impairment, and hedge accounting.
The Group adopted the new standard as of 1 January 2018 without restating comparative information. The cumulative effect of the adjustments arising from the new requirements are therefore recognized in the opening balance of retained earnings on 1 January 2018.
The following table shows the adjustments recognized for each individual line item. Line items that were not affected by the changes have not been included. The adjustments are explained in more detail below.
Impact on the statement of financial position (increase/(decrease)) as at 31 December 2017 as published:
| Balance sheet extract | Adjustments | 31 December 2017 As published |
IFRS 9 | 1 January 2018 after effect of IFRS 9 |
|---|---|---|---|---|
| Non-current assets | ||||
| Investments in associates and joint ventures | (b) | 701.635 | (1.750) | 699.885 |
| Deferred income tax assets | (b) | 71.355 | 582 | 71.937 |
| Available for sale financial assets | (a) | 1.857 | (1.857) | - |
| Investment in equity instruments | (a) | - | 1.857 | 1.857 |
| Current assets | ||||
| Trade and other receivables | (b) | 791.205 | (2.084) | 789.121 |
| Equity | ||||
| Reserves | (a) | 358.056 | 166 | 358.222 |
| Retained earnings | (a), (b) | 930.522 | (3.418) | 927.104 |
Under IFRS 9, financial assets are subsequently measured at fair value through profit or loss (FVPL), amortized cost, or fair value through other comprehensive income (FVOCI). The classification is based on two criteria: the Group's business model for managing the assets; and whether the instruments' contractual cash flows represent solely payments of principal and interest on the principal amount outstanding.
The financial assets (equity investments) that were classified by the Group as available-for-sale (AFS) under IAS 39, are now classified as 'Investments in equity instruments' and measured at fair value through other comprehensive income. Any changes in the fair value of such equity instruments are included in "items that will not be reclassified to profit or loss". IFRS 9 permits an entity to make an irrevocable election to designate an investment in equity instruments that is not held for trading as at fair value through other comprehensive income.
As a result of applying the classification retrospectively, the Group reclassified an amount of € 0,2 million from retained earnings to reserves.
Derivative instruments, to the extent they are not designated as effective hedges, continue to be classified as financial assets at FVPL.
The accounting for the Group's financial liabilities remain largely the same as under IAS 39.
The adoption of IFRS 9 has changed the Group's accounting for impairment losses for financial assets by replacing IAS 39's incurred loss approach with a forward-looking expected credit loss (ECL) approach. For trade receivables, the Group has applied the standard's simplified approach and has calculated ECLs based on lifetime expected credit losses. The Group has established a provision matrix that is based on the Group's historical credit loss experience, adjusted for forward-looking factors specific to the debtors and the economic environment.
For other financial assets, the ECL is based on the 12-month ECL. The 12-month ECL is the portion of lifetime ECLs that results from default events on a financial instrument that are possible within 12 months after the reporting date. However, when there has been as significant increase in credit risk since origination, the allowance will be based on the lifetime ECL.
Financial assets with contractual payments over 90 days past due constitute default events. However, in certain cases, the Group may also consider a financial asset to be in default when internal or external information indicates that the Group is unlikely to receive the outstanding contractual amounts in full before taking into account any credit enhancements held by Group.
The effect of the above change on the statement of financial position as at 1 January 2018 resulted in a decrease of retained earnings of €3,4 million, a decrease of €2,1 million in trade receivables, an increase of 0,6 million in deferred income tax assets and a decrease of €1,8 million in investment in associates and joint ventures.
(c) Hedge accounting
At the date of the initial application, all of the Group's existing hedging relationships were eligible to be treated as continuing hedging relationships under IFRS 9 and, as such, the adoption of the hedge accounting requirements of the new standard had no significant impact on the Group's financial statements. The Group's risk management policies and hedge documentation are aligned with the requirement of the new standard and hedge accounting continues to apply.
IFRS 15 Revenue from Contracts with Customers: IFRS 15 establishes a five-step model that will apply to revenue earned from a contract with a customer (with limited exceptions), regardless of the type of revenue transaction or the industry. The standard's requirements will also apply to the recognition and measurement of gains and losses on the sale of some non-financial assets that are not in the Group's ordinary activities (e.g. sales of property, plant and equipment or intangible).
As from 1 January 2018, the Group applies the new standard using the modified retrospective method, therefore the initial application did not result in any restatement of comparative data. The new standard did not have any significant impact on the Group's interim condensed consolidated financial statements, upon adoption since, no material differences from the current accounting policies were identified. Therefore it did not have any impact on retained earnings and no transition adjustments were required as a result of its application. Although the implementation of IFRS 15 does not generally represent a material change from the Group's current practices the Group revised its respective accounting policy as follows:
The Group recognizes revenue when (or as) a contractual promise to a customer (performance obligation) is fulfilled by transferring a promised good or service (which is when the customer obtains control over the promised goods or services). If a contract contains more than one performance obligation, the total transaction price of the contract is allocated among the individual, separate performance obligations based on their relative standalone selling prices. The amount of revenue recognized is the amount allocated to the satisfied performance obligation based on the consideration that the Group expects to receive in accordance with the terms of the contracts with the customers. Variable considerations are included in the amount of revenue recognized only to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognized will not occur in the future.
Options for volume related rebates are assessed by the Group to determine whether they constitute a material right that the customer would not receive without entering into that contract. For all such options that are considered as material rights, the Group assesses the likelihood of its exercise and then the portion of the transaction price allocated to the option is deferred and recognized when it is either exercised or lapsed.
Under the new requirements, the Group concluded that volume rebates constitute a material right which should be recognized over time up to the point it crystalizes. The Group provides volume rebates to customers based on thresholds specified in contracts. All such rebates are settled within the financial year and therefore the application of the new standard would have a nil effect in the annual Financial Statements. However, for the purposes of the interim condensed financial statements the Group has estimated the portion of volume rebates which corresponds to the build-up of the material right based on volumes sold to each client. The total charge to revenue for the six month period ended 30 June 2018 is €1,6m.
Revenue from contracts with customers in accordance with the Group's commercial policy is disaggregated by operating segment and distribution channel in Note 4.
(All amounts in Euro thousands unless otherwise stated)
The Group has not early adopted any other of the following standard, interpretation or amendment that has been issued but is not yet effective.
IFRS 16 Leases: The standard is effective for annual periods beginning on or after 1 January 2019. IFRS 16 sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract, i.e. the customer ('lessee') and the supplier ('lessor').
The new standard requires lessees to recognize most leases on their financial statements. Lessees will have a single accounting model for all leases, with certain exemptions. Lessor accounting is substantially unchanged.
The standard will affect primarily the accounting for the Group's operating leases. As at the reporting date, the Group has non-cancellable operating lease commitments of € 244 million. However, the Group has not yet determined to what extent these commitments will result in the recognition of an asset and a liability for future payments and how this will affect the Group's profit and classification of cash flows.
This is due to the fact that some of the commitments may be covered by the exception for short-term and lowvalue leases and some commitments may relate to arrangements that will not qualify as leases under IFRS 16.
The Group expects to complete the assessment of the impact from the implementation of the new standard by 31 December 2018.
holder of the asset there may be 'negative compensation'), to be measured at amortized cost or at fair value through other comprehensive income.
The Group's activities are primarily centred on Downstream Refining (incl. Petrochemicals) & Marketing of petroleum products; with secondary activities relating to exploration of hydrocarbons and power generation and trading. As such, the Group is exposed to a variety of financial and commodity markets risks including foreign exchange and commodity price risk, credit risk, liquidity risk, cash flow risk and interest-rate risk. In line with international best practices and within the context of local markets and legislative framework, the Group's overall risk management policies aim at reducing possible exposure to market volatility and / or mitigating its adverse effects on the financial position of the Group to the extent possible. In general, the key factors that impact the Group's operations are summarised as follows:
Greek Macros: Following a period of economic recession between 2009-2016, during which real GDP fell by 26%, the Greek economy returned to positive growth rates in 2017, with GDP rising by 1,4%, supported mainly by exports of goods and services, as well as investments. The upward trend of the economy continued for a fifth consecutive quarter, with real GDP in the first quarter of 2018 increasing by 0,8% compared to the fourth quarter of 2017 and 2,3% compared to the first quarter of 2017 (the highest annual growth since 2008). Economic recovery, improved banking system stability, completion of the second and third EU bailout programme reviews, as well as improved confidence reflected in the Greek government bond yields and the recent 7-year government bond issue, contributed to an enhanced macroeconomic backdrop in the country. Employment growth (+2,2% in 2017, +0,3% in the first quarter of 2018) had a positive impact on income and private consumption; however, inflation and wage growth are still weak.
Total domestic fuels consumption reduced by 4,2% during the first half of 2018, mainly due to the reduction in demand for heating gasoil which is mainly attributed to mild weather conditions and higher oil product prices during the first three months of the year. Motor fuels demand, however, increased by 2,2% comparing to the first half of 2017, driven by the higher auto diesel consumption.
Despite the significant progress in economic recovery recorded in 2017 and the first quarter of 2018, the Greek economy faces a number of significant challenges, such as the high public debt, large non-performing loans, high unemployment, low structural competitiveness and the collapse of investment, which should be addressed in the medium-term and will affect the country's future growth prospects. Management continually assesses the situation and its possible future impact to ensure that all necessary actions and measures are taken in order to minimize the impact on the Group's Greek operations.
Securing continuous crude oil supplies: During the last 12 months crude oil reference prices started recovering, following a 3-year period of contraction (June 2014 – June 2017), averaging \$75/bbl in the second quarter of 2018. Nonetheless, oil prices are still 35% below June 2014 peak, therefore the cost of crude, for both sweet and especially sour grades, which represent the key source of feedstock for complex refiners like Hellenic Petroleum, remains at reasonable levels, maintaining the competitive position of Med refiners vs. their global peers. Concerning the decision of the US President for re-imposition of the nuclear-related sanctions against Iran, Hellenic Petroleum, which is currently being supplied with Iranian oil, is closely monitoring developments and will assess its position accordingly (Note 18).
Financing of operations: Given financial market developments since 2011, the key priorities of the Group have been the management of the 'Assets and Liabilities' maturity profile, funding in accordance with its strategic investment plan and liquidity risk for operations. As a result of these key priority initiatives and in line with its medium term financing plan, the Group has maintained a mix of long term, medium term and short term credit facilities by taking into consideration bank and debt capital markets' credit capacity as well as cash flow planning and commercial requirements. Approximately 73% of total debt is financed by medium to long term committed credit lines while the remaining debt is being financed by short term working capital credit facilities. Further details of the relevant loans and refinancing are provided in Note 17, "Borrowings".
Capital management: Another key priority of the Group has been the management of its Assets. Overall the Group has around €4,4 billion of capital employed which is driven from working capital, investment in fixed assets and its investment in the DEPA Group. Current assets are mainly funded with current liabilities (incl. short term bank debt) which are used to finance working capital (inventories and receivables). As a result of the implementation of the Group's investment plan during the period 2007-2012, net debt level has increased to 43% of total capital employed
(All amounts in Euro thousands unless otherwise stated)
while the remaining 57% is financed through shareholders equity. The Group has started reducing its net debt levels through utilization of the incremental operating cashflows, post completion and operation of the new Elefsina refinery. This is expected to lead to lower Debt to Equity ratio, better matched Asset and Liability maturity profiles as well as lower financing costs.
The interim condensed consolidated financial statements do not include all financial risk management information and disclosures that are required in the annual consolidated financial statements and should be read in conjunction with the group's annual consolidated financial statements as at 31 December 2017.
There have been no changes in the risk management or in any risk management policies since 31 December 2017.
The table below analyses financial instruments carried at fair value, by valuation method. The different levels are defined as follows:
The following table presents the Group's assets and liabilities that are measured at fair value at 30 June 2018:
| Total | |||
|---|---|---|---|
| Level 1 | Level 2 | Level 3 | balance |
| 13.396 | |||
| 957 | |||
| 957 | 13.396 | - | 14.353 |
| - | |||
| - | - | - | - |
| - 957 - |
13.396 - |
- - - |
The following table presents the Group's assets and liabilities that are measured at fair value at 31 December 2017:
| Total | ||||
|---|---|---|---|---|
| Level 1 | Level 2 | Level 3 | balance | |
| Assets | ||||
| Derivatives used for hedging | - | 11.514 | - | 11.514 |
| Investment in equity instruments | 1.857 | - | - | 1.857 |
| 1.857 | 11.514 | - | 13.371 | |
| Liabilities | ||||
| Derivatives used for hedging | - | - | - | - |
| - | - | - | - |
The fair value of financial instruments traded in active markets is based on quoted market prices at the balance sheet date. A market is regarded as active if quoted prices are readily and regularly available from an exchange, dealer, broker, industry Group, pricing service, or regulatory agency. These financial instruments are included in level 1.
The fair value of financial instruments that are not traded in an active market (for example, over-the-counter derivatives) is determined by using valuation techniques. These valuation techniques maximise the use of observable market data where it is available and rely as little as possible on entity specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.
If one or more of the significant inputs are not based on observable market data, the instrument is included in level 3.
Specific valuation techniques used to value financial instruments include:
There were no changes in valuation techniques during the period. There were no transfers between levels during the period.
The fair value of Euro denominated Eurobonds as at 30 June 2018 was €795 million (31 December 2017: €796 million), compared to its book value of €763 million (31 December 2017: €762 million). The fair value of the remaining borrowings approximates their carrying value, as the effect of discounting is insignificant.
The fair value of the following financial assets and liabilities approximate their carrying amount due to their short term nature:
All critical operating decisions, are made by the Group's Executive Committee, which reviews the Group's internal reporting in order to assess performance and allocate resources. Management has determined the operating segments based on these reports. The committee assesses performance taking into account a number of measures which may vary depending on the nature and evolution of a business segment by taking into account the risk profile, cash flow, product and market considerations. Information provided to the committee is measured in a manner consistent with that of the financial statements.
Financial information regarding the Group's operating segments for the period ended 30 June 2018 is presented below:
| For the six month period ended 30 June 2018 | ||||||||
|---|---|---|---|---|---|---|---|---|
| Refining | Marketing | Exploration & | Production Petro-chemicals Gas & Power | Other | Total | |||
| Gross Sales | 4.181.290 | 1.456.377 | (0) | 152.678 | 1.309 | 6.222 | 5.797.876 | |
| Inter-segmental Sales | (1.121.995) | (3.893) | (0) | (0) | (4) | (5.075) (1.130.967) | ||
| Net Sales | 3.059.295 | 1.452.484 | (0) | 152.678 | 1.305 | 1.147 | 4.666.909 | |
| EBITDA | 387.796 | 37.626 | (3.637) | 52.840 | 977 | (2.589) | 473.013 | |
| Depreciation & Amortisation | 10,11 | (69.859) | (20.537) | (343) | (2.155) | (353) | (403) | (93.650) |
| Operating profit / (loss) | 317.937 | 17.089 | (3.980) | 50.685 | 624 | (2.992) | 379.363 | |
| Currency exchange gains/ (losses) | 4.229 | 300 | (1) | - | - | - | 4.528 | |
| Share of profit/(loss) of investments in associates & joint ventures | (133) | 289 | - | - | 14.928 | (1) | 15.083 | |
| Finance (expense)/income - net | (49.714) | (8.805) | - | 3 | (31) | (17.469) | (76.016) | |
| Profit / (loss) before income tax | 272.319 | 8.873 | (3.981) | 50.688 | 15.521 | (20.462) | 322.958 | |
| Income tax expense | (97.785) | |||||||
| Profit for the period | 225.173 | |||||||
| (Profit) attributable to non-controlling interests | (1.560) | |||||||
| Profit for the period attributable to the owners of the parent | 223.613 |
(All amounts in Euro thousands unless otherwise stated)
Financial information regarding the Group's operating segments for the period ended 30 June 2017 is presented below:
| For the six month period ended 30 June 2017 | ||||||||
|---|---|---|---|---|---|---|---|---|
| Refining | Marketing | Exploration & | Production Petro-chemicals Gas & Power | Other | Total | |||
| Gross Sales | 3.603.743 | 1.371.288 | - | 135.417 | 783 | 4.789 | 5.116.020 | |
| Inter-segmental Sales | (1.042.789) | (3.271) | - | (0) | (5) | (4.253) (1.050.318) | ||
| Net Sales | 2.560.954 | 1.368.017 | - | 135.417 | 778 | 536 | 4.065.702 | |
| EBITDA | 292.396 | 40.288 | (2.249) | 51.147 | 352 | (2.528) | 379.406 | |
| Depreciation & Amortisation | 10,11 | (64.756) | (20.453) | (133) | (2.145) | (219) | (248) | (87.954) |
| Operating profit / (loss) | 227.640 | 19.835 | (2.382) | 49.002 | 133 | (2.776) | 291.452 | |
| Currency exchange gains/ (losses) | (6.812) | (31) | 5 | - | - | (10) | (6.848) | |
| Share of profit of investments in associates & joint ventures | (2.373) | (125) | - | - | 33.159 | (2) | 30.659 | |
| Finance (expense)/income - net | (56.124) | (11.084) | (2) | 6 | 1 | (20.897) | (88.100) | |
| Profit / (loss) before income tax | 162.331 | 8.595 | (2.379) | 49.008 | 33.293 | (23.685) | 227.163 | |
| Income tax expense | (59.518) | |||||||
| Profit for the period | 167.645 | |||||||
| (Profit) attributable to non-controlling interests | (193) | |||||||
| Profit for the period attributable to the owners of the parent | 167.452 |
Inter-segment sales primarily relate to sales from the refining segment to other operating segments.
"Other Segments" include Group entities which provide treasury, consulting and engineering services.
During the year 2017, management reconsidered the treatment of oil products exchanged or swapped for oil products of a similar nature and value. Previously, sales and purchases arising from such transactions were recognised at their gross sales value within "Sales" and "Cost of sales" respectively. Following the reconsideration, the above transactions are no longer regarded as sales and to this effect comparative figures for the period ended 30 June 2017 were restated by reclassifying an amount of € 29,6 million from "Sales" to "Cost of Sales" so as to conform to the change in presentation.
There were no changes in the basis of segmentation or in the basis of measurement of segment profit or loss, as compared to the consolidated annual financial statements for the year ended 31 December 2017.
There has been no material change in the definition of segments or the segmental analysis of total assets or total liabilities from the amounts disclosed in the consolidated annual financial statements for the year ended 31 December 2017.
An analysis of the Group's net sales by type of market (domestic, aviation & bunkering, exports and international activities) is presented below:
| For the six month period ended | ||||
|---|---|---|---|---|
| 30 June 2018 | 30 June 2017 | |||
| Net Sales | ||||
| Domestic | 1.356.039 | 1.487.693 | ||
| Aviation & Bunkering | 557.627 | 486.560 | ||
| Exports | 2.182.566 | 1.691.891 | ||
| International activities | 570.677 | 399.558 | ||
| Total | 4.666.909 | 4.065.702 |
| For the six month period ended | For the three month period ended | |||
|---|---|---|---|---|
| 30 June 2018 | 30 June 2017 | 30 June 2018 | 30 June 2017 | |
| Other operating income | ||||
| Income from Grants | 392 | 424 | 196 | 210 |
| Services to 3rd Parties | 1.988 | 1.729 | 927 | 675 |
| Rental income | 3.800 | 4.602 | 1.799 | 2.318 |
| Insurance compensation | 1.145 | 525 | 886 | 313 |
| Total other operating income | 7.325 | 7.280 | 3.808 | 3.516 |
| Other gains/(losses) | ||||
| Profit from the sale of PPE | 80 | (101) | (5) | (245) |
| Amortisation of long-term contracts costs | (2.784) | (4.628) | (1.807) | (2.347) |
| Voluntary retirement scheme cost | (323) | (389) | (152) | (344) |
| Legal costs relating to Arbitration proceedings ruling | - | (13.681) | - | (5.681) |
| Other operating income/(expenses) | 348 | (3.179) | 779 | (2.265) |
| Total other losses | (2.679) | (21.978) | (1.185) | (10.882) |
| Total other operating income / (expenses) and other gains/(losses) | 4.646 | (14.698) | 2.623 | (7.366) |
Other operating income / (expenses) – net, include income or expenses which do not relate to the trading activities of the Group.
Foreign currency exchange gains of €4,5 million reported for the six month period ended 30 June 2018, mainly relate to unrealized gains arising from the valuation of bank accounts denominated in foreign currency (mostly USD). Foreign currency exchange losses of €6,8 million reported for the six month period ended 30 June 2017, mainly relate to unrealized losses arising from the valuation of bank accounts denominated in foreign currency (mostly USD).
The amounts represent the Group's share of the net profit / (losses) from associated companies and joint ventures accounted for on an equity accounting basis, which are analysed as follows:
| For the six month period ended | For the three month period ended | |||
|---|---|---|---|---|
| 30 June 2018 | 30 June 2017 | 30 June 2018 | 30 June 2017 | |
| Public Natural Gas Corporation of Greece (DEPA) | 20.977 | 35.258 | 4.325 | 8.247 |
| ELPEDISON B.V. | (6.049) | (2.099) | (4.181) | (3.331) |
| DMEP | (425) | (2.620) | 553 | (4.973) |
| Other associates | 580 | 120 | 491 | 99 |
| Total | 15.083 | 30.659 | 1.188 | 42 |
The balance of Investments in associates and joint ventures has been also reduced by an amount of €23.0 million which relates to the dividends received by the Company from DEPA during the first six month period of 2018 and by an amount of €1.8 million which relates to the effect from the implementation of IFRS 9 by DEPA.
On 16 February 2012, HELPE and HRADF (jointly the "Sellers") agreed to launch a joint sale process of their shareholding in DEPA Group aiming to dispose 100% of the supply, trading and distribution activities, as well as 66% of their shareholding in the high pressure transmission network (DESFA S.A., a 100% subsidiary of DEPA S.A.).
The sale process resulted in the submission of a binding offer of €400 million by SOCAR (Azerbaijan's Oil and Gas National Company) for the purchase of the 66% of DESFA. The amount corresponding to HELPE's 35% effective shareholding was €212 million.
On 21 December 2013, the Share Purchase Agreement (SPA) for the above sale was signed by HRADF, HELPE and SOCAR, while the completion of the transaction was agreed to be subject to the clearance of EU's responsible competition authorities.
On 30 November 2016, the deadline for the fulfilment of all prerequisites for the finalisation of the transaction expired without the desired outcome.
By decision of the Governmental Economic Policy Council (ΚΥΣΟΙΠ) on 1 March 2017, the Greek State decided, inter alia, to launch a new tender procedure for the disposal of the 66% of the shares of DESFA, i.e. the 31% of the 65% of the shares held by HRADF combined with the 35% of the shares owned by HELPE, as well as the termination of the respective selling process which was launched in 2012. In addition, article 103 of the most recent law 4472/2017 provides that by 31 December 2017, the participation of DEPA in DESFA (66%) will be sold and transferred through an international tender process, which will be carried out by HRADF, while the remaining balance of 34% will be transferred to the Greek State. Furthermore, the above law provides that at the end of the tender process, DESFA should constitute an Unbundled Natural Gas Transmission System Operator, in accordance with the provisions of articles 62 & 63 of Law 4001/2011 as in force, and be certified as such, in accordance with Articles 9 & 10 of the 2009/73/EC (Full Ownership Unbundled System Operator - FOU).
The Board of Directors of HELPE, at its meeting on 12 June 2017, evaluated the strategic choices of HELPE regarding its minority participation in DESFA and considered that the disposal (jointly with HRADF) of the 66% of DESFA's shares is in the interest of the Company. For this purpose, a draft Memorandum of Understanding (MOU) between the Greek State, HRADF and HELPE was drawn up, based on the corresponding text of 2012. At the abovementioned meeting, the Board of Directors also convened the Extraordinary General Assembly of the Company's shareholders in order to obtain a special permit, in accordance with the provisions of article 23a of the Codified Law 2190/1920, for the conclusion of the MOU between the Greek State, HRADF and HELPE. The MOU was signed by the three parties on 26 June 2017 and the special permit of the General Assembly was provided retrospectively on 6 July 2017, pursuant to the provision of article 23a par.4 2190/1920. On 26 June 2017, the Invitation for the Non-Binding Expression of Interest was published. Four parties expressed interest, two of which were notified on 22 September 2017 by the Sellers that they qualified to participate in the next phase of the Tender Process (Binding Offers Phase), and were considered as Shortlisted Parties. The two Shortlisted Parties were on the one hand, a consortium formed by SNAM S.p.A., FLUXYS S.A., Enagas Internacional S.L.U. and N.V. Nederlandse Gasunies and on the other hand Regasificadora del Noroeste S.A..
The Shortlisted Parties submitted their binding offers on 16 February 2018, pursuant to the Sellers' Request on 10 October 2017 for the Submission of Binding Offers.
Best and final offers were submitted by the two Shortlisted Parties on 29 March 2018. The consortium formed by SNAM S.p.A., FLUXYS S.A. and Enagas Internacional S.L.U. confirmed its best and final offer on 19 April 2018, offering an amount of €535 million for the purchase of the 66% of DESFA. The above binding offer has been accepted by virtue of resolution no. 1319 of 19 April 2018 of the Board of Directors and the resolution of 14 May 2018 of the Extraordinary General Meeting of Shareholders of Hellenic Petroleum. By virtue of decision No. 235 of 25/6/2018, the Court of Audit has cleared the transaction and on 13/7/2018, the European Commission has provided its approval under the EU Merger Regulation.
On 20/7/2018 a Share Sale & Purchase Agreement (SPA) has been executed by HRADF and HELPE as Sellers and "SENFLUGA Energy Infrastructure Holdings S.A." (SNAM-Enagas-Fluxys Consortium SPV) as Purchaser. On the same date a Shareholders' Agreement for DESFA has been executed between SENFLUGA S.A. and the Hellenic Republic.
Although the parties undertake valid commitments upon signing of the SPA, the effectiveness of the totality of the provisions of the SPA (including the transfer of shares and the payment of the consideration) remains subject to approvals, some of which lie beyond the control or diligent behavior of the parties.
The Group consolidates the DEPA Group using the equity method of accounting and the carrying value of the investment in the consolidated financial statements reflects HELPE's 35% share of the net asset value of the DEPA group which as at 30 June 2018 amounts to €655 million. The net assets of DESFA, which amount to €320 million at 30 June 2018, are included in the value of €655 million and will be sold for €284 million on the basis of the above mentioned SPA. Following completion of the SPA, HELPE Group will recognise an impairment loss of € 36m. The cost of investment of the DEPA group in the financial statements of HELPE S.A is €237 million. DEPA Group, as it currently stands, continues to be accounted for and included in HELPE Group's consolidated financial statements as an associate.
(All amounts in Euro thousands unless otherwise stated)
| For the six month period | For the three month period ended | ||||
|---|---|---|---|---|---|
| 30 June 2018 | 30 June 2017 | 30 June 2018 | 30 June 2017 | ||
| Current Year tax | (42.987) | (3.506) | (41.683) | (1.863) | |
| Prior year tax | 5.107 | 108 | (1.175) | 108 | |
| Tax on reserves | (11.927) | - | (11.927) | - | |
| Deferred tax | (47.978) | (56.120) | (24.984) | (17.136) | |
| Total expense | (97.785) | (59.518) | (79.769) | (18.891) |
The corporate income tax rate of legal entities in Greece is 29% for 2018 (2017: 29%). In accordance with the applicable tax provisions, tax audits in Group companies are conducted as follows:
Effective for fiscal years ending 31 December 2011 onwards, Greek companies meeting certain criteria can obtain an "Annual Tax Certificate" as provided for by par. 5, article 82 of L.2238/1994 and article 65A of L. 4174/2013, as of 2014, from their statutory auditor in respect of compliance with tax law. The issuance of a Tax Compliance Report under certain conditions, substitutes the full tax audit by the tax authorities, however the tax authorities reserve the right of future tax audit.
All Group companies based in Greece have received unqualified Tax Compliance Reports by their respective statutory auditor for fiscal years up to 2016 (inclusive). The tax audit for the financial year 2017 is in progress, the issuance of Tax Compliance Report is expected to be issued within the fourth quarter of 2018 and based on the current status it is expected to be unqualified.
Income tax years of the parent company and its most significant subsidiaries audited by the tax authorities are set out below:
| Company name | Financial years ended (up to & including) |
|---|---|
| HELLENIC PETROLEUM SA | 2011 |
| EKO SA | 2010 |
| HELLENIC FUELS & LUBRICANTS SA (former HELLENIC FUELS SA) | 2011 |
As explained also in Note 22, and notwithstanding the possibility of future tax audits, the Group's management believes that no additional material liability will arise as a result of unaudited tax years over and above the tax liabilities and provisions recognised in the consolidated financial statements for the six month period ended 30 June 2018.
Basic earnings per share are calculated by dividing the net profit attributable to equity holders of the Company by the weighted average number of ordinary shares in issue during the period, excluding the weighted average number of treasury shares (Note 16). Diluted earnings per ordinary share are not materially different from basic earnings per share.
| For the six month period ended 30 June 2018 |
30 June 2017 | For the three month period ended 30 June 2018 |
30 June 2017 | |
|---|---|---|---|---|
| Earnings per share attributable to the Company Shareholders (expressed | ||||
| in Euro per share): Net income attributable to ordinary shares |
0,73 | 0,55 | 0,49 | 0,14 |
| (Euro in thousands) | 223.613 | 167.452 | 149.341 | 43.631 |
| Weighted average number of ordinary shares | 305.621.912 | 305.635.185 | 305.632.718 | 305.635.185 |
(All amounts in Euro thousands unless otherwise stated)
| Furniture | Assets | ||||||
|---|---|---|---|---|---|---|---|
| Plant & | Motor | and | Under Con | ||||
| Land | Buildings | Machinery | vehicles | fixtures | struction | Total | |
| Cost | |||||||
| As at 1 January 2017 | 288.126 | 897.678 | 4.578.708 | 92.769 | 168.215 | 88.609 | 6.114.105 |
| Additions | 20.878 | 6.052 | 6.136 | 1.685 | 4.952 | 33.752 | 73.455 |
| Capitalised projects | - | 909 | 5.793 | 106 | 88 | (6.896) | - |
| Disposals | (1.669) | (284) | (581) | (255) | (117) | (280) | (3.186) |
| Currency translation effects | 442 | 578 | 3.061 | (5) | (16) | 21 | 4.081 |
| Transfers and other movements | - | 767 | 2.527 | 123 | 1.041 | (4.004) | 454 |
| As at 30 June 2017 | 307.777 | 905.700 | 4.595.644 | 94.423 | 174.163 | 111.202 | 6.188.909 |
| Accumulated Depreciation | |||||||
| As at 1 January 2017 | - | 439.270 | 2.179.967 | 60.625 | 143.437 | - | 2.823.299 |
| Charge for the period | - | 14.366 | 64.250 | 1.738 | 3.485 | - | 83.839 |
| Disposals | - | (265) | (475) | (255) | (117) | - | (1.112) |
| Currency translation effects | - | 342 | (33) | (4) | (15) | - | 290 |
| Transfers and other movements | - | - | 1.441 | (1.703) | 987 | - | 725 |
| As at 30 June 2017 | - | 453.713 | 2.245.150 | 60.401 | 147.777 | - | 2.907.041 |
| Net Book Value at 30 June 2017 | 307.777 | 451.987 | 2.350.494 | 34.022 | 26.386 | 111.202 | 3.281.868 |
| Cost | |||||||
| As at 1 January 2018 | 315.557 | 909.409 | 4.708.733 | 96.556 | 181.388 | 102.131 | 6.313.774 |
| Additions | 1.915 | 3.504 | 6.282 | 1.551 | 3.539 | 40.817 | 57.608 |
| Capitalised projects | 1.231 | 5.034 | 38.704 | 54 | 356 | (45.379) | - |
| Disposals | (71) | (14) | (121) | (144) | (41) | - | (391) |
| Currency translation effects | 89 | 305 | 235 | - | 14 | 2 | 645 |
| Transfers and other movements | - | (68) | 2.927 | - | - | (572) | 2.287 |
| As at 30 June 2018 | 318.721 | 918.170 | 4.756.760 | 98.017 | 185.256 | 96.999 | 6.373.923 |
| Accumulated Depreciation | |||||||
| As at 1 January 2018 | 2.689 | 467.548 | 2.319.571 | 61.948 | 150.125 | - | 3.001.881 |
| Charge for the period | - | 14.319 | 69.044 | 2.091 | 4.156 | - | 89.610 |
| Disposals | - | (7) | (116) | (142) | (41) | - | (306) |
| Impairment | 18 | 167 | 84 | 2 | 15 | 916 | 1.202 |
| Currency translation effects | - | 201 | 270 | (1) | 15 | - | 485 |
| Transfers and other movements | - | (68) | 68 | - | - | - | - |
| As at 30 June 2018 | 2.707 | 482.160 | 2.388.921 | 63.898 | 154.270 | 916 | 3.092.872 |
| Net Book Value at 30 June 2018 | 316.014 | 436.010 | 2.367.839 | 34.119 | 30.986 | 96.083 | 3.281.051 |
'Transfers and other movements' include the transfer of spare parts for the refinery units from inventories to fixed assets (Note 12), as well as the transfer of computer software development costs to intangible assets. During 2017, the Group proceeded with changes in the allocation of the provision for consumables and spare parts. As a result the comparative figure of Plant and Machinery – Transfers and other movements (cost) was reduced by € 0,8 million.
(All amounts in Euro thousands unless otherwise stated)
| Retail Service Station Usage |
Computer | Licences & | ||||
|---|---|---|---|---|---|---|
| Goodwill | Rights | software | Rights | Other | Total | |
| Cost | ||||||
| As at 1 January 2017 | 133.914 | 49.915 | 106.036 | 40.683 | 74.426 | 404.974 |
| Additions | - | 593 | 1.252 | 55 | - | 1.900 |
| Disposals | - | (52) | - | - | - | (52) |
| Currency translation effects | - | - | 15 | (2) | 92 | 105 |
| Other movements | - | - | 1.632 | (90) | (142) | 1.400 |
| As at 30 June 2017 | 133.914 | 50.456 | 108.935 | 40.646 | 74.376 | 408.327 |
| Accumulated Amortisation | ||||||
| As at 1 January 2017 | 71.829 | 32.022 | 96.559 | 32.106 | 64.164 | 296.680 |
| Charge for the period | - | 1.498 | 2.079 | 369 | 169 | 4.115 |
| Disposals | - | (37) | - | - | - | (37) |
| Currency translation effects | - | - | 4 | 130 | - | 134 |
| Other movements | - | - | (52) | (72) | (81) | (205) |
| As at 30 June 2017 | 71.829 | 33.483 | 98.590 | 32.533 | 64.252 | 300.687 |
| Net Book Value at 30 June 2017 | 62.085 | 16.973 | 10.345 | 8.113 | 10.124 | 107.640 |
| Cost | ||||||
| As at 1 January 2018 | 133.914 | 51.241 | 111.527 | 38.075 | 74.603 | 409.360 |
| Additions | - | 310 | 335 | 3.551 | - | 4.196 |
| Currency translation effects | - | - | 4 | - | 15 | 19 |
| Other movements | - | - | 572 | - | - | 572 |
| As at 30 June 2018 | 133.914 | 51.551 | 112.438 | 41.626 | 74.618 | 414.147 |
| Accumulated Amortisation | ||||||
| As at 1 January 2018 | 71.829 | 34.834 | 101.407 | 31.224 | 64.382 | 303.676 |
| Charge for the period | - | 1.236 | 2.283 | 521 | - | 4.040 |
| Impairment | - | - | - | 295 | - | 295 |
| Currency translation effects | - | - | 1 | - | - | 1 |
| Other movements | - | - | 72 | (72) | - | - |
| As at 30 June 2018 | 71.829 | 36.070 | 103.763 | 31.968 | 64.382 | 308.012 |
| Net Book Value at 30 June 2018 | 62.085 | 15.481 | 8.675 | 9.658 | 10.236 | 106.135 |
'Licenses and Rights' include net exploration license costs relating to the two new exploration & production hydrocarbons' concessions in Western Greece. 'Other movements' in computer software include the transfer of computer software development costs from assets under construction to intangible assets.
(All amounts in Euro thousands unless otherwise stated)
| As at | |||
|---|---|---|---|
| 30 June 2018 | 31 December 2017 | ||
| Crude oil | 367.095 | 331.353 | |
| Refined products and semi-finished products | 598.034 | 640.142 | |
| Petrochemicals | 18.971 | 21.670 | |
| Consumable materials and other spare parts | 94.170 | 91.277 | |
| - Less: Provision for consumables and spare parts | (28.948) | (28.049) | |
| Total | 1.049.322 | 1.056.393 |
The cost of inventories recognised as an expense and included in Cost of sales amounted to €3,7 billion (30 June 2017: €3,2 billion). As at 30 June 2018, the Group recorded a loss of €1,1 million arising from inventory valuation (30 June 2017: loss of €0,3 million included in Cost of Sales in the statement of comprehensive income). In addition, as at 30 June 2018 an amount of €2,9 million (December 2017: €3,0 million) relating to spare parts for the refinery units, has been transferred from inventories to fixed assets (Note 10).
Under IEA and EU regulations, Greece is obliged to hold crude oil and refined product stocks in order to fulfil the EU requirement for compulsory Stock obligations (90 days stock directive), as legislated by Greek Law 3054/2002. This responsibility is passed on to all companies, including Hellenic Petroleum S.A., which import and sell in the domestic market and who have the responsibility to maintain and finance the appropriate stock levels. Such stocks are part of the operating stocks and are valued on the same basis.
| As at | ||||
|---|---|---|---|---|
| 30 June 2018 | 31 December 2017 | |||
| Trade receivables - Less: Provision for impairment of receivables |
846.053 (250.407) |
734.038 (248.008) |
||
| Trade receivables net | 595.646 | 486.030 | ||
| Other receivables - Less: Provision for impairment of receivables |
323.849 (52.843) |
327.203 (47.566) |
||
| Other receivables net | 271.006 | 279.637 | ||
| Deferred charges and prepayments | 37.417 | 25.538 | ||
| Total | 904.069 | 791.205 |
As part of its working capital management the Group utilises factoring facilities to accelerate the collection of cash from its customers in Greece. Non-recourse factoring, is excluded from balances shown above, since all risks and rewards of the relevant invoices have been transferred to the factoring institution.
Other receivables include balances in respect of advances to suppliers, advances to personnel, claimed VAT, income tax prepayment and taxes paid, as a result of tax audit assessments during previous years, from the tax authorities, where the Company has started legal proceedings and disputed the relevant amounts. The time of the finalization of these disputes cannot be estimated and the Group has classified the amounts as current assets. This balance as at 30 June 2018 also includes an amount of €54 million (31 December 2017: €54 million) of VAT approved refunds which has been withheld by the customs office due to a dispute relating to stock shortages. The Group has filed a specific legal objection and claim against this action and expects to fully recover this amount following the conclusion of the relevant legal proceedings (Note 22).
| As at | |||
|---|---|---|---|
| 30 June 2018 | 31 December 2017 | ||
| Cash at Bank and in Hand | 908.116 | 873.261 | |
| Cash and Cash Equivalents | 908.116 | 873.261 | |
| Restricted Cash | 1.207 | 145.652 | |
| Total Cash, Cash Equivalents and Restricted Cash | 909.323 | 1.018.913 |
Restricted cash in 2017 mainly relates to a deposit amounting to €144 million, placed as security for a loan agreement of an equal amount with Piraeus Bank in relation to the Company's Facility Agreement B with the European Investment Bank (Note 17). The outstanding balance under the EIB Facility Agreement B as at 31 December 2017 was €100 million, whilst the outstanding balance of the Piraeus loan as at 31 December 2017 was €144 million. In February 2018, the Company amended the EIB Facility Agreement B which no longer has security requirements. As a result, the loan with Piraeus was repaid, the security deposit was released and the bank guarantee agreement has been cancelled.
The balance of US Dollars included in Cash at bank as at 30 June 2018 was \$ 652 million (euro equivalent €559 million). The respective amount for the period ended 31 December 2017 was \$ 555 million (euro equivalent €463 million).
| Number of Shares (authorised and issued) |
Share Capital |
Share premium |
Total | |
|---|---|---|---|---|
| As at 1 January & 31 December 2017 | 305.635.185 | 666.285 | 353.796 | 1.020.081 |
| As at 30 June 2018 | 305.635.185 | 666.285 | 353.796 | 1.020.081 |
All ordinary shares were authorised, issued and fully paid. The nominal value of each ordinary share is €2,18 (31 December 2017: €2,18).
During the Annual General Meeting (AGM) of Hellenic Petroleum S.A. held on 25 May 2005, a share option scheme was approved, with the intention of linking the number of share options granted to management with the results and performance of the Company. Subsequent AGMs have approved and granted the share options. At the 2014 and 2015 AGM's, the shareholders approved several changes to the share option program incorporating recent tax changes, without altering the net effect in terms of benefit to the participants.
(All amounts in Euro thousands unless otherwise stated)
Movements in the number of share options outstanding and their related weighted average exercise prices during the period are as follows:
| As at | |||||
|---|---|---|---|---|---|
| 30 June 2018 | 31 December 2017 | ||||
| Average | |||||
| Exercise | Average | ||||
| Price in € | Exercise Price in | ||||
| per share | Options | € per share | Options | ||
| Balance at the beginning of the period (1 January) | 4,52 | 185.633 | 4,52 | 1.479.933 | |
| Exercised | 4,52 | (145.561) | 4,52 | (1.294.300) | |
| Balance at the end of the period | 4,52 | 40.072 | 4,52 | 185.633 |
During the six month period ended 30 June 2018, share options were exercised via the acquisition and subsequent issue of treasury shares to employees with a total value of €1,0 million (see Note 16).
| Note | Statutory reserve |
Special reserves |
Hedging reserve |
Share-based payment reserve |
Tax-free & Incentive Law reserves |
Other Reserves |
Treasury Shares |
Total | |
|---|---|---|---|---|---|---|---|---|---|
| Balance at 1 January 2017 | 118.668 | 98.420 | 13.268 | 747 | 263.047 | (24.362) | - | 469.788 | |
| Fair value losses on cash flow hedges | - | - | (21.431) | - | - | - | - | (21.431) | |
| Derecognition of gains on hedges through comprehensive income | - | - | 1.979 | - | - | - | - | 1.979 | |
| Actuarial losses on defined benefit pension plans | - | - | - | - | - | (2.219) | - | (2.219) | |
| Reduction in value of land | - | - | - | - | - | (907) | - | (907) | |
| Changes of the fair value of equity investments | - | - | - | - | - | 2.127 | - | 2.127 | |
| Currency translation differences and other movements | - | - | - | - | - | 177 | - | 177 | |
| Dividends | - | - | - | - | (61.127) | - | - | (61.127) | |
| Balance at 30 June 2017 | 118.668 | 98.420 | (6.184) | 747 | 201.920 | (25.184) | - | 388.387 | |
| Balance at 31 December 2017 as originally presented | 118.668 | 98.420 | 10.657 | 94 | 164.882 | (34.134) | (531) | 358.056 | |
| Change in accounting policy | 2 | - | - | - | - | - | 166 | - | 166 |
| Restated total equity as at 1 January 2018 | 118.668 | 98.420 | 10.657 | 94 | 164.882 | (33.968) | (531) | 358.222 | |
| Changes of the fair value of equity investments | - | - | - | - | - | (444) | - | (444) | |
| Derecognition of losses on hedges through comprehensive income | - | - | (14.920) | - | - | - | - | (14.920) | |
| Fair value gains on cash flow hedges | - | - | 16.256 | - | - | - | - | 16.256 | |
| Currency translation differences and other movements | - | - | - | - | - | (353) | - | (353) | |
| Share-based payments | - | - | - | (73) | - | - | - | (73) | |
| Acquisition of treasury shares | - | - | - | - | - | - | (511) | (511) | |
| Issue of treasury shares to employees | - | - | - | - | - | - | 1.042 | 1.042 | |
| Transfers of tax on reserves distributed to retained earnings | - | - | - | - | (11.927) | - | - | (11.927) | |
| Dividends | - | - | - | - | (76.408) | - | (76.408) | ||
| Transfer of grant received to tax free reserves | - | - | - | - | 80 | - | - | 80 | |
| As at 30 June 2018 | 118.668 | 98.420 | 11.993 | 21 | 76.627 | (34.765) | - | 270.964 |
Under Greek law, corporations are required to transfer a minimum of 5% of their annual net profit as reflected in their statutory books to a statutory reserve until such reserve equals one third of outstanding share capital. This reserve cannot be distributed during the existence of the corporation, but can be used to offset accumulated losses.
Special reserves primarily relate to reserves arising from tax revaluations which have been included in the holding company accounts in accordance with the relevant legislation in prior years.
(i) Retained earnings which have not been taxed with the prevailing corporate income tax rate as allowed by Greek law under various statutes. Certain of these retained earnings will become liable to tax at the rate prevailing at the time of distribution to shareholders or conversion to share capital.
(All amounts in Euro thousands unless otherwise stated)
The hedging reserve is used to record gains or losses on derivatives that are designated and qualify as cash flow hedges and that are recognised in other comprehensive income. Amounts are reclassified to profit or loss when the associated hedged transaction affects profit or loss.
These include:
Treasury shares are held regarding the Share Option Plan. During the six month period ended 30 June 2018, 64.548 shares were acquired at a cost of €0,5 million, while 134.706 shares were issued to employees following the exercise of share options held. Treasury shares are recognised on a first-in-first out method.
| As at | |||
|---|---|---|---|
| 30 June 2018 | 31 December 2017 | ||
| Non-current borrowings | |||
| Bank borrowings | 972.959 | 155.556 | |
| Eurobonds | 763.330 | 761.607 | |
| Finance leases | 2.706 | 3.071 | |
| Total non-current borrowings | 1.738.995 | 920.234 | |
| Current borrowings | |||
| Short term bank borrowings | 1.042.074 | 1.855.170 | |
| Current portion of long-term bank borrowings | 44.444 | 44.444 | |
| Finance leases - current portion | 700 | 655 | |
| Total current borrowings | 1.087.218 | 1.900.269 | |
| Total borrowings | 2.826.213 | 2.820.503 |
The Group has centralized treasury operations which coordinate and control the funding and cash management activities of all group companies. Within this framework, Hellenic Petroleum Finance plc (HPF) was established in November 2005 in the U.K. as a wholly-owned subsidiary of Hellenic Petroleum S.A. to act as the central treasury vehicle of the Hellenic Petroleum Group.
Βorrowings of the Group by maturity as at 30 June 2018 and 31 December 2017 are summarised in the table below (amounts in € million):
| Balance as at | Balance as at | |||
|---|---|---|---|---|
| Company Maturity | 30 June 2018 | 31 December 2017 | ||
| 1a. Syndicated credit facility € 20 million | HPF Plc | Jul 2018 | - | 20 |
| 1b. Syndicated credit facility € 10 million | HPF Plc | Jul 2018 | - | 10 |
| 1c. Syndicated bond loan € 350 million | HP SA | Jul 2018 | - | 348 |
| 1d. Bond loan € 400 million | HP SA | Jun 2023 | 391 | - |
| 2. Bond loan € 400 million | HP SA | Oct 2018 | 284 | 284 |
| 3. Bond loan € 300 million | HP SA | Feb 2021 | 297 | 200 |
| 4. Bond loan SBF € 400 million | HP SA | May 2018 | - | 239 |
| 5. Bond loan \$ 250 million | HP SA | Jun 2021 | 152 | - |
| 6. European Investment Bank ("EIB") Term loan | HP SA | Jun 2022 | 178 | 200 |
| 7. Eurobond €325m | HPF Plc | Jul 2019 | 317 | 316 |
| 8. Eurobond €450m | HPF Plc | Oct 2021 | 446 | 446 |
| 9. Bilateral lines | Various | Various | 758 | 754 |
| 10. Finance leases | Various | Various | 3 | 4 |
| Total | 2.826 | 2.821 |
No loans were in default as at 30 June 2018 (none as at 31 December 2017).
Significant movements in borrowings for the six-month period ended 30 June 2018 are as follows:
In July 2014, the Group concluded two new credit facilities with a syndicate of Greek and international banks as follows:
(1a-1b) HPF concluded a €50 million syndicated credit facility guaranteed by Hellenic Petroleum S.A. The facility had a €40 million tranche which matured in July 2016 and a €10 million tranche maturing in July 2018. In July 2016, upon maturity of the € 40 million tranche, the Group proceeded with a partial repayment of € 20 million and extended the maturity of the remaining € 20 million to July 2018.
(1c) Hellenic Petroleum S.A. concluded a €350 million syndicated bond loan credit facility guaranteed by HPF maturing in July 2018.
(1d) In June 2018 the Group prepaid both facilities which had a total outstanding balance of €380 million. The facilities were refinanced with a 5 year syndicated revolving bond loan facility issued by Hellenic Petroleum S.A. and subscribed to by Greek and international banks for an increased amount of €400 million.
In September 2015 Hellenic Petroleum S.A. extended the maturity date of a €400 million syndicated bond loan agreement from December 2015 to June 2016 and subsequently to October 2017 with two six-month extension options. In April 2018, Hellenic Petroleum S.A. extended the facility maturity date to October 2018 and is in the process of refinancing it.
In January 2015 Hellenic Petroleum S.A. concluded a €200 million revolving bond loan facility, with a tenor of 3 years. The facility was refinanced in February 2018 for an increased amount of €300 million and a tenor of 3 years.
In May 2016 Hellenic Petroleum S.A. concluded a € 400 million bond loan stand-by facility with a tenor of 18 months and an extension option for a further 6 months. The bond loan facility has two Tranches, a committed Tranche of €240 million and an uncommitted Tranche of €160 million. In May 2017, Hellenic Petroleum S.A. made an additional drawdown of €167 million under the committed Tranche of the facility. In October 2017 Hellenic Petroleum S.A. extended the facility maturity date to May 2018. In May 2018 Hellenic Petroleum S.A. fully repaid the outstanding balance of €240 million upon maturity.
In June 2018 Hellenic Petroleum S.A. concluded a new \$250 million revolving bond loan facility with a tenor of 3 years to finance general working capital needs.
On 26 May 2010, Hellenic Petroleum S.A. signed two loan agreements (Facilities A and B) with the European Investment Bank for a total amount of €400 million (€200 million each). The purpose of the loans was to finance part of the investment program relating to the upgrade of the Elefsina Refinery. Both loans had a maturity of twelve years with amortization beginning in December 2013 and similar terms and conditions. Facility B was credit enhanced by a commercial bank guarantee. This is normal practice for EIB lending particularly during the construction phase of large projects. Total repayments on both loans up to 30 June 2018 amounted to € 222 million. Up to February 2018, Facility B included financial covenant ratios which were comprised of leverage, interest cover and gearing ratios. In February 2018, Hellenic Petroleum S.A. amended the terms of this facility in order to align the loan covenants' definitions and ratios with those used for all its commercial bank loans and Εurobonds (see also Note 14).
In July 2014 the Group issued a €325 million five-year Eurobond, with a 5,25% annual coupon, maturing in July 2019. The notes, which were issued by Hellenic Petroleum Finance Plc and guaranteed by Hellenic Petroleum S.A., are listed on the Luxembourg Stock Exchange.
In October 2016 HPF issued a €375 million five-year 4.875% Eurobond guaranteed by Hellenic Petroleum S.A. with the issue price being 99.453 per cent. of the principal amount. The notes mature in October 2021. The proceeds of the issue were used to repay existing financial indebtedness, including the partial prepayment of the €500 million Eurobond maturing in May 2017 through a tender offer process which was completed in October 2016 during which notes of nominal value of €225 million were accepted. In July 2017, HPF issued €74.53 million guaranteed notes due 14 October 2021, which were consolidated and form a single series with the €375 million 4.875% guaranteed notes.
The Group companies have credit facilities with various banks to finance general corporate needs which are being renewed according with the Group's finance needs. The facilities mainly comprise of short-term loans of the parent company Hellenic Petroleum S.A.
Certain medium term credit facility agreements that the Group has concluded, include financial covenants, mainly for the maintenance of certain ratios such as: "Consolidated Net Debt/ Consolidated Adjusted EBITDA", "Consolidated Adjusted EBITDA/ Consolidated Net Interest" and "Consolidated Net Debt/ Consolidated Net Worth". Management monitors the performance of the Group to ensure compliance with the above covenants.
| As at | ||
|---|---|---|
| 30 June 2018 | 31 December 2017 | |
| Trade payables | 1.089.456 | 1.474.336 |
| Accrued expenses | 152.464 | 100.810 |
| Other payables | 51.985 | 86.311 |
| Total | 1.293.905 | 1.661.457 |
Trade payables comprise amounts payable or accrued in respect of supplies of crude oil, products, and services.
Trade payables, as at 30 June 2018 and 31 December 2017, include amounts in respect of crude oil imports from Iran, which were received between December 2011 and March 2012 as part of a long term contract with NIOC. Despite repeated attempts to settle the payment for these cargoes through the international banking system between January and June 2012, it was not possible to do so. This was due to the fact that payments to Iranian banks and state entities were not accepted for processing by the International banking system, as a result of explicit or implicit US and International sanctions. After 30 June 2012, Hellenic Petroleum was prohibited to effect payments to NIOC by virtue of EU sanctions (Council Regulation (EU) No. 267/2012 of 23 March 2012). The Group duly notified its supplier of this restriction on payments and the inability to accept further crude oil cargoes under the contract, as a result of the aforementioned international sanctions.
On 18 October 2015, by Decision (CFSP) 2015/1863, the Council of the European Union (EU) decided to terminate implementation of most of EU restrictions against Iran, taking into account UNSCR 2231 (2015) and Annex B to UNSCR 2231 (2015), simultaneously with the IAEA-verified implementation by Iran of agreed nuclear-related measures. On 16 January 2016 ("Implementation Day"), by Decision (CFSP) 2016/37, the Council decided that Decision (CFSP) 2015/1863 shall apply from that date. On the same date, U.S and other International Restrictive Measures were also partially lifted. In light of the above developments, Hellenic Petroleum and NIOC executed Heads of Terms to a cooperation-agreement on 22 January 2016 for the recommencement of their commercial relationship for the supply of crude and for the settlement of the due trade payables.
On May 8, 2018, the President of the U.S. (the President) announced his decision to cease the United States' participation in the Joint Comprehensive Plan of Action (JCPOA), and to begin re-imposing, following a wind-down period, the U.S. nuclear-related sanctions that were lifted to effectuate the JCPOA sanctions relief. In conjunction with this announcement, the President issued a National Security Presidential Memorandum (NSPM) directing the Secretary of State and the Secretary of the Treasury to prepare immediately for the re-imposition of all of the U.S. sanctions lifted or waived in connection with the JCPOA, to be accomplished as expeditiously as possible and in no case later than 180 days from the date of the NSPM. Hellenic Petroleum is closely monitoring developments following the US administration decision on JCPOA and will assess its position accordingly. Implementation of the cooperation-agreement, according to the Heads of Terms signed between Hellenic Petroleum and NIOC on 22 January 2016 (as abovementioned), will be in full compliance with prevailing EU and international framework, as well as surviving restrictions.
Where deemed beneficial to the Group, in order to achieve better terms (such as better pricing, higher credit limits, longer payment terms), the Group provides short term letters of credit or guarantee for the payment of liabilities arising from trade creditors, making use of its existing credit lines with its banks. To the extent these liabilities materialise before the balance sheet date, they are included in the balance under trade creditors.
Accrued expenses mainly relate to accrued interest, payroll related accruals and accruals for operating expenses not yet invoiced.
Other payables include amounts in respect of payroll related liabilities, social security obligations and sundry taxes.
| For the six month period ended | |||
|---|---|---|---|
| Note | 30 June 2018 | 30 June 2017 | |
| Profit before tax | 322.958 | 227.163 | |
| Adjustments for: | |||
| Depreciation and amortisation of property, plant and | |||
| equipment and intangible assets | 10,11 | 93.650 | 87.954 |
| Impairment of fixed and intangible assets | 10,11 | 1.497 | - |
| Amortisation of grants | 5 | (392) | (424) |
| Finance costs - net | 76.016 | 88.100 | |
| Share of operating profit of associates | 7 | (15.083) | (30.659) |
| Provisions for expenses and valuation charges | 28.322 | 17.610 | |
| Foreign exchange losses | 6 | (4.528) | 6.848 |
| Amortisation of long-term contracts costs | 5 | 2.784 | 4.628 |
| (Gain) / loss on sales of property, plant and equipment | 5 | (80) | 101 |
| 505.144 | 401.321 | ||
| Changes in working capital | |||
| Decrease in inventories | 6.172 | 41.332 | |
| Ιncrease in trade and other receivables | (100.018) | (19.859) | |
| Decrease in payables | (379.850) | (284.537) | |
| (473.696) | (263.064) | ||
| Net cash inflow from operating activities | 31.448 | 138.257 |
The interim condensed consolidated statement of comprehensive income includes transactions between the Group and related parties. Such transactions mainly comprise sales and purchases of goods and services in the ordinary course of business.
Transactions have been carried out with the following related parties:
(All amounts in Euro thousands unless otherwise stated)
| For the six month period ended | |||
|---|---|---|---|
| 30 June 2018 | 30 June 2017 | ||
| Sales of goods and services to related parties | |||
| Associates | 360.696 | 418.467 | |
| Joint ventures | 340 | 191 | |
| Total | 361.036 | 418.658 | |
| Purchases of goods and services from related parties | |||
| Associates | 418.412 | 436.817 | |
| Joint ventures | 9.650 | 3.646 | |
| Total | 428.062 | 440.463 | |
| As at | |||
| 30 June 2018 | 31 December 2017 | ||
| Balances due to related parties | |||
| Associates | 20.199 | 3.182 | |
| Joint ventures | 934 | 1.886 | |
| Total | 21.133 | 5.068 | |
| Balances due from related parties | |||
| Associates | 47.230 | 37.133 | |
| Joint ventures | 189 | 101 | |
| Total | 47.419 | 37.234 |
Hellenic Petroleum S.A. has provided letters of comfort and guarantees in favour of banks as security for loans granted by them to Elpedison B.V. The outstanding amount of these as at 30 June 2018 was €84 million (31 December 2017: €88 million).
During the six month period ended 30 June 2018, transactions and balances with the above government related entities are as follows:
| For the six month period ended | |||
|---|---|---|---|
| 30 June 2018 | 30 June 2017 | ||
| Short-term employee benefits | 2.698 | 2.285 | |
| Post-employment benefits | 552 | 585 | |
| Termination benefits | 522 | - | |
| Total | 3.772 | 2.870 |
Significant contractual commitments of the Group, other than future operating lease payments that are disclosed in the annual consolidated financial statements as at 31 December 2017, mainly relate to improvements in refining assets and amount to €30 million as at 30 June 2018 (31 December 2017: €20 million).
The Group has contingent liabilities in respect of bank and other guarantees and other matters arising in the ordinary course of business. They are as follows:
(i) Unresolved legal claims
The Group is involved in a number of legal proceedings and has various unresolved claims pending arising in the ordinary course of business. Based on currently available information and the opinion of legal counsel, management believes the final outcome will not have a significant effect on the Group's operating results or financial position, over and above provisions already reflected in the interim condensed consolidated financial statements.
(ii) Guarantees
The parent company has provided letters of comfort and guarantees in favour of banks as security for loans granted by them to subsidiaries and associates of the Group, the outstanding amount of which as at 30 June 2018 was the equivalent of €978 million (31 December 2017: €1.016 million). Out of these, €894 million (31 December 2017: €928 million) are included in consolidated borrowings of the Group in the interim condensed consolidated financial statements.
(iii) International operations
Τhe Group's international operations face a number of legal issues related to changes in local permits and tax regulations, however it is considered that they do not present any material impact on the consolidated financial statements. Such cases include a dispute in connection with the local tank depots of Jugopetrol AD in Montenegro, as well as the re-opening of the Commission for the Protection of Competition in Cyprus' investigation against the Petroleum companies operating there (wholesale), for the period from 1 October 2004 to 22 December 2006. On 15 November 2017 the Commission for the Protection of Competition in Cyprus imposed a fine amounting to €5 million against Hellenic Petroleum Cyprus Ltd. Pertinent legal actions, have commenced on 30 December 2017 and are in progress. The likelihood for an outflow of resources is assessed as remote. Management believes that no additional material liabilities will arise as a result of these cases over and above those recognised in the consolidated financial statements.
The tax framework and practices in Greece, which determine the tax base for the transactions of the Group's main entities, may result in inherent uncertainties, due to its complexity and it being subject to changes and alternative interpretation by relevant authorities at different points in time and across different entities. As a result, there may be types of expenses or treatments for which a company may be assessed on a different basis than the one adopted during preparation of its tax return and the financial statements. Based on past experience tax audits were carried out by tax authorities on average 5-7 years after the filing of the tax return, while, recently, the 5 year statute of limitation period seems to be taken into consideration. In addition, where a tax audit results in a different assessment to the one adopted by the Group entity, and for which the Group after consideration, disagrees with, the process for resolving the issue is usually through a court of law proceeding, which has many stages and can take a considerable
(All amounts in Euro thousands unless otherwise stated)
number of years to reach its final and irrevocable ruling. For an entity to engage in this process, a minimum down payment of 50% of the total tax and penalties assessed is required.
All of the above result in inherent difficulties in the determination and accounting of tax liabilities. As a result, management aims to determine its policy based on specific legislation available at the time of accounting for a transaction, obtain specialist legal and tax advice on individual cases and utilise prior tax audits experience and rulings, including relevant court decisions. This process should ensure that the financial statements reflect any material tax and customs liabilities as accurately and completely as possible.
As disclosed in Note 8, tax audits for the Group's most important Greek legal entities have been completed by the Tax Authorities as follows:
For Hellenic Petroleum S.A.: up to and including the financial year ended 31 December 2011. The Tax Audit Reports for years ended 31 December 2010 and 31 December 2011 were received in December 2017 and they are subject to legal dispute by the Company. In summary, the reports assess additional taxes of € 22,5 million and penalties of €23,5 million, for items relating to stamp duty, various non-deductible expenses and other income tax adjustments. Following a detailed review of the Tax Audit Report, the Company disputes the additional taxes imposed (which are over and above the amounts already included in the Companies' normal tax returns) and has proceeded with all possible legal means and actions to appeal against these additional taxes and penalties.
Even though the Company disputes the additional taxes and penalties imposed, it is obliged to pay 50% of the assessed amounts (taxes and penalties) to the Tax Authorities in order to appeal the results of the tax audits. This was paid within the applicable deadline in January 2018, while the remaining 50% has been fully offset, with tax and other State receivables, by 30th of June 2018. The amounts are included in Other Receivables (Note 13).
As far as penalties are concerned, the report has assessed penalties at 120% of the original tax instead of the applicable 50%; this is also legally challenged by the Company.
At present, an audit for the year ended 31 December 2012 is in progress.
Likewise, the two main retail subsidiaries in Greece, which merged into one during 2016, Hellenic Fuels and Lubricants S.A (EKO) have been audited as follows:
(a) Former Hellenic Fuels S.A.: up to and including the financial year ended 31 December 2011, with ongoing audits for subsequent years up to and including 31 December 2013. The most recent Tax Audit Reports for 2010 and 2011 were delivered in December 2017, and assess additional taxes of € 1,6 million and penalties of € 1,9 million for similar reasons as Hellenic Petroleum. The process followed is identical to the one described above for Hellenic Petroleum and the Subsidiary has already proceeded with the relevant legal actions.
(b) EKO S.A.: up to and including 31 December 2010 with ongoing audit for the year ended 31 December 2012. The most recent Tax Audit Reports for 2008, 2009 and 2010 were delivered in February 2018 and assess additional stamp duty of € 4,1 million and penalties of € 3,5 million. The process followed is identical to the one described above for Hellenic Petroleum and the Subsidiary has already proceeded with the relevant legal actions.
Even though the Subsidiary (after the merger) disputes the additional taxes and penalties imposed, it is obliged to pay 50% of the assessed amounts (taxes and penalties) to the Tax Authorities in order to appeal the results of the tax audits. Those amounts were paid within the applicable deadlines, while the remaining 50% has been fully offset, with tax and other State receivables, by 30th of June 2018. The amounts are included in the Other Receivables (Note 13).
Management believes that no additional material liability will arise either as a result of open tax years or from the outcome of current litigation cases over and above the tax liabilities and provisions already recognized in the consolidated financial statements as at 30 June 2018. The Group has recorded any down payments made for taxes and penalties assessed in previous disputes with the tax authorities in other receivables (Note 13), to the extent that the Group has assessed that the amounts will be ultimately recoverable.
It is noted that for financial years ending 31 December 2011 up to and including 31 December 2016, the Group's Greek legal entities obtained unqualified "Annual Tax Certificates" from their Statutory Auditors, as provided for by par. 5, article 82 of L.2238/1994. The tax audit for the financial year 2017 is in progress and the issuance of Tax Compliance Report is expected to be issued within the fourth quarter of 2018 and based on the current status is expected to be unqualified.
In 2008, Customs authorities assessed additional customs duties and penalties amounting to approximately €40 million for alleged "stock shortages" during the years 2001-2005. Τhe Company has duly filed contestations before the Administrative Court of First Instance, and Management believes that this case will have a positive outcome when the court hearings take place.
Notwithstanding the filing of the above contestations, the Customs office withheld an amount of €54 million (full payment plus surcharges) of established VAT refunds (Note 13), an action against which the Company filed two Contestations before the Administrative Courts of Athens and Piraeus. The Administrative Court of Athens ruled that the withholding effected by the Tax Office was unlawful.
The Company considers that the above amounts will be recovered.
A proposal to the AGM for a final dividend €0,25 per share (excluding treasury shares – Note 16) for the year ended 2017 was approved by the Board of Directors on 22 February 2018 and the final approval was given by the shareholders at the AGM held on 6 June 2018. This amounts to €76.408 million and is included in the Consolidated Financial Statements for the period ended 30 June 2018.
The Board did not approve a change in dividend policy overall and will re-evaluate the payment of an additional dividend, special dividend or interim dividend during 2018.
| EFFECTIVE | ||||
|---|---|---|---|---|
| COUNTRY OF | PARTICIPATION | METHOD OF | ||
| COMPANY NAME | ACTIVITY | REGISTRATION | PERCENTAGE | CONSOLIDATION |
| HELLENIC FUELS AND LUBRICANTS INDUSTRIAL AND COMMERCIAL S.A | Marketing | GREECE | 100,00% | FULL |
| ΕΚΟΤΑ KO S.A. | Marketing | GREECE | 49,00% | FULL |
| ΕΚΟ KALYPSO M.E.P.E. | Marketing | GREECE | 100,00% | FULL |
| EKO ATHINA MARITIME COMPANY | Vessel owning / Marketing | GREECE | 100,00% | FULL |
| EKO ARTEMIS MARITIME COMPANY | Vessel owning / Marketing | GREECE | 100,00% | FULL |
| EKO DIMITRA MARITIME COMPANY | Vessel owning / Marketing | GREECE | 100,00% | FULL |
| EKO IRA MARITIME COMPANY | Vessel owning / Marketing | GREECE | 100,00% | FULL |
| EKO AFRODITI MARITIME COMPANY | Vessel owning / Marketing | GREECE | 100,00% | FULL |
| EKO BULGARIA EAD | Marketing | BULGARIA | 100,00% | FULL |
| EKO SERBIA AD | Marketing | SERBIA | 100,00% | FULL |
| HELLENIC PETROLEUM INTERNATIONAL S.A. | Holding | AUSTRIA | 100,00% | FULL |
| HELPE CYPRUS LTD | Marketing | U.K | 100,00% | FULL |
| RAMOIL S.A. | Marketing | CYPRUS | 100,00% | FULL |
| HELLENIC PETROLEUM BULGARIA (HOLDINGS) LTD | Holding | CYPRUS | 100,00% | FULL |
| HELLENIC PETROLEUM SERBIA (HOLDINGS) LTD | Holding | CYPRUS | 100,00% | FULL |
| JUGOPETROL AD | Marketing | ΜONTENEGRO | 54,35% | FULL |
| GLOBAL ALBANIA S.A | Marketing | ΑLBANIA | 99,96% | FULL |
| ELPET BALKANIKI S.A. | Holding | GREECE | 100,00% | FULL |
| VARDAX S.A | Pipeline | GREECE | 80,00% | FULL |
| OKTA CRUDE OIL REFINERY A.D | Refining | FYROM | 81,51% | FULL |
| ASPROFOS S.A | Engineering | GREECE | 100,00% | FULL |
| DIAXON S.A. | Petrochemicals | GREECE | 100,00% | FULL |
| POSEIDON MARITIME COMPANY | Vessel owning / Petrochemicals | GREECE | 100,00% | FULL |
| APOLLON MARITIME COMPANY | Vessel owning / Refining | GREECE | 100,00% | FULL |
| HELLENIC PETROLEUM FINANCE PLC | Treasury services | U.K | 100,00% | FULL |
| HELLENIC PETROLEUM CONSULTING | Consulting services | GREECE | 100,00% | FULL |
| HELLENIC PETROLEUM R.E.S S.A. | Energy | GREECE | 100,00% | FULL |
| HELPE-LARCO ENERGIAKI SERVION S.A. | Energy | GREECE | 51,00% | FULL |
| HELPE-LARCO ENERGIAKI KOKKINOU S.A. | Energy | GREECE | 51,00% | FULL |
| ENERGIAKI PYLOY METHONIS S.A. | Energy | GREECE | 100,00% | FULL |
| ATEN ENERGY S.A. | Energy | GREECE | 100,00% | FULL |
| HELPE E&P HOLDINGS S.A | E&P of hydrocarbons | GREECE | 100,00% | FULL |
| HELPE PATRAIKOS S.A. | E&P of hydrocarbons | GREECE | 100,00% | FULL |
| HELPE UPSTREAM S.A | E&P of hydrocarbons | GREECE | 100,00% | FULL |
| SUPERLUBE LTD | Lubricants | CYPRUS | 100,00% | FULL |
| ELPEDISON B.V. | Power Generation | NETHERLANDS | 50,00% | EQUITY |
| SAFCO S.A. | Airplane Fuelling | GREECE | 33,33% | EQUITY |
| DEPA S.A. | Natural Gas | GREECE | 35,00% | EQUITY |
| Ε.Α.Κ.Α.Α S.A. | Pipeline | GREECE | 50,00% | EQUITY |
| HELPE THRAKI S.A | Pipeline | GREECE | 25,00% | EQUITY |
| DMEP HOLDCO LTD | Trade of crude/products | U.K | 48,00% | EQUITY |
Details of significant post balance sheet events are provided in the following notes:
Note 7 – Latest developments in DESFA's selling process.
4.2. Condensed Interim Financial Statements
30 JUNE 2018
INTERIM CONDENSED FINANCIAL STATEMENTS FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2018 (All amounts in Euro thousands unless otherwise stated)
| Page | ||
|---|---|---|
| I. | Company Information | 3 |
| II. | Interim Condensed Statement of Financial Position | 4 |
| III. | Interim Condensed Statement of Comprehensive Income | 5 |
| IV. | Interim Condensed Statement of Changes in Equity | 6 |
| V. | Interim Condensed Statement of Cash Flows | 7 |
| VI. | Notes to the Interim Condensed Financial Statements | 8 |
INTERIM CONDENSED FINANCIAL STATEMENTS FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2018 (All amounts in Euro thousands unless otherwise stated)
| Directors | Efstathios Tsotsoros – Chairman of the Board & Chief Executive Officer (from 17/04/2018) Andreas Shiamishis – Deputy Chief Executive Officer Ioannis Psichogios – Member Georgios Alexopoulos – Member Theodoros–Achilleas Vardas – Member Georgios Grigoriou – Member Dimitrios Kontofakas – Member Vasileios Kounelis – Member Loudovikos Kotsonopoulos – Member (from 17/04/2018) Theodoros Pantalakis – Member Spiridon Pantelias – Member Constantinos Papagiannopoulos – Member Georgios Papakonstantinou – Member (from 06/06/2018) |
|---|---|
| Other Board Members during the year |
Grigorios Stergioulis – Chief Executive Officer (until 17/04/2018) Panagiotis Ofthalmides – Member (until 06/06/2018) |
| Registered Office: | 8A Chimarras Str. GR 15125 Maroussi, Greece |
| Registration number: | 2443/06/B/86/23 |
| General Commercial Registry: |
000296601000 |
| Auditors: | ERNST & YOUNG (HELLAS) Certified Auditors – Accountants 8B Chimarras str 15125 Maroussi Greece |
These financial statements constitute an integral part of the Group Half-Yearly Financial Report, which can be found at https://www.helpe.gr/ and which incorporate the Independent Auditor's Report.
INTERIM CONDENSED FINANCIAL STATEMENTS FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2018 (All amounts in Euro thousands unless otherwise stated)
| As at | |||
|---|---|---|---|
| Note | 30 June 2018 | 31 December 2017 | |
| ASSETS | |||
| Non-current assets | |||
| Property, plant and equipment | 9 | 2.693.831 | 2.719.172 |
| Intangible assets | 10 | 8.226 | 7.042 |
| Investments in subsidiaries, associates and joint ventures | 689.172 | 671.622 | |
| Investment in equity instruments | 3 | 595 | 1.252 |
| Loans, advances and long-term assets | 18.926 | 19.686 | |
| 3.410.750 | 3.418.774 | ||
| Current assets | |||
| Inventories | 11 | 931.465 | 963.746 |
| Trade and other receivables | 12 | 1.106.951 | 989.901 |
| Derivative financial instruments | 3 | 13.396 | 11.514 |
| Cash, cash equivalents and restricted cash | 13 | 736.250 | 813.251 |
| 2.788.062 | 2.778.412 | ||
| Total assets | 6.198.812 | 6.197.186 | |
| EQUITY | |||
| Share capital | 14 | 1.020.081 | 1.020.081 |
| Reserves | 15 | 273.851 | 360.694 |
| Retained Earnings | 672.060 | 428.448 | |
| Total equity | 1.965.992 | 1.809.223 | |
| LIABILITIES | |||
| Non-current liabilities | |||
| Borrowings | 16 | 1.732.683 | 909.579 |
| Deferred income tax liabilities | 136.189 | 89.959 | |
| Retirement benefit obligations | 108.133 | 104.331 | |
| Provisions for other liabilities and charges | 2.291 | 6.058 | |
| Trade and other payables | 15.061 | 15.569 | |
| 1.994.357 | 1.125.496 | ||
| Current liabilities | |||
| Trade and other payables | 17 | 1.186.635 | 1.554.027 |
| Current income tax liabilities | 55.385 | 2.769 | |
| Borrowings | 16 | 921.483 | 1.704.951 |
| Dividends payable | 74.960 | 720 | |
| 2.238.463 | 3.262.467 | ||
| Total liabilities | 4.232.820 | 4.387.963 | |
| Total equity and liabilities | 6.198.812 | 6.197.186 |
| E. Tsotsoros | A. Shiamishis | S. Papadimitriou | ||
|---|---|---|---|---|
| Chairman of the Board & Chief Executive Officer |
Deputy Chief Executive Officer & Chief Financial Officer |
Accounting Director |
INTERIM CONDENSED FINANCIAL STATEMENTS FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2018 (All amounts in Euro thousands unless otherwise stated)
| Note | For the six-month period ended 30 June 2018 |
30 June 2017 | For the three-month period ended 30 June 2018 |
30 June 2017 | |
|---|---|---|---|---|---|
| Sales | 4 | 4.322.650 | 3.724.054 | 2.312.015 | 1.819.580 |
| Cost of sales | (3.877.253) | (3.369.930) | (2.021.461) | (1.685.854) | |
| Gross profit | 445.397 | 354.124 | 290.554 | 133.726 | |
| Selling and distribution expenses | (48.132) | (31.771) | (25.894) | (16.203) | |
| Administrative expenses | (40.142) | (37.148) | (20.585) | (19.331) | |
| Exploration and development expenses | (162) | (66) | (141) | (28) | |
| Other operating income/(expenses) & other gains/(losses)-net | 5 | 1.044 | (21.069) | 425 | (11.902) |
| Operating profit | 358.005 | 264.070 | 244.359 | 86.262 | |
| Finance income Finance expense |
4.614 (71.584) |
6.295 (81.561) |
2.127 (35.165) |
3.187 (38.747) |
|
| Dividend income | 35.083 | 33.724 | 35.083 | 33.724 | |
| Currency exchange losses | 6 | 4.243 | (7.024) | 6.744 | (6.303) |
| Profit before income tax | 330.361 | 215.504 | 253.148 | 78.123 | |
| Income tax expense | 7 | (96.634) | (54.403) | (79.236) | (12.989) |
| Profit for the period | 233.727 | 161.101 | 173.912 | 65.134 | |
| Other comprehensive income / (loss): | |||||
| Items that will not be reclassified to profit or loss: | |||||
| Acruarial losses on defined benefit pension plans | 15 | - | (1.775) | - | (1.775) |
| Changes in the fair value of equity instruments | 15 | (468) (468) |
2.130 355 |
(345) (345) |
2.130 355 |
| Items that may be reclassified subsequently to profit or loss: | |||||
| Fair value gains / (losses) on cash flow hedges | 15 | 16.256 | (21.431) | 14.372 | (12.010) |
| Derecognition of gains/(losses) on hedges through comprehensive income |
15 | (14.920) 1.336 |
1.979 (19.452) |
(14.920) (548) |
1.979 (10.031) |
| Other Comprehensive income / (loss) for the period, net of | |||||
| tax | 868 | (19.097) | (893) | (9.676) | |
| Total comprehensive income for the period | 234.595 | 142.004 | 173.019 | 55.458 | |
| Basic and diluted earnings per share (expressed in Euro per share) |
8 | 0,76 | 0,53 | 0,57 | 0,21 |
INTERIM CONDENSED FINANCIAL STATEMENTS FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2018 (All amounts in Euro thousands unless otherwise stated)
| Note | Share Capital |
Reserves | Retained Earnings |
Total Equity |
|
|---|---|---|---|---|---|
| Balance at 1 January 2017 | 1.020.081 | 469.754 | 100.315 | 1.590.150 | |
| Actuarial losses on defined benefit pension plans Changes in the fair value of equity instruments |
15 15 |
- - |
(1.775) 2.130 |
- - |
(1.775) 2.130 |
| Fair value gains / (losses) on cash flow hedges Derecognition of gains/(losses) on hedges through |
15 | - | (21.431) | - | (21.431) |
| comprehensive income | 15 | - | 1.979 | - | 1.979 |
| Other comprehensive income | - | (19.097) | - | (19.097) | |
| Profit for the period | - | - | 161.101 | 161.101 | |
| Total comprehensive income for the period | - | (19.097) | 161.101 | 142.004 | |
| Dividends | 22 | - | (61.127) | - | (61.127) |
| Balance at 30 June 2017 | 1.020.081 | 389.530 | 261.416 | 1.671.027 | |
| Balance at 1 January 2018 (as originally presented) Effect of changes in accounting policy |
2 | 1.020.081 - |
360.694 166 |
428.448 (1.072) |
1.809.223 (906) |
| Balance at 1 January 2018 | 1.020.081 | 360.860 | 427.376 | 1.808.317 | |
| Movement - 1 January 2018 to 30 June 2018 Changes in the fair value of equity instruments |
15 | - | (468) | - | (468) |
| Fair value gains / (losses) on cash flow hedges Derecognition of gains/(losses) on hedges through |
15 | - | 16.256 | - | 16.256 |
| comprehensive income | 15 | - | (14.920) | - | (14.920) |
| Other comprehensive income | - | 868 | - | 868 | |
| Profit for the period | - | - | 233.727 | 233.727 | |
| Total comprehensive income for the period | - | 868 | 233.727 | 234.595 | |
| Share based payments | 15 | - | (73) | (970) | (1.043) |
| Acquisition of Treasury Shares | 15 | - | (511) | - | (511) |
| Issue of Treasury shares to employees | 15 | - | 1.042 | - | 1.042 |
| Dividends | 15,22 | - | (88.335) | 11.927 | (76.408) |
| Balance at 30 June 2018 | 1.020.081 | 273.851 | 672.060 | 1.965.992 |
INTERIM CONDENSED FINANCIAL STATEMENTS FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2018 (All amounts in Euro thousands unless otherwise stated)
| For the six-month period ended | |||
|---|---|---|---|
| Note | 30 June 2018 | 30 June 2017 | |
| Cash flows from operating activities | |||
| Cash generated from operations | 18 | 13.860 | 143.812 |
| Income tax received / (paid) | 4.184 | (15) | |
| Net cash generated from operations | 18.044 | 143.797 | |
| Cash flows from investing activities | |||
| Purchase of property, plant and equipment & intangible assets | 9,10 | (41.992) | (62.446) |
| Dividends received | - | 318 | |
| Interest received | 4.614 | 6.295 | |
| Settlement of consideration of acquisition of further equity interest | |||
| in subsidiary | 23 | (16.000) | - |
| Participation in share capital increase of subsidiaries & associates | 23 | (15.853) | (415) |
| Net cash used in investing activities | (69.231) | (56.248) | |
| Cash flows from financing activities | |||
| Interest paid | (65.164) | (100.811) | |
| Dividends paid | (214) | (187) | |
| Movement in restricted cash | 13 | 144.445 | 11.873 |
| Acquisition of treasury stock | 15 | (511) | - |
| Proceeds from borrowings | 442.698 | 229.634 | |
| Repayments of borrowings | (406.866) | (406.038) | |
| Net cash generated from / (used in) financing activities | 114.388 | (265.529) | |
| Net decrease in cash and cash equivalents | 63.201 | (177.980) | |
| Cash and cash equivalents at the beginning of the period | 13 | 667.599 | 731.258 |
| Exchange losses on cash and cash equivalents | 4.243 | (7.024) | |
| Net decrease in cash and cash equivalents | 63.201 | (177.980) | |
| Cash and cash equivalents at end of the period | 13 | 735.043 | 546.254 |
INTERIM CONDENSED FINANCIAL STATEMENTS FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2018 (All amounts in Euro thousands unless otherwise stated)
Hellenic Petroleum S.A. (the "Company" or "Hellenic Petroleum") operates in the energy sector in Greece. The Company's activities include refining and marketing of oil products, production and marketing of petrochemical products and exploration for hydrocarbons.
The interim condensed financial statements are prepared in accordance with International Accounting Standard 34 (IAS 34) – Interim Financial Reporting, and present the financial position, results of operations and cash flows of the Company on a going concern basis. Management has concluded that the going concern basis of preparation of the accounts is appropriate.
The interim condensed financial statements have been prepared in accordance with the historical cost basis, except for the following:
Where necessary, comparative figures have been reclassified to conform to changes in the presentation of the current period.
These interim condensed financial statements do not include all information and disclosures required for the annual financial statements and should be read in conjunction with the annual financial statements for the year ended 31 December 2017, which can be found on the Company's website www.helpe.gr.
The interim condensed financial statements for the six-month period ended 30 June 2018 have been authorised for issue by the Board of Directors on 30 August 2018.
The preparation of the interim condensed financial statements, in accordance with IFRS, requires the use of certain critical accounting estimates and assumptions. It also requires management to exercise its judgment in the process of applying the Company's accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the interim condensed financial statements are disclosed where considered necessary. Estimates and judgements are discussed in detail in the annual financial statements for the year ended 31 December 2017, are continuously evaluated and are based on historical experience and other factors, including expectations of future events as assessed to be reasonable under the present circumstances.
The accounting principles and calculations used in the preparation of the interim condensed financial statements are consistent with those applied in the preparation of the financial statements for the year ended 31 December 2017 and have been consistently applied in all periods presented in this report, except for the following IFRS's, which have been adopted by the Company as of 1 January 2018. The Company applies for the first time, IFRS 15 Revenue from Contracts with Customers and IFRS 9 Financial Instruments. As required by IAS 34, the nature and effect of these changes are disclosed below. Several other amendments and interpretations apply for the first time in 2018 but do not have a significant impact on the interim condensed financial statements of the Company for the six-month period ended 30 June 2018.
IFRS 9 "Financial Instruments. The standard introduces new requirements for classification and measurement, impairment, and hedge accounting.
The Company adopted the new standard as of 1 January 2018 without restating comparative information. The cumulative effect of the adjustments arising from the new requirements are, therefore recognised in the opening balance of retained earnings on 1 January 2018.
The following table shows the adjustments recognised for each individual line item. Line items that were not affected by the changes have not been included. The adjustments are explained in more detail below.
Impact on the statement of financial position (increase / (decrease)) as at 31 December 2017, as published:
| Statement of financial position extract | Adjustments | 31 December 2017 | IFRS 9 | 1 January 2018 |
|---|---|---|---|---|
| As published | after effect of IFRS9 | |||
| ASSETS | ||||
| Non-current assets | ||||
| Available for sale financial assets | (a) | 1.252 | (1.252) | - |
| Investment in equity instruments | (a) | - | 1.252 | 1.252 |
| Current assets | ||||
| Trade and other receivables | (b) | 989.901 | (1.277) | 988.624 |
| EQUITY | ||||
| Reserves | (a) | 360.694 | 166 | 360.860 |
| Retained Earnings | (a),(b) | 428.448 | (1.072) | 427.376 |
| LIABILITIES | ||||
| Non-current liabilities | ||||
| Deferred income tax liabilities | (b) | 89.959 | (371) | 89.588 |
Under IFRS 9, financial assets are subsequently measured at fair value through profit or loss (FVPL), amortized cost, or fair value through other comprehensive income (FVOCI). The classification is based on two criteria: the Company's business model for managing the assets; and whether the instruments' contractual cash flows represent solely payments of principal and interest on the principal amount outstanding.
The financial assets (equity investments) that were classified as available-for-sale (AFS) under IAS 39, are now classified as 'Investments in equity instruments' and measured at fair value through other comprehensive income. Any changes in the fair value of such equity instruments are included in "items that will not be reclassified to profit or loss". IFRS 9 permits an entity to make an irrevocable election to designate an investment in equity instruments that is not held for trading as at fair value through other comprehensive income.
As a result of applying the classification retrospectively, the Company reclassified an amount of € 0,2 million from retained earnings to reserves.
Derivative instruments, to the extent they are not designated as effective hedges, continue to be classified as financial assets at FVPL.
The accounting for the Company's financial liabilities remain largely the same as under IAS 39
The adoption of IFRS 9 has changed the Company's accounting for impairment losses for financial assets by replacing IAS 39's incurred loss approach with a forward-looking expected credit loss ("ECL") approach.
For trade receivables, the Company has applied the standard's simplified approach and has calculated ECLs based on lifetime expected credit losses. The Company has established a provision matrix that is based on the Company's historical credit loss experience, adjusted for forward-looking factors specific to the debtors and the economic environment.
For other financial assets (including intra-group loans to subsidiaries), the ECL is based on the 12-month ECL. The 12-month ECL is the portion of lifetime ECLs that results from default events on a financial instrument that are possible within 12 months after the reporting date. However, when there has been as significant increase in credit risk since origination, the allowance will be based on the lifetime ECL.
Financial assets with contractual payments over 90 days past due constitute default events. However, in certain cases, the Company may also consider a financial asset to be in default when internal or external information indicates that the Company is unlikely to receive the outstanding contractual amounts in full before taking into account any credit enhancements held by the Company.
The effect of the above change on the statement of financial position as at 1 January 2018 resulted in a decrease of equity of €0,9 million, a decrease of € 1,3 million in trade receivables and the increase of € 0,4 million in deferred income tax assets.
At the date of the initial application, all of the Company's existing hedging relationships were eligible to be treated as continuing hedging relationships under IFRS 9 and, as such, the adoption of the hedge accounting requirements of the new standard had no significant impact on the Company's financial statements. The Company's risk management policies and hedge documentation are aligned with the requirement of the new standard and hedge accounting continues to apply.
IFRS 15 "Revenue from Contracts with Customers". IFRS 15 establishes a five-step model that will apply to revenue earned from a contract with a customer (with limited exceptions), regardless of the type of revenue transaction or the industry. The standard's requirements will also apply to the recognition and measurement of gains and losses on the sale of some non-financial assets that are not in the Company's ordinary activities (e.g. sales of property, plant and equipment or intangible).
As from 1 January 2018, the Company applies the new standard using the modified retrospective method, therefore the initial application did not result in any restatement of comparative data. The new standard did not have any significant impact on the Company's interim condensed financial statements, upon adoption since no material differences from the current accounting policies were identified. Therefore it did not have any impact on retained earnings and no transition adjustments were required as a result of its application. Although the implementation of IFRS 15 does not generally represent a material change from the Company's current practices the Company revised its respective accounting policy as follows.
The Company recognizes revenue when (or as) a contractual promise to a customer (performance obligation) is fulfilled by transferring a promised good or service (which is when the customer obtains control over the promised goods or services). If a contract contains more than one performance obligation, the total transaction price of the contract is allocated among the individual, separate performance obligations based on their relative standalone selling prices. The amount of revenue recognized is the amount allocated to the satisfied performance obligation based on the consideration that the Company expects to receive in accordance with the terms of the contracts with the customers. Variable considerations are included in the amount of revenue recognized only to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognized will not occur in the future.
Options for volume related rebates are assessed by the Company to determine whether they constitute a material right that the customer would not receive without entering into that contract. For all such options that are considered as material rights, the Company assesses the likelihood of its exercise and then the portion of the transaction price allocated to the option is deferred and recognized when it is either exercised or lapsed.
Under the new requirements, the Company concluded that volume related rebates constitute a material right which should be recognized over time up to the point it crystalizes. The Company provides volume rebates to customers based on thresholds specified in contracts. All such rebates are settled within the financial year and therefore the application of the new standard would have a nil effect in the annual Financial Statements. However, for the purposes of the interim condensed financial statements the Company has estimated the portion of volume rebates
which corresponds to the build-up of the material right based on volumes sold to each client. The total charge to revenue for the six-month period ended 30 June 2018 is €4,1 million.
Revenue from contracts with customers in accordance with the Group's commercial policy is disaggregated by operating segment and distribution channel in Note 4.
The Company has not early adopted any other of the following standards, interpretations or amendments that have been issued, but are not yet effective.
IFRS 16 "Leases". The standard is effective for annual periods beginning on or after 1 January 2019. IFRS 16 sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract, i.e. the customer ('lessee') and the supplier ('lessor'). The new standard requires lessees to recognise most leases on their financial statements. Lessees will have a single accounting model for all leases, with certain exemptions. Lessor accounting is substantially unchanged.
INTERIM CONDENSED FINANCIAL STATEMENTS FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2018 (All amounts in Euro thousands unless otherwise stated)
The standard will affect primarily the accounting for operating leases. As at the reporting date, the Company has non-cancellable operating lease commitments of € 12,5 million. However, the Company has not yet determined to what extent these commitments will result in the recognition of an asset and a liability for future payments and how this will affect the Company's profit and classification of cash flows. This is due to the fact that, some of the commitments may be covered by the exception for short-term and low-value leases and some commitments may relate to arrangements that will not qualify as leases under IFRS 16. The Company expects to complete the assessment of the impact from the implementation of the new standard by 31 December 2018.
who develop accounting policies based on the Conceptual Framework, it is effective for annual periods beginning on or after 1 January 2020.
The Company's activities are primarily centred on Downstream Refining (incl. Petrochemicals) & Marketing of petroleum products, with secondary activities relating to exploration of hydrocarbons. As such, the Company is exposed to a variety of financial and commodity markets risks including foreign exchange and commodity price risk, credit risk, liquidity risk, cash flow risk and interest-rate risk. In line with international best practices and within the context of local markets and legislative framework, the Company's overall risk management policies aim at reducing possible exposure to market volatility and / or mitigating its adverse effects on the financial position of the Company to the extent possible. In general, the key factors that impact the Company's operations are summarised as follows:
Greek Macros: Following a period of economic recession between 2009-2016, during which real GDP fell by 26%, the Greek economy returned to positive growth rates in 2017, with GDP rising by 1,4%, supported mainly by exports of goods and services, as well as investments. The upward trend of the economy continued for a fifth consecutive quarter, with real GDP in the first quarter of 2018 increasing by 0,8% compared to the fourth quarter of 2017 and 2,3% compared to the first quarter of 2017 (the highest annual growth since 2008). Economic recovery, improved banking system stability, completion of the second and third EU bailout programme reviews, as well as improved confidence reflected in the Greek government bond yields and the recent 7-year government bond issue, contributed to an enhanced macroeconomic backdrop in the country. Employment growth (+2,2% in 2017, +0,3% in the first quarter of 2018) had a positive impact on income and private consumption; however, inflation and wage growth are still weak.
Total domestic fuels consumption reduced by 4,2% during the first half of 2018, mainly due to the reduction in demand for heating gasoil, which is mainly attributed to mild weather conditions and higher oil product prices during the first three months of the year. Motor fuels demand, however, increased by 2,2% comparing to the first half of 2017, driven by the higher auto diesel consumption.
Despite the significant progress in economic recovery recorded in 2017, and the first quarter of 2018, the Greek economy faces a number of significant challenges, such as the high public debt, large non-performing loans, high unemployment, low structural competitiveness and the collapse of investment, which should be addressed in the medium-term and will affect the country's future growth prospects. Management continually assesses the situation and its possible future impact to ensure that all necessary actions and measures are taken in order to minimize the impact on the Company's operations.
Securing continuous crude oil supplies: During the last 12 months crude oil reference prices started recovering, following a 3-year period of contraction (June 2014 – June 2017), averaging \$75/bbl in the second quarter of 2018. Nonetheless, oil prices are still 35% below June 2014 peak, therefore the cost of crude, for both sweet and especially
INTERIM CONDENSED FINANCIAL STATEMENTS FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2018 (All amounts in Euro thousands unless otherwise stated)
sour grades, which represent the key source of feedstock for complex refiners like Hellenic Petroleum, remains at reasonable levels, maintaining the competitive position of Med refiners vs. their global peers. Concerning the decision of the US President for re-imposition of the nuclear-related sanctions against Iran, Hellenic Petroleum, which is currently being supplied with Iranian oil, is closely monitoring developments and will assess its position accordingly (Note 17).
Financing of operations: Given financial market developments since 2011, the key priorities of the Company have been the management of the 'Assets and Liabilities' maturity profile, funding in accordance with its strategic investment plan and liquidity risk for operations. As a result of these key priority initiatives and in line with its medium term financing plan, Hellenic Petroleum has maintained a mix of long term, medium term and short term credit facilities by taking into consideration bank and debt capital markets' credit capacity as well as cash flow planning and commercial requirements. Approximately 67% of total debt is financed by medium to long-term committed credit lines while the remaining debt is being financed by short term working capital credit facilities. Further details of the relevant loans and refinancing are provided in Note 16.
Capital management: Another key priority of the Company has been the management of its Assets. Overall the Company has around €3,9 billion of capital employed which is driven from working capital, investment in fixed assets and its investment in the DEPA Group. Current assets are mainly funded with current liabilities (incl. short-term bank debt) which are used to finance working capital (inventories and receivables). As a result of the implementation of the Company's investment plan, during the period 2007-2012, net debt level has increased to approximately 49% of total capital employed while the remaining is financed through shareholders equity. The Company has started reducing its net debt levels through utilisation of the incremental operating cashflows, post completion and operation of the new Elefsina refinery. This is expected to lead to lower Debt to Equity ratio, better matched Asset and Liability maturity profiles as well as lower financing costs.
The interim condensed financial statements do not include all financial risk management information and disclosures that are required in the annual financial statements and should be read in conjunction with the annual financial statements as at 31 December 2017.
There have been no changes in the risk management or in any risk management policies since 31 December 2017.
The table below analyses financial instruments carried at fair value, by valuation method. The different levels are defined as follows:
The following table presents the Company's assets and liabilities that are measured at fair value at 30 June 2018:
| Total | ||||
|---|---|---|---|---|
| Assets | Level 1 | Level 2 | Level 3 | balance |
| Derivatives used for hedging | - | 13.396 | - | 13.396 |
| Investment in equity instruments | 595 | - | - | 595 |
| 595 | 13.396 | - | 13.991 | |
| Liabilities | ||||
| Derivatives used for hedging | - | - | - | - |
| - | - | - | - |
The following table presents the Company's assets and liabilities that are measured at fair value at 31 December 2017:
| Assets | Level 1 | Level 2 | Level 3 | Total balance |
|---|---|---|---|---|
| Derivatives used for hedging | - | 11.514 | - | 11.514 |
| Investment in equity instruments | 1.252 | - | - | 1.252 |
| 1.252 | 11.514 | - | 12.766 | |
| Liabilities | ||||
| Derivatives used for hedging | - | - | - | - |
| - | - | - | - |
The fair value of financial instruments traded in active markets is based on quoted market prices at the balance sheet date. A market is regarded as active if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service, or regulatory agency. These financial instruments are included in level 1.
The fair value of financial instruments that are not traded in an active market (for example, over-the-counter derivatives) is determined by using valuation techniques. These valuation techniques maximise the use of observable market data where it is available and rely as little as possible on entity specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.
If one or more of the significant inputs are not based on observable market data, the instrument is included in level 3.
Specific valuation techniques used to value financial instruments include:
There were no changes in valuation techniques during the period. There were no transfers between levels during the period.
The fair value of the following financial assets and liabilities approximate their carrying amount, due to their shortterm nature:
INTERIM CONDENSED FINANCIAL STATEMENTS FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2018 (All amounts in Euro thousands unless otherwise stated)
All critical operating decisions are made by the Executive Committee, which reviews the Company's internal reporting in order to assess performance and allocate resources. Management has determined the operating segments based on these reports. The committee assesses performance taking into account a number of measures, which may vary depending on the nature and evolution of a business segment by taking into account the risk profile, cash flow, product and market considerations. Information provided to the committee is measured in a manner consistent with that of the financial statements.
Financial information regarding the Company's operating segments for the six-month periods ended 30 June 2018 and 2017 is presented below:
| Exploration | ||||||
|---|---|---|---|---|---|---|
| Petro | & | |||||
| Note | Refining | chemicals | Production | Other | Total | |
| Sales | 4.169.972 | 152.678 | - | - | 4.322.650 | |
| EBITDA | 385.771 | 47.679 | (3.379) | (3.898) | 426.173 | |
| Depreciation and amortisation | 9,10 | (66.071) | (1.772) | (309) | (16) | (68.168) |
| Operating profit / (loss) | 319.700 | 45.907 | (3.688) | (3.914) | 358.005 | |
| Finance (expenses)/income - net | (49.804) | (913) | - | (16.253) | (66.970) | |
| Dividend income | - | - | - | 35.083 | 35.083 | |
| Currency exchange gains/(losses) | 6 | 4.243 | - | - | - | 4.243 |
| Profit / (Loss) before income tax | 274.139 | 44.994 | (3.688) | 14.916 | 330.361 | |
| Income tax expense | 7 | (96.634) | ||||
| Profit for the year | 233.727 |
| Exploration | ||||||
|---|---|---|---|---|---|---|
| Petro | & | |||||
| Refining | chemicals | Production | Other | Total | ||
| Sales | 3.588.637 | 135.417 | - | - | 3.724.054 | |
| EBITDA | 285.790 | 46.538 | (1.849) | (3.473) | 327.006 | |
| Depreciation and amortisation | 9,10 | (61.067) | (1.743) | (97) | (29) | (62.936) |
| Operating profit / (loss) | 224.723 | 44.795 | (1.946) | (3.502) | 264.070 | |
| Finance (expenses)/income - net | (55.383) | (913) | - | (18.970) | (75.266) | |
| Dividend income | - | - | - | 33.724 | 33.724 | |
| Currency exchange gains/(losses) | 6 | (7.024) | - | - | - | (7.024) |
| Profit / (Loss) before income tax | 162.316 | 43.882 | (1.946) | 11.252 | 215.504 | |
| Income tax expense | 7 | (54.403) | ||||
| Profit for the year | 161.101 |
During the year 2017, management reconsidered the treatment of oil products exchanged or swapped for oil products of a similar nature and value. Previously, sales and purchases arising from such transactions were recognised at their gross sales value within "Sales" and "Cost of sales" respectively. Following the reconsideration, the above transactions are no longer regarded as sales and to this effect comparative figures for the period ended 30 June 2017 were restated by reclassifying an amount of € 29,6 million from "Sales" to "Cost of Sales" so as to conform to the change in presentation.
There were no changes in the basis of segmentation or in the basis of measurement of segment profit or loss, as compared to the annual financial statements for the year ended 31 December 2017. There has been no material change in the definition of segments or the segmental analysis of total assets or total liabilities from the amounts disclosed in the annual financial statements for the year ended 31 December 2017.
An analysis of the Company's net sales by type of market (domestic, aviation & bunkering, exports) is presented below:
| For the six-month period ended | ||
|---|---|---|
| 30 June 2018 | 30 June 2017 | |
| Net Sales | ||
| Domestic | 1.259.193 | 1.252.494 |
| Aviation & Bunkering | 512.375 | 441.194 |
| Exports | 2.551.082 | 2.030.366 |
| Total | 4.322.650 | 3.724.054 |
| For the six-month period ended | For the three-month period ended | |||
|---|---|---|---|---|
| 30 June 2018 | 30 June 2017 | 30 June 2018 | 30 June 2017 | |
| Income from grants | 315 | 349 | 157 | 175 |
| Services to third parties | 2.245 | 2.058 | 1.050 | 939 |
| Rental income | 715 | 671 | 356 | 336 |
| Ιnsurance compensation | 1.149 | - | 1.370 | - |
| Total other operating income | 4.424 | 3.078 | 2.933 | 1.450 |
| Amortization of long-term contracts costs | (2.763) | (6.846) | (1.763) | (3.565) |
| Legal costs relating to arbitration proceedings ruling | - | (13.680) | - | (5.680) |
| Other operating income / (expenses) | 2.683 | (621) | 2.555 | (1.107) |
| Total other gains / (losses) | 4.344 | (18.069) | 3.725 | (8.902) |
| Impairment of investments in associates | (3.300) | (3.000) | (3.300) | (3.000) |
| Other operating income / (expenses) and other gains / (losses) |
1.044 | (21.069) | 425 | (11.902) |
Other operating income / (expenses) – net, include income or expenses, which do not relate to the trading activities of the Company.
Foreign currency exchange gains of €4,2 million, reported for the six-month period ended 30 June 2018, mainly relate to unrealized gains arising from the valuation of bank accounts denominated in foreign currency (mostly US\$). Foreign currency exchange losses of €7,0 million, reported for the six-month period ended 30 June 2017, mainly relate to unrealized losses arising from the valuation of bank accounts denominated in foreign currency (mostly US\$).
INTERIM CONDENSED FINANCIAL STATEMENTS FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2018 (All amounts in Euro thousands unless otherwise stated)
| For the six-month period ended | For the three-month period ended | ||||
|---|---|---|---|---|---|
| 30 June 2018 | 30 June 2017 | 30 June 2018 | 30 June 2017 | ||
| Current year tax | (39.519) | (15) | (39.306) | (15) | |
| Prior year tax | 5.426 | - | (1.740) | - | |
| Tax on Reserves | (11.927) | - | (11.927) | - | |
| Deferred tax | (50.614) | (54.388) | (26.263) | (12.974) | |
| Income tax expense | (96.634) | (54.403) | (79.236) | (12.989) |
The corporate income tax rate is 29% for 2018 and 2017. In accordance with the applicable tax provisions, tax audits are conducted as follows:
Effective for fiscal years ending 31 December 2011 onwards, Greek companies meeting certain criteria can obtain an "Annual Tax Certificate" as provided for by par.5, article 82 of L.2238/1994 and article 65a of L.4174/2013 from their statutory auditor in respect of compliance with tax law. The issuance of a Tax Compliance Report, under certain conditions, substitutes the full tax audit by the tax authorities; however, the tax authorities reserve the right of future tax audit. The Company has received unqualified Tax Compliance Reports, for fiscal years up to 2016 (inclusive). The tax audit for the financial year 2017 is in progress, the Tax Compliance Report is expected to be issued within the fourth quarter of 2018 and, based on the current status it is expected to be unqualified.
The Company has undergone full tax audits for the financial years ended 31 December 2011.
As explained also in Note 21 and notwithstanding the possibility of future tax audits, Management believes that no additional material liability will arise as a result of unaudited tax years over and above the tax liabilities and provisions recognised in the interim financial statements for the six-month period ended 30 June 2018.
Basic earnings per share are calculated by dividing the net profit attributable to equity holders of the Company by the weighted average number of ordinary shares in issue during the period, excluding the weighted average number of treasury shares (Note 15). Diluted earnings per ordinary share are not materially different from basic earnings per share.
| For the six-month period ended | For the three-month period ended | ||||
|---|---|---|---|---|---|
| 30 June 2018 | 30 June 2017 | 30 June 2018 | 30 June 2017 | ||
| Earnings per share attributable to the Company | |||||
| Shareholders (expressed in Euro per share): | 0,76 | 0,53 | 0,57 | 0,21 | |
| Net income attributable to ordinary shares | |||||
| (Euro in thousands) | 233.727 | 161.101 | 173.912 | 65.134 | |
| Weighted average number of ordinary shares | 305.621.912 | 305.635.185 | 305.632.718 | 305.635.185 |
INTERIM CONDENSED FINANCIAL STATEMENTS FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2018 (All amounts in Euro thousands unless otherwise stated)
| Land | Buildings | Plant & Machi nery |
Motor vehicles |
Furniture and fixtures |
Assets Under Cons truction |
Total | |
|---|---|---|---|---|---|---|---|
| Cost | |||||||
| As at 1 January 2017 | 115.396 | 530.850 | 3.790.315 | 15.054 | 85.947 | 80.659 | 4.618.221 |
| Additions | 20.775 | 5.328 | 1.427 | 23 | 2.047 | 31.737 | 61.337 |
| Capitalised projects | - | 692 | 5.300 | 81 | 74 | (6.147) | - |
| Disposals | - | - | - | (32) | (87) | (280) | (399) |
| Transfers and other movements | - | - | 2.375 | - | - | (1.735) | 640 |
| As at 30 June 2017 | 136.171 | 536.870 | 3.799.417 | 15.126 | 87.981 | 104.234 | 4.679.799 |
| Accumulated Depreciation | |||||||
| As at 1 January 2017 | - | 200.440 | 1.624.451 | 10.470 | 76.179 | - | 1.911.540 |
| Charge for the period | - | 8.246 | 51.557 | 194 | 1.121 | - | 61.118 |
| Disposals | - | - | - | (32) | (87) | - | (119) |
| As at 30 June 2017 | - | 208.686 | 1.676.008 | 10.632 | 77.213 | - | 1.972.539 |
| Net Book Value at 30 June 2017 | 136.171 | 328.184 | 2.123.409 | 4.494 | 10.768 | 104.234 | 2.707.260 |
| Cost | |||||||
| As at 1 January 2018 | 142.850 | 534.559 | 3.900.635 | 15.453 | 89.474 | 83.287 | 4.766.258 |
| Additions | - | 48 | 2.090 | 10 | 470 | 36.644 | 39.262 |
| Capitalised projects | - | 1.077 | 32.857 | 54 | 115 | (34.103) | - |
| Disposals | - | - | (28) | - | (38) | - | (66) |
| Transfers and other movements | - | - | 2.859 | - | - | (572) | 2.287 |
| As at 30 June 2018 | 142.850 | 535.684 | 3.938.413 | 15.517 | 90.021 | 85.256 | 4.807.741 |
| Accumulated Depreciation | |||||||
| As at 1 January 2018 | - | 216.487 | 1.741.434 | 10.814 | 78.351 | - | 2.047.086 |
| Charge for the period | - | 7.799 | 56.874 | 211 | 1.166 | - | 66.050 |
| Disposals | - | - | (28) | - | (38) | - | (66) |
| Impairment | - | - | - | - | - | 840 | 840 |
| As at 30 June 2018 | - | 224.286 | 1.798.280 | 11.025 | 79.479 | 840 | 2.113.910 |
| Net Book Value at 30 June 2018 | 142.850 | 311.398 | 2.140.133 | 4.492 | 10.542 | 84.416 | 2.693.831 |
'Transfers and other movements' include the transfer of spare parts for the refinery units from inventories to fixed assets (Note 11), as well as the transfer of computer software development costs to intangible assets. During 2017, the Company proceeded with changes in the allocation of the provision for consumables and spare parts. As a result the comparative figure of Plant and Machinery, Transfers and other movements (cost) was reduced by €0,8 million.
INTERIM CONDENSED FINANCIAL STATEMENTS FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2018 (All amounts in Euro thousands unless otherwise stated)
| Computer software |
Licences & Rights |
Total | |
|---|---|---|---|
| Cost | |||
| As at 1 January 2017 | 90.340 | 24.299 | 114.639 |
| Additions | 1.109 | - | 1.109 |
| Transfers & other movements | 1.735 | - | 1.735 |
| As at 30 June 2017 | 93.184 | 24.299 | 117.483 |
| Accumulated Amortisation | |||
| As at 1 January 2017 | 83.862 | 24.287 | 108.149 |
| Charge for the period | 1.818 | - | 1.818 |
| As at 30 June 2017 | 85.680 | 24.287 | 109.967 |
| Net Book Value at 30 June 2017 | 7.504 | 12 | 7.516 |
| Cost | |||
| As at 1 January 2018 | 95.205 | 24.299 | 119.504 |
| Additions | 190 | 2.540 | 2.730 |
| Transfers & other movements | 572 | - | 572 |
| As at 30 June 2018 | 95.967 | 26.839 | 122.806 |
| Accumulated Amortisation | |||
| As at 1 January 2018 | 88.175 | 24.287 | 112.462 |
| Charge for the period | 1.908 | 210 | 2.118 |
| As at 30 June 2018 | 90.083 | 24.497 | 114.580 |
| Net Book Value at 30 June 2018 | 5.884 | 2.342 | 8.226 |
'Licenses and Rights' include net exploration license costs relating to the two new exploration & production of hydrocarbons' concessions in Western Greece. 'Transfers and other movements' in computer software include the transfer of computer software development costs from assets under construction to intangible assets.
| As at | |||
|---|---|---|---|
| 30 June 2018 | 31 December 2017 | ||
| Crude oil | 366.397 | 330.840 | |
| Refined products and semi-finished products | 492.891 | 559.312 | |
| Petrochemicals | 18.971 | 21.670 | |
| Consumable materials, spare parts and other | 81.568 | 79.454 | |
| - Less: Impairment provision for Consumables and spare | |||
| parts | (28.362) | (27.530) | |
| Total | 931.465 | 963.746 |
The cost of inventories recognised as an expense and included in 'Cost of sales' amounted to €3,7 billion (30 June 2017: €3,2 billion). As at 30 June 2018, the Company recorded a loss of €1,1 million arising from inventory valuation (30 June 2017: loss of €0,3 million). This is included in 'Cost of sales' in the statement of comprehensive income. In addition, as at 30 June 2018 an amount of €3 million (31 December 2017: €3 million) relating to spare parts for the refinery units, has been transferred from inventories to fixed assets (Note 9).
Under IEA and EU regulations Greece is obliged to hold crude oil and refined product stocks in order to fulfil the EU requirement for compulsory Stock obligations (90 days stock directive), as legislated by Greek Law 3054/2002. This responsibility is passed on to all companies, including Hellenic Petroleum S.A., which import and sell in the domestic
market and who have the responsibility to maintain and finance the appropriate stock levels. Such stocks are part of the operating stocks and are valued on the same basis.
| As at | |||
|---|---|---|---|
| 30 June 2018 | 31 December 2017 | ||
| Trade receivables | 539.532 | 450.922 | |
| - Less: Provision for impairment of receivables | (119.594) | (117.305) | |
| Trade receivables net | 419.938 | 333.617 | |
| Other receivables | 695.295 | 670.606 | |
| - Less: Provision for impairment of receivables | (24.153) | (20.060) | |
| Other receivables net | 671.142 | 650.546 | |
| Deferred charges and prepayments | 15.871 | 5.738 | |
| Total | 1.106.951 | 989.901 |
As part of its working capital management, the Company utilises factoring facilities to accelerate the collection of cash from its customers in Greece. Non-recourse factoring, is excluded from balances shown above, since all risks and rewards of the relevant invoices have been transferred to the factoring institution.
'Other receivables' include balances in respect of advances to suppliers, advances to personnel, claimed VAT, income tax prepayment and taxes paid as a result of tax audit assessments during previous years from the tax authorities, where the Company has started legal proceedings and disputes the relevant amounts. The time of the finalisation of these disputes cannot be estimated and the Company has classified the amounts as current assets. This balance as at 30 June 2018 also includes the following:
| As at | |||
|---|---|---|---|
| 30 June 2018 | 31 December 2017 | ||
| Cash at Bank and in Hand | 735.043 | 667.599 | |
| Cash and cash equivalents | 735.043 | 667.599 | |
| Restricted cash | 1.207 | 145.652 | |
| Total cash, cash equivalents and restricted cash | 736.250 | 813.251 |
Restricted cash as at 31 December 2017 mainly related to a deposit amounting to €144 million, placed as security for a loan agreement of an equal amount with Piraeus Bank, in relation to the Company's Facility Agreement B with the European Investment Bank (Note 16). The outstanding balance under the EIB Facility Agreement B as at 31 December 2017 was €100 million, whilst the outstanding balance of the Piraeus loan as at 31 December 2017 was €144 million. In February 2018, the Company amended the EIB Facility Agreement B, which no longer has security requirements. As a result, the loan with Piraeus Bank was repaid, the security deposit was released and the bank guarantee agreement has been cancelled.
The balance of US Dollars included in Cash at bank as at 30 June 2018 was US\$648 million (Euro equivalent €555 million). The respective amount for the year ended 31 December 2017 was US\$ 549 million (Euro equivalent €458 million).
| Number of Shares (authorised and issued) |
Share Capital |
Share premium |
Total | |
|---|---|---|---|---|
| As at 1 January 2017 & 31 December 2017 | 305.635.185 | 666.285 | 353.796 | 1.020.081 |
| As at 30 June 2018 | 305.635.185 | 666.285 | 353.796 | 1.020.081 |
All ordinary shares were authorised, issued and fully paid. The nominal value of each ordinary share is €2,18 (31 December 2017: €2,18).
During the Annual General Meeting (AGM) of Hellenic Petroleum S.A. held on 25 May 2005, a share option scheme was approved, with the intention of linking the number of share options granted to management with the results and performance of the Company. Subsequent AGMs have approved and granted the share options. At the 2014 and 2015 AGM's, the shareholders approved several changes to the share option program incorporating recent tax changes, without altering the net effect in terms of benefit to the participants.
Movements in the number of share options outstanding and their related weighted average exercise prices during the period are as follows:
| As at | ||||||
|---|---|---|---|---|---|---|
| 30 June 2018 | 31 December 2017 | |||||
| Average Exercise Price in € per share |
Options | Average Exercise Price in € per share |
Options | |||
| Balance at beginning of period (1 January) | 4,52 | 185.633 | 4,52 | 1.479.933 | ||
| Exercised | 4,52 | (145.561) | 4,52 | (1.294.300) | ||
| Balance at end of period | 4,52 | 40.072 | 4,52 | 185.633 |
During the six-month period ended 30 June 2018 share options were exercised via the acquisition and subsequent issue of treasury shares to employees, with a total value of €1,0 million (Note 15).
| Note | Statutory reserve |
Special reserves |
Tax free & Incentive law reserves |
Hedging reserve |
Actuarial gains/ (losses) |
Equity instrum. FVOCI gains/ (losses) |
Share-based payment reserve |
Treasury shares |
Total | |
|---|---|---|---|---|---|---|---|---|---|---|
| Balance at 1 January 2017 | 118.668 | 86.495 | 263.146 | 10.786 | (10.087) | - | 746 | - | 469.754 | |
| - Fair value gains / (losses) on cash flow hedges - Derecognition of gains/(losses) on hedges through |
- | - | - | (21.431) | - | - | - | - | (21.431) | |
| comprehensive income | - | - | - | 1.979 | - | - | - | - | 1.979 | |
| Actuarial losses on defined benefit pension plans | - | - | - | - | (1.775) | - | - | - | (1.775) | |
| Changes in the fair value of equity instruments | - | - | - | - | - | 2.130 | - | - | 2.130 | |
| Dividends | 22 | - | - | (61.127) | - | - | - | - | - | (61.127) |
| Balance at 30 June 2017 | 118.668 | 86.495 | 202.019 | (8.666) | (11.862) | 2.130 | 746 | - | 389.530 | |
| Balance at 1 January 2018 (as originally presented) | 118.668 | 86.495 | 164.981 | 8.175 | (17.187) | - | 93 | (531) | 360.694 | |
| Effect of changes in accounting policy | 2 | - | - | - | - | - | 166 | - | - | 166 |
| Balance at 1 January 2018 | 118.668 | 86.495 | 164.981 | 8.175 | (17.187) | 166 | 93 | (531) | 360.860 | |
| - Fair value gains / (losses) on cash flow hedges - Derecognition of gains/(losses) on hedges through |
- | - | - | 16.256 | - | - | - | - | 16.256 | |
| comprehensive income | - | - | - | (14.920) | - | - | - | - | (14.920) | |
| Changes in the fair value of equity instruments | - | - | - | - | - | (468) | - | - | (468) | |
| Share-based payments | - | - | - | - | - | - | (73) | - | (73) | |
| Acquisition of Treasury Shares | - | - | - | - | - | - | - | (511) | (511) | |
| Issue of Treasury shares to employees | - | - | - | - | - | - | - | 1.042 | 1.042 | |
| Dividends | 22 | - | - | (76.408) | - | - | - | - | - | (76.408) |
| Transfers of tax on reserves to retained earnings | - | - | (11.927) | - | - | - | - | - | (11.927) | |
| Balance at 30 June 2018 | 118.668 | 86.495 | 76.646 | 9.511 | (17.187) | (302) | 20 | - | 273.851 |
Under Greek law, corporations are required to transfer a minimum of 5% of their annual net profit as reflected in their statutory books to a statutory reserve until such reserve equals one third of outstanding share capital. This reserve cannot be distributed during the existence of the corporation, but can be used to offset accumulated losses.
Special reserves primarily relate to reserves arising from tax revaluations in accordance with the relevant legislation in prior years.
These include:
The hedging reserve is used to record gains or losses on derivatives that are designated and qualify as cash flow hedges and that are recognised in other comprehensive income. Amounts are reclassified to profit or loss when the associated hedged transaction affects profit or loss.
These reserves include:
Treasury shares are held regarding the Share Option Plan. During the six-month period ended 30 June 2018, 64.548 shares were acquired at a cost of €0,5 million, while 134.706 shares were issued to employees, following the exercise of share options held. Treasury shares are recognised on a first-in first-out method.
| As at | ||||
|---|---|---|---|---|
| 30 June 2018 | 31 December 2017 | |||
| Non-current borrowings | ||||
| Bank borrowings | 166.334 | 188.556 | ||
| Bond loans | 1.566.349 | 721.023 | ||
| Νon-current borrowings | 1.732.683 | 909.579 | ||
| Current borrowings | ||||
| Short-term bank borrowings | 877.039 | 1.660.507 | ||
| Current portion of long-term bank borrowings | 44.444 | 44.444 | ||
| Total current borrowings | 921.483 | 1.704.951 | ||
| Total borrowings | 2.654.166 | 2.614.530 |
Hellenic Petroleum and its subsidiaries (the "Group") has centralised treasury operations, which coordinate and control the funding and cash management activities of all group companies. Within this framework, Hellenic Petroleum Finance plc ("HPF") was established in November 2005 in the U.K. as a wholly-owned subsidiary of Hellenic Petroleum S.A. to act as the central treasury vehicle of the Hellenic Petroleum Group.
Βorrowings of the Company by maturity as at 30 June 2018 and 31 December 2017 are summarised in the table below (amounts in € million):
| As at | ||||
|---|---|---|---|---|
| 30 June 2018 | 31 December 2017 | |||
| Maturity | (millions) | (millions) | ||
| 1. | Syndicated bond loan €400 million | Jun 2023 | 389 | 348 |
| 2. | Bond loan €400 million | Oct 2018 | 284 | 284 |
| 3. | Bond loan €300 million | Feb 2021 | 297 | 200 |
| 4. | Bond loan SBF €400 million | May 2018 | - | 239 |
| 5. | Bond loan \$250 million | Jun 2021 | 152 | - |
| 6. | European Investment Bank ("EIB") Term loan | Jun 2022 | 178 | 200 |
| 7. | HPF Loan €317,6m | Jul 2019 | 280 | 274 |
| 8. | HPF Loan €367m | Oct 2021 | 447 | 447 |
| 9. | Bilateral lines | Various | 627 | 623 |
| Total | 2.654 | 2.615 |
No loans were in default as at 30 June 2018 (none as at 31 December 2017).
INTERIM CONDENSED FINANCIAL STATEMENTS FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2018 (All amounts in Euro thousands unless otherwise stated)
Significant movements in borrowings for the six-month period ended 30 June 2018 are as follows:
In July 2014, the Company concluded a €350 million syndicated bond loan credit facility guaranteed by HPF, maturing in July 2018. In June 2018, the Company prepaid the facility and refinanced it with a 5 year syndicated revolving bond loan facility, which was subscribed to by Greek and international banks, for an increased amount of €400 million.
In September 2015, Hellenic Petroleum S.A. extended the maturity date of a €400 million syndicated bond loan agreement from December 2015 to June 2016 and subsequently to October 2017 with two six-month extension options. In April 2018 the Company extended the facility maturity date to October 2018 and is in the process of refinancing it.
In January 2015, Hellenic Petroleum S.A. concluded a €200 million revolving bond loan facility, with a tenor of 3 years. The facility was refinanced in February 2018, for an increased amount of €300 million and a tenor of 3 years.
In May 2016, Hellenic Petroleum S.A. concluded a € 400 million bond-loan stand-by facility with a tenor of 18 months and an extension option for a further six months. The bond loan facility has two Tranches, a committed Tranche of €240 million and an uncommitted Tranche of €160 million. In October 2017, Hellenic Petroleum S.A. extended the facility maturity date to May 2018. In May 2018, the Company repaid the outstanding balance of €240 million upon maturity.
In June 2018, Hellenic Petroleum S.A. concluded a new \$250 million revolving bond loan facility, with a tenor of 3 years to finance general working capital needs.
On 26 May 2010, Hellenic Petroleum S.A. signed two loan agreements (Facilities A and B) with the European Investment Bank for a total amount of €400 million (€200 million each). The purpose of the loans was to finance part of the investment programme relating to the upgrade of the Elefsina Refinery. Both loans had a maturity of twelve years with amortisation beginning in December 2013 and similar terms and conditions. Facility B was credit enhanced by a commercial bank guarantee (see Note 13). This is normal practice for EIB lending particularly during the construction phase of large projects. Total repayments on both loans up to 30 June 2018 amounted to €222 million. Up to February 2018, Facility B included financial covenant ratios, which were comprised of leverage, interest cover and gearing ratios. In February 2018, Hellenic Petroleum S.A. amended the terms of this facility in order to align the loan covenants' definitions and ratios with those used for all its commercial bank loans and Εurobonds.
In July 2014, HPF issued a €325 million five-year Eurobond, with a 5,25% annual coupon, maturing in July 2019. The notes are guaranteed by Hellenic Petroleum S.A. and are listed on the Luxembourg Stock Exchange. Subsequently the Company concluded a €317,6 million loan agreement with HPF and the proceeds were used for general corporate purposes.
In October 2016, HPF issued a €375 million five-year 4,875% Eurobond guaranteed by Hellenic Petroleum S.A., with the issue price being 99,453 per cent of the principal amount. The notes mature in October 2021. The proceeds of the new issue were used to repay existing financial indebtedness, including the partial prepayment of the €500 million Eurobond maturing in May 2017, through a tender offer process, which was completed in October 2016, during which
notes of nominal value of €225 million were accepted. Subsequently the Company concluded a €367 million loan agreement with HPF and the proceeds were used to prepay existing indebtedness, including part of the €488 million maturing in May 2017 and for general corporate purposes.
In July 2017, HPF issued €74,5 million guaranteed notes, due in October 2021, which were consolidated to form a single series with HPF's €375 million 4,875% guaranteed notes. Subsequently the Company increased its existing loan agreement with HPF.
The Company has credit facilities with various banks to finance general corporate needs, which are being renewed according to the Company's finance needs. The facilities mainly comprise of short-term loans.
Certain medium term credit facility agreements that the Company has concluded, include financial covenants, mainly for the maintenance of certain ratios at Group level, such as: "Consolidated Net Debt/ Consolidated Adjusted EBITDA", " Consolidated Adjusted EBITDA/ Consolidated Net Interest" and " Consolidated Net Debt/ Consolidated Net Worth". Management monitors the performance of the Group to ensure compliance with the above covenants.
| As at | |||||
|---|---|---|---|---|---|
| 30 June 2018 | 31 December 2017 | ||||
| Trade payables | 1.037.717 | 1.417.731 | |||
| Accrued Expenses | 129.854 | 84.535 | |||
| Other payables | 19.064 | 51.761 | |||
| Total | 1.186.635 | 1.554.027 |
Trade payables comprise amounts payable, or accrued in respect of supplies of crude oil, products and services.
Trade payables, as at 30 June 2018 and 31 December 2017, include amounts in respect of crude oil imports from Iran, which were received between December 2011 and March 2012 as part of a long-term contract with NIOC. Despite repeated attempts to settle the payment for these cargoes through the international banking system between January and June 2012, it was not possible to do so. This was due to the fact that payments to Iranian banks and state entities were not accepted for processing by the International banking system as a result of explicit or implicit US and International sanctions. After 30 June 2012, Hellenic Petroleum was prohibited to effect payments to NIOC by virtue of EU sanctions (Council Regulation (EU) No. 267/2012 of 23 March 2012). The Company duly notified its supplier of this restriction on payments and the inability to accept further crude oil cargoes under the contract, as a result of the aforementioned international sanctions.
On 18 October 2015, by Decision (CFSP) 2015/1863, the Council of the European Union (EU) decided to terminate implementation of most of EU restrictions against Iran, taking into account UNSCR 2231 (2015) and Annex B to UNSCR 2231 (2015), simultaneously with the IAEA-verified implementation by Iran of agreed nuclear-related measures. On 16 January 2016 ("Implementation Day"), by Decision (CFSP) 2016/37, the Council decided that Decision (CFSP) 2015/1863 shall apply from that date. On the same date, U.S and other International Restrictive Measures were also partially lifted. In light of the above developments, Hellenic Petroleum and NIOC executed Heads of Terms to a cooperation agreement on 22 January 2016 for the recommencement of their commercial relationship for the supply of crude and for the settlement of the due trade payables.
On May 8, 2018, the President of the U.S. (the President) announced his decision to cease the United States' participation in the Joint Comprehensive Plan of Action (JCPOA), and to begin re-imposing, following a wind-down period, the U.S. nuclear-related sanctions that were lifted to effectuate the JCPOA sanctions relief. In conjunction with this announcement, the President issued a National Security Presidential Memorandum (NSPM) directing the Secretary of State and the Secretary of the Treasury to prepare immediately for the re-imposition of all of the U.S. sanctions lifted or waived in connection with the JCPOA, to be accomplished as expeditiously as possible and in no case later than 180 days from the date of the NSPM. Hellenic Petroleum S.A. is closely monitoring developments, following the US administration decision on JCPOA and will assess its position accordingly. Implementation of the cooperation-agreement, according to the Heads of Terms signed between Hellenic Petroleum and NIOC on 22 January
2016 (as abovementioned), will be in full compliance with prevailing EU and international framework, as well as surviving restrictions.
Where deemed beneficial to the Company, in order to achieve better terms (such as better pricing, higher credit limits, longer payment terms), the Company provides short term letters of credit or guarantee for the payment of liabilities arising from trade creditors, making use of its existing credit lines with its banks. To the extent these liabilities materialise before the balance sheet date, they are included in the balance under trade creditors.
Accrued expenses mainly relate to accrued interest, payroll-related accruals and accruals for operating expenses not yet invoiced.
Other payables include amounts in respect of payroll-related liabilities, social security obligations and sundry taxes.
| For the six-month period ended | |||
|---|---|---|---|
| Note | 30 June 2018 | 30 June 2017 | |
| Profit before tax | 330.361 | 215.504 | |
| Adjustments for: | |||
| Depreciation and amortisation of property, plant and | |||
| equipment and intangible assets | 9,10 | 68.168 | 62.936 |
| Impairment of fixed assets | 9 | 840 | - |
| Amortisation of grants | 5 | (315) | (349) |
| Financial expenses / (income) - net | 66.970 | 75.266 | |
| Provisions for expenses and valuation changes | 29.341 | 18.381 | |
| Foreign exchange (gains) / losses | 6 | (4.243) | 7.024 |
| Dividend income | (35.083) | (33.724) | |
| Amortization of long-term contracts costs | 5 | (2.763) | 6.846 |
| Loss on disposal of Non Current Assets | - | 280 | |
| 453.276 | 352.164 | ||
| Changes in working capital | |||
| Decrease in inventories | 30.959 | 44.203 | |
| (Increase) / Decrease in trade and other receivables | (90.737) | 21.917 | |
| Decrease in trade and other payables | (379.638) | (274.472) | |
| (439.416) | (208.352) | ||
| Net cash generated from operating activities | 13.860 | 143.812 |
The interim condensed statement of comprehensive income includes transactions between the Company and related parties. Such transactions are mainly comprised of sales and purchases of goods and services in the ordinary course of business.
| For the six-month period ended | ||||
|---|---|---|---|---|
| 30 June 2018 | 30 June 2017 | |||
| Sales of goods and services to related parties | ||||
| Subsidiaries | 1.307.568 | 1.201.653 | ||
| Associates | 360.391 | 418.104 | ||
| Joint ventures | 272 | 191 | ||
| Total | 1.668.231 | 1.619.948 | ||
| Purchases of goods and services from related parties | ||||
| Subsidiaries | 29.995 | 28.103 | ||
| Associates | 417.742 | 436.396 | ||
| Joint ventures | 9.013 | 3.219 | ||
| Total | 456.750 | 467.718 |
Other operating income/(expenses) & other gains/(losses)-net for the six-month period to 30 June 2018 include income from subsidiaries, amounting to €2,5 million (30 June 2017: €2,3 million).
The statement of financial position includes balances, which derive from sales / purchases of goods and services in the ordinary course of business.
| As at | ||||
|---|---|---|---|---|
| 30 June 2018 | 31 December 2017 | |||
| Balances due to related parties | ||||
| (Trade and other creditors) | ||||
| Subsidiaries | 25.198 | 37.726 | ||
| Associates | 19.984 | 3.094 | ||
| Joint ventures | 894 | 1.677 | ||
| Total | 46.076 | 42.497 | ||
| Balances due from related parties | ||||
| (Trade and other debtors) | ||||
| Subsidiaries | 488.915 | 458.313 | ||
| Associates | 44.183 | 34.144 | ||
| Joint ventures | 52 | 30 | ||
| Total | 533.150 | 492.487 |
Transactions have been carried out with the following related parties:
b) Associates and joint ventures of the Group, which are consolidated under the equity method.
The Company has provided letters of comfort and guarantees in favour of banks as security for loans granted by them to Elpedison B.V. The outstanding amount of these as at 30 June 2018 was €84 million (31 December 2017: €88 million).
During the six-month period ended 30 June 2018, transactions and balances with the above government related entities are as follows:
| For the six-month period ended | |||||
|---|---|---|---|---|---|
| 30 June 2018 | 30 June 2017 | ||||
| Short-term employee benefits | 2.552 | 2.248 | |||
| Post-employment benefits | 552 | 585 | |||
| Termination benefits | 522 | - | |||
| Total | 3.626 | 2.833 |
f) The Company has extended loans to its subsidiaries. The outstanding balance of these loans as at 30 June 2018 was €138 million (31 December 2017: €138 million). Interest income for the six-month period ended 30 June 2018 was €4 million (30 June 2017: €5 million). All loans are at variable interest rates. The average interest rate on inter-company loans due was 5,31%.
The Company has also received loans from its subsidiaries. The outstanding balance of these loans as at 30 June 2018 was €760 million (31 December 2017: €754 million). Interest expense for the six-month period ended 30 June 2018 was €21 million (30 June 2017: €27 million). All loans are at variable interest rates. The average interest rate on inter-company loans during the six-month period ended 30 June 2018 was 5,55%.
Significant contractual commitments of the Company, other than future operating lease payments that are disclosed in the annual financial statements as at 31 December 2017, mainly relate to improvements in refining assets and amount to €30 million as at 30 June 2018 (31 December 2017: €20 million).
INTERIM CONDENSED FINANCIAL STATEMENTS FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2018 (All amounts in Euro thousands unless otherwise stated)
The Company has contingent liabilities in respect of bank and other guarantees and other matters arising in the ordinary course of business. They are as follows:
The Company is involved in a number of legal proceedings and has various unresolved claims pending arising in the ordinary course of business. Based on currently available information and the opinion of legal counsel, management believes the final outcome will not have a significant effect on the Company's operating results or financial position, over and above provisions already reflected in the interim condensed financial statements.
The Company has provided letters of comfort and guarantees in favour of banks as security for loans granted by them to subsidiaries and associates of the Group, the outstanding amount of which as at 30 June 2018 was the equivalent of €978 million (31 December 2017: €1.016 million).
The tax framework and practices in Greece, which determine the tax base for the Company's transactions, may result in inherent uncertainties, due to its complexity and it being subject to changes and alternative interpretation by relevant authorities at different points in time and across different entities. As a result, there may be types of expenses or treatments for which a company may be assessed on a different basis than the one adopted during the preparation of its tax return and of the financial statements. Based on past experience, tax audits were carried out by tax authorities on average 5-7 years after the filing of the tax return, while recently the 5 year statute of limitation period seems to be taken into consideration. In addition, where a tax audit results in a different assessment to the one adopted by the Company, and for which the Company after consideration, disagrees with, the process for resolving the issue is usually through a court of law proceeding, which has many stages and can take a considerable number of years to reach its final and irrevocable ruling. For an entity to engage in this process, a minimum down payment of 50% of the total tax and penalties assessed is required.
All of the above result in inherent difficulties in the determination and accounting of tax liabilities. As a result, management aims to determine its policy based on specific legislation available at the time of accounting for a transaction, obtain specialist legal and tax advice on individual cases and utilise prior tax audits experience and rulings, including relevant court decisions. This process should ensure that the financial statements reflect any material tax and customs liabilities as accurately and completely as possible.
As disclosed in Note 7, tax audits have been completed by the Tax Authorities up to and including the financial year ended 31 December 2011. The Tax Audit Reports for years ended 31 December 2010 and 2011 were received in December 2017, and they are subject to legal dispute by the Company. In summary, the reports assess additional taxes of €22,5 million and penalties of €23,5 million for items relating to stamp duty, various non-deductible expenses and other income tax adjustments. Following a detailed review of the Tax Audit Report, the Company disputes the additional taxes imposed (which are over and above the amounts already included in the Company's normal tax returns) and has proceeded with all possible legal means and actions to appeal against these additional taxes and penalties. Even though the Company disputes the additional taxes and penalties imposed, it is obliged to pay 50% of the assessed amounts (taxes and penalties) to the Tax Authorities, in order to appeal the results of the tax audits. This was paid within the applicable deadline in January 2018, while the remaining 50% has been fully offset, with tax and other State receivables, by 30th of June 2018. The amounts are included in the οther Receivables (Note 12).
As far as penalties are concerned, the report has assessed penalties at 120% of the original tax instead of the applicable 50%; this is also legally challenged by the Company.
At present, an audit for the year ended 31 December 2012 is in progress.
Management believes that no additional material liability will arise either as a result of open tax years or from the outcome of current litigation cases over and above the tax liabilities and provisions already recognised in the financial statements as at 30 June 2018. The Company has recorded any down payments made for taxes and penalties assessed
in previous disputes with the tax authorities in other receivables (Note 11), to the extent that the Company has assessed that the amounts will be ultimately recoverable.
It is noted that for financial years ending 31 December 2011 up to and including 31 December 2016, the Company obtained unqualified "Annual Tax Certificates" from their Statutory Auditors, as provided for by par. 5, article 82 of L.2238/1994. The tax audit for the financial year 2017 is in progress, the Tax Compliance Report is expected to be issued within the fourth quarter of 2018 and, based on the current status it is expected to be unqualified.
In 2008, Customs authorities assessed additional customs duties and penalties amounting to approximately €40 million for alleged "stock shortages" during the years 2001-2005. The Company has duly filed contestations before the Administrative Court of First Instance and Management believes that this case will have a positive outcome when the court hearings take place.
Notwithstanding the filing of the above contestations, the Customs office withheld an amount of €54 million (full payment plus surcharges) of established VAT refunds (Note 12), an action against which the Company filed two Contestations before the Administrative Courts of Athens and Piraeus. The Administrative Court of Athens ruled that the withholding effected by the Tax Office was unlawful.
The Company considers that the above amounts will be recovered.
A proposal to the AGM for a final dividend of €0,25 per share (excluding treasury shares – Note 15) for the year ended 31 December 2017 was approved by the Board of Directors on 22 February 2018 and the final approval was given by the shareholders at the AGM held on 6 June 2018. This amounts to €76.408 and is included in the interim condensed financial statements for the six-month period ended 30 June 2018.
The Board did not approve a change in dividend policy overall and will re-evaluate the payment of an additional dividend, special dividend, or interim dividend during 2018.
DEPA Group operates in the wholesale, trading, transmission, distribution and supply of natural gas. It is currently owned 65% by HRADF ("Hellenic Republic Assets Development Fund") and 35% by Hellenic Petroleum SA.
On 16 February 2012, Hellenic Petroleum S.A. and HRADF (jointly the "Sellers") agreed to launch a joint sale process of their shareholding in DEPA Group aiming to dispose 100% of the supply, trading and distribution activities, as well as 66% of their shareholding in the high pressure transmission network (DESFA S.A., a 100% subsidiary of DEPA S.A.).
The sale process resulted in the submission of a binding offer of €400 million by SOCAR (Azerbaijan's Oil and Gas National Company) for the purchase of the 66% of DESFA. The amount corresponding to the Company's 35% effective shareholding was €212 million.
On 21 December 2013, the Share Purchase Agreement (SPA) for the above sale was signed by HRADF, Hellenic Petroleum S.A. and SOCAR, while the completion of the transaction was agreed to be subject to the clearance of EU's responsible competition authorities.
On 30 November 2016, the deadline for the fulfilment of all prerequisites for the finalisation of the transaction expired without the desired outcome.
By decision of the Governmental Economic Policy Council (ΚΥΣΟΙΠ) on 1 March 2017, the Greek State decided, inter alia, to launch a new tender procedure for the disposal of the 66% of the shares of DESFA, i.e. the 31% of the 65% of the shares held by HRADF combined with the 35% of the shares owned by HELPE, as well as the termination of the respective selling process which was launched in 2012. In addition, article 103 of the most recent law 4472/2017 provides that by 31 December 2017, the participation of DEPA in DESFA (66%) will be sold and transferred through an international tender process, which will be carried out by HRADF, while the remaining balance of 34% will be
INTERIM CONDENSED FINANCIAL STATEMENTS FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2018 (All amounts in Euro thousands unless otherwise stated)
transferred to the Greek State. Furthermore, the above law provides that at the end of the tender process, DESFA should constitute an Unbundled Natural Gas Transmission System Operator, in accordance with the provisions of articles 62 & 63 of Law 4001/2011 as in force, and be certified as such, in accordance with Articles 9 & 10 of the 2009/73/EC (Full Ownership Unbundled System Operator - FOU).
The Board of Directors of HELPE, at its meeting on 12 June 2017, evaluated the strategic choices of HELPE regarding its minority participation in DESFA and considered that the disposal (jointly with HRADF) of the 66% of DESFA's shares is in the interest of the Company. For this purpose, a draft Memorandum of Understanding (MOU) between the Greek State, HRADF and HELPE was drawn up, based on the corresponding text of 2012. At the abovementioned meeting, the Board of Directors also convened the Extraordinary General Assembly of the Company's shareholders in order to obtain a special permit, in accordance with the provisions of article 23a of the Codified Law 2190/1920, for the conclusion of the MOU between the Greek State, HRADF and HELPE. The MOU was signed by the three parties on 26 June 2017 and the special permit of the General Assembly was provided retrospectively on 6 July 2017, pursuant to the provision of article 23a par.4 of L.2190/1920. On 26 June 2017, the Invitation for the Non-Binding Expression of Interest was published. Four parties expressed interest, two of which were notified on 22 September 2017 by the Sellers, that they qualified to participate in the next phase of the Tender Process (Binding Offers Phase), and were considered as Shortlisted Parties. The two Shortlisted Parties were on the one hand, a consortium formed by SNAM S.p.A., FLUXYS S.A., Enagas Internacional S.L.U. and N.V. Nederlandse Gasunies and on the other hand Regasificadora del Noroeste S.A..
The Shortlisted Parties submitted their binding offers on 16 February 2018, pursuant to the Sellers' Request on 10 October 2017 for the Submission of Binding Offers.
Best and final offers were submitted by the two Shortlisted Parties on 29 March 2018. The consortium formed by SNAM S.p.A., FLUXYS S.A. and Enagas Internacional S.L.U. confirmed its best and final offer on 19 April 2018, offering an amount of €535 million for the purchase of the 66% of DESFA. The above binding offer has been accepted by virtue of resolution no. 1319 of 19 April 2018 of the Board of Directors and the resolution of 14 May 2018 of the Extraordinary General Meeting of Shareholders of Hellenic Petroleum S.A. By virtue of decision No. 235 of 25 June 2018, the Court of Audit has cleared the transaction and on 13 July 2018, the European Commission has provided its approval under the EU Merger Regulation.
On 20 July 2018 a Share Sale & Purchase Agreement ("SPA") has been executed by HRADF and HELPE as Sellers and "SENFLUGA Energy Infrastructure Holdings S.A." (SNAM-Enagas-Fluxys Consortium SPV) as Purchaser. On the same date a Shareholders' Agreement for DESFA has been executed between SENFLUGA S.A. and the Hellenic Republic.
Although the parties undertake valid commitments upon signing of the SPA, the effectiveness of the totality of the provisions of the SPA (including the transfer of shares and the payment of the consideration) remains subject to approvals, some of which lie beyond the control or diligent behaviour of the parties.
The cost of investment of the DEPA group in the Company's interim financial statements is €237 million. DEPA Group, as it currently stands, continues to be accounted for and included in the interim condensed financial statements as an associate.
On 24 November 2017, HELPE S.A. acquired the remaining 37% minority shareholding of ELPET BALKANIKI S.A., which is now a wholly owned subsidiary (100%). The total aggregate consideration for the ordinary share capital acquired is comprised of an upfront amount of €16 million, which was paid within 2018 and of a deferred consideration of €5 million payable within a period of up to five years from the date of acquisition of the shares.
On 24 May 2018, the Company established Hellenic Petroleum E&P Holding S.A. (100% subsidiary). The share capital to be injected to the new company amount to €20 million, of which €15 million were paid during the six-month period ended 30 June 2018.
INTERIM CONDENSED FINANCIAL STATEMENTS FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2018 (All amounts in Euro thousands unless otherwise stated)
Details of significant post balance sheet events are provided in the following notes:
Note 23 – Latest developments in DESFA's selling process.
5.1. Published Summary Financial Statements
COMPANY
Head office Address: 8
A
, CHIMARRAS STR. - 15125 MAROUSI
Website : http://www.helpe.gr
Approval date of the six month financial information by the Board of
Directors 30 AUGUST 2018
| 30/6/2018 | 31/12/2017 | 30/6/2018 | 31/12/2017 | 30/6/2018 | 30/6/2017 | 30/6/2018 | 30/6/2017 | |
|---|---|---|---|---|---|---|---|---|
| Issue of treasury shares to employees | 1.042 | - | 1.042 | - | ||||
| Transfer of grant received to tax free reserves | 80 | - | - | - | ||||
| Impairment of fixed and intangible assets | 1.497 | - | 840 | - | ||||
| Interest expense and similar charges | 77.766 | 90.538 | 71.584 | 81.561 | ||||
| Interest income | (1.750) | (2.438) | (4.614) | (6.295) | ||||
| 1/1/2018 - | 1/1/2017 - | 1/4/2018 - | 1/4/2017 - | Foreign exchange (gains) / losses | (4.528) | 6.848 | (4.243) | 7.024 |
| 30/6/2018 | 30/6/2017 | 30/6/2018 | 30/6/2017 | Dividend income | - | - | (35.083) | (33.724) |
| Amortisation of long-term contracts costs | 2.784 | 4.628 | (2.763) | 6.846 | ||||
| (Increase) / decrease in trade and other receivables | (100.018) | (19.859) | (90.737) | 21.917 | ||||
| 225.173 | 167.645 | 150.953 | 43.821 | Net cash generated from / (used in) operating activities (a) | 34.020 | 136.236 | 18.044 | 143.797 |
| Cash flows from investing activities | ||||||||
| 225.710 | 146.597 | 149.849 | 33.909 | Settlement of consideration of acquisition of further equity interest | ||||
| in subsidiary | (16.000) | - | (16.000) | - | ||||
| Purchase of subsidiary, net of cash acquired | (1.298) | - | - | - | ||||
| Interest received | 1.750 | 2.438 | 4.614 | 6.295 | ||||
| Dividends received | - | 318 | - | 318 | ||||
| Investments in associates - net | - | (147) | (15.853) | (415) | ||||
| Proceeds from disposal of investments in equity instruments | 266 | - | - | - | ||||
| Cash flows from financing activities | ||||||||
| 1/1/2018 - | 1/1/2017 - | 1/4/2018 - | 1/4/2017 - | Dividends paid to non-controlling interests | (2.061) | (2.561) | - | - |
| 30/6/2018 | 30/6/2017 | 30/6/2018 | 30/6/2017 | Movement in restricted cash | 144.445 | 11.873 | 144.445 | 11.873 |
| Acquisition of treasury shares | (511) | - | (511) | - | ||||
| Net decrease in cash & cash equivalents (a)+(b)+(c) | 30.583 | (226.849) | 63.201 | (177.980) | ||||
| Cash & cash equivalents at the beginning of the period | 873.261 | 924.055 | 667.599 | 731.258 | ||||
| Net increase/(decrease) in cash & cash equivalents | 30.583 | (226.849) | 63.201 | (177.980) | ||||
| The Certified Auditor: | Christiana Panayidou, SOEL reg.no.62141 | |||||||
|---|---|---|---|---|---|---|---|---|
| Auditing Company: Type of Auditor's Report |
Unqualified | ERNST & YOUNG (HELLAS), SOEL reg.no.107 | ||||||
| STATEMENT OF FINANCIAL POSITION | Τα παρακάτω στοιχεία και πληροφορίες στοχεύουν σε μία γενική ενημέρωση για την οικονομική κατάσταση και τα αποτελέσματα της ΕΛΛΗΝΙΚΑ ΠΕΤΡΕΛΑΙΑ Α.Ε. Συνιστούμε, επομένως στον αναγνώστη, πριν προβεί σε οποιαδήποτε είδους επενδυτική επιλογή ή άλλη συναλλαγή με την Εταιρεία, να ανατρέξει στην διεύθυνση STATEMENT OF CHANGES IN EQUITY |
|||||||
| (Amounts in thousands €) | GROUP | COMPANY | (Amounts in thousands €) | GROUP | COMPANY | |||
| 30/6/2018 | 31/12/2017 | 30/6/2018 31/12/2017 |
30/6/2018 | 30/6/2017 | 30/6/2018 | 30/6/2017 | ||
| ASSETS | Total equity at beginning of the year 1/1/2018 (published) & 1/1/2017 | 2.371.574 | 2.141.635 | 1.809.223 | 1.590.150 | |||
| Property, plant and equipment | 3.281.051 | 3.311.893 | 2.693.831 2.719.172 |
Change in accounting policy | (3.252) | - | (906) | - |
| Intangible assets | 106.135 | 105.684 | 8.226 7.042 |
Total equity at beginning of the year 1/1/2018 (restated) & 1/1/2017 | 2.368.322 | 2.141.635 | 1.808.317 | 1.590.150 |
| Other non-current assets | 850.898 | 862.616 | 708.098 691.308 |
225.710 | 146.597 | 234.595 | ||
| Inventories Trade and other receivables |
1.049.322 904.069 |
1.056.393 791.205 |
931.465 963.746 1.106.951 989.901 |
Total comprehensive income for the period Dividends |
(76.408) | (61.127) | (76.408) | 142.004 (61.127) |
| Derivative financial instruments | 13.396 | 11.514 | 13.396 11.514 |
Dividends to non-controlling interests | (2.061) | (2.561) | - | - |
| Cash, cash equivalents and restricted cash | 909.323 | 1.018.913 | 736.250 813.251 |
Tax on intra-group dividends | (123) | (136) | - | - |
| Investment in equity instruments | 957 | 1.857 | 595 1.252 |
Share based payments | (1.043) | - | (1.043) | - |
| TOTAL ASSETS | 7.115.151 | 7.160.075 | 6.198.812 6.197.186 |
Acquisition of treasury shares | (511) | - | (511) | - |
| Issue of treasury shares to employees Transfer of grant received to tax free reserves |
1.042 80 |
- - |
1.042 - |
- - |
||||
| EQUITY AND LIABILITIES | Total equity at the end of the period | 2.515.008 | 2.224.408 | 1.965.992 | 1.671.027 | |||
| Share capital | 666.285 | 666.285 | 666.285 666.285 |
|||||
| Share premium | 353.796 | 353.796 | 353.796 353.796 |
|||||
| Retained earnings and other reserves | 1.432.515 | 1.288.578 | 945.911 789.142 |
STATEMENT OF CASH FLOW | ||||
| Capital and reserves attributable to owners of the parent (a) Non-controlling interests (b) |
2.452.596 62.412 |
2.308.659 62.915 |
1.965.992 1.809.223 - - |
(Amounts in thousands €) | GROUP 1/1/2018 - |
1/1/2017 - | COMPANY 1/1/2018 - |
1/1/2017 - |
| TOTAL EQUITY (c) = (a) + (b) | 2.515.008 | 2.371.574 | 1.965.992 1.809.223 |
30/6/2018 | 30/6/2017 | 30/6/2018 | 30/6/2017 | |
| Long-term borrowings | 1.738.995 | 920.234 | 1.732.683 909.579 |
Cash flows from operating activities | ||||
| Provisions and other long term liabilities Short-term borrowings |
344.086 1.087.218 |
299.938 1.900.269 |
261.674 215.917 921.483 1.704.951 |
Profit before income tax | 322.958 | 227.163 | 330.361 | 215.504 |
| Other short-term liabilities | 1.429.844 | 1.668.060 | 1.316.980 1.557.516 |
Adjustments for: | ||||
| Total liabilities (d) | 4.600.143 | 4.788.501 | 4.232.820 4.387.963 |
Depreciation and amortisation of tangible and intangible assets | 93.650 | 87.954 | 68.168 | 62.936 |
| Impairment of fixed and intangible assets | 1.497 | - | 840 | - | ||||
| TOTAL EQUITY AND LIABILITIES (c) + (d) | 7.115.151 | 7.160.075 | 6.198.812 6.197.186 |
Amortisation of grants | (392) | (424) | (315) | (349) |
| Interest expense and similar charges Interest income |
77.766 (1.750) |
90.538 (2.438) |
71.584 (4.614) |
81.561 (6.295) |
||||
| STATEMENT OF COMPREHENSIVE INCOME FOR THE PERIOD | Share of operating profit of associates | (15.083) | (30.659) | - | - | |||
| (Amounts in thousands €) | GROUP | Provisions for expenses and valuation charges | 28.322 | 17.610 | 29.341 | 18.381 | ||
| 1/1/2018 - | 1/1/2017 - | 1/4/2018 - 1/4/2017 - |
Foreign exchange (gains) / losses | (4.528) | 6.848 | (4.243) | 7.024 | |
| 30/6/2018 | 30/6/2017 | 30/6/2018 30/6/2017 |
Dividend income | - | - | (35.083) | (33.724) | |
| Sales | 4.666.909 | 4.065.702 | 2.498.523 1.999.949 |
Amortisation of long-term contracts costs (Gain) / loss on sale of fixed assets |
2.784 (80) |
4.628 101 |
(2.763) - |
6.846 280 |
| Gross profit | 595.602 | 502.890 | 371.903 218.226 |
505.144 | 401.321 | 453.276 | 352.164 | |
| Operating profit | 379.363 | 291.452 | 260.371 110.377 |
|||||
| Profit before income tax | 322.958 | 227.163 | 230.722 62.712 |
|||||
| Income tax expense | (97.785) | (59.518) | (79.769) (18.891) |
Changes in working capital | ||||
| Profit for the period | 225.173 | 167.645 | 150.953 43.821 |
(Increase) / decrease in inventories (Increase) / decrease in trade and other receivables |
6.172 (100.018) |
41.332 | 30.959 (90.737) |
44.203 |
| Attributable to: | Decrease in payables | (379.850) | (19.859) (284.537) |
(379.638) | 21.917 (274.472) |
|||
| Owners of the parent | 223.613 | 167.452 | 149.341 43.631 |
Less: | ||||
| Non-controlling interests | 1.560 | 193 | 1.612 190 |
Income tax received /paid | 2.572 | (2.021) | 4.184 | (15) |
| 225.173 | 167.645 | 150.953 43.821 |
Net cash generated from / (used in) operating activities (a) | 34.020 | 136.236 | 18.044 | 143.797 | |
| Other comprehensive (loss)/income for the period, net of tax Total comprehensive income for the period |
537 225.710 |
(21.048) 146.597 |
(1.104) (9.912) 149.849 33.909 |
|||||
| Cash flows from investing activities | ||||||||
| Attributable to: | Purchase of property, plant and equipment & intangible assets | (60.531) | (75.355) | (41.992) | (62.446) | |||
| Owners of the parent | 224.152 | 147.178 | 148.298 33.798 |
Proceeds from disposal of property, plant and equipment & | ||||
| Non-controlling interests | 1.558 | (581) | 1.551 111 |
intangible assets | 40 | 303 | - | - |
| 225.710 | 146.597 | 149.849 33.909 |
Settlement of consideration of acquisition of further equity interest in subsidiary |
(16.000) | - | (16.000) | - | |
| Purchase of subsidiary, net of cash acquired | (1.298) | - | - | - | ||||
| Basic and diluted earnings per share (in Euro per share) | 0,73 | 0,55 | 0,49 0,14 |
Grants received | 80 | - | - | - |
| Interest received | 1.750 | 2.438 | 4.614 | 6.295 | ||||
| Dividends received Investments in associates - net |
- - |
318 (147) |
- (15.853) |
318 (415) |
||||
| Proceeds from disposal of investments in equity instruments | 266 | - | - | - | ||||
| Earnings Before Interest, Taxes, Depreciation and | Net cash generated from / (used in) investing activities (b) | (75.693) | (72.443) | (69.231) | (56.248) | |||
| Amortisation (EBITDA) | 472.621 | 378.982 | 247.202 250.075 |
|||||
| Cash flows from financing activities | ||||||||
| STATEMENT OF COMPREHENSIVE INCOME FOR THE PERIOD | Interest paid | (69.941) | (89.891) | (65.164) | (100.811) | |||
| (Amounts in thousands €) | COMPANY | Dividends paid to shareholders of the Company | (214) | (187) | (214) | (187) | ||
| 1/1/2018 - | 1/1/2017 - | 1/4/2018 - 1/4/2017 - |
Dividends paid to non-controlling interests | (2.061) | (2.561) | - | - | |
| 30/6/2018 | 30/6/2017 | 30/6/2018 30/6/2017 |
Movement in restricted cash Acquisition of treasury shares |
144.445 (511) |
11.873 - |
144.445 (511) |
11.873 - |
|
| Sales | 4.322.650 | 3.724.054 | 2.312.015 1.819.580 |
Proceeds from borrowings | 407.810 | 207.530 | 442.698 | 229.634 |
| Gross profit | 445.397 | 354.124 | 290.554 133.726 |
Repayments of borrowings | (407.272) | (417.406) | (406.866) | (406.038) |
| Operating profit | 358.005 | 264.070 | 244.359 86.262 |
Net cash generated from / (used in) financing activities (c) | 72.256 | (290.642) | 114.388 | (265.529) |
| Profit before income tax | 330.361 | 215.504 | 253.148 78.123 |
|||||
| Income tax expense | (96.634) | (54.403) | (79.236) (12.989) |
|||||
| Profit for the period | 233.727 | 161.101 | 173.912 65.134 |
Net decrease in cash & cash equivalents (a)+(b)+(c) | 30.583 | (226.849) | 63.201 | (177.980) |
| Other comprehensive (loss)/income for the period, net of tax Total comprehensive income for the period |
868 234.595 |
(19.097) 142.004 |
(893) (9.676) 173.019 55.458 |
|||||
| Cash & cash equivalents at the beginning of the period | 873.261 | 924.055 | 667.599 | 731.258 | ||||
| Basic and diluted earnings per share (in Euro per share) | 0,76 | 0,53 | 0,57 0,21 |
Exchange gains/(losses) on cash and cash equivalents | 4.272 | (7.762) | 4.243 | (7.024) |
| Earnings Before Interest, Taxes, Depreciation and | Net increase/(decrease) in cash & cash equivalents | 30.583 | (226.849) | 63.201 | (177.980) | |||
| Amortisation (EBITDA) | 425.858 | 326.657 | 216.668 210.783 |
Cash & cash equivalents at end of the period | 908.116 | 689.444 | 735.043 | 546.254 |
a) for pending legal cases 5.600 2.291 b) for tax matters 2.403 0 c) for SLI 135.942 107.965
GROUP COMPANY d) for other provisions relating to expenses 54.436 54.364
Changes in the fair value of equity instruments (442) 2.125 (468) 2.130 Actuarial losses on defined benefit pension plans - (2.219) - (1.775)
| Revaluation of land and buildings | - | (1.669) | - | - |
|---|---|---|---|---|
| Derecognition of (gains)/ losses on hedges through comprehensive income | (14.920) | 1.979 | (14.920) | 1.979 |
| Currency translation differences and other movements | (357) | 167 | - | - |
| Net income/(expense) recognised directly in equity | 537 | (21.048) | 868 | (19.097) |
| GROUP | COMPANY | |
|---|---|---|
| Sales of goods and services | 517.245 | 1.729.605 |
| Purchases of goods and services | 448.689 | 477.287 |
| Receivables | 115.896 | 559.303 |
| Payables | 21.217 | 46.076 |
| Board members and senior management remuneration & other benefits | 3.772 | 3.626 |
The following financial data and information are only for general information purposes with regard to the financial position and results of HELLENIC PETROLEUM Group and the parent company. We, therefore, recommend to the reader, before making any investment decision, or pro ceeding to any transaction with the company, to refer to the company's internet address, where the financial statements in accordance with International Financial Reporting Standards are available, together with the auditors' review report.
1.Νοte No. 24 of the interim condensed consolidated financial statements includes all subsidiary and associated companies and their relate d information. 2. No company shares, other than those disclosed as treasury shares in Note 16 of the interim condensed consolidated financial statements, are owned either by the parent company or any of the subsidiaries as at the end of the period. 3. With regards to tax audits carried out by Certified Auditors, all Group companies based in Greece have received unqualified Tax Compliance Reports by their respective statutory auditor, for fiscal years up to 2016 (inclusive). With regards to tax audits carried out by the Tax Authorities, tax audits have been completed as follows: a) for Hellenic Petroleum S.A for years up to and including 2011, b) for former Hellenic Fuels SA for years up to and including 2011, with ongoing audits for subsequent years up to and including 2013, c) for EKO S.A for years up to and including 2010. Notwithstanding the possibility of future tax audits, the Group's management believes that no additional material liability will arise as a result of unaudited tax years over and above the tax liabilities and provisions recognised in the interim condensed consolidated financial statements for the period ended 30 June 2018 (Note 22 of the interim condensed consolidated financial statements). 4. The accounting policies used in the preparation of the interim condensed consolidated financial statements for the period ended 30 June 2018 are consistent with those applied for the preparation of the annual consolidated financial statements for the year ended 31 December 2017, except for the new or revised accounting standards and interpretations that have been implemented in 2018, as outlined in Note 2 of the interim condensed consolidated financial statements of 30 June 2018. Where necessary, comparative figures have been reclassified to conform to changes in the presentation of the current financial period. 5. As mentioned in Note 22 of the interim condensed consolidated financial statements, the Group's entities are involved in a number of legal proceedings and have various unresolved claims pending
arising in the ordinary course of business. Based on currently available information, management believes the outcome will not have a significant impact on the Group's operating results or financial position. 6. During the six month period ended 30 June 2018 the following actions performed for the sale of DESFA: Best and final offers were submitted by the two Shortlisted Parties on 29 March 2018. The consortium formed by SNAM S.p.A., FLUXYS S.A. and Enagas Internacional S.L.U. confirmed its best and final offer on 19 April 2018, offering an amount of €535 million for the purchase of the 66% of DESFA. The above binding offer has been accepted by the Board of Directors and the Extraordinary General Meeting of Shar eholders of Hellenic Petroleum on 19 April 2018 and 14 May 2018 respectively, while on 13/7/2018, the European Commission provided its approval under the EU Merger Regulation. On 20/7/2018 a Share Sale & Purchase Agreement has been executed by HRADF & HELPE as Sellers and "SENFLUGA Energy Infrastructure Holdings S.A." (SNAM-Enagas-Fluxys Consortium SPV) as Purchaser and a Shareholders' Agreement for DESFA has been executed between SENFLUGA S.A. and the Hellenic Republic. Although the parties undertake valid commitments upon signing of the SPA, the effectiveness of the totality of the provisions of the SPA (including the transfer of shares and the payment of the consideration) remains subject to approvals, some of which lie beyond the control or diligent behavior of the parties (Note 7). 7. Number of employees at 30/06/2018 in Greece: Company: 2,059, Group: 2,847 30/06/2017: Company: 2,060, Group: 2,841).
FINANCIAL DATA AND INFORMATION FOR THE PERIOD FROM 1 JANUARY 2018 TO 30 JUNE 2018 (In accordance with decision of the Board of Directors of the Capital Market Commission 4/507/28.04.2009)
CHAIRMAN OF THE BOARD DEPUTY CHIEF EXECUTIVE OFFICER ACCOUNTING DIRECTOR & & CHIEF EXECUTIVE OFFICER CHIEF FINANCIAL OFFICER
EFSTATHIOS N. TSOTSOROS ANDREAS N. SHIAMISHIS STEFANOS I. PAPADIMITRIOU ID. Number ΑΕ 075524 ID. Number ΑΑ 010147 ID. Number ΑΚ 553436
The annual and interim financial statements of the HELLENIC PETROLEUM Group and the parent company on a consolidated and non-consolidated basis, the Independent Auditors' Report and the Annual Report of the Board of Directors are available on the internet at www.helpe.gr.
The financial statements of the consolidated companies under EKO S.A. are available online at www.eko.gr.
On HELLENIC PETROLEUM's website https://www.helpe.gr/investor-relations/quarterlyresults/financial-statements/financial-statements-of-subsidiary-companies/, there is a list of subsidiaries that are fully consolidated in the Group's financial statements; these companies also have their own website through which their financial statements can be accessed. The financial statements of the other subsidiaries can be viewed at the above address.
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