Interim / Quarterly Report • Sep 1, 2017
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 2017
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 report
2. Board of Directors Half-Yearly Report for the Six Month Period ended 30th of June 2017
2.1. Information required as per par. 6, Article 5 of Law No. 3556/2007
2.1.1. Significant Events during the 1st half of 2017 and their impact on the Financial Statements
2.1.2. Major Risks and Uncertainties in the 2nd half of 2017
2.1.3. Significant Related Party Transactions (Decision No. 1/434/3.7.2007 Αrticle 3)
2.2. Additional Information of the Board of Directors' Half Yearly Financial Report (article 4 of Decision No.7/448/2007)
2.2.1. Presentation of the Group's Financial Position and Performance during the 1st half of 2017
2.2.2. Other Financial Information
2.2.3. Selected Alternative Performance Measures
2.2.4. Non-Financial Information
3. Certified Auditor – Accountant's Review Report regarding the Half-Yearly Report
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.
The Chairman of the Board of Directors
The Chief Executive Officer Deputy Chief Executive
Officer & Chief Financial Officer
Efstathios Tsotsoros Grigorios Stergioulis Andreas Shiamishis
The global economy growth is expected to continue improving in 2017 (3.5%), with GDP growth rate of developed economies to increase by 0.3%, to 2.0%, while emerging economies growth is anticipated to accelerate from 4.3% to 4.6%. The increased uncertainty around United Kingdom's exit from the European Union is expected to negatively affect the pace of economic growth in emerging economies. It is worth noting the estimated recovery of the Russian economy from -0.2% to 1.4%, mainly due to a gradual increase in crude oil prices during the first half of 2017.
The Eurozone economy is projected to continue to grow in 2017 at a marginal rate (1.9%) versus 2016 (1.8%), mainly due to the ongoing improvement in confidence in the Eurozone, driven by demand growth, mainly through private consumption and, to an extent, through investments.
Growth in Greece is expected to reach 1.6% in 2017, according to the Bank of Greece, as it is estimated that the completion of the second evaluation will have a positive effect on funding conditions, with significant positive impact on economy's domestic demand macroeconomic indicators. The progress made so far in the implementation of the program has had a positive effect on the liquidity and the confidence as reflected in the recent return of the Hellenic Republic to the international capital markets with the new bond issue.
The domestic taxed fuels demand remained stable in the first half of 2017 and amounted to 3.4 million tonnes lower by 2% vs last year, based on official market data. The demand for all product categories remained unchanged in the first half of 2017, excluding gasoline, which fell by -3.7% and heating oil (+ 7%).
Global demand for oil in 2017 is expected to be 98.0 mbpd, versus 96.6 mbpd in 2016 i.e. 1.4% higher, with China leading the 2.5% rise, to 12.3 mbpd. European OECD countries as well as North America are expected to record a demand increase of +1.4% and +0.4% respectively.
1 IMF, World Economic Outlook, July 2017
Bank of Greece, Monetary Policy 2016-2017, June 2017
2 Data : IEA, Oil Market Report, July 2017
Hellenic Petroleum Group's main segments of business activity include:
The Group's activities during the first half of 2017 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. During the 1st half of 2017, the Group's refining activity is summaried below:
| Refinery | Annual Nominal Capacity (Κbpd) |
Crude & Intermediate products processed (ΜΤ'000 ) |
Final & Intermediate Products output (MT'000) |
|---|---|---|---|
| Αspropyrgos | 148 | 4,332 | 4,058 |
| Thessaloniki | 93 | 1,763 | 1,709 |
| Εlefsina | 100 | 3,075 | 2,762 |
| Inter-refinery | (751) | (750) | |
| Total | 8,419 | 7,779 |
The refining performance was affected by the positive global environment, with international benchmark margins for all types of refineries at satisfactory levels, higher compared to the corresponding period last year, with improved FCC and Hydroskimming benchmark margins, while the strong dollar against the euro sustained. All Group refineries recorded increased production due to high availability in all units, thus increasing their contribution.
Total sales of refined and trading petroleum products of the Group's refineries amounted to 8.2 million ΜΤ for the first half of 2017, 11% higher versus the first half of 2016, because of the improved sales in all the market channels that the Group operates, as shown in the table below:
| 1st Half of 2017 (MΤ'000) |
1st Half of 2016 (MΤ'000) |
|
|---|---|---|
| Domestic Market 1 | 2,414 | 2,077 |
| International Sales | 1,280 | 1,088 |
| Εxports 2 | 4,506 | 4,195 |
| Total | 8,200 | 7,360 |
Refining, supply and trading results are affected by external factors such as:
During the 1st half of 2017, the evolution of the factors outlined above was as follows:
Brent crude oil price for the 1st half of 2017 averaged \$53/bbl versus \$41/bbl in same period last year, 30% higher mainly because of OPEC's decision to reduce the production of crude oil.
Brent Urals spread in the first half of 2017 declined to \$1.3/bbl in the first half of 2017, 22% below the high of \$1.7/bbl last year.
Benchmark refining margins for Mediterranean FCC refineries were stronger, while Hydrocracking were lower vs 1H2016. FCC benchmark margins averaged \$6/bbl in 1H2017 vs \$5.1/bbl in 1H2016, while HDC amounted to \$4.7/bbl vs \$5.3/bbl. All individual product cracks were almost unchanged, with the exception of the high sulfur fuel oil, which rose to the highest levels in recent years and is the key driver of margins in the Mediterranean because of the reduced availability of heavy crude, following reduction in supply from OPEC.
Med FCC benchmark margins (\$/bbl) Med Hydrocracking benchmark margins (\$/bbl)
In 2017, the EURO vs the USD moved higher vs the end of December 2016. During the first half of 2017, EUR/USD averaged \$1.08, 3% lower than last year. The main drivers were political developments in both United States and the Eurozone as well as the monetary policy direction, with FED increasing short-term interest rates.
3 Based on Brent price
The Group is active in the marketing of petroleum products through its subsidiary companies EKO and Hellenic Fuels (ex BP) in Greece and through its subsidiary companies in the Balkans and Cyprus.
During the 1st half of 2017, marketing sales were as follows:
| 1st Half of 2017 (ΜΤ'000) |
1st Half of 2016 (ΜΤ'000) |
|
|---|---|---|
| Domestic Market | 1,249 | 1,024 |
| Bunkering and Aviation, Exports | 671 | 578 |
| Domestic Marketing Sales (ΕΚΟ & HF) | 1,920 | 1,602 |
| International Marketing Sales | 526 | 512 |
| Total | 2,445 | 2,114 |
In Greece, ΕΚΟ and Hellenic Fuel (HF) total sales of petroleum products amounted to 1,920 thousand MT, in the 1st half of 2017, increased by 20% compared to the same period last year. The number of petrol stations amounted to 1,738 versus 1,725 last year.
The increase in sales came mainly from the Bunkering (+21%), Aviation (+10%) and Heating Gasoil (+15%). Differentiated auto fuels, LPG and Bitumen sales were also higher.
In the first half of the year, Group's marketing companies were able to improve their competitive position, by increasing their market share in key products and by offering highquality products and services to the final consumer.
The number of petrol stations in Cyprus, Montenegro, Serbia and Bulgaria amounted to 273 (against a total of 272 in A' half 2016). In the first half of 2017, total sales volumes of International Marketing activities amounted to 526 thousand tonnes versus 512 thousand tonnes.
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 2017, total Petrochemical sales volumes decreased by 6% versus the corresponding period in 2016 due to the shutdown of the Polypropylene production unit for general maintenance work in May 2017.
Petrochemical sales4 per product are as follows:
| Product | 1st half of 2017 (ΜΤ'000) |
1st Half of 2016 (ΜΤ'000) |
|---|---|---|
| Polypropylene | 99 | 106 |
| Solvents | 5 | 5 |
| ΒΟΡΡ film | 14 | 14 |
| Traded goods/Others | 2 | 5 |
| Total Sales | 120 | 129 |
International Petrochemicals is a cyclical, capital intensive industry with capacity surplus. Petrochemicals' margins which affect the profitability of the industry are highly volatile and are closely dependent on supply/demand conditions as well as the local environment.
During the first half of 2017, PP margins were at similar levels as 1H2016, due to satisfactory demand conditions. On the other hand, BOPP film and other product margins were lower, on account of weak demand and higher supply.
In addition, in the first six months of 2017, the strong export orientation was maintained, with 73% of the sales of polypropylene being directed to selected Mediterranean markets.
HELLENIC PETROLEUM Group is also engaged in the exploration and production of Hydrocarbons. Its main activities in the field are focused in Greece:
• 25% participation in a consortium with Calfrac Well Services Ltd (75%) in the Thracian Sea Concession, North Aegean, with a total area of approximately 1,600 sq. km. Geological studies were carried out in the first half of 2017.
• Participation as an Operator, through its 100% subsidiary company, HELPE Patraikos (50%), in an international Joint Venture of oil companies, with EDISON International (50%) as a contractor to a Lease Agreement with Hellenic Republic in the offshore region of the Patraikos Gulf amounting to 1,892 sq. km. The Lease Agreement was ratified by the Greek parliament and has the force of law (Official Gazette Issue A, 221/03-10-14).
In the first half of 2017, the three-dimensional seismic recordings were processed and over the next few months is expected to complete the region's data interpretation in order to finalise drilling targets and decide on the relinquishment area (25%) in accordance with the Lease Agreement.
• In February 2016, following an international competition and following the evaluation of tender offers, Hellenic Petreleum was selected by the Ministry of Environment & Energy as the Preferred Bidder for the concession rights of exploration and exploitation of hydrocarbons of the onshore block areas of "Arta-Preveza" and "NW Peloponnese". The Lease Agreement for both areas were signed on 25/05/2017 by the Minister of Environment and Energy and by the Contractor, and are now in the process of ratification by the Court of Auditors and the Greek Parliament.
• In the first half of 2017, the negotiations with the Greek State were concluded and the terms of the Lease Agreements for Block 2 in the Ionian Sea west of Corfu were finalised, between the RIS and the business consortium Total (50%, operator) – Edison (25%) – HELPE (25%). Also, the pre-contractual audit procedure was initiated by the Court of Audit in order to subsequently ratify the Lease Agreement by the Greek Parliament. For the offshore Block 10 of the Ionian Sea in Kyparissia Gulf, where HELPE has been declared as Preferred Bidder,
4 Sales are included only from continuing operations
the negotiations of the Lease Contract have begun with the aim of finalising the documents and sending it for pre-contractual review by the Court of Audit and subsequent ratification by the Greek Parliament. In the offshore Block 1 of the Ionian Sea, north of Corfu, where ELPE has submitted an offer, it is expected to be declared as Preferred Bidder.
• On 31 May 2017, the consortium of TOTAL (operator), ExxonMobil and HELPE submitted to the Ministry of Environment and Energy as well as the Hellenic Hydrocarbon Management Authority (HHMA) formal indication of interest for hydrocarbon exploration in two (2) offshore Areas of Crete. Following the positive opinion of HHMA, the application was accepted by the Ministry in June 2017 and an international tender is expected to be announced in accordance with N 4001/11.
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 continued to be negative during the first half of 2017, but improved compared to the same period in 2016. The participation of Natural gas-fired units in the energy mix system was higher (30% vs. 26% in the first half of 2016), mainly due to the low cost of raw materials and the increased electricity demand in the first two months of the year. The "Transitional Flexibility Compensation Mechanism", which was terminated in April 2017 has reacted positively. This Mechanism was established in May 2016, for 12 months, aiming to compensate plants in return for their availability to provide the "Flexibility Service" to the Electricity System. RAE and the Independent Power Transmission Operator are in the process of processing a new transitional compensation mechanism.
In the retail electricity market, the Company's market share is constantly increasing (June 2017: 3.38% versus June 2016: 2.28%). In this direction, NOME auctions, which were launched in October 2016, have acted positively, providing private suppliers with access to the electricity of Hellenic Public Electricity Company. However, the increasing competition has led to a reduction in the margins of the independent suppliers, which affects financial results.
The contribution of the DEPA Group increased significantly compared to the first half of 2016, mainly due to the increased profits of DESFA and EPA / EDA. The regulatory framework, which is developed and implemented with the aim of liberalizing the Greek gas market (retail market, auctions, freezing of Natural Gas System capacity commitments), has led to increased competition, negatively affecting the results of the parent company DEPA SA.
In terms of international backdrop, demand for oil is expected to continue increasing during the second half of 2017, at similar rate as in the 1st half of 2017, with demand growth reaching 1.4 mbpd, while production is expected to slightly reduce compared to 2016, due to OPEC's policy to control production and exports.
The main factors likely to affect the benchmark margins during the forthcoming months are the increase in the supply of crude oil, which is estimated at over 500,000 bbl /per day, the rise in global refinery capacity due to the operation of new refineries and utilization rates 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 first half of 2017 was characterized by a significant increase in sales as well as by the increase of market share in all the basic products for ground fuels as well as aviation and bunkering markets. The increase in volumes as well as the maximization of benefits due to the merger of the two companies affected the profitability of EKO SA, which recorded in the first half of 2017 a comparative EBITDA of €16 million (+20% compared to first half of 2016). Despite the difficult conditions of the domestic fuel market, EKO SA will continue implementing its business plan, which focuses on increase market share by further improving operational profitability and liquidity, as well as the value offered to the consumer through innovative products & high quality services at competitive prices.
For the first half of 2017, the International Trade sector maintained its profitability at the same level as last year's performance improvement performance in most of its countries. For the second half of the year, positive performance is expected to remain subject to market conditions.
During the 2nd half of 2017, sales volumes and margins are anticipated to remain within the business plan estimates range.
In Patraikos Gulf, the reprocessing of the 3D seismic lines of 1,822 sq.km and 2D lines of 325km length are expected to complete within second half of 2017. It is also expected that the relevant geological and geophysical studies will be completed in order to finalise the already identified drilling targets and decide the relinquishment area (25%) in accordance with the Lease Agreement. Following a unanimous decision of the partners, it was decided to submit an application to the Lessor for an extension of six (6) months of the First Phase of the Research Period with the aim of completing the in-depth treatment of 3D seismics and their interpretation. In the 2nd phase of the Research Period, commencing on April 3, 2017, the Contractor is required to carry out exploration drilling.
With reference to the land areas in Western Greece "Arta-Preveza" and "Northwest Peloponnese" during the second half of 2017, it is expected that the Greek Parliament will ratify the agreements and the exploration work will initiate, including the contractually mandatory environmental studies, according to the relevant terms of the agreements.
On 17/03/2017, the Lease Agreement for offshore Block 2 in the Ionian Sea west of Corfu, between the Ministry and the business scheme Total (50% - operator) - Edison (25%) - Hellenic Petroleum (25%) was in the final form. By the end of the year, the Court Audit is expected to complete the pre-contractual review, sign the Agreement so it can subsequently be ratified by the Greek Parliament.
The condensed interim 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 | Balances | ||||
|---|---|---|---|---|---|
| Purchases of | |||||
| Sales of | Sales of | goods & | |||
| goods | services | services | Receivables | Payables | |
| Subsidiaries | |||||
| VARDAX S.A. | - | - | - | 27 | - |
| OKTA S.A. | 158.886 | - | - | 3.516 | - |
| EKO BULGARIA | 43.635 | 249 | - | 7.729 | - |
| ΕΚΟ SERBIA | 649 | - | 9 | 215 | - |
| ELPET BALKANIKI S.A. | - | - | - | 24 | - |
| HELLENIC FUELS S.A. | 860.466 | 3.301 | 5.944 | 98.289 | 2.420 |
| EKO ATHINA MARITIME CO. | - | 15 | 39 | 5 | 1 |
| EKO ARTEMIS MARITIME CO. | - | 24 | 165 | 2 | 4 |
| EKO DIMITRA MARITIME CO. | - | 26 | 305 | 1 | 116 |
| ΕΚΟ IRA | - | 2 | - | 4 | - |
| ΕΚΟ AFRODITI | - | 3 | - | 3 | - |
| ΕΚΟ KALYPSO | - | 1 | 32 | 1 | 12 |
| HELPE INTERNATIONAL | - | - | - | 327.000 | - |
| HELPE CYPRUS LTD | 90.882 | - | - | 5.386 | - |
| JUGOPETROL AD | 43.463 | - | - | 427 | 9.882 |
| GLOBAL S.A. | - | - | - | 1.161 | - |
| POSEIDON MARITIME CO. | 30 | 6 | 4.475 | 16 | 6.518 |
| APOLLON MARITIME CO. | - | 16 | 4.089 | 4 | 6.274 |
| ASPROFOS S.A. | - | - | 3.341 | 538 | 702 |
| DIAXON S.A. | - | - | 7.858 | 32 | 12.979 |
| HELPE RENEWABLE E.S. S.A. | - | - | - | 3 | - |
| HELPE-LARCO SERVION | - | - | - | 0 | - |
| HELPE-LARCO KOKKINOU | - | - | - | 0 | - |
| HELPE INT. CONSULTING S.A. | - | - | 274 | 1 | 340 |
| ENERGIAKI PYLOU METHONIS S.A. | - | - | - | 0 | - |
| ELPE PATRAIKOS S.A. | - | - | - | 5 | 200 |
| ELPE UPSTREAM S.A. | - | - | 1.571 | 141 | 764 |
| 1.198.011 | 3.642 | 28.103 | 444.531 | 40.211 | |
| Associates & other related parties | |||||
| PPC S.A. | 126.733 | - | 25.533 | 43.718 | 3.758 |
| HELLENIC ARMED FORCE | 44.225 | - | - | 18.321 | - |
| DMEP HOLDCO | 418.085 | - | 409.949 | 38.263 | 34.207 |
| DEPA S.A. | 315 | - | 26.445 | 18.678 | 199 |
| ΕΑΚΑΑ | 66 | - | 410 | 22 | 218 |
| ELPEDISON B.V. | 191 | - | 3.646 | 56 | 561 |
| HELPE THRAKI S.A. | 1 | - | - | 5 | - |
| ROAD TRANSPORT S.A., TRAINOSE, | 23.626 | - | - | 10.375 | - |
| OTHER | - | - | 11 | - 6 |
- |
| 613.242 | - | 465.994 | 129.432 | 38.943 |
Transactions and balances with related parties are in regard to the following:
a) Government related entities which are under common control with the Group due to the shareholding and control rights of the Hellenic State:
During the six month period ended 30 June 2017, transactions and balances with the above government related entities are as follows:
b) The Group participates in the following jointly controlled operations with other third parties relating to exploration and production of hydrocarbons in Greece and abroad:
Edison International SpA (Greece, Patraikos Gulf).
Calfrac Well Services Ltd (Greece, Sea of Thrace concession).
C) Associates and joint ventures of the Group which are consolidated under the equity method:
| For the six month period ended | |||
|---|---|---|---|
| 30 June 2017 | 30 June 2016 | ||
| Sales of goods and services to related parties | |||
| Associates | 418.467 | 340.256 | |
| Joint ventures | 191 | 67 | |
| Total | 418.658 | 340.323 | |
| Purchases of goods and services from related parties | |||
| Associates | 436.817 | 330.815 | |
| Joint ventures | 3.646 | 1.547 | |
| Total | 440.463 | 332.362 | |
| As at | |||
| 30 June 2017 | 31 December 2016 | ||
| Balances due to related parties | |||
| Associates | 34.617 | 34.846 | |
| Joint ventures | 561 | 639 | |
| Total | 35.178 | 35.485 | |
| Balances due from related parties | |||
| Associates | 57.066 | 23.720 | |
| Joint ventures | 56 | 9 | |
| Total | 57.122 | 23.729 |
The parent 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 2017 was €91 million (31 December 2016: €100 million).
The following section presents a summary of the Group's consolidated financial statements for the first half of 2017, in accordance with the International Financial Reporting Standards (IFRS).
Τhe Group's key financials extracted from the consolidated results, in accordance with the International Financial Reporting Standards, for the first half of 2017 compared to first half of 2016, are presented below:
| € Million | 30/06/2017 | 30/06/2016 |
|---|---|---|
| Turnover | 4,095 | 2,940 |
| Reported EBITDA | 379 | 334 |
| Adjusted5 EBITDA | 457 | 326 |
| Reported Net Income | 168 | 104 |
| Adjusted6 Net Income | 224 | 108 |
The improved performance of Refining, Supply and Trading was the key driver of Group's financial results. Higher benchmark margins, stronger USD vs EURO, increased liquidity and credit capacity that enabled the realisation of opportunities in Med crude oil pricing, as well as increase refinery availability that led to higher production and sales were the key factors that led to improved performance.
Results per segment of activity in the 1st half of 2017 were:
| Sales Volumes (ΜΤ'000) |
Turnover (€ Million) |
Adjusted EBITDA (€ Million) |
|
|---|---|---|---|
| Refining | 8,2846 | 3,633 | 370 |
| Marketing | 2,445 | 1,371 | 40 |
| Exploration and Production | - | - | (2) |
| Petrochemicals | 120 | 135 | 51 |
| Engineering Services and Other | - | 6 | (2) |
| Intra-Group | (2,381) | (1,050) | - |
| Total | 8,468 | 4,095 | 457 |
Key data for the Group's Consolidated Balance Sheet and cash flows are presented below:
| Balance Sheet (€ Million) | 30/06/2017 | 30/06/2016 |
|---|---|---|
| Total Assets | 6,884 | 7,327 |
| Total Equity | 2,224 | 1,915 |
| Capital Employed | 4.028 | 3.607 |
| Net Debt | 1.799 | 1.688 |
| % of Borrowing on Capital Employed (Debt Gearing) | 45% | 47% |
| Cash Items (€ Million) | 30/06/2017 | 30/06/2016 |
|---|---|---|
| Net Cash Flows | 64 | (466) |
| Investments (Capex) | (75) | (49) |
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-
5 Adjusted results exclude the impact of crude oil prices and other one-off items (e.g. personnel compensation due to early retirement).
6 Excluding sales to OTSM, transactions with Motor Oil and sales of crude oil and petroleum products to OKTA.
owned subsidiary of Hellenic Petroleum S.A. to act as the central treasury vehicle of the Hellenic Petroleum Group.
Group's Net debt amounted to €1,799 million as at 30/6/2017 (30 June 2016: €1,688 million). Gearing stood at 45% (30 June 2016: 47%).
Group's borrowings in € million, per company, facility and maturity are summarized in the table below:
| Balance as at | Balance as at | |||
|---|---|---|---|---|
| Company | Maturity | 30 June 2017 | 31 December 2016 | |
| 1a. Syndicated credit facility €20 million | HPF plc | Jul 2018 | 20 | 20 |
| 1b. Syndicated credit facility €10 million | HPF plc | Jul 2018 | 10 | 10 |
| 1c. Syndicated bond loan €350 million | HP SA | Jul 2018 | 346 | 344 |
| 2. Bond loan €400 million | HP SA | Oct 2017 | 284 | 284 |
| 3. Bond loan €200 million | HP SA | Jan 2018 | 200 | 199 |
| 4. Bond loan SBF €400 million | HP SA | Nov 2017 | 239 | 72 |
| 5. European Investment Bank ("EIB")Term loan | HP SA | Jun 2022 | 222 | 244 |
| 6. Eurobond €500 million | HPF plc | May 2017 | - | 263 |
| 7. Eurobond €325 million | HPF plc | Jul 2019 | 315 | 313 |
| 8. Eurobond €375 million | HPF plc | Oct 2021 | 367 | 367 |
| 9. Bilateral lines | Various | Various | 632 | 723 |
| 10. Finance leases | Various | Various | 4 | 4 |
| Total | 2.639 | 2.843 |
No loans were in default as at 30 June 2017 (none as at 31 December 2016).
Significant movements in borrowings for the six month period ended 30 June 2017 are as follows:
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.
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 is 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 2017 amounted to € 178 million (€22 million paid during 2017). Facility B includes financial covenant ratios which are comprised of leverage, interest cover and gearing ratios.
During 2016 the Group successfully completed a covenants harmonisation process for all its commercial bank loans and Eurobonds. Following the completion of the harmonisation process the Company entered into discussions with EIB in order to bring the loan covenants' definitions and ratios in line with those used for all its commercial bank loans and Εurobonds. In case a common position with EIB is not reached, the Group will evaluate all options, including if deemed appropriate, a possible refinancing or repayment of the facility out of existing credit lines.
In May 2013, the Group issued a €500 million four-year Eurobond, with an 8% annual coupon, maturing in May 2017. The Notes were issued by Hellenic Petroleum Finance Plc and are guaranteed by Hellenic Petroleum S.A. The notes were partially prepaid in October 2016 with the proceeds of a new Eurobond issue of €375 million five-year Eurobond. In May 2017 Hellenic Petroleum Finance repaid the outstanding amount €263 million of the €500 Eurobond upon maturity.
The Group companies have credit facilities with various banks in place, for general corporate purposes. These mainly relate to short-term loans of the parent company Hellenic Petroleum S.A., which have been put in place and renewed as necessary over the past few years.
Certain medium term credit agreements that the Group has concluded, include financial covenants, mainly for the maintenance of certain ratios such as: "Net Debt/EBITDA", "EBITDA/Net Interest" and "Net Debt/Net Worth". Management monitors the performance of the Group to ensure compliance with the above covenants.
On the 30th of June 2017, the company's share price closed at €8.30, a 87.8% increase compared with the 31th of December 2016. The average price for the 1st half of 2017 amounted to €5.47, a 45.7% increase compared to the same period in 2016. The highest was €8.31 on 29.06.2017 whilst the lowest was €4.19 on 08.02.2017.
The average trading volume in the 1st half reached 144,793 shares a day, a decrease of 18.3% from the respective volume of 2016, while the average daily turnover increased by 29.4% to €859.430.
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 2017 compared to the same period in 2016.
| Average Closing price (€) |
Average Trading Volumes (# shares) |
|||
|---|---|---|---|---|
| 2017 | 2016 | 2017 | 2016 | |
| January | 4.45 | 3.78 | 71,312 | 132,864 |
| February | 4.41 | 3.42 | 89,999 | 193,630 |
| March | 4.86 | 3.80 | 133,107 | 243,335 |
| April | 5.23 | 3.63 | 90,906 | 166,901 |
| May | 6.15 | 4.05 | 230,241 | 188,223 |
| June | 7.58 | 3.84 | 237,317 | 137,341 |
Τhe following chart shows the share price evolution at the closing of each month and the average trading volume in the Company's shares from 01.01.2017 up until 30.06.2017:
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, currency exchange gains/(losses) and share of net results of associates, as derived from the company's reported financial statements under IFRS.
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 cost of early retirement schemes, 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 (as defined below)) 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 nonrecurring 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.
| HELPE Group | ||||||
|---|---|---|---|---|---|---|
| Calculation of EBITDA, Adjusted EBITDA, Adjusted Profit after tax | ||||||
| million € | 1H2017 | 1H2016 | ||||
| Operating Profit | 291.5 | 236.0 | ||||
| Depreciation & Amortization* | 86.1 | 103.3 | ||||
| EBITDA | 377.6 | 339.3 | ||||
| Inventory effect | -57.0 | 9.5 | ||||
| Other One-off expenses** | -22.3 | 3.9 | ||||
| Adjusted EBITDA | 456.9 | 325.9 | ||||
| Profit After Tax | 167.6 | 103.7 | ||||
| Taxed Inventory effect | -40.4 | 6.7 | ||||
| Taxed other one-off expenses*** | -15.9 | -7.3 | ||||
| Adjusted Profit After Tax | 223.9 | 104.3 |
| Calculation of Net Debt, Capital Employed and Gearing ratio | ||||
|---|---|---|---|---|
| million € | 1H2017 | 1H2016 | ||
| Borrowings LT | 1,238.1 | 1,287.6 | ||
| Borrowings ST | 1,400.9 | 1,816.6 | ||
| Cash & Cash equivalents and Restricted Cash | 835.1 | 1,412.7 | ||
| Available for sale financial assets | 4.6 | 3.5 | ||
| Net Debt | 1,799.3 | 1,688.0 | ||
| Equity | 2,224.4 | 1,915.3 | ||
| Capital Employed | 4,028.4 | 3,606.9 | ||
| Gearing ratio (Net Debt / Capital Employed) | 55% | 53% |
* The figure of 1H2017 includes the lines "Charge for the year" for Tangibles & Intangibles as well as an additional amount of -€1.8m from line "Transfers and other movements" related to prior year adjustments in the scrap value and useful life of shipping companies' assets
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.
The health and safety in all 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 1H2017 and in line with the Health, Safety, Environment and Sustainable Development Policy and the facilities' Certified Security Management Systems (OSHAS-18001), the inspections completed and respective systems were verified. Furthermore, Aspropyrgos, Elefsina and Thessaloniki refineries were re-certified, 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 during the first half of 2017.
Details of the key indices for the first half 2017 are shown in the following table for all the facilities of the ELPE Group in Greece, as well as for its international subsidiaries.
| LWI, | Lost | |||
|---|---|---|---|---|
| 30/6/2017 | Work Days | FTE Hours | LWIF | |
| ΒΕΑ | 7 | 203 | 1,481,021 | 4.73 |
| ΒΕΕ | 3 | 46 | 899,546 | 3.34 |
| ΒΕΘ | 4 | 62 | 670,974 | 5.96 |
| Κεντρικά Γραφεία | 3 | 24 | 292,719 | 10.25 |
| ΕΚΟ | 1 | 8 | 1,183,926 | 0.84 |
| ΕΛΠΕ/ΕΚΟ | 18 | 343 | 4,528,185 | 3.98 |
| DIAXON | 0 | 0 | 121,920 | 0 |
| OKTA | 6 | 298 | 377,383 | 15.90 |
| EKO Bulgaria | 1 | 25 | 970,752 | 1.03 |
| JP MONTENEGRO | 0 | 0 | 255,785 | 0 |
| ΕΚΟ Serbia | 0 | 0 | 613,333 | 0 |
| HP CYPRUS | 0 | 0 | 61,915 | 0 |
The diagram below shows the evolution of AIF and PSER indices in recent years compared to the European average (CONCAWE).
PSER Index
Regarding the management of liquid and solid waste, the primary objective is the reduction of their production at the source, maximisation of recycling and reuse in the production process for those waste streams that is possible and manage them in the best possible way in respect to the environment and public health.
HELLENIC PETROLEUM have invested in modern waste treatment facilities, such as integrated three-stage wastewater treatment plants and an oily sludge treatment plant with the biodegradation technique, at the industrial facilities of Thessaloniki.
The carbon dioxide emissions (CO2) from the three refineries (Aspropyrgos, Elefsina and Thessaloniki) for the first half of 2017 amounted to 1.84 million tonnes. The liquid waste index "gr of hydrocarbons per tn of throughput" for the period January – June 2017 for the Aspropyrgos and Elefsina refineries was 1.59 and 3.48 gr/tn throughput respectively, which are 40% and 20% lower, respectively, than current statutory limit (Saronic Gulf), while for Thessaloniki refinery, the relevant index was 2.05 gr/tn throughout, 41% lower than the regulatory limit.
The company continued to monitor all critical developments concerning 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.
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, including the participation of the company in the SEV's Sustainable Development Council of United Nations' Sustainable Development Goals (SDGs).
The sector in which the Group operates requires specialized skills, education and experience. Thus, the ability to attract and retain appropriate human resources is an important factor for its seamless operation.
Inability to employ competent personnel, especially highly skilled and in middle and senior management, could adversely affect the operation and financial position of the Group.
In principle, the provision of a safe working environment, which further motivates employees and treats them with respect, giving equal opportunities to all, is a priority of the Group. Relationships with employees are based on the principle of equal treatment. Both the integration and the progress of each employee within the Group, are assessed on their qualifications, performance and ambitions, without any discrimination.
As mentioned before, the security of the Group's facilities are among the most important priorities. In the field of occupational risk management, we focus on prevention to be provided and on all potential health and safety risks to be controlled, according to the criteria of Greek legislation (N.3850 / 2010), European and international codes and best practices .
Moreover, ensuring the health of workers is an integral part of the company policy and Procedure of Health Supervision. Periodic medical examinations of workers take place, considering their role, age group and gender.
Training of workers is another focus area, so that each employee understands the strategic objectives of the Group, and better defines its role and develops its skills.
The Group monitors the relevant labor legislation (national, EU, ILO), including reports on the work of minors, respect for human rights and working conditions and is in full compliance with the collective and relevant international conventions.
The Group understands the impact of its activities on society, especially in areas adjacent to its facilities. Thus communication and our cooperation with the wider community, especially neighbouring communities are multidimensional, including activities such as charity and sponsorships, but also more direct cooperation such as infrastructure development and support of small local businesses, focusing on socially vulnerable groups and the younger generations. These are supported by continuous dialogue and surveys, such as the materiality assessment, periodic customer satisfaction surveys, annual opinion surveys, public debates and other forms of communication.
The results of these actions are evaluated and redefined to take into account and 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 peridiocally 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.
During the three years of implementing the Code of Conduct 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 2017, 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, 31 August 2017 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
4.1. Condensed Interim Consolidated Financial Statements
30 JUNE 2017
CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTH PERIOD ENDED 30 JUNE 2017 (All amounts in Euro thousands unless otherwise stated)
| Page | ||
|---|---|---|
| I. | Company Information | 3 |
| II. | Condensed Interim Consolidated Statement of Financial Position | 5 |
| III. | Condensed Interim Consolidated Statement of Comprehensive Income | 6 |
| IV. | Condensed Interim Consolidated Statement of Changes in Equity | 7 |
| V. | Condensed Interim Consolidated Statement of Cash Flows | 8 |
| VI. | Notes to the Condensed Interim Consolidated Financial Statements | 9 |
CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTH PERIOD ENDED 30 JUNE 2017 (All amounts in Euro thousands unless otherwise stated)
| Directors | Efstathios Tsotsoros - Chairman of the Board Grigorios Stergioulis - Chief Executive Officer Andreas Shiamishis - Deputy Chief Executive Officer Ioannis Psichogios - Member Georgios Alexopoulos - Member (From 22/6/2017) Theodoros-Achilleas Vardas - Member Georgios Grigoriou - Member Dimitrios Kontofakas - Member Vasileios Kounelis - Member Panagiotis Ofthalmides - Member Theodoros Pantalakis - Member Spiridon Pantelias - Member Constantinos Papagiannopoulos - Member |
|---|---|
| Other Board Members during the year |
Stratis Zafiris - Member (until 22/6/2017) |
| 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) 8B Chimarras Str 151 25 Marousi Greece |
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 2017, 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 sixmonth financial report prepared in accordance with article 5 of Law 3556/2007 and the accompanying interim condensed consolidated financial information.
Athens, 31 August 2017 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
| As at | |||
|---|---|---|---|
| Note | 30 June 2017 | 31 December 2016 | |
| ASSETS | |||
| Non-current assets | |||
| Property, plant and equipment | 11 | 3.294.792 | 3.302.923 |
| Intangible assets | 12 | 107.640 | 108.294 |
| Investments in associates and joint ventures | 701.692 | 689.607 | |
| Deferred income tax assets | 62.646 | 100.973 | |
| Available-for-sale financial assets | 3 | 4.622 | 1.626 |
| Loans, advances and long term assets | 88.051 | 91.131 | |
| 4.259.443 | 4.294.554 | ||
| Current assets | |||
| Inventories | 13 | 886.488 | 929.164 |
| Trade and other receivables | 14 | 900.980 | 868.331 |
| Derivative financial instruments | 3 | - | 15.192 |
| Cash, cash equivalents and restricted cash | 15 | 835.096 | 1.081.580 |
| 2.622.564 | 2.894.267 | ||
| Total assets | 6.882.007 | 7.188.821 | |
| EQUITY | |||
| Share capital | 16 | 1.020.081 | 1.020.081 |
| Reserves | 17 | 388.387 | 469.788 |
| Retained Earnings | 717.207 | 549.891 | |
| Capital and reserves attributable to owners of the parent | 2.125.675 | 2.039.760 | |
| Non-controlling interests | 98.733 | 101.875 | |
| Total equity | 2.224.408 | 2.141.635 | |
| LIABILITIES | |||
| Non-current liabilities | |||
| Borrowings | 18 | 1.238.135 | 1.456.204 |
| Deferred income tax liabilities | 50.685 | 42.736 | |
| Retirement benefit obligations | 119.789 | 110.912 | |
| Provisions for other liabilities and charges | 9.791 | 9.306 | |
| Trade and other payables | 19 | 173.052 | 259.644 |
| 1.591.452 | 1.878.802 | ||
| Current liabilities | |||
| Trade and other payables | 19 | 1.583.654 | 1.777.909 |
| Derivative financial instruments | 3 | 14.675 - |
- - |
| Current income tax liabilities | 6.908 | 3.534 | |
| Borrowings | 18 | 1.400.912 | 1.386.299 |
| Dividends payable | 59.998 | 642 | |
| 3.066.147 | 3.168.384 | ||
| Total liabilities | 4.657.599 | 5.047.186 | |
| Total equity and liabilities | 6.882.007 | 7.188.821 |
The notes on pages 9 to 32 are an integral part of these condensed interim consolidated financial statements.
| E. Tsotsoros | G.Stergioulis | 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 2017 | 30 June 2016 | 30 June 2017 | 30 June 2016 | |
| Sales | 4 | 4.095.304 | 2.939.810 | 2.017.710 | 1.692.809 |
| Cost of sales | (3.592.414) | (2.517.486) | (1.799.484) | (1.444.397) | |
| Gross profit | 502.890 | 422.324 | 218.226 | 248.412 | |
| Selling and distribution expenses | (133.488) | (143.996) | (67.254) | (74.594) | |
| Administrative expenses | (63.044) | (62.751) | (33.150) | (35.589) | |
| Exploration and development expenses | (208) | (2.185) | (79) | (113) | |
| Other operating income / (losses) - net | 5 | (14.698) | 22.579 | (7.366) | 18.375 |
| Operating profit | 291.452 | 235.971 | 110.377 | 156.491 | |
| Finance income | 6 | 2.438 | 2.411 | 1.174 | 423 |
| Finance expense | 6 | (90.538) | (100.662) | (42.887) | (50.245) |
| Currency exchange (losses) / gains | 7 | (6.848) | 10.871 | (5.994) | (585) |
| Share of profit/ (loss) of investments in associates and | |||||
| joint ventures | 8 | 30.659 | (3.140) | 42 | (2.422) |
| Profit before income tax | 227.163 | 145.451 | 62.712 | 103.662 | |
| Income tax expense | 9 | (59.518) | (41.753) | (18.891) | (31.561) |
| Profit for the period | 167.645 | 103.698 | 43.821 | 72.101 | |
| Other comprehensive income/ (loss) : | |||||
| Items that will not be reclassified to profit or loss: | |||||
| Actuarial losses on defined benefit pension plans | 17 | (2.219) | (5.300) | (2.219) | (5.300) |
| (2.219) | (5.300) | (2.219) | (5.300) | ||
| Items that may be reclassified subsequently to profit or loss: |
|||||
| Changes in the fair value on available-for-sale financial assets |
2.125 | (4.990) | 2.111 | (60) | |
| Derecognition of gains on hedges through comprehensive | |||||
| income | 17 | 1.979 | 19.642 | - | 19.642 |
| Revaluation of land and buildings | (1.669) | - | - | - | |
| Fair value (losses) / gains on cash flow hedges | 17 | (21.431) | 13.269 | (10.031) | 16.425 |
| Currency translation differences and other movements | 167 | (1.273) | 227 | (545) | |
| Other comprehensive (loss) / income for the period, | |||||
| net of tax Total comprehensive income for the period |
(21.048) 146.597 |
21.348 125.046 |
(9.912) 33.909 |
30.162 102.263 |
|
| Profit attributable to: | |||||
| Owners of the parent | 167.452 | 106.865 | 43.631 | 74.457 | |
| Non-controlling interests | 193 167.645 |
(3.167) 103.698 |
190 43.821 |
(2.356) 72.101 |
|
| Total comprehensive income attributable to: | |||||
| Owners of the parent | 147.178 | 128.314 | 33.798 | 104.589 | |
| Non-controlling interests | (581) 146.597 |
(3.268) 125.046 |
111 33.909 |
(2.326) 102.263 |
|
| Basic and diluted earnings per share | |||||
| (expressed in Euro per share) | 10 | 0,55 | 0,35 | 0,14 | 0,24 |
The notes on pages 9 to 32 are an integral part of these condensed interim consolidated financial statements.
| Attributable to owners of the Parent | |||||||
|---|---|---|---|---|---|---|---|
| Share | Retained | Non-Controling | Total | ||||
| Note | Capital Reserves | Earnings | Total | interests | Equity | ||
| Balance at 1 January 2016 | 1.020.081 | 443.729 | 220.506 1.684.316 | 105.954 1.790.270 | |||
| Changes in the fair value on available-for-sale financial assets | 17 | - | (4.991) | - | (4.991) | 1 | (4.990) |
| Currency translation losses and other movements | 17 | - | (1.171) | - | (1.171) | (102) | (1.273) |
| Actuarial losses on defined benefit pension plans | - | (5.300) | - | (5.300) | - | (5.300) | |
| Fair value gains on cash flow hedges | 17 | - | 13.269 | - | 13.269 | - | 13.269 |
| Derecognition of gains on hedges through comprehensive income | 17 | - | 19.642 | - | 19.642 | - | 19.642 |
| Other comprehensive income/ (loss) | - | 21.449 | - | 21.449 | (101) | 21.348 | |
| Profit/ (loss) for the period | - | - | 106.865 | 106.865 | (3.167) | 103.698 | |
| Total comprehensive income/ (loss) for the period | - | 21.449 | 106.865 | 128.314 | (3.268) | 125.046 | |
| Balance at 30 June 2016 | 1.020.081 | 465.178 | 327.371 1.812.630 | 102.686 1.915.316 | |||
| Movement - 1 Jul 2016 to 31 December 2016 | |||||||
| Changes in the fair value on available-for-sale financial assets | 17 | - | (1.352) | - | (1.352) | 75 | (1.277) |
| Transfer of available-for-sale reserves to operating profit | 17 | - | 6.414 | - | 6.414 | - | 6.414 |
| Currency translation losses and other movements | 17 | - | 287 | - | 287 | (90) | 197 |
| Actuarial losses on defined benefit pension plans | - | (2.463) | - | (2.463) | (13) | (2.476) | |
| Fair value gains on cash flow hedges | 17 | - | 2.593 | - | 2.593 | - | 2.593 |
| Share of other comprehensive income of associates | 17 | - | (869) | - | (869) | - | (869) |
| Other comprehensive income/ (loss) | - | 4.610 | - | 4.610 | (28) | 4.582 | |
| Profit for the period | - | - | 222.895 | 222.895 | 2.142 | 225.037 | |
| Total comprehensive income for the period | - | 4.610 | 222.895 | 227.505 | 2.114 | 229.619 | |
| Tax on intra-group dividends | - | - | (375) | (375) | - | (375) | |
| Dividends to non-controlling interests | - | - | - | - | (2.925) | (2.925) | |
| Balance at 31 December 2016 | 1.020.081 | 469.788 | 549.891 2.039.760 | 101.875 2.141.635 | |||
| Movement - 1 January 2017 to 30 June 2017 | |||||||
| Changes in the fair value on available-for-sale financial assets | 17 | - | 2.127 | - | 2.127 | (2) | 2.125 |
| Derecognition of gains on hedges through comprehensive income | 17 | - | 1.979 | - | 1.979 | - | 1.979 |
| Revaluation of land and buildings | 17 | - | (907) | - | (907) | (762) | (1.669) |
| Fair value losses on cash flow hedges | 17 | - | (21.431) | - | (21.431) | - | (21.431) |
| Currency translation gains / (loss) and other movements | 17 | - | 177 | - | 177 | (10) | 167 |
| Actuarial gains/(losses) on defined benefit pension plans | - | (2.219) | - | (2.219) | - | (2.219) | |
| Other comprehensive loss | - | (20.274) | - | (20.274) | (774) | (21.048) | |
| Profit for the period | - | - | 167.452 | 167.452 | 193 | 167.645 | |
| Total comprehensive gain / (loss) 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 | 17 | - | (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 |
The notes on pages 9 to 32 are an integral part of these condensed interim consolidated financial statements.
| For the six month period ended | ||||
|---|---|---|---|---|
| Note | 30 June 2017 | 30 June 2016 | ||
| Cash flows from operating activities | ||||
| Cash generated from / (used in) operations | 20 | 138.257 | (419.210) | |
| Income tax paid | (2.021) | (1.964) | ||
| Net cash generated from / (used in) operating activities | 136.236 | (421.174) | ||
| Cash flows from investing activities | ||||
| Purchase of property, plant and equipment & intangible assets | 11,12 | (75.355) | (48.986) | |
| Proceeds from disposal of property, plant and equipment & intangible assets | 303 | 354 | ||
| Interest received | 6 | 2.438 | 2.411 | |
| Dividends received | 318 | 1.119 | ||
| Investments in associates - net | (147) | - | ||
| Net cash used in investing activities | (72.443) | (45.102) | ||
| Cash flows from financing activities | ||||
| Interest paid | (89.891) | (95.766) | ||
| Dividends paid to shareholders of the Company | (187) | (473) | ||
| Dividends paid to non-controlling interests | (2.561) | - | ||
| Movement in restricted cash | 15 | 11.873 | (13.081) | |
| Proceeds from borrowings | 207.530 | 272.800 | ||
| Repayments of borrowings | (417.406) | (405.658) | ||
| Net cash used in financing activities | (290.642) | (242.178) | ||
| Net decrease in cash and cash equivalents | (226.849) | (708.454) | ||
| Cash and cash equivalents at the beginning of the period | 15 | 924.055 | 1.952.808 | |
| Exchange losses on cash and cash equivalents | (7.762) | (288) | ||
| Net decrease in cash and cash equivalents | (226.849) | (708.454) | ||
| Cash and cash equivalents at end of the period | 15 | 689.444 | 1.244.066 |
The notes on pages 9 to 32 are an integral part of these condensed interim consolidated financial statements.
CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTH PERIOD ENDED 30 JUNE 2017 (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 condensed interim 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.
The condensed interim consolidated financial statements have been prepared in accordance with the historical cost basis, apart from financial instruments which are stated at fair value. Where necessary, comparative figures have been reclassified to conform to changes in the presentation of the current year.
These condensed interim 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 2016, which can be found on the Group's website www.helpe.gr.
The condensed interim consolidated financial statements for the six month period ended 30 June 2017 have been authorised for issue by the Board of Directors on 31 August 2017.
The preparation of the condensed interim 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 consolidated financial statements are disclosed where considered necessary. Estimates and judgements 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 condensed interim consolidated financial statements are consistent with those applied in the preparation of the consolidated financial statements for the year ended 31 December 2016 and have been consistently applied in all periods presented in this report except for the following amended IFRS's which have been adopted by the Group as of 1 January 2017. The below amendments did not have a significant impact on the condensed interim consolidated financial statements for the six month period ended 30 June 2017.
IAS 12 (Amendments) "Recognition of Deferred Tax Assets for Unrealised Losses": The objective of the Amendments is to clarify the requirements of deferred tax assets for unrealized losses in order to address diversity in practice in the application of IAS 12 Income Taxes. The specific issues where diversity in practice existed relate to the existence of a deductible temporary difference upon a decrease in fair value, to recovering an asset for more than its carrying amount, to probable future taxable profit and to combined versus separate assessment. These amendments have not yet been endorsed by the EU.
IFRS 9 "Financial Instruments" – Classification and Measurement: The standard is effective for annual periods beginning on or after 1 January 2018, with early application permitted. The final version of IFRS 9 Financial Instruments reflects all phases of the financial instruments project and replaces IAS 39 Financial Instruments: Recognition and Measurement and all previous versions of IFRS 9. The standard introduces new requirements for classification and measurement, impairment, and hedge accounting.
While the group has yet to undertake a detailed assessment of the classification and measurement of financial assets, it would appear that financial assets currently held would likely continue to be measured on the same basis under IFRS 9, and accordingly, the group does not expect the new guidance to have a significant impact on the classification and measurement of its financial assets.
There will be no impact on the group's accounting for financial liabilities, as the new requirements only affect the accounting for financial liabilities that are designated at fair value through profit or loss and the group does not have any such liabilities.
The new hedge accounting rules will align the accounting for hedging instruments more closely with the group's risk management practices. While the group is yet to undertake a detailed assessment, it would appear that the group's current hedge relationships would qualify as continuing hedges upon the adoption of IFRS 9. Accordingly, the group does not expect a significant impact on the accounting for its hedging relationships.
The new impairment model requires the recognition of impairment provisions based on expected credit losses (ECL) rather than only incurred credit losses as is the case under IAS 39. While the group has not yet undertaken a detailed assessment of how its impairment provisions would be affected by the new model, it may result in an earlier recognition of credit losses.
The new standard also introduces expanded disclosure requirements and changes in presentation. These are expected to change the nature and extent of the group's disclosures about its financial instruments particularly in the year of the adoption of the new standard.
IFRS 15 "Revenue from Contracts with Customers": The standard is effective for annual periods beginning on or after 1 January 2018. 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 an output of the entity's ordinary activities (e.g., sales of property, plant and equipment or intangibles). Extensive disclosures will be required, including disaggregation of total revenue; information about performance obligations; changes in contract asset and liability account balances between periods and key judgments and estimates.
Management has made a preliminary assessment of the impact on potential areas that may be affected by the application of this standard. The group considers that the application of the new rules will not impact the group's consolidated financial statements.
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 € 205 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 low-value 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 the end of the year.
IFRS 10 (Amendment) "Consolidated Financial Statements" and IAS 28 "Investments in Associates and Joint Ventures: Sale or Contribution of Assets between an Investor and its Associate or Joint Venture": The amendments address an acknowledged inconsistency between the requirements in IFRS 10 and those in IAS 28, in dealing with the sale or contribution of assets between an investor and its associate or joint venture. The main consequence of the amendments is that a full gain or loss is recognized when a transaction involves a business (whether it is housed in a subsidiary or not). A partial gain or loss is recognized when a transaction involves assets that do not constitute a business, even if these assets are housed in a subsidiary. In December 2015 the IASB postponed the effective date of this amendment indefinitely pending the outcome of its research project on the equity method of accounting. The amendments have not yet been endorsed by the EU.
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: During the previous years the Group faced exceptional challenges and increased cost of doing business mainly as a result of the economic crisis in Greece and the political uncertainty. These challenges remain, albeit with a less profound impact, as signs of improvement have appeared.
The approval of the €86 billion bailout programme in August 2015 and the recapitalisation of the 4 systemic banks during December 2015 were key steps towards the stabilisation of the macroeconomic and financial environment in Greece. The improvement in the labour market has supported household consumption however the unemployment rate remains high despite a moderate decline since 2013. Tax and benefit reforms have materially improved the Greek state budget position, but public debt remains high. Despite signs of a turnaround and the slower pace of fiscal consolidation agreed in the context of the ESM programme, the macroeconomic and financial situation is still fragile. Confidence is not restored and banks are still challenged with nonperforming loans. As stipulated in the August 2015 bailout programme, in order to achieve the fiscal targets agreed, the fiscal position requires additional measures to deliver medium-term sustainability, in order to reach primary fiscal surplus of 3,5% of GDP by 2018. Following completion of the program, the primary surplus target is expected to be sustained and closely monitored. Addressing these measures will be necessary for a stronger recovery and a faster reduction in unemployment.
The bailout program was approved to be dispensed in allotments/tranches following the adoption of a series of agreed upon changes and austerity measures. Implementation of these changes is reviewed by the lenders prior to the disbursement of each tranche. To date two tranches have been approved.
While the bailout program and its progress to date have reduced the risk of economic instability in Greece, concerns around its implementation remain, as reflected in debt capital and equity markets risk assessment and pricing. The implementation of the program and its effects on the economy are beyond the Group's control.
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: Developments in the global and regional crude oil markets in the last 2 years have reduced the cost of raw material for the Group and increased optionality. International crude oil reference prices dropped by more than 50% compared to June 2014 peak. These developments led to lower cost of crude, for both sweet and especially sour grades, which represent the key source of feedstock for complex refiners like Hellenic Petroleum, improving the competitive position of Med refiners vs. their global peers. The Group was able to take advantage of this development and diversify its crude basket compared to previous years.
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 75% 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 18, "Borrowings".
Capital management: The second key priority of the Group has been the management of its Assets. Overall the Group has around €4,0 billion of capital employed which is driven from working capital, investment in fixed assets and its investment in 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 Group's investment plan, during the period 2007-2012, net debt level has increased to 45% of total capital employed with the remaining 55% being 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 condensed interim 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 2016.
There have been no changes in the risk management or in any risk management policies since 31 December 2016.
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 2017:
| Assets | Level 1 | Level 2 | Level 3 | Total balance |
|---|---|---|---|---|
| Derivative financial instruments held for trading | - | - | - | - |
| Derivatives used for hedging | - | - | - | - |
| Available for sale financial assets | 4.622 | - | - | 4.622 |
| 4.622 | - | - | 4.622 | |
| Liabilities | ||||
| Derivative financial instruments held for trading | - | 2.469 | - | 2.469 |
| Derivatives used for hedging | - | 12.206 | - | 12.206 |
| - | 14.675 | - | 14.675 | |
The following table presents the Group's assets and liabilities that are measured at fair value at 31 December 2016:
| Level 1 | Level 2 | Level 3 | Total balance |
|
|---|---|---|---|---|
| Assets | ||||
| Derivative financial instruments held for trading | - | - | - | - |
| Derivatives used for hedging | - | 15.192 | - | 15.192 |
| Available for sale financial assets | 1.626 | - | - | 1.626 |
| 1.626 | 15.192 | - | 16.818 | |
| Liabilities | ||||
| Derivative financial instruments held for trading | - | - | - | - |
| 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 2017 was €716 million (31 December 2016: €949 million), compared to its book value of €682 million (31 December 2016: €943 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:
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 considers the business from 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.
Information on the revenue and profit regarding the Group's operating segments is presented below:
| For the period ended | ||||||
|---|---|---|---|---|---|---|
| 30 June 2017 | 30 June 2016 | |||||
| Sales | Total | Inter-segment | Net | Total | Inter-segment | Net |
| Refining | 3.633.345 | 1.042.789 | 2.590.556 | 2.528.689 | 692.160 | 1.836.529 |
| Marketing | 1.371.288 | 3.271 | 1.368.017 | 978.661 | 3.838 | 974.823 |
| Petro-chemicals | 135.417 | - | 135.417 | 126.042 | - | 126.042 |
| Gas & Power | 783 | 5 | 778 | 901 | - | 901 |
| Other | 4.789 | 4.253 | 536 | 6.874 | 5.359 | 1.515 |
| Total | 5.145.622 | 1.050.318 | 4.095.304 | 3.641.167 | 701.357 | 2.939.810 |
| For the period ended | ||||
|---|---|---|---|---|
| Note | 30 June 2017 | 30 June 2016 | ||
| Operating profit / (loss) | ||||
| Refining | 225.171 | 180.264 | ||
| Marketing | 19.835 | 14.189 | ||
| Exploration & Production | (2.382) | (4.071) | ||
| Petro-chemicals | 49.002 | 46.530 | ||
| Gas & Power | 133 | (5.111) | ||
| Other | (307) | 4.170 | ||
| Total | 291.452 | 235.971 | ||
| Currency exchange gains/ (losses) | 7 | (6.848) | 10.871 | |
| Share of profit/(loss) of investments in associates and joint ventures | 8 | 30.659 | (3.140) | |
| Finance expense | 6 | (88.100) | (98.251) | |
| Profit before income tax | 227.163 | 145.451 | ||
| Income tax expense | 9 | (59.518) | (41.753) | |
| Profit for the period | 167.645 | 103.698 | ||
| (Income) / loss applicable to non-controlling interests | (193) | 3.167 | ||
| Profit for the period attributable to the owners of the parent | 167.452 | 106.865 |
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.
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 2016.
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 2016.
(All amounts in Euro thousands unless otherwise stated)
An analysis of the Group's net sales by type of market (domestic, aviation & bunkering, exports and international activities) is presented below:
| For the period ended | ||
|---|---|---|
| 30 June 2017 | 30 June 2016 | |
| Net Sales | ||
| Domestic | 1.487.632 | 953.177 |
| Aviation & Bunkering | 684.635 | 620.699 |
| Exports | 1.523.478 | 937.454 |
| International activities | 399.559 | 428.480 |
| Total | 4.095.304 | 2.939.810 |
| For the six month period ended | For the three month period ended | ||||
|---|---|---|---|---|---|
| 30 June 2017 | 30 June 2016 | 30 June 2017 | 30 June 2016 | ||
| Income from Grants | 424 | 703 | 210 | 350 | |
| Services to 3rd Parties | 1.729 | 2.497 | 675 | 1.732 | |
| Rental income | 4.602 | 6.588 | 2.318 | 3.271 | |
| (Loss)/profit from the sale of PPE - net | (101) | 75 | (245) | 26 | |
| Insurance compensation | 525 | 286 | 313 | 230 | |
| Voluntary retirement scheme cost | (389) | (309) | (344) | (187) | |
| Amortisation of long-term contracts costs | (4.628) | 13.500 | (2.347) | 13.500 | |
| Legal costs relating to Arbitration proceedings ruling | (13.681) | - | (5.681) | - | |
| Other operating expenses | (3.179) | (761) | (2.265) | (547) | |
| Total other operating income / (expenses)-net | (14.698) | 22.579 | (7.366) | 18.375 |
Other operating income / (expenses) – net, include income or expenses which do not relate to the trading activities of the Group.
| 30 June 2017 | For the six month period ended 30 June 2016 |
For the three month period ended 30 June 2017 30 June 2016 |
||||
|---|---|---|---|---|---|---|
| Interest income | 2.438 | 2.411 | 1.174 | 423 | ||
| Interest expense and similar charges | (90.538) | (100.662) | (42.887) | (50.245) | ||
| Finance expenses -net | (88.100) | (98.251) | (41.713) | (49.822) |
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). Foreign currency exchange gains of €10,9 million reported for the six-month period ended 30 June 2016, relate mainly to realized gains from the repayment of US\$ denominated borrowings.
The amounts represent the Group's share of the net profit / (losses) from associated companies 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 2017 | 30 June 2016 | 30 June 2017 | 30 June 2016 | ||
| Public Natural Gas Corporation of Greece (DEPA) | 35.258 | 11.698 | 8.247 | 7.230 | |
| ELPEDISON B.V. | (2.099) | (10.341) | (3.331) | (7.372) | |
| DMEP | (2.620) | (4.787) | (4.973) | (2.525) | |
| Other associates | 120 | 290 | 99 | 245 | |
| Total | 30.659 | (3.140) | 42 | (2.422) |
The share of loss from ELPEDISON BV for the period ended 30 June 2016 (€10,3 million), includes an amount of €5,5 million relating to impairment of the investment.
The main financial information of DEPA Group is presented below:
| For the six month period ended | For the three month period ended | |||||
|---|---|---|---|---|---|---|
| 30 June 2017 30 June 2016 |
30 June 2017 | 30 June 2016 | ||||
| EBITDA | 159.572 | 121.132 | 43.347 | 45.772 | ||
| Income before Tax | 131.227 | 87.200 | 30.933 | 28.782 | ||
| Income Tax | (30.490) | (20.627) | (7.370) | (8.125) | ||
| Net income | 100.737 | 66.573 | 23.563 0 |
20.657 0 |
||
| Income accounted in Group | 35.258 | 11.698 | 8.247 | 7.230 |
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 March 1, 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).
(All amounts in Euro thousands unless otherwise stated)
The Board of Directors of HELPE, at its meeting on June 12, 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 June 26, 2017 and the special permit of the General Assembly was provided retrospectively on July 6, 2017, pursuant to the provision of article 23a par.4 2190/1920. On June 26, 2017 the Invitation for the Non-Binding Expression of Interest was published.
The Group consolidates the DEPA Group using the equity method of accounting and the carrying value of the investment in the condensed interim consolidated financial statements reflects HELPE's 35% share of the net asset value of the DEPA group which as at 30 June 2017 amounts to €648 million. The historic cost of investment of the DEPA group in the condensed interim consolidated financial statements of HELPE S.A is €237 million. DEPA Group, as it currently stands, continues to be accounted for and included in the Group's condensed interim consolidated financial statements as an associate.
| For the six month period ended | |||||
|---|---|---|---|---|---|
| 30 June 2017 | 30 June 2016 | 30 June 2017 | 30 June 2016 | ||
| Current tax | (3.398) | (5.287) | (1.755) | (4.312) | |
| Deferred tax | (56.120) | (36.466) | (17.136) | (27.249) | |
| Total expense | (59.518) | (41.753) | (18.891) | (31.561) |
The corporate income tax rate of legal entities in Greece for the period ending 30 June 2017 is 29% (31 December 2016: 29%).
Effective for fiscal years ending 31 December 2011 onward, Greek companies meeting certain criteria have to be audited on an annual basis by their statutory auditor in respect of compliance with tax law. This audit leads to the issuance of a Tax Compliance Report which 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 been audited by their respective statutory auditor and have received unqualified Tax Compliance Reports, for fiscal years up to 2015 (inclusive). The tax audit for the financial year 2016 is in progress and the relevant Report is expected to be issued after the publication of the condensed interim consolidated financial statements for the period ended 30 June 2017. Group management estimates that any additional tax liabilities, which may arise until the completion of the audit, will not significantly impact the condensed interim consolidated financial statements.
The unaudited income tax years of the parent company and its most significant subsidiaries are set out below. As a result, their income tax obligations are not considered final. As mentioned above from 2011 onwards, Group companies based in Greece have been audited by their respective statutory auditor and have obtained unqualified Tax Compliance Reports up to the fiscal year ended 31 December 2015; therefore, these fiscal years are considered audited.
| Financial years | |
|---|---|
| Company Name | ended |
| HELLENIC PETROLEUM S.A. | 2010 |
| ΕΚΟ S.A | 2008-2010 |
| HELLENIC FUELS S.A. | 2010 |
Issuance of tax certificates for the fiscal year 2016 is expected within the third quarter of 2017 and they are expected to be unqualified.
(All amounts in Euro thousands unless otherwise stated)
Group 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 condensed interim consolidated financial statements for the period ended 30 June 2017.
Provisional VAT audits have been completed for:
Relevant audits, for subsequent periods and for other Group companies are in progress.
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. 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 | 30 June 2016 | 30 June 2017 | 30 June 2016 | ||
| Earnings per share attributable to the Company | |||||
| Shareholders (expressed in Euro per share): | 0,55 | 0,35 | 0,14 | 0,24 | |
| Net income attributable to ordinary shares | |||||
| (Euro in thousands) | 167.452 | 106.865 | 43.631 | 74.457 | |
| Average number of ordinary shares | 305.635.185 | 305.635.185 | 305.635.185 | 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 2016 | 286.567 | 889.226 | 4.526.737 | 90.720 | 160.162 | 63.738 | 6.017.150 |
| Additions | 77 | 618 | 4.167 | 1.215 | 3.163 | 38.377 | 47.617 |
| Capitalised projects | 1.606 | 1.978 | 25.487 | 24 | 105 | (29.200) | - |
| Disposals | - | (74) | (2.156) | (622) | (702) | (139) | (3.693) |
| Impairment | - | - | (8.314) | - | - | - | (8.314) |
| Currency translation effects | (289) | (526) | (266) | (3) | (8) | (75) | (1.167) |
| Transfers and other movements | - | 997 | 1.843 | - | (20) | (3.294) | (474) |
| As at 30 June 2016 | 287.961 | 892.219 | 4.547.498 | 91.334 | 162.700 | 69.407 | 6.051.119 |
| Accumulated Depreciation | |||||||
| As at 1 January 2016 | - | 408.915 | 2.027.382 | 57.042 | 138.541 | - | 2.631.880 |
| Charge for the period | - | 14.767 | 75.939 | 2.154 | 3.118 | - | 95.978 |
| Disposals | - | (12) | (2.092) | (622) | (687) | - | (3.413) |
| Currency translation effects | - | (232) | (206) | (2) | (7) | - | (447) |
| Transfers and other movements | - | - | - | - | (4) | - | (4) |
| As at 30 June 2016 | - | 423.438 | 2.101.023 | 58.572 | 140.961 | - | 2.723.994 |
| Net Book Value at 30 June 2016 | 287.961 | 468.781 | 2.446.475 | 32.762 | 21.739 | 69.407 | 3.327.125 |
| Cost | |||||||
| As at 1 January 2017 | 288.126 | 897.678 | 4.582.512 | 92.769 | 168.215 | 88.609 | 6.117.909 |
| 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 | 3.334 | 112 | 1.032 | (4.004) | 1.241 |
| As at 30 June 2017 | 307.777 | 905.700 | 4.600.255 | 94.412 | 174.154 | 111.202 | 6.193.500 |
| Accumulated Depreciation | |||||||
| As at 1 January 2017 | - | 439.270 | 2.171.654 | 60.625 | 143.437 | - | 2.814.986 |
| 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 | (1.714) | 978 | - | 705 |
| As at 30 June 2017 | - | 453.713 | 2.236.837 | 60.390 | 147.768 | - | 2.898.708 |
| Net Book Value at 30 June 2017 | 307.777 | 451.987 | 2.363.418 | 34.022 | 26.386 | 111.202 | 3.294.792 |
'Transfers and other movements' mainly include the transfer of spare parts for the upgraded Elefsina units from inventories to fixed assets and the transfer of computer software development costs to intangible assets.
(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 2016 | 133.914 | 50.276 | 100.705 | 40.016 | 73.812 | 398.723 |
| Additions | - | 70 | 1.120 | 167 | 12 | 1.369 |
| Currency translation effects and other movements | - | (156) | 1.409 | 349 | (58) | 1.544 |
| As at 30 June 2016 | 133.914 | 50.190 | 103.234 | 40.532 | 73.766 | 401.636 |
| Accumulated Amortisation | ||||||
| As at 1 January 2016 | 71.829 | 29.019 | 91.103 | 30.060 | 59.650 | 281.661 |
| Charge for the period | - | 1.620 | 2.315 | 1.047 | 2.372 | 7.354 |
| Currency translation effects and other movements | - | - | (51) | 52 | - | 1 |
| As at 30 June 2016 | 71.829 | 30.639 | 93.367 | 31.159 | 62.022 | 289.016 |
| Net Book Value at 30 June 2016 | 62.085 | 19.551 | 9.867 | 9.373 | 11.744 | 112.620 |
| 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 |
| Currency translation effects and other movements | - | (52) | 1.647 | (92) | (50) | 1.453 |
| 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 | |
| Currency translation effects and other movements | - | (37) | (48) | 58 | (81) | (108) |
| 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 |
'Currency translation effects and 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 2017 | 31 December 2016 | |||
| Crude oil | 334.039 | 371.829 | ||
| Refined products and semi-finished products | 486.255 | 489.037 | ||
| Petrochemicals | 16.533 | 20.387 | ||
| Consumable materials and other spare parts | 89.758 | 86.665 | ||
| - Less: Provision for consumables and spare parts | (40.097) | (38.754) | ||
| Total | 886.488 | 929.164 |
The cost of inventories recognised as an expense and included in "Cost of sales" amounted to €3,2 billion (30 June 2016: €2,1 billion). The Group has reported a loss of €0,3 million as at 30 June 2017 arising from inventory valuation (30 June 2016: €2,9 million). This was recognised as an expense in the six-month period ended 30 June 2017 and included in 'Cost of Sales' in the statement of comprehensive income.
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., who 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 2017 | 31 December 2016 | |||
| Trade receivables | 759.755 | 722.269 | ||
| - Less: Provision for impairment of receivables | (242.118) | (235.636) | ||
| Trade receivables net | 517.637 | 486.633 | ||
| Other receivables | 399.051 | 359.486 | ||
| - Less: Provision for impairment of receivables | (41.326) | (41.325) | ||
| Other receivables net | 357.725 | 318.161 | ||
| Deferred charges and prepayments | 25.618 | 63.537 | ||
| Total | 900.980 | 868.331 |
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 VAT, income tax prepayment, advances to suppliers and advances to personnel. This balance as at 30 June 2017 also includes an amount of €54 million (31 December 2016: €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 23). The fair values of trade and other receivables approximate their carrying amount.
Deferred charges and prepayments is reduced during the current period, due to the settlement of an insurance claim, amounting to €42 million, which relates to the property damage and business interruption of the Elefsina refinery during 2013-2015.
| As at | |||
|---|---|---|---|
| 30 June 2017 | 31 December 2016 | ||
| Cash at Bank and in Hand | 689.444 | 924.055 | |
| Cash and Cash Equivalents | 689.444 | 924.055 | |
| Restricted Cash | 145.652 | 157.525 | |
| Total Cash, Cash Equivalents and Restricted Cash | 835.096 | 1.081.580 |
Restricted cash 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 18). The outstanding balance under the EIB Facility Agreement B as at 30 June 2017 was €111 million, whilst the outstanding balance of the Piraeus loan as at 30 June 2017 was €144 million. This is expected to be reduced to €111 million in the following months. The guarantee matured on 15 June 2017 and was renewed for an additional year. The effect of the loan and the deposit with Piraeus Bank is a grossing up of the Statement of Financial Position with no effect to the Net Debt position and Net Equity of the Group.
The balance of US Dollars included in Cash at bank as at 30 June 2017 was \$ 481 million (euro equivalent €421 million). The respective amount for the year ended 31 December 2016 was \$ 510 million (euro equivalent €484 million).
| Number of Shares (authorised and issued) |
Share Capital |
Share premium |
Total | |
|---|---|---|---|---|
| As at 1 January & 31 December 2016 | 305.635.185 | 666.285 | 353.796 | 1.020.081 |
| As at 30 June 2017 | 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 2016: €2,18).
(All amounts in Euro thousands unless otherwise stated)
| Balance at 1 January 2016 | Statutory reserve 118.668 |
Special reserves |
Hedging reserve 98.420 (22.236) |
Share-based payment reserve 747 |
Tax-free & Incentive Law reserves |
Other Reserves 263.047 (14.917) 443.729 |
Total |
|---|---|---|---|---|---|---|---|
| Cash flow hedges | |||||||
| - Fair value gains on cash flow hedges | - | - | 13.269 | - | - | - | 13.269 |
| - Derecognition of losses on hedges through comprehensive income Actuarial losses on defined benefit pension plans |
- - |
- - |
19.642 - |
- - |
- - |
- (5.300) |
19.642 (5.300) |
| Changes in the fair value on available-for-sale finacial assets Currency translation differences and other movements |
- - |
- - |
- - |
- - |
- - |
(4.991) (1.171) |
(4.991) (1.171) |
| Balance at 30 June 2016 | 118.668 | 98.420 | 10.675 | 747 | 263.047 (26.379) 465.178 | ||
| Cash flow hedges - Fair value gains on cash flow hedges |
- | - | 2.593 | - | - | - | 2.593 |
| Changes in the fair value on available-for-sale finacial assets | - | - | - | - | - | (1.352) | (1.352) |
| Transfer of available-for-sale reserve to operating profit | - | - | - | - | - | 6.414 | 6.414 |
| Actuarial losses on defined benefit pension plans | - | - | - | - | - | (2.463) | (2.463) |
| Share of other comprehensive income of associates | - | - | - | - | - | (869) | (869) |
| Currency translation differences and other movements | - | - | - | - | - | 287 | 287 |
| Balance at 31 December 2016 and 1 January 2017 | 118.668 | 98.420 | 13.268 | 747 | 263.047 (24.362) 469.788 | ||
| Changes in the fair value on available-for-sale financial assets Derecognition of gains on hedges through comprehensive income |
- - |
- - |
- 1.979 |
- - |
- - |
2.127 - |
2.127 1.979 |
| Revaluation of land and buildings | - | - | - | - | - | (907) | (907) |
| Fair value losses on cash flow hedges | - | - (21.431) | - | - | - (21.431) | ||
| Currency translation differences and other movements | - | - | - | - | - | 177 | 177 |
| Actuarial losses on defined benefit pension plans | - | - | - | - | - | (2.219) | (2.219) |
| Dividends | - | - | - | - | (61.127) | - (61.127) | |
| As at 30 June 2017 | 118.668 | 98.420 | (6.184) | 747 | 201.920 (25.184) 388.387 |
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 the outstanding share capital. This reserve cannot be distributed, but can be used to offset accumulated losses.
Special reserves primarily relate to reserves arising from tax revaluations in accordance with relevant legislation in prior years.
These reserves 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 recognized in other comprehensive income.
Amounts are reclassified to profit or loss when the associated hedged transaction affects profit or loss.
(All amounts in Euro thousands unless otherwise stated)
These include actuarial gains / (losses) on defined benefit plans resulting from experience adjustments (the effects of differences between the previous actuarial assumptions and what has actually occurred); and the effects of changes in actuarial assumptions.
| As at | ||||
|---|---|---|---|---|
| 30 June 2017 | 31 December 2016 | |||
| Non-current borrowings | ||||
| Bank borrowings | 553.223 | 772.364 | ||
| Eurobonds | 681.505 | 680.111 | ||
| Finance leases | 3.407 | 3.729 | ||
| Total non-current borrowings | 1.238.135 | 1.456.204 | ||
| Current borrowings | ||||
| Short term bank borrowings | 1.355.479 | 1.078.095 | ||
| Eurobonds | - | 262.814 | ||
| Current portion of long-term bank borrowings | 44.820 | 44.815 | ||
| Finance leases - current portion | 613 | 575 | ||
| Total current borrowings | 1.400.912 | 1.386.299 | ||
| Total borrowings | 2.639.047 | 2.842.503 |
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 2017 and 31 December 2016 are summarised in the table below (amounts in € million):
| Balance as at | Balance as at | |||
|---|---|---|---|---|
| Company | Maturity | 30 June 2017 | 31 December 2016 | |
| 1a. Syndicated credit facility €20 million | HPF plc | Jul 2018 | 20 | 20 |
| 1b. Syndicated credit facility €10 million | HPF plc | Jul 2018 | 10 | 10 |
| 1c. Syndicated bond loan €350 million | HP SA | Jul 2018 | 346 | 344 |
| 2. Bond loan €400 million | HP SA | Oct 2017 | 284 | 284 |
| 3. Bond loan €200 million | HP SA | Jan 2018 | 200 | 199 |
| 4. Bond loan SBF €400 million | HP SA | Nov 2017 | 239 | 72 |
| 5. European Investment Bank ("EIB")Term loan | HP SA | Jun 2022 | 222 | 244 |
| 6. Eurobond €500 million | HPF plc | May 2017 | - | 263 |
| 7. Eurobond €325 million | HPF plc | Jul 2019 | 315 | 313 |
| 8. Eurobond €375 million | HPF plc | Oct 2021 | 367 | 367 |
| 9. Bilateral lines | Various | Various | 632 | 723 |
| 10. Finance leases | Various | Various | 4 | 4 |
| Total | 2.639 | 2.843 |
No loans were in default as at 30 June 2017 (none as at 31 December 2016).
Significant movements in borrowings for the six month period ended 30 June 2017 are as follows:
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.
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 is credit enhanced by a commercial bank guarantee (see Note 15). This is normal practice for EIB lending particularly during the construction phase of large projects. Total repayments on both loans up to 30 June 2017 amounted to € 178 million (€22 million paid during 2017). See also note 15 - Cash and Cash Equivalents. Facility B includes financial covenant ratios which are comprised of leverage, interest cover and gearing ratios. During 2016 the Group successfully completed a covenants harmonisation process for all its commercial bank loans and Eurobonds. Following the completion of the harmonisation process, the Company entered into discussions with EIB in order to bring the loan covenants' definitions and ratios in line with those used for all its commercial bank loans and Εurobonds. In case a common position with EIB is not reached, the Group will evaluate all options, including if deemed appropriate, a possible refinancing or repayment of the facility out of existing credit lines.
In May 2013, the Group issued a €500 million four-year Eurobond, with an 8% annual coupon, maturing in May 2017. The Notes were issued by Hellenic Petroleum Finance Plc and are guaranteed by Hellenic Petroleum S.A. The notes were partially prepaid in October 2016 with the proceeds of a new Eurobond issue of €375 million fiveyear Eurobond. In May 2017 Hellenic Petroleum Finance repaid the outstanding amount €263 million of the €500 Eurobond upon maturity.
The Group companies have credit facilities with various banks in place, for general corporate purposes. These mainly relate to short-term loans of the parent company Hellenic Petroleum S.A., which have been put in place and renewed as necessary over the past few years.
Certain medium term credit agreements that the Group has concluded, include financial covenants, mainly for the maintenance of certain ratios such as: "Net Debt/EBITDA", "EBITDA/Net Interest" and "Net Debt/Net Worth". Management monitors the performance of the Group to ensure compliance with the above covenants.
| As at | ||||
|---|---|---|---|---|
| 30 June 2017 | 31 December 2016 | |||
| Trade payables | 1.406.791 | 1.617.894 | ||
| Accrued expenses | 116.832 | 78.584 | ||
| Other payables | 60.031 | 81.431 | ||
| Total | 1.583.654 | 1.777.909 |
Trade payables comprise amounts payable or accrued in respect of supplies of crude oil, products and services.
Trade payables, as at 30 June 2017 and 31 December 2016, 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 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. Implementation of the agreement will be in full compliance with prevailing EU and international framework, as well as surviving restrictions. In accordance with the aforementioned Heads of Terms, the relevant amount which falls due after twelve months has been transferred from trade payables to trade and other payables in non-current liabilities as at 30 June 2017.
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 2017 | 30 June 2016 | |
| Profit before tax | 227.163 | 145.451 | |
| Adjustments for: | |||
| Depreciation and amortisation of property, plant and equipment and | |||
| intangible assets | 11, 12 | 87.954 | 103.332 |
| Impairment of fixed assets | 11 | - | 8.314 |
| Amortisation of grants | 5 | (424) | (703) |
| Finance costs - net | 6 | 88.100 | 98.251 |
| Share of operating profit / (loss) of associates | 8 | (30.659) | 3.140 |
| Provisions for expenses and valuation charges | 17.610 | 24.849 | |
| Foreign exchange (gains) / losses | 7 | 6.848 | (10.871) |
| Amortisation of long-term contracts costs | 5 | 4.628 | (13.500) |
| (Gain) / loss on sales of property, plant and equipment | 5 | 101 | (75) |
| 401.321 | 358.188 | ||
| Changes in working capital | |||
| Decrease /(increase) in inventories | 41.332 | (85.310) | |
| Increase in trade and other receivables | (19.859) | (55.392) | |
| Decrease in payables | (284.537) | (636.696) | |
| (263.064) | (777.398) | ||
| Net cash (outflow)/ inflow from operating activities | 138.257 | (419.210) |
The condensed interim 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.
(All amounts in Euro thousands unless otherwise stated)
Transactions have been carried out with the following related parties:
| 30 June 2017 418.467 191 418.658 436.817 |
For the six month period ended 30 June 2016 340.256 67 340.323 330.815 1.547 |
|---|---|
| 3.646 | |
| 440.463 | 332.362 |
| As at | |
| 30 June 2017 | 31 December 2016 |
| 34.617 | 34.846 |
| 639 | |
| 35.485 | |
| 561 35.178 |
| Balances due from related parties | ||
|---|---|---|
| Associates | 57.066 | 23.720 |
| Joint ventures | 56 | 9 |
| Total | 57.122 | 23.729 |
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 2017 was €91 million (31 December 2016: €100 million).
During the six month period ended 30 June 2017, transactions and balances with the above government related entities are as follows:
| For the six month period ended 30 June 2017 |
For the six month period ended 30 June 2016 |
|||
|---|---|---|---|---|
| Short term employee benefits |
Termination benefits |
Short term employee benefits |
Termination benefits |
|
| BOD Executive Members | 859 | - | 560 | - |
| BOD Non Executive Members | 235 | - | 229 | - |
| General Managers | 1.191 | - | 768 | 523 |
| Total | 2.285 | - | 1.557 | 523 |
Significant contractual commitments of the Group, other than future operating lease payments disclosed in the annual consolidated financial statements as at 31 December 2016, mainly relate to improvements in refining assets and amount to €16 million as at 30 June 2017 (31 December 2016: €23 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 condensed interim 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 2017 was the equivalent of €944 million (31 December 2016: €1.210 million). Out of these, €853 million (31 December 2016: €1.110 million) are included in consolidated borrowings of the Group and are presented as such in the condensed interim 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 condensed interim 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, according to which a fine of €14 million against the Company had been imposed in 2011. Management believes that no additional material liabilities will arise as a result of these cases over and above those recognised in the condensed interim consolidated financial statements.
Income tax audits for the Group's most important Greek legal entities have been completed up to and including the financial year ended 31 December 2009, with the exception of EKO where income tax audits have been concluded up to and including the financial year ended 31 December 2007, while ongoing audits are in place for financial years from 2008 up to and including the year ended 31 December 2010 for EKO, as well as for financial years from 2010 up to and including the years ended 31 December 2012, for HELPE. Furthermore, for these legal entities, provisional tax audits mainly relating to VAT refunds have been concluded up to more recent dates. In cases where the audits have been finalized and any amounts charged are disputable, the Group has timely practiced all possible legal remedies. 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 recognised in the condensed interim consolidated financial statements.
It is noted that for financial years ending 31 December 2011 up to 31 December 2015, Greek legal entities were subject to annual tax audits from their statutory auditors. All the relevant Group companies were audited for the financial years ended 31 December 2011- 2015 obtaining unqualified Tax Compliance Reports. According to recent legislation, the tax audit and the issuance of tax certificates is also valid from 2016 onwards but on an optional basis. Management believes that the respective Group companies will also receive unqualified Tax Compliance Reports for the year 2016.
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 14), 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.
The AGM held on 23 June 2017 approved the proposal for a €0.20/share distribution out of prior year taxed reserves, which was paid out on 10 July 2017. 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 2017.
| EFFECTIVE | ||||
|---|---|---|---|---|
| COUNTRY OF | PARTICIPATION | METHOD OF | ||
| COMPANY NAME | ACTIVITY | REGISTRATION | PERCENTAGE | CONSOLIDATION |
| HELLENIC FUELS AND LUBRICANTS INDUSTRIAL | 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 | 63,00% | FULL |
| VARDAX S.A | Pipeline | GREECE | 50,40% | FULL |
| OKTA CRUDE OIL REFINERY A.D | Refining | FYROM | 51,35% | 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 |
| 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 |
On 31 July 2017, the Group issued new notes with a principal amount of €74,5 million to be consolidated so as to form a single series with Hellenic Petroleum Finance Plc existing notes due October 2021. The new notes, which are fully guaranteed by Hellenic Petroleum S.A., were offered through a private placement at an offering price of 106%, resulting in proceeds of €79 million and a yield of 3.333% and are listed on the Luxemburg Stock Exchange. The proceeds of the new notes will be used for general corporate purposes, more specifically the implementation of the Group's approved capital investment plan, including development in renewable energy sources.
On 10 July 2017, the Elefsina Refinery proceeded to a temporary shut-down following a technical incident that occurred in the hydrogen production unit.
All maintenance works which were scheduled to be implemented from the end of September 2017 until March 2018, will be carried out during the shut-down period. The completion of maintenance works and the start-up of the refinery are scheduled to take place during September 2017.
During the shut-down supply needs of the domestic market and of international subsidiaries will be covered by the refineries of Aspropyrgos and Thessaloniki.
4.2. Condensed Interim Financial Statements
30 JUNE 2017
CONDENSED INTERIM FINANCIAL STATEMENTS FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2017 (All amounts in Euro thousands unless otherwise stated)
| Page | ||
|---|---|---|
| I. | Company Information | 3 |
| II. | Condensed Interim Statement of Financial Position | 5 |
| III. | Condensed Interim Statement of Comprehensive Income | 6 |
| IV. | Condensed Interim Statement of Changes in Equity | 7 |
| V. | Condensed Interim Statement of Cash Flows | 8 |
| VI. | Notes to the Condensed Interim Financial Statements | 9 |
CONDENSED INTERIM FINANCIAL STATEMENTS FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2017 (All amounts in Euro thousands unless otherwise stated)
| Directors | Efstathios Tsotsoros – Chairman of the Board Grigorios Stergioulis – Chief Executive Officer Andreas Shiamishis – Deputy Chief Executive Officer Ioannis Psichogios – Member Georgios Alexopoulos – Member (from 22/6/2017) Theodoros–Achilleas Vardas – Member Georgios Grigoriou – Member Dimitrios Kontofakas – Member Vasileios Kounelis – Member Panagiotis Ofthalmides – Member Theodoros Pantalakis – Member Spiridon Pantelias – Member Constantinos Papagiannopoulos – Member |
|---|---|
| Other Board Members during the year |
Stratis Zafiris – Member (until 22/6/2017) |
| Registered Office: | 8A Chimarras Str. GR 15125 Maroussi, Greece |
| Registration number: | 2443/06/B/86/23 |
| General Commercial Registry: |
000296601000 |
| Audit Company | Ernst & Young (Hellas) Certified Auditors Accountants SA Chimarras 8B, 15125 Maroussi, Greece |
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 2017, 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 sixmonth financial report prepared in accordance with article 5 of Law 3556/2007 and the accompanying interim condensed financial information.
Athens, 31 August 2017 THE CERTIFIED AUDITOR ACCOUNTANT
ERNST & YOUNG (HELLAS) CERTIFIED AUDITORS ACCOUNTANTS S.A. Chimarras 8B Maroussi, 151 25, Greece COMPANY S.O.E.L. R.N. 107
CHRISTIANA PANAYIDOU S.O.E.L. R.N. 62141
CONDENSED INTERIM FINANCIAL STATEMENTS FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2017 (All amounts in Euro thousands unless otherwise stated)
| As at | |||
|---|---|---|---|
| Note | 30 June 2017 | 31 December 2016 | |
| ASSETS | |||
| Non-current assets | |||
| Property, plant and equipment | 10 | 2.720.182 | 2.718.798 |
| Intangible assets | 11 | 7.516 | 6.490 |
| Investments in subsidiaries, associates and joint ventures | 652.777 | 655.265 | |
| Deferred income tax assets | - | 38.839 | |
| Available-for-sale financial assets | 3 | 4.019 | 1.017 |
| Loans, advances and long-term assets | 18.807 | 35.109 | |
| 3.403.301 | 3.455.518 | ||
| Current assets | |||
| Inventories | 12 | 793.779 | 839.306 |
| Trade and other receivables | 13 | 1.062.169 | 1.036.420 |
| Derivative financial instruments | 3 | - | 15.192 |
| Cash, cash equivalents and restricted cash | 14 | 691.905 | 888.783 |
| 2.547.853 | 2.779.701 | ||
| 5.951.154 | 6.235.219 | ||
| Total assets | |||
| EQUITY | |||
| Share capital | 15 | 1.020.081 | 1.020.081 |
| Reserves | 16 | 389.530 | 469.754 |
| Retained Earnings | 261.416 | 100.315 | |
| Total equity | 1.671.027 | 1.590.150 | |
| LIABILITIES | |||
| Non-current liabilities | |||
| Borrowings | 17 | 1.203.459 | 1.460.281 |
| Deferred income tax liabilities | 7.748 | - | |
| Retirement benefit obligations | 95.789 | 88.521 | |
| Provisions for other liabilities and charges | 7.133 | 6.829 | |
| Trade and other payables | 18 | 159.642 | 246.405 |
| 1.473.771 | 1.802.036 | ||
| Current liabilities | |||
| Trade and other payables | 18 | 1.499.263 | 1.691.973 |
| Derivative financial instruments | 3 | 14.675 | - |
| Current income tax liabilities | 1.584 | - | |
| Borrowings | 17 | 1.230.836 | 1.150.418 |
| Dividends payable | 59.998 | 642 | |
| 2.806.356 | 2.843.033 | ||
| Total liabilities | 4.280.127 | 4.645.069 | |
| Total equity and liabilities | 5.951.154 | 6.235.219 |
The notes on pages 9 to 29 are an integral part of these condensed interim financial statements.
| E. Tsotsoros G. Stergioulis |
A. Shiamishis | S. Papadimitriou | ||
|---|---|---|---|---|
| Chairman of the Board | Chief Executive Officer | Deputy Chief Executive Officer | Accounting Director |
& Chief Financial Officer
CONDENSED INTERIM FINANCIAL STATEMENTS FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2017 (All amounts in Euro thousands unless otherwise stated)
| Note | For the six-month period ended 30 June 2017 |
30 June 2016 | For the three month period ended 30 June 2017 |
30 June 2016 | |
|---|---|---|---|---|---|
| Sales | 3.753.656 | 2.641.400 | 1.837.341 | 1.531.488 | |
| Cost of sales | (3.399.532) | (2.348.533) | (1.703.615) | (1.354.112) | |
| Gross profit | 354.124 | 292.867 | 133.726 | 177.376 | |
| Selling and distribution expenses | (31.771) | (41.292) | (16.203) | (21.808) | |
| Administrative expenses | (37.148) | (39.653) | (19.331) | (23.014) | |
| Exploration and development expenses | (66) | (151) | (28) | (73) | |
| Other operating income / (expenses) - net | 5 | (21.069) | 8.700 | (11.902) | 7.438 |
| Operating profit | 264.070 | 220.471 | 86.262 | 139.919 | |
| Finance income | 6 | 6.295 | 6.783 | 3.187 | 2.531 |
| Finance expense | 6 | (81.561) | (88.019) | (38.747) | (43.539) |
| Finance (expenses) / income - net | 6 | (75.266) | (81.236) | (35.560) | (41.008) |
| Dividend income | 33.724 | 38.348 | 33.724 | 38.348 | |
| Currency exchange (losses) / gains | 7 | (7.024) | 11.305 | (6.303) | (304) |
| Profit before income tax | 215.504 | 188.888 | 78.123 | 136.955 | |
| Income tax expense | 8 | (54.403) | (43.683) | (12.989) | (31.883) |
| Profit for the period | 161.101 | 145.205 | 65.134 | 105.072 | |
| Other comprehensive income: | |||||
| Items that will not be reclassified to profit or loss: | |||||
| Acruarial losses on defined benefit pension plans | 16 | (1.775) | (3.914) | (1.775) | (3.914) |
| (1.775) | (3.914) | (1.775) | (3.914) | ||
| Items that may be reclassified subsequently to profit or | |||||
| loss: Changes in the fair value on available-for-sale financial |
|||||
| assets | 16 | 2.130 | (4.993) | 2.130 | (70) |
| Fair value gains / (losses) on cash flow hedges Derecognition of gains/(losses) on hedges through |
16 | (21.431) | 13.269 | (12.010) | 16.425 |
| comprehensive income | 16 | 1.979 | 19.642 | 1.979 | 19.642 |
| (17.322) | 27.918 | (7.901) | 35.997 | ||
| Other Comprehensive income / (loss) for the period, net of tax |
(19.097) | 24.004 | (9.676) | 32.083 | |
| Total comprehensive income for the period | 142.004 | 169.209 | 55.458 | 137.155 | |
| Basic and diluted earnings per share (expressed in Euro per share) |
9 | 0,53 | 0,48 | 0,21 | 0,34 |
The notes on pages 9 to 29 are an integral part of these condensed interim financial statements.
CONDENSED INTERIM FINANCIAL STATEMENTS FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2017 (All amounts in Euro thousands unless otherwise stated)
| Note | Share Capital |
Reserves | Retained Earnings |
Total Equity |
|
|---|---|---|---|---|---|
| Balance at 1 January 2016 | 1.020.081 | 438.818 | (234.008) | 1.224.891 | |
| Actuarial gains/(losses) on defined benefit pension plans Changes in the fair value on available-for-sale financial |
16 | - | (3.914) | - | (3.914) |
| assets | 16 | - | (4.993) | - | (4.993) |
| Fair value gains / (losses) on cash flow hedges Derecognition of gains/(losses) on hedges through |
16 | - | 13.269 | - | 13.269 |
| comprehensive income | 16 | - | 19.642 | - | 19.642 |
| Other comprehensive income | - | 24.004 | - | 24.004 | |
| Profit for the period | - | - | 145.205 | 145.205 | |
| Total comprehensive income for the period | - | 24.004 | 145.205 | 169.209 | |
| Balance at 30 June 2016 | 1.020.081 | 462.822 | (88.803) | 1.394.100 | |
| Movement - 1 July 2016 to 31 December 2016 | |||||
| Actuarial gains/(losses) on defined benefit pension plans | - | (654) | - | (654) | |
| Changes in the fair value on available-for-sale financial assets |
- | (1.421) | - | (1.421) | |
| Transfer of available-for-sale reserve to operating profit | - | 6.414 | - | 6.414 | |
| Fair value gains / (losses) on cash flow hedges | - | 2.593 | - | 2.593 | |
| Other comprehensive income | - | 6.932 | - | 6.932 | |
| Profit for the period | - | - | 189.118 | 189.118 | |
| Total comprehensive income for the period | - | 6.932 | 189.118 | 196.050 | |
| Balance at 31 December 2016 | 1.020.081 | 469.754 | 100.315 | 1.590.150 | |
| Movement - 1 January 2017 to 30 June 2017 | |||||
| Actuarial gains/(losses) on defined benefit pension plans Changes in the fair value on available-for-sale financial |
16 | - | (1.775) | - | (1.775) |
| assets | 16 | - | 2.130 | - | 2.130 |
| Fair value gains / (losses) on cash flow hedges Derecognition of gains/(losses) on hedges through |
16 | - | (21.431) | - | (21.431) |
| comprehensive income | 16 | - | 1.979 | - | 1.979 |
| Other comprehensive income / (loss) | - | (19.097) | - | (19.097) | |
| Profit for the period | - | - | 161.101 | 161.101 | |
| Total comprehensive income / (loss) for the period | - | (19.097) | 161.101 | 142.004 | |
| Dividends | 23 | - | (61.127) | - | (61.127) |
| Balance at 30 June 2017 | 1.020.081 | 389.530 | 261.416 | 1.671.027 |
The notes on pages 9 to 29 are an integral part of these condensed interim financial statements.
CONDENSED INTERIM FINANCIAL STATEMENTS FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2017 (All amounts in Euro thousands unless otherwise stated)
| For the six-month period ended | |||
|---|---|---|---|
| Note | 30 June 2017 | 30 June 2016 | |
| Cash flows from operating activities | |||
| Cash inflow / (outflow) from operations | 19 | 143.812 | (445.237) |
| Income tax paid | (15) | - | |
| Net cash inflow / (outflow) from operating activities | 143.797 | (445.237) | |
| Cash flows from investing activities | |||
| Purchase of property, plant and equipment & intangible assets | 10,11 | (62.446) | (36.800) |
| Dividends received | 318 | 37.684 | |
| Interest received | 6 | 6.295 | 6.783 |
| Participation in share capital increase of affiliated companies | (415) | (2.000) | |
| Net cash inflow / (outflow) from investing activities | (56.248) | 5.667 | |
| Cash flows from financing activities | |||
| Interest paid | (100.811) | (90.439) | |
| Dividends paid | (187) | (473) | |
| Movement in restricted cash | 14 | 11.873 | (13.081) |
| Proceeds from borrowings | 229.634 | 287.500 | |
| Repayments of borrowings | (406.038) | (387.689) | |
| Net cash outflow from financing activities | (265.529) | (204.182) | |
| Net decrease in cash and cash equivalents | (177.980) | (643.752) | |
| Cash and cash equivalents at the beginning of the period | 14 | 731.258 | 1.683.600 |
| Exchange losses on cash and cash equivalents | (7.024) | (276) | |
| Net decrease in cash and cash equivalents | (177.980) | (643.752) | |
| Cash and cash equivalents at end of the period | 14 | 546.254 | 1.039.572 |
The notes on pages 9 to 29 are an integral part of these condensed interim financial statements.
CONDENSED INTERIM FINANCIAL STATEMENTS FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2017 (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 condensed interim financial statements of Hellenic Petroleum S.A. is 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.
The condensed interim financial statements have been prepared in accordance with the historical cost basis, apart from financial instruments which are stated at fair value Where necessary, comparative figures have been reclassified to conform to changes in the presentation of the current year.
These condensed interim 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 2016, which can be found on the Company's website www.helpe.gr.
The condensed interim financial statements for the six-month period ended 30 June 2017 have been authorised for issue by the Board of Directors on 31 August 2017.
The preparation of the condensed interim 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 financial statements are disclosed where considered necessary. Estimates and judgements 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 condensed interim financial statements are consistent with those applied in the preparation of the financial statements for the year ended 31 December 2016 and have been consistently applied in all periods presented in this report, except for the following amended IFRS's, which have been adopted by the Company as of 1 January 2017. The below amendments did not have a significant impact on the condensed interim financial statements for the six-month period ended 30 June 2017.
CONDENSED INTERIM FINANCIAL STATEMENTS FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2017 (All amounts in Euro thousands unless otherwise stated)
or other businesses, the effect of changes in foreign exchange rates, changes in fair values and other changes. These amendments have not yet been endorsed by the EU.
IFRS 9 "Financial Instruments – Classification and Measurement". The standard is effective for annual periods beginning on or after 1 January 2018, with early application permitted. The final version of IFRS 9 Financial Instruments reflects all phases of the financial instruments project and replaces IAS 39 "Financial Instruments: Recognition and Measurement" and all previous versions of IFRS 9. The standard introduces new requirements for classification and measurement, impairment, and hedge accounting.
While the Company has yet to undertake a detailed assessment of the classification and measurement of financial assets, it would appear that financial assets currently held would likely continue to be measured on the same basis under IFRS 9, and accordingly, the Company does not expect the new guidance to have a significant impact on the classification and measurement of its financial assets.
There will be no impact on the Company's accounting for financial liabilities, as the new requirements only affect the accounting for financial liabilities that are designated at fair value through profit or loss and the Company does not have any such liabilities.
The new hedge accounting rules will align the accounting for hedging instruments more closely with the Company's risk management practices. While the Company is yet to undertake a detailed assessment, it would appear that the Company's current hedge relationships would qualify as continuing hedges upon the adoption of IFRS 9. Accordingly, the Company does not expect a significant impact on the accounting for its hedging relationships.
The new impairment model requires the recognition of impairment provisions based on expected credit losses (ECL) rather than only incurred credit losses, as is the case under IAS 39. While the Company has not yet undertaken a detailed assessment of how its impairment provisions would be affected by the new model, it may result in an earlier recognition of credit losses.
The new standard also introduces expanded disclosure requirements and changes in presentation. These are expected to change the nature and extent of the Company's disclosures about its financial instruments particularly in the year of the adoption of the new standard.
IFRS 15 "Revenue from Contracts with Customers". The standard is effective for annual periods beginning on or after 1 January 2018. 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 an output of the entity's ordinary activities (e.g., sales of property, plant and equipment or intangibles). Extensive disclosures will be required, including disaggregation of total revenue; information about performance obligations; changes in contract asset and liability account balances between periods and key judgments and estimates.
Management has made a preliminary assessment of the impact on potential areas that may be affected by the application of this standard. The Company considers that the application of the new rules will not affect the financial statements.
The standard will affect primarily the accounting for operating leases. As at the reporting date, the Company has non-cancellable operating lease commitments of € 17 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 the end of the year.
CONDENSED INTERIM FINANCIAL STATEMENTS FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2017 (All amounts in Euro thousands unless otherwise stated)
intentions for the use of a property does not provide evidence of a change in use. These Amendments have not yet been endorsed by the EU.
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: During the previous years, the Company faced exceptional challenges and increased cost of doing business mainly as a result of the economic crisis in Greece and the political uncertainty. These challenges remain, albeit with a less profound impact, as signs of improvement have appeared.
The approval of the €86 billion bailout programme in August 2015 and the recapitalisation of the four systemic banks during December 2015 were key steps towards the stabilisation of the macroeconomic and financial environment in Greece. The improvement in the labour market has supported household consumption; however, the unemployment rate remains high despite a moderate decline since 2013. Tax and benefit reforms have materially improved the Greek state budget position, but public debt remains high. Despite signs of a turnaround and the slower pace of fiscal consolidation agreed in the context of the ESM programme, the macroeconomic and financial situation is still fragile. Confidence is not restored and banks are still challenged with non-performing loans. As stipulated in the August 2015 bailout programme, in order to achieve the fiscal targets agreed, the fiscal position requires additional measures to deliver medium-term sustainability, in order to reach primary fiscal surplus of 3,5% of GDP by 2018. Following completion of the program, the primary surplus target is expected to be sustained and
closely monitored. Addressing these measures will be necessary for a stronger recovery and a faster reduction in unemployment.
The bailout program was approved to be dispensed in allotments/tranches following the adoption of a series of agreed upon changes and austerity measures. Implementation of these changes is reviewed by the lenders prior to the disbursement of each tranche. To date two tranches have been approved.
While the bailout program and its progress to date have reduced the risk of economic instability in Greece, concerns around its implementation remain, as reflected in debt capital and equity markets risk assessment and pricing. The implementation of the program and its effects on the economy are beyond the Company's control.
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: Developments in the global and regional crude oil markets in the last 2 years have reduced the cost of raw material for the Company and increased optionality. International crude oil reference prices dropped by more than 50% compared to June 2014 peak. These developments led to lower cost of crude, for both sweet and especially sour grades, which represent the key source of feedstock for complex refiners like Hellenic Petroleum, improving the competitive position of Med refiners vs. their global peers. The Company was able to take advantage of this development and diversify its crude basket compared to previous years.
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 50% of total debt is being 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.
Capital management: The second key priority of the Company has been the management of its Assets. Overall, the Company has around €3,4 billion of capital employed, which is driven from working capital, investment in fixed assets and its investment in 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 Company's investment plan, during the period 2007-2012, net debt level has increased to approximately 50% of total capital employed with the remaining being financed through shareholders' equity. The Company has started reducing its net debt levels through utilization of the incremental operating cash flows, 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 condensed interim 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 2016.
There have been no changes in the risk management or in any risk management policies since 31 December 2016.
The table below analyses financial instruments carried at fair value, by valuation method. The different levels are defined as follows:
Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (level 3).
The following table presents the Company's assets and liabilities that are measured at fair value at 30 June 2017:
| Assets | Level 1 | Level 2 | Level 3 | Total balance |
|---|---|---|---|---|
| Derivatives used for hedging | - | - | - | - |
| Available for sale financial assets | 4.019 | - | - | 4.019 |
| 4.019 | - | - | 4.019 | |
| Liabilities | ||||
| Derivative financial instruments held for trading | - | 2.469 | - | 2.469 |
| Derivatives used for hedging | - | 12.206 | - | 12.206 |
| - | 14.675 | - | 14.675 |
The following table presents the Company's assets and liabilities that are measured at fair value at 31 December 2016:
| Assets | Level 1 | Level 2 | Level 3 | Total balance |
|---|---|---|---|---|
| Derivatives used for hedging | - | 15.192 | - | 15.192 |
| Available for sale financial assets | 1.017 | - | - | 1.017 |
| 1.017 | 15.192 | - | 16.209 | |
| Liabilities | ||||
| Derivative financial instruments held for trading 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:
CONDENSED INTERIM FINANCIAL STATEMENTS FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2017 (All amounts in Euro thousands unless otherwise stated)
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:
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 considers the business from 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.
Information on the revenue and profit regarding the Company's operating segments is presented below:
| Petro | Exploration & | |||||
|---|---|---|---|---|---|---|
| Note | Refining | chemicals | Production | Other | Total | |
| Sales | 3.618.239 | 135.417 | - | - | 3.753.656 | |
| Operating profit / (loss) | 224.723 | 44.795 | (1.946) | (3.502) | 264.070 | |
| Finance income/(expense) - net | 6 | (75.266) | ||||
| Dividend income | 33.724 | |||||
| Currency exchange gains / (losses) | 7 | (7.024) | ||||
| Profit before income tax Income tax expense |
8 | 215.504 (54.403) |
||||
| Profit for the period | 161.101 |
| Note | Refining | Petro chemicals |
Exploration & Production |
Other | Total | |
|---|---|---|---|---|---|---|
| Sales | 2.515.358 | 126.042 | - | - | 2.641.400 | |
| Operating profit / (loss) | 188.468 | 41.285 | (1.397) | (7.885) | 220.471 | |
| Finance income/(expense) - net | 6 | (81.236) | ||||
| Dividend income | 38.348 | |||||
| Currency exchange gains / (losses) | 7 | 11.305 | ||||
| Profit before income tax Income tax expense |
8 | 188.888 (43.683) |
||||
| Profit for the period | 145.205 |
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 2016.
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 2016.
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 2017 | 30 June 2016 | |
| Net Sales | ||
| Domestic | 1.252.504 | 871.062 |
| Aviation & Bunkering | 649.429 | 591.369 |
| Exports | 1.851.723 | 1.178.969 |
| Total | 3.753.656 | 2.641.400 |
| For the six-month period ended | For the three month period ended | ||||
|---|---|---|---|---|---|
| 30 June 2017 | 30 June 2016 | 30 June 2017 | 30 June 2016 | ||
| Income from grants' amortisation | 349 | 633 | 174 | 317 | |
| Services to third parties | 2.058 | 1.636 | 940 | 874 | |
| Rental income | 671 | 672 | 336 | 333 | |
| Losses on disposal of fixed assets | (279) | (52) | (279) | (52) | |
| Amortization of long-term contracts costs | (4.846) | 13.500 | (2.565) | 13.500 | |
| Legal costs relating to arbitration proceedings ruling | (13.680) | - | (5.680) | - | |
| Other expenses | (2.342) | (189) | (1.828) | (34) | |
| Other operating income / (expenses) | (18.069) | 16.200 | (8.902) | 14.938 | |
| Impairment of investments in associates | (3.000) | (7.500) | (3.000) | (7.500) | |
| Other operating income / (expenses) - net | (21.069) | 8.700 | (11.902) | 7.438 |
Other operating income / (expenses) – net, include income or expenses, which do not relate to the trading activities of the Company.
| For the six-month period ended | For the three month period ended | ||||
|---|---|---|---|---|---|
| 30 June 2017 | 30 June 2016 | 30 June 2017 | 30 June 2016 | ||
| Interest income | 6.295 | 6.783 | 3.187 | 2.531 | |
| Interest expense and similar charges | (81.561) | (88.019) | (38.747) | (43.539) | |
| Finance (expenses) / income -net | (75.266) | (81.236) | (35.560) | (41.008) |
Foreign currency exchange losses of €7 million reported for the six-month period to 30 June 2017, mainly relate to unrealized losses arising from the valuation of bank accounts denominated in foreign currency (mostly US\$). Foreign currency exchange gains of €11 million reported for the six-month period to 30 June 2016, mainly relate to realized gains from the repayment of US\$ denominated borrowings.
| For the six-month period ended | For the three month period ended | |||
|---|---|---|---|---|
| 30 June 2017 | 30 June 2016 | 30 June 2017 | 30 June 2016 | |
| Current tax | (15) | - | (15) | - |
| Deferred tax | (54.388) | (43.683) | (12.974) | (31.883) |
| Income tax expense | (54.403) | (43.683) | (12.989) | (31.883) |
The corporate income tax rate for the period ending 30 June 2017 is 29% (2016: 29%).
Effective for fiscal years ending 31 December 2011 onward, Greek companies meeting certain criteria have to be audited on an annual basis by their statutory auditor in respect of compliance with tax law. This audit leads to the issuance of a Tax Compliance Report, which, 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 been audited by the statutory auditor and has received unqualified Tax Compliance Reports, for fiscal years up to 2015 (inclusive). The tax audit for the financial year 2016 is in progress and the relevant Report is expected to be issued after the publication of the condensed interim financial statements for the period ended 30 June 2017. Management estimates that any additional tax liabilities, which may arise until the completion of the audit, will not significantly impact the condensed interim financial statements.
The Company has not undergone a full tax audit for the financial year ended 31 December 2010. As a result, income tax obligations are not considered final. As mentioned above from 2011 onwards, the Company has been audited by the statutory auditor and has obtained unqualified Tax Compliance Reports up to the fiscal year ended 31 December 2015, therefore these fiscal years are considered audited.
Issuance of the Tax Compliance Report for the fiscal year 2016 is expected within the third quarter of 2017 and it is expected to be unqualified.
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 condensed interim financial statements for the six-month period ended 30 June 2017.
Provisional VAT audits have been completed up to and including December 2014. Relevant audits for subsequent periods are in progress.
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. 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 2017 | 30 June 2016 | 30 June 2017 | 30 June 2016 | ||
| Earnings per share attributable to the Company | |||||
| Shareholders (expressed in Euro per share): | 0,53 | 0,48 | 0,21 | 0,34 | |
| Net income attributable to ordinary shares | |||||
| (Euro in thousands) | 161.101 | 145.205 | 65.134 | 105.072 | |
| Average number of ordinary shares | 305.635.185 | 305.635.185 | 305.635.185 | 305.635.185 |
| Plant & | Furniture | Assets Under |
|||||
|---|---|---|---|---|---|---|---|
| Land | Buildings | Machi nery |
Motor vehicles |
and fixtures |
Cons truction |
Total | |
| Cost | |||||||
| As at 1 January 2016 | 115.396 | 527.747 | 3.748.398 | 14.283 | 84.649 | 52.813 | 4.543.286 |
| Additions | - | - | 342 | 107 | 633 | 34.723 | 35.805 |
| Capitalised projects | - | 945 | 24.734 | - | 16 | (25.695) | - |
| Disposals | - | - | - | - | (211) | (52) | (263) |
| Transfers and other movements | - | - | 1.029 | - | - | (1.483) | (454) |
| As at 30 June 2016 | 115.396 | 528.692 | 3.774.503 | 14.390 | 85.087 | 60.306 | 4.578.374 |
| Accumulated Depreciation | |||||||
| As at 1 January 2016 | - | 182.950 | 1.501.991 | 10.148 | 74.171 | - | 1.769.260 |
| Charge for the period | - | 8.759 | 62.911 | 190 | 1.261 | - | 73.121 |
| Disposals | - | - | - | - | (211) | - | (211) |
| As at 30 June 2016 | - | 191.709 | 1.564.902 | 10.338 | 75.221 | - | 1.842.170 |
| Net Book Value at 30 June 2016 | 115.396 | 336.983 | 2.209.601 | 4.052 | 9.866 | 60.306 | 2.736.204 |
| Cost | |||||||
| As at 1 January 2017 | 115.396 | 530.850 | 3.802.432 | 15.054 | 85.947 | 80.659 | 4.630.338 |
| 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 | - | - | 3.180 | - | - | (1.735) | 1.445 |
| As at 30 June 2017 | 136.171 | 536.870 | 3.812.339 | 15.126 | 87.981 | 104.234 | 4.692.721 |
| 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 | 2.136.331 | 4.494 | 10.768 | 104.234 | 2.720.182 |
'Transfers and other movements' include the transfer of spare parts for the upgraded Elefsina units from inventories to fixed assets and the transfer of computer software development costs to intangible assets.
CONDENSED INTERIM FINANCIAL STATEMENTS FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2017 (All amounts in Euro thousands unless otherwise stated)
| Computer software |
Licences & Rights |
Total | |
|---|---|---|---|
| Cost | |||
| As at 1 January 2016 | 86.445 | 24.299 | 110.744 |
| Additions | 995 | - | 995 |
| Transfers & other movements | 1.743 | - | 1.743 |
| As at 30 June 2016 | 89.183 | 24.299 | 113.482 |
| Accumulated Amortisation | |||
| As at 1 January 2016 | 79.271 | 23.102 | 102.373 |
| Charge for the period | 2.129 | 602 | 2.731 |
| As at 30 June 2016 | 81.400 | 23.704 | 105.104 |
| Net Book Value at 30 June 2016 | 7.783 | 595 | 8.378 |
| 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 |
'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 2017 | 31 December 2016 | ||
| Crude oil | 333.792 | 371.829 | |
| Refined products and semi-finished products | 406.153 | 410.560 | |
| Petrochemicals | 16.533 | 20.387 | |
| Consumable materials, spare parts and other | 77.349 | 75.254 | |
| - Less: Impairment provision for Consumables and spare | |||
| parts | (40.048) | (38.724) | |
| Total | 793.779 | 839.306 |
The cost of inventories recognized as an expense and included in "Cost of sales" amounted to €3,2 billion (30 June 2016: €2,1 billion). The Company has reported a loss of €0,3 million as at 30 June 2017 arising from inventory valuation (30 June 2016: €2,9 million). This was recognised as an expense in the six-month period ended 30 June 2017 and included in 'Cost of Sales' in the statement of comprehensive income.
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., who 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 2017 | 31 December 2016 | ||
| Trade receivables | 442.127 | 444.395 | |
| - Less: Provision for impairment of receivables | (120.886) | (118.186) | |
| Trade receivables net | 321.241 | 326.209 | |
| Other receivables | 749.905 | 679.848 | |
| - Less: Provision for impairment of receivables | (17.481) | (17.481) | |
| Other receivables net | 732.424 | 662.367 | |
| Deferred charges and prepayments | 8.504 | 47.844 | |
| Total | 1.062.169 | 1.036.420 |
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 VAT, income tax prepayments, advances to suppliers and advances to personnel. This balance as at 30 June 2017 also includes the following:
Deferred charges and prepayments is reduced during the current period, due to the settlement of an insurance claim, amounting to €42 million, which relates to the property damage and business interruption of the Elefsina refinery during 2013 – 2015.
The fair values of trade and other receivables approximate their carrying amount.
| As at | |||
|---|---|---|---|
| 30 June 2017 | 31 December 2016 | ||
| Cash at Bank and in Hand | 546.253 | 731.258 | |
| Cash and cash equivalents | 546.253 | 731.258 | |
| Restricted cash | 145.652 | 157.525 | |
| Total cash, cash equivalents and restricted cash | 691.905 | 888.783 |
Restricted cash 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 30 June 2017 was €111 million, whilst the outstanding balance of the Piraeus loan as at 30 June 2017 was €144 million. This is expected to be reduced to €111 million in the following months. The guarantee matured on 15 June 2017 and was renewed for an additional year. The effect of the loan and the deposit with Piraeus Bank is a grossing up of the Statement of Financial Position, with no effect to the Net Debt position and Net Equity.
The balance of US Dollars included in Cash at bank as at 30 June 2017 was US\$477 million (Euro equivalent €418 million). The respective amount for the year ended 31 December 2016 was US\$ 503 million (Euro equivalent €477 million).
| Number of Shares (authorised and issued) |
Share Capital |
Share premium |
Total | |
|---|---|---|---|---|
| As at 1 January 2016 & 31 December 2016 | 305.635.185 | 666.285 | 353.796 | 1.020.081 |
| As at 30 June 2017 | 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 2016: €2,18).
| Tax free & Incentive |
Share-based | Available for-sale |
||||||
|---|---|---|---|---|---|---|---|---|
| Statutory reserve |
Special reserves |
law reserves |
Hedging reserve |
payment reserve |
Actuarial gains/ (losses) |
gains/ (losses) |
Total | |
| Balance at 1 January 2016 | 118.668 | 86.495 | 263.146 | (24.718) | 746 | (5.519) | - | 438.818 |
| Fair value gains / (losses) on cash flow hedges Derecognition of gains/(losses) on hedges through |
- | - | - | 13.269 | - | - | - | 13.269 |
| comprehensive income Actuarial gains/(losses) on defined benefit pension plans Changes in the fair value on available-for-sale financial |
- - |
- - |
- - |
19.642 - |
- - |
- (3.914) |
- - |
19.642 (3.914) |
| assets | - | - | - | - | - | - | (4.993) | (4.993) |
| Balance at 30 June 2016 | 118.668 | 86.495 | 263.146 | 8.193 | 746 | (9.433) | (4.993) | 462.822 |
| Fair value gains / (losses) on cash flow hedges Actuarial gains/(losses) on defined benefit pension plans Changes in the fair value on available-for-sale financial assets Transfer of available-for-sale reserve to operating profit |
- - - - |
- - - - |
- - - - |
2.593 - - - |
- - - - |
- (654) - - |
- - (1.421) 6.414 |
2.593 (654) (1.421) 6.414 |
| Balance at 31 December 2016 and 1 January 2017 | 118.668 | 86.495 | 263.146 | 10.786 | 746 | (10.087) | - | 469.754 |
| Cash flow hedges: Fair value gains / (losses) on cash flow hedges |
- | - | - | (21.431) | - | - | - | (21.431) |
| Derecognition of gains/(losses) on hedges through comprehensive income Actuarial gains/(losses) on defined benefit pension plans Changes in the fair value on available-for-sale financial |
- - |
- - |
- - |
1.979 - |
- - |
- (1.775) |
- - |
1.979 (1.775) |
| assets Distribution of reserves (Note 23) |
- - |
- - |
- (61.127) |
- - |
- - |
- - |
2.130 - |
2.130 (61.127) |
| Balance at 30 June 2017 | 118.668 | 86.495 | 202.019 | (8.666) | 746 | (11.862) | 2.130 | 389.530 |
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, 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.
Tax-free and incentive law reserves
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 recognized in other comprehensive income. Amounts are reclassified to profit or loss when the associated hedged transaction affects profit or loss.
These include actuarial gains / (losses) on defined benefit plans resulting from experience adjustments (the effects of differences between the previous actuarial assumptions and what has actually occurred); and the effects of changes in actuarial assumptions.
| As at | |||
|---|---|---|---|
| 30 June 2017 | 31 December 2016 | ||
| Non-current borrowings | |||
| Bank borrowings | 210.778 | 233.000 | |
| Bond loans | 992.681 | 1.227.281 | |
| Νon-current borrowings | 1.203.459 | 1.460.281 | |
| Current borrowings | |||
| Short term bank borrowings | 1.186.392 | 1.105.974 | |
| Current portion of long-term bank borrowings | 44.444 | 44.444 | |
| Total current borrowings | 1.230.836 | 1.150.418 | |
| Total borrowings | 2.434.295 | 2.610.699 |
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 2017 and 31 December 2016 are summarised in the table below (amounts in € million):
| Balance as at | |||||
|---|---|---|---|---|---|
| Maturity | 30 June 2017 (millions) |
31 December 2016 (millions) |
|||
| Syndicated bond loan €350 million | Jul 2018 | 346 | 344 | ||
| Bond loan €400 million | Oct 2017 | 284 | 284 | ||
| Bond loan €200 million | Jan 2018 | 200 | 199 | ||
| Bond loan SBF €400 million | Nov 2017 | 239 | 72 | ||
| European Investment Bank ("EIB") Term loan | Jun 2022 | 222 | 244 | ||
| HPF Loan €488m | May 2017 | - | 170 | ||
| HPF Loan €317,6m | Jul 2019 | 280 | 318 | ||
| HPF Loan €367m | Oct 2021 | 367 | 367 | ||
| Bilateral lines | Various | 496 | 613 | ||
| Total | 2.434 | 2.611 |
Significant movement in borrowings for the six-month period ended 30 June 2017 are as follows:
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.
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 amortization beginning in December 2013 and similar terms and conditions. Facility B is credit enhanced by a commercial bank guarantee (see Note 14). This is normal practice for EIB lending particularly during the construction phase of large projects. Total repayments on both loans up to 30 June 2017 amounted to €178 million (€22 million paid during 2017). Facility B includes financial covenant ratios which are comprised of leverage, interest cover and gearing ratios. During 2016 the Group successfully completed a covenants harmonisation process for all its commercial bank loans and Eurobonds. Following the completion of the harmonisation process the Company entered into discussions with EIB in order to bring the loan covenants' definitions and ratios in line with those used for all its commercial bank loans and Εurobonds. In case a common position with EIB is not reached, the Company will evaluate all options, including, if deemed appropriate, a possible refinancing or repayment of the facility out of existing credit lines.
In May 2013, HPF issued a €500 million four-year Eurobond, with an 8% annual coupon, maturing in May 2017. The notes were guaranteed by Hellenic Petroleum S.A. Subsequently the Company concluded a €488 million loan agreement with HPF, which was partially prepaid, in October 2016. The outstanding amount was repaid in April 2017.
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., are redeemable at the option of the Issuer in July 2017 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. Total repayments up to 30 June 2017 amounted to €38 million.
The Company has credit facilities with various banks in place, for general corporate purposes. These mainly relate to short-term loans, which have been put in place and renewed as necessary over the past few years.
Certain debt agreements that the Company enters into, include financial covenants, the most significant of which are the maintenance of certain ratios at Group level as follows: "Net Debt/EBITDA", "EBITDA/Net Interest" and "Net Debt/Net Worth". Management monitors the performance of the Group to ensure compliance with the above covenants.
| As at | |||
|---|---|---|---|
| 30 June 2017 | 31 December 2016 | ||
| Trade payables | 1.389.510 | 1.579.039 | |
| Accrued Expenses | 95.802 | 81.590 | |
| Other payables | 13.951 | 31.344 | |
| Total | 1.499.263 | 1.691.973 |
Trade payables comprise amounts payable, or accrued in respect of supplies of crude oil, products and services.
Trade payables, as at 30 June 2017 and 31 December 2016, 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. Implementation of the agreement will be in full compliance with prevailing EU and international framework as well as surviving restrictions. In accordance with the aforementioned Heads of Terms, the relevant amount, which falls due after twelve months, has been transferred from trade payables to trade and other payables in non-current liabilities as at 30 June 2017.
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 payroll-related liabilities, social security obligations and sundry taxes.
| For the six-month period ended | |||||
|---|---|---|---|---|---|
| Note | 30 June 2017 | 30 June 2016 | |||
| Profit before tax | 215.504 | 188.888 | |||
| Adjustments for: | |||||
| Depreciation and amortisation of property, plant and | |||||
| equipment and intangible assets | 10,11 | 62.936 | 75.852 | ||
| Amortisation of grants | 5 | (349) | (633) | ||
| Financial expenses / (income) - net | 6 | 75.266 | 81.236 | ||
| Provisions for expenses and valuation changes | 18.381 | 29.793 | |||
| Foreign exchange (gains) / losses | 7 | 7.024 | (11.305) | ||
| Dividend income | (33.724) | (38.348) | |||
| Amortization of long-term contracts costs | 5 | 4.846 | (13.500) | ||
| (Gain)/Loss from disposal of Non Current Assets | 280 | 52 | |||
| 350.164 | 312.035 | ||||
| Changes in working capital | |||||
| Decrease / (Increase) in inventories | 44.203 | (91.107) | |||
| Decrease in trade and other receivables | 21.917 | 20.584 | |||
| Decrease in trade and other payables | (272.472) | (686.749) | |||
| (206.352) | (757.272) | ||||
| Net cash inflow / (outflow) from operating activities | 143.812 | (445.237) |
The condensed interim statement of comprehensive income includes transactions between the Company and related parties. Such transactions mainly comprise sales and purchases of goods and services in the ordinary course of business.
| For the six-month period ended | |||
|---|---|---|---|
| 30 June 2017 | 30 June 2016 | ||
| Sales of goods and services to related parties | |||
| Subsidiaries | 1.201.653 | 809.691 | |
| Associates | 418.104 | 339.785 | |
| Joint ventures | 191 | 63 | |
| Total | 1.619.948 | 1.149.539 | |
| Purchases of goods and services from related parties | |||
| Subsidiaries | 28.103 | 27.300 | |
| Associates | 436.396 | 329.717 | |
| Joint ventures | 3.219 | 760 | |
| Total | 467.718 | 357.777 |
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 2017 | 31 December 2016 | |||
| Balances due to related parties | ||||
| (Trade and other creditors) | ||||
| Subsidiaries | 40.211 | 42.292 | ||
| Associates | 34.405 | 34.750 | ||
| Joint ventures | 391 | 400 | ||
| Total | 75.007 | 77.442 | ||
| Balances due from related parties | ||||
| (Trade and other debtors) | ||||
| Subsidiaries | 444.530 | 462.804 | ||
| Associates | 54.180 | 20.938 | ||
| Joint ventures | 36 | 3 | ||
| Total | 498.746 | 483.745 |
Transactions have been carried out with the following related parties:
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 2017 was €91 million (31 December 2016: €100 million).
During the six-month period ended 30 June 2017, transactions and balances with the above government related entities are as follows:
CONDENSED INTERIM FINANCIAL STATEMENTS FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2017 (All amounts in Euro thousands unless otherwise stated)
| 30 June 2017 | For the six-month period ended For the six-month period ended 30 June 2016 |
|||
|---|---|---|---|---|
| Short term employee benefits |
Termination benefits |
Short term employee benefits |
Termination benefits |
|
| BOD Executive Members | 859 | - | 560 | - |
| BOD Non Executive Members | 223 | - | 219 | - |
| General Managers | 1.167 | - | 739 | 523 |
| Total | 2.249 | - | 1.518 | 523 |
The Company has also received loans from its subsidiaries. The outstanding balance of these loans as at 30 June 2017 was € 680 million (31 December 2016: €888 million). All loans are at variable interest rates. The average interest rate on inter-company loans during the six-month period ended 30 June 2017 was 6,72%.
Significant contractual commitments of the Company, other than future operating lease payments disclosed in the annual financial statements as at 31 December 2016, mainly relate to improvements in refining assets and amount to amounts to €16 million as of 30 June 2017 (31 December 2016: €22 million).
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:
(iii) Open tax years – Litigation tax cases: Income tax audits have been completed up to and including the financial year ended 31 December 2009, while ongoing audits are in place for financial years from 2010 up to and including 2012. Furthermore, provisional tax audits, mainly relating to VAT refunds have been concluded up to December 2014. In cases where the audits have been finalized and any amounts charged are disputable, the Company has timely taken all possible legal action. 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 recognised in the condensed interim financial statements.
It is noted that for financial years ending 31 December 2011 up to 31 December 2015, Greek legal entities are subject to annual tax audits from their statutory auditors. The Company was audited for the financial years ended 31 December 2011 – 2015 obtaining unqualified Tax Compliance Reports. According to recent legislation, the tax audit and the issuance of tax certificates is also valid from 2016 onwards but on an optional basis. Management believes that the Company will also receive an unqualified Tax Compliance Report for the year 2016.
(iv) Assessments of customs and fines: 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 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.
The AGM held on 23 June 2017 approved the proposal for a €0,20 per share distribution out of prior-year taxed reserves, which was paid out on 10 July 2017. 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 2017.
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 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, at its meeting on 12 June 2017, evaluated the strategic choices of the Company 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 Hellenic Petroleum S.A. 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 Hellenic Petroleum S.A. 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. 2190/1920. On 26 June 2017, the Invitation for the Non-Binding Expression of Interest was published.
The historical cost of investment of the DEPA group in the condensed interim financial statements is €237 million. DEPA Group, as it currently stands, continues to be accounted for and included in the condensed interim financial statements as an associate.
On 31 July 2017, the Group issued new notes with a principal amount of €74,5 million to be consolidated so as to form a single series with Hellenic Petroleum Finance Plc existing notes due October 2021. The new notes, which are fully guaranteed by the Company, were offered through a private placement at an offering price of 106%, resulting in proceeds of €79 million and a yield of 3.333% and are listed on the Luxemburg Stock Exchange. The proceeds of the new notes will be used for general corporate purposes, more specifically the implementation of the Group's approved capital investment plan, including development in renewable energy sources.
On 10 July 2017, the Elefsina Refinery proceeded to a temporary shutdown following a technical incident that occurred in the hydrogen production unit.
All maintenance works, which were scheduled to be implemented from the end of September 2017 until March 2018, will be carried out during the shutdown period. The completion of maintenance works and the start-up of the refinery are scheduled to take place during September 2017.
During the shutdown supply of the domestic market and of international subsidiaries will be covered by the refineries of Aspropyrgos and Thessaloniki.
5.1. Published Summary Financial Statements
General Commercial Registry 000296601000 (A.R.M.A.E. 2443/06/B/86/23)
, CHIMARRAS STR. - 15125 MAROUSI
Head office Address: 8 A Website : http://www.helpe.gr Approval date of the six month financial information by the Board of Directors 31 AUGUST 2017 The Certified Auditor: Christiana Panayidou, SOEL reg.no.62141 Auditing Company: ERNST & YOUNG (HELLAS), SOEL reg.no.107 Type of Auditor's Report Unqualified
| STATEMENT OF FINANCIAL POSITION | STATEMENT OF CHANGES IN EQUITY | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| (Amounts in thousands €) | GROUP 30/6/2017 |
31/12/2016 | COMPANY 30/6/2017 |
31/12/2016 | (Amounts in thousands €) | GROUP 30/6/2017 |
30/6/2016 | COMPANY 30/6/2017 |
30/6/2016 |
| ASSETS | Total equity at beginning of the period (1/1/2017 & 1/1/2016) | 2.141.635 | 1.790.270 | 1.590.150 | 1.224.891 | ||||
| Property, plant and equipment | 3.294.792 | 3.302.923 | 2.720.182 | 2.718.798 | |||||
| Intangible assets Other non-current assets |
107.640 852.389 |
108.294 881.711 |
7.516 671.584 |
6.490 729.213 |
Total comprehensive income for the period Dividends |
146.597 (61.127) |
125.046 - |
142.004 (61.127) |
169.209 - |
| Inventories | 886.488 | 929.164 | 793.779 | 839.306 | Dividends to non-controlling interests | (2.561) | - | - | - |
| Trade and other receivables | 900.980 | 868.331 | 1.062.169 | 1.036.420 | Tax on intra-group dividends | (136) | - | - | - |
| Derivative financial instruments | - | 15.192 | - | 15.192 | Total equity at the end of the period | 2.224.408 | 1.915.316 | 1.671.027 | 1.394.100 |
| Cash, cash equivalents and restricted cash | 835.096 | 1.081.580 | 691.905 | 888.783 | |||||
| Available-for-sale financial assets | 4.622 | 1.626 | 4.019 | 1.017 | |||||
| TOTAL ASSETS | 6.882.007 | 7.188.821 | 5.951.154 | 6.235.219 | STATEMENT OF CASH FLOW | ||||
| (Amounts in thousands €) | GROUP | COMPANY | |||||||
| 1/1/2017 - | 1/1/2016 - | 1/1/2017 - | 1/1/2016 - | ||||||
| EQUITY AND LIABILITIES | 30/6/2017 | 30/6/2016 | 30/6/2017 | 30/6/2016 | |||||
| Share capital Share premium |
666.285 353.796 |
666.285 353.796 |
666.285 353.796 |
666.285 353.796 |
Cash flows from operating activities | ||||
| Retained earnings and other reserves | 1.105.594 | 1.019.679 | 650.946 | 570.069 | Profit before income tax | 227.163 | 145.451 | 215.504 | 188.888 |
| Capital and reserves attributable to owners of the parent (a) | 2.125.675 | 2.039.760 | 1.671.027 | 1.590.150 | |||||
| Non-controlling interests (b) | 98.733 | 101.875 | - | - | |||||
| TOTAL EQUITY (c) = (a) + (b) | 2.224.408 | 2.141.635 | 1.671.027 | 1.590.150 | Adjustments for: | ||||
| Depreciation and amortisation of tangible and intangible assets | 87.954 | 103.332 | 62.936 | 75.852 | |||||
| Long-term borrowings | 1.238.135 | 1.456.204 | 1.203.459 | 1.460.281 | Impairment of fixed assets | - | 8.314 | - | - |
| Provisions and other long term liabilities | 353.317 | 422.598 | 270.312 | 341.755 | Amortisation of grants | (424) | (703) | (349) | (633) |
| Short-term borrowings | 1.400.912 | 1.386.299 | 1.230.836 | 1.150.418 | Interest expense and similar charges | 90.538 | 100.662 | 81.561 | 88.019 |
| Other short-term liabilities | 1.665.235 | 1.782.085 | 1.575.520 | 1.692.615 | Interest income | (2.438) | (2.411) | (6.295) | (6.783) |
| Total liabilities (d) | 4.657.599 | 5.047.186 | 4.280.127 | 4.645.069 | Share of operating (profit) / loss of associates | (30.659) | 3.140 | - | - |
| Provisions for expenses and valuation charges | 17.610 | 24.849 | 18.381 | 29.793 | |||||
| TOTAL EQUITY AND LIABILITIES (c) + (d) | 6.882.007 | 7.188.821 | 5.951.154 | 6.235.219 | Foreign exchange (gains) / losses | 6.848 | (10.871) | 7.024 | (11.305) |
| Dividend income | - | - | (33.724) | (38.348) | |||||
| STATEMENT OF COMPREHENSIVE INCOME FOR THE PERIOD | Amortisation of long-term contracts costs (Gain) / loss on sale of fixed assets |
4.628 101 |
(13.500) (75) |
4.846 280 |
(13.500) 52 |
||||
| (Amounts in thousands €) | GROUP | 401.321 | 358.188 | 350.164 | 312.035 | ||||
| 1/1/2017 - | 1/1/2016 - | 1/4/2017 - | 1/4/2016 - | ||||||
| 30/6/2017 | 30/6/2016 | 30/6/2017 | 30/6/2016 | ||||||
| Sales | 4.095.304 | 2.939.810 | 2.017.710 | 1.692.809 | |||||
| Gross profit | 502.890 | 422.324 | 218.226 | 248.412 | Changes in working capital | ||||
| Operating profit | 291.452 | 235.971 | 110.377 | 156.491 | (Increase) / decrease in inventories | 41.332 | (85.310) | 44.203 | (91.107) |
| Profit before income tax | 227.163 | 145.451 | 62.712 | 103.662 | (Increase) / decrease in trade and other receivables | (19.859) | (55.392) | 21.917 | 20.584 |
| Income tax expense | (59.518) | (41.753) | (18.891) | (31.561) | Decrease in payables | (284.537) | (636.696) | (272.472) | (686.749) |
| Profit for the period | 167.645 | 103.698 | 43.821 | 72.101 | Less: | ||||
| Income tax paid | (2.021) | (1.964) | (15) | - | |||||
| Attributable to: Owners of the parent |
167.452 | 106.865 | 43.631 | 74.457 | Net cash generated from / (used in) operating activities (a) | 136.236 | (421.174) | 143.797 | (445.237) |
| Non-controlling interests | 193 | (3.167) | 190 | (2.356) | |||||
| 167.645 | 103.698 | 43.821 | 72.101 | ||||||
| Other comprehensive (loss)/income for the period, net of tax | (21.048) | 21.348 | (9.912) | 30.162 | Cash flows from investing activities | ||||
| Total comprehensive income for the period | 146.597 | 125.046 | 33.909 | 102.263 | Purchase of property, plant and equipment & intangible assets | (75.355) | (48.986) | (62.446) | (36.800) |
| Proceeds from disposal of property, plant and equipment & intangible assets | 303 | 354 | - | - | |||||
| Attributable to: | Interest received | 2.438 | 2.411 | 6.295 | 6.783 | ||||
| Owners of the parent | 147.178 | 128.314 | 33.798 | 104.589 | Dividends received | 318 | 1.119 | 318 | 37.684 |
| Non-controlling interests | (581) | (3.268) | 111 | (2.326) | Participation in share capital (increase)/decrease of subsidiaries and associates | (147) | - | (415) | (2.000) |
| 146.597 | 125.046 | 33.909 | 102.263 | Net cash generated from / (used in) investing activities (b) | (72.443) | (45.102) | (56.248) | 5.667 | |
| Basic and diluted earnings per share (in Euro per share) | 0,55 | 0,35 | 0,14 | 0,24 | |||||
| Earnings Before Interest, Taxes, Depreciation and Amortisation | |||||||||
| (EBITDA) | 377.581 | 338.600 | 152.162 | 209.693 | Cash flows from financing activities | ||||
| Interest paid | (89.891) | (95.766) | (100.811) | (90.439) | |||||
| Dividends paid to shareholders of the Company | (187) | (473) | (187) | (473) | |||||
| Dividends paid to non-controlling interests | (2.561) | - | - | - | |||||
| STATEMENT OF COMPREHENSIVE INCOME FOR THE PERIOD | Movement in restricted cash | 11.873 | (13.081) | 11.873 | (13.081) | ||||
| (Amounts in thousands €) | COMPANY | Proceeds from borrowings | 207.530 | 272.800 | 229.634 | 287.500 | |||
| 1/1/2017 - | 1/1/2016 - | 1/4/2017 - | 1/4/2016 - | Repayments of borrowings | (417.406) | (405.658) | (406.038) | (387.689) | |
| 30/6/2017 | 30/6/2016 | 30/6/2017 | 30/6/2016 | Net cash used in financing activities (c) | (290.642) | (242.178) | (265.529) | (204.182) | |
| Sales | 3.753.656 | 2.641.400 | 1.837.341 | 1.531.488 | |||||
| Gross profit | 354.124 | 292.867 | 133.726 | 177.376 | |||||
| Operating profit | 264.070 | 220.471 | 86.262 | 139.919 | |||||
| Profit before income tax Income tax expense |
215.504 (54.403) |
188.888 (43.683) |
78.123 (12.989) |
136.955 (31.883) |
Net decrease in cash & cash equivalents (a)+(b)+(c) |
(226.849) | (708.454) | (177.980) | (643.752) |
| Profit for the period | 161.101 | 145.205 | 65.134 | 105.072 | |||||
| Other comprehensive (loss)/income for the period, net of tax | (19.097) | 24.004 | (9.676) | 32.083 | |||||
| Total comprehensive income for the period | 142.004 | 169.209 | 55.458 | 137.155 | |||||
| Cash & cash equivalents at the beginning of the period | 924.055 | 1.952.808 | 731.258 | 1.683.600 | |||||
| Basic and diluted earnings per share (in Euro per share) | 0,53 | 0,48 | 0,21 | 0,34 | Exchange losses on cash and cash equivalents | (7.762) | (288) | (7.024) | (276) |
| Net decrease in cash & cash equivalents | (226.849) | (708.454) | (177.980) | (643.752) | |||||
| Earnings Before Interest, Taxes, Depreciation and | |||||||||
| Amortisation (EBITDA) | 326.657 | 295.690 | 117.467 | 179.816 | Cash & cash equivalents at end of the period | 689.444 | 1.244.066 | 546.254 | 1.039.572 |
ADDITIONAL INFORMATION
| GROUP | COMPANY | |
|---|---|---|
| a) for pending legal cases | 9.585 | 7.133 |
| b) for tax matters | 6.558 | 3.911 |
| c) for SLI | 119.789 | 95.789 |
| d) for other provisions relating to expenses | 24.730 | 24.544 |
| GROUP | COMPANY | |||
|---|---|---|---|---|
| 30/6/2017 | 30/6/2016 | 30/6/2017 | 30/6/2016 | |
| Fair value gains/(losses) on available-for-sale financial assets | 2.125 | (4.990) | 2.130 | (4.993) |
| Fair value gains/(losses) on cash flow hedges | (21.431) | 13.269 | (21.431) | 13.269 |
| Actuarial losses on defined benefit pension plans | (2.219) | (5.300) | (1.775) | (3.914) |
| Revaluation of land and buildings | (1.669) | - | - | - |
| Derecognition of (gains)/ losses on hedges through comprehensive income | 1.979 | 19.642 | 1.979 | 19.642 |
| Other movements and currency translation differences | 167 | (1.273) | - | - |
| Net income/(expense) recognised directly in equity | (21.048) | 21.348 | (19.097) | 24.004 |
| GROUP | COMPANY | |
|---|---|---|
| Sales of goods and services | 613.243 | 1.699.495 |
| Purchases of goods and services | 465.997 | 493.129 |
| Receivables | 129.536 | 533.473 |
| Payables | 38.937 | 78.897 |
| Board members and senior management remuneration & other benefits | 2.285 | 2.249 |
Athens, 31st of August 2017
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 proceeding 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.
| CHAIRMAN OF THE BOARD | CHIEF EXECUTIVE OFFICER | DEPUTY CHIEF EXECUTIVE OFFICER & CHIEF FINANCIAL OFFICER |
ACCOUNTING DIRECTOR |
|---|---|---|---|
| EFSTATHIOS N. TSOTSOROS ID. Number ΑΕ 075524 |
GRIGORIOS S. STERGIOULIS ID. Number ΑΜ 142474 |
ANDREAS N. SHIAMISHIS ID. Number ΑΑ 010147 |
STEFANOS I. PAPADIMITRIOU ID. Number ΑΚ 553436 |
The annual 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 annual financial statements of the consolidated companies of EKO A.B.E.E. are available on the internet at www.eko.gr.
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