Quarterly Report • May 12, 2016
Quarterly Report
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CONDENSED INTERIM CONSOLIDATED FINANCIAL INFORMATION FOR THE THREE MONTH PERIOD ENDED 31 MARCH 2016 (All amounts in Euro thousands unless otherwise stated)
| Page | ||
|---|---|---|
| I. | Company Information | 3 |
| II. | Condensed Interim Consolidated Statement of Financial Position | 4 |
| III. | Condensed Interim Consolidated Statement of Comprehensive Income | 5 |
| IV. | Condensed Interim Consolidated Statement of Changes in Equity | 6 |
| V. | Condensed Interim Consolidated Statement of Cash Flows | 7 |
| VI. | Notes to the Condensed Interim Consolidated Financial Information | 8 |
CONDENSED INTERIM CONSOLIDATED FINANCIAL INFORMATION FOR THE THREE MONTH PERIOD ENDED 31 MARCH 2016 (All amounts in Euro thousands unless otherwise stated)
| Directors | Efstathios Tsotsoros - Chairman of the Board Grigorios Stergioulis - Chief Executive Officer Andreas Shiamishis - Member Ioannis Psichogios - Member Georgios Grigoriou - Member Georgios Stampoulis - Member Dimitrios Kontofakas - Member Theodoros-Achilleas Vardas - Member Theodoros Pantalakis - Member Constantinos Papagiannopoulos - Member Panagiotis Ofthalmides - Member Spiridon Pantelias - Member Stratis Zafiris - Member |
|---|---|
| Other Board Members during the year |
Georgios Maloglou (Until 27/04/2016) |
| Registered Office | 8A Chimarras Str GR 151 25 - Marousi |
| Registration number | 2443/06/B/86/23 |
| General Commercial Registry |
000296601000 |
| As at | |||
|---|---|---|---|
| Note | 31 March 2016 | 31 December 2015 | |
| ASSETS | |||
| Non-current assets | |||
| Property, plant and equipment | 11 | 3.363.520 | 3.385.270 |
| Intangible assets | 12 | 114.111 | 117.062 |
| Investments in associates and joint ventures | 677.918 | 678.637 | |
| Deferred income tax assets | 232.593 | 239.538 | |
| Available-for-sale financial assets | 3 | 3.583 | 523 |
| Loans, advances and other receivables | 85.251 | 85.022 | |
| 4.476.976 | 4.506.052 | ||
| Current assets | |||
| Inventories | 13 | 656.573 | 662.025 |
| Trade and other receivables | 14 | 823.444 | 752.142 |
| Cash, cash equivalents and restricted cash | 15 | 719.824 | 2.108.364 |
| 2.199.841 | 3.522.531 | ||
| Total assets | 6.676.817 | 8.028.583 | |
| EQUITY | |||
| Share capital | 16 | 1.020.081 | 1.020.081 |
| Reserves | 17 | 435.020 | 443.729 |
| Retained Earnings | 252.912 | 220.506 | |
| Capital and reserves attributable to owners of the parent | 1.708.013 | 1.684.316 | |
| Non-controlling interests | 105.038 | 105.954 | |
| Total equity | 1.813.051 | 1.790.270 | |
| LIABILITIES | |||
| Non-current liabilities | |||
| Borrowings | 18 | 1.599.621 | 1.597.954 |
| Deferred income tax liabilities | 44.266 | 45.287 | |
| Retirement benefit obligations | 95.932 | 95.362 | |
| Provisions for other liabilities and charges | 6.532 | 6.405 | |
| Other long term liabilities | 382.183 | 22.674 | |
| Current liabilities | 2.128.534 | 1.767.682 | |
| Trade and other payables | 19 | 1.062.669 | 2.795.378 |
| Derivative financial instruments | 3 | 39.259 | 34.814 |
| Current income tax liabilities | 4.506 | 6.290 | |
| Borrowings | 18 | 1.628.155 | 1.633.033 |
| Dividends payable | 643 | 1.116 | |
| 2.735.232 | 4.470.631 | ||
| Total liabilities | 4.863.766 | 6.238.313 | |
| Total equity and liabilities | 6.676.817 | 8.028.583 |
The notes on pages 8 to 31 are an integral part of this condensed interim consolidated financial information.
| E. Tsotsoros | G.Stergioulis | A. Shiamishis | S. Papadimitriou |
|---|---|---|---|
Chairman of the Board Chief Executive Officer Chief Financial Officer Accounting Director
| For the three month period ended | ||||
|---|---|---|---|---|
| Note | 31 March 2016 | 31 March 2015 | ||
| Sales | 1.247.001 | 1.879.498 | ||
| Cost of sales | (1.073.088) | (1.670.215) | ||
| Gross profit | 173.913 | 209.283 | ||
| Selling and distribution expenses | (69.401) | (76.354) | ||
| Administrative expenses | (27.164) | (28.342) | ||
| Exploration and development expenses | (2.072) | (355) | ||
| Other operating income / (expenses) - net | 5 | 4.204 | 4.316 | |
| Operating profit / (loss) | 79.480 | 108.548 | ||
| Finance (expenses) / income - net | 6 | (48.430) | (49.870) | |
| Currency exchange gains / (losses) | 7 | 11.455 | (38.934) | |
| Share of net result of associates | 8 | (718) | 8.101 | |
| Profit / (loss) before income tax | 41.787 | 27.845 | ||
| Income tax (expense) / credit | 9 | (10.192) | (10.682) | |
| Profit / (loss) for the period | 31.595 | 17.163 | ||
| Other comprehensive income: | ||||
| Items that may be reclassified subsequently to profit or loss: | ||||
| Fair value gains/(losses) on available-for-sale financial assets | (4.930) | (15) | ||
| Fair value gains / (losses) on cash flow hedges | 17 | (3.156) | 4.124 | |
| Other movements and currency translation differences | (728) | (3) | ||
| (8.814) | 4.106 | |||
| Other comprehensive (loss) / income for the period, net of tax | (8.814) | 4.106 | ||
| Total comprehensive (loss) / income for the period | 22.781 | 21.269 | ||
| Profit attributable to: | ||||
| Owners of the parent | 32.406 | 18.289 | ||
| Non-controlling interests | (811) | (1.126) | ||
| 31.595 | 17.163 | |||
| Total comprehensive income attributable to: | ||||
| Owners of the parent | 23.697 | 22.548 | ||
| Non-controlling interests | (916) | (1.279) | ||
| 22.781 | 21.269 | |||
| Basic and diluted earnings per share (expressed in Euro per share) |
10 | 0,11 | 0,06 | |
The notes on pages 8 to 31 are an integral part of this condensed interim consolidated financial information.
| Attributable to owners of the Parent Non |
|||||||
|---|---|---|---|---|---|---|---|
| Note | Share Capital |
Reserves | Retained Earnings |
Total | Controling interests |
Total Equity |
|
| Balance at 1 January 2015 | 1.020.081 | 435.013 | 163.048 | 1.618.142 | 110.404 | 1.728.546 | |
| Fair value gains/ (losses) on available-for-sale financial assets Currency translation differences and other movements Fair value gains / (losses) on cash flow hedges |
17 17 17 |
- - - |
(7) 142 4.124 |
- - - |
(7) 142 4.124 |
(8) (145) - |
(15) (3) 4.124 |
| Other comprehensive income/ (loss) Profit/ (loss) for the period |
- - |
4.259 - |
- 18.289 |
4.259 18.289 |
(153) (1.126) |
4.106 17.163 |
|
| Total comprehensive income/ (loss) for the period | - | 4.259 | 18.289 | 22.548 | (1.279) | 21.269 | |
| Balance at 31 March 2015 | 1.020.081 | 439.272 | 181.337 | 1.640.690 | 109.125 | 1.749.815 | |
| Movement - 1 Apr 2015 to 31 December 2015 Fair value gains/ (losses) on available-for-sale financial assets Currency translation differences and other movements Actuarial gains/(losses) on defined benefit pension plans Fair value gains / (losses) on cash flow hedges Derecognition of gains/(losses) on hedges through comprehensive income |
17 17 17 17 |
- - - - - |
(171) (774) 1.619 (8.926) 24.548 |
- - - - - |
(171) (774) 1.619 (8.926) 24.548 |
(69) 174 (4) - - |
(240) (600) 1.615 (8.926) 24.548 |
| Other comprehensive income/ (loss) | - | 16.296 | - | 16.296 | 101 | 16.397 | |
| Profit/ (loss) for the period | - | - | 28.395 | 28.395 | (531) | 27.864 | |
| Total comprehensive income/ (loss) for the period Share based payments Transfers from Reserves to Retained Earnings Expenses relating to share capital increase of subsidiary Tax on intra-group dividends relating to 2014 Dividends to non-controlling interests |
17 17 |
- - - - - - |
16.296 (2.893) (8.946) - - - |
28.395 2.893 8.946 (772) (293) - |
44.691 - - (772) (293) - |
(430) - - - - (2.741) |
44.261 - - (772) (293) (2.741) |
| Balance at 31 December 2015 | 1.020.081 | 443.729 | 220.506 | 1.684.316 | 105.954 | 1.790.270 | |
| Fair value gains/ (losses) on available-for-sale financial assets Currency translation differences and other movements Fair value gains / (losses) on cash flow hedges |
17 17 17 |
- - - |
(4.927) (626) (3.156) |
- - - |
(4.927) (626) (3.156) |
(3) (102) - |
(4.930) (728) (3.156) |
| Other comprehensive income/ (loss) | - | (8.709) | - | (8.709) | (105) | (8.814) | |
| Profit / (loss) for the period Total comprehensive income/ (loss) for the period |
- - |
- (8.709) |
32.406 32.406 |
32.406 23.697 |
(811) (916) |
31.595 22.781 |
|
| Balance at 31 March 2016 | 1.020.081 | 435.020 | 252.912 | 1.708.013 | 105.038 | 1.813.051 |
The notes on pages 8 to 31 are an integral part of this condensed interim consolidated financial information.
| For the three month period ended | ||||
|---|---|---|---|---|
| Note | 31 March 2016 | 31 March 2015 | ||
| Cash flows from operating activities | ||||
| Cash generated from operations | 20 | (1.324.708) | (764.827) | |
| Income and other taxes paid | (1.777) | (15.101) | ||
| Net cash generated from / (used in) operating activities | (1.326.485) | (779.928) | ||
| Cash flows from investing activities | ||||
| Purchase of property, plant and equipment & intangible assets | (25.718) | (17.239) | ||
| Proceeds from disposal of property, plant and equipment & intangible assets | 142 | 78 | ||
| Interest received | 1.988 | 2.435 | ||
| Dividends received | - | 133 | ||
| Net cash generated from / (used in) investing activities | (23.588) | (14.593) | ||
| Cash flows from financing activities | ||||
| Interest paid | (43.664) | (46.200) | ||
| Dividends paid to shareholders of the Company | (473) | (64.002) | ||
| Proceeds from borrowings | 21.923 | 215.574 | ||
| Repayments of borrowings | (13.883) | (10.945) | ||
| Net cash generated from / (used in) financing activities | (36.097) | 94.427 | ||
| Net (decrease) / increase in cash, cash equivalents and restricted cash | (1.386.170) | (700.094) | ||
| Cash,cash equivalents and restricted cash at the beginning of the period | 15 | 2.108.364 | 1.847.842 | |
| Exchange gains / (losses) on cash, cash equivalents and restricted cash | (2.370) | 7.460 | ||
| Net (decrease) / increase in cash, cash equivalents and restricted cash | (1.386.170) | (700.094) | ||
| Cash, cash equivalents and restricted cash at end of the period | 15 | 719.824 | 1.155.208 |
The notes on pages 8 to 31 are an integral part of this condensed interim consolidated financial information.
CONDENSED INTERIM CONSOLIDATED FINANCIAL INFORMATION FOR THE THREE MONTH PERIOD ENDED 31 MARCH 2016 (All amounts in Euro thousands unless otherwise stated)
Hellenic Petroleum and its subsidiaries (together "Hellenic Petroleum" or the "Group") operate 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 sector of natural gas and in the production and trading of electricity power.
The interim consolidated financial information of Hellenic Petroleum and its subsidiaries is prepared in accordance with International Accounting Standard 34 (IAS 34) – Interim Financial Reporting, and presents the financial position, results of operations and cash flows of the Group on a going concern basis. In this respect Management has concluded that (a) the going concern basis of preparation of the accounts is appropriate, and (b) all assets and liabilities of the Group are appropriately presented in accordance with the Group"s accounting policies.
This interim consolidated financial information should be read in conjunction with the annual consolidated financial statements for the year ended 31 December 2015, which have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union. These can be found on the Group"s website www.helpe.gr.
The condensed interim consolidated financial information of the Group for the three month period ended 31 March 2016 was authorised for issue by the Board of Directors on 11 May 2016.
The accounting policies used in the preparation of the condensed interim consolidated financial information for the three month period ended 31 March 2016 are consistent with those applied for the preparation of the consolidated financial statements for the year ended 31 December 2015, except as described below. Where necessary, comparative figures have been reclassified to conform to changes in the presentation of the current year.
New standards, amendments to standards and interpretations: Certain new standards, amendments to standards and interpretations have been issued that are mandatory for periods beginning during the current financial year and subsequent years. The Group"s evaluation of the effect of these new standards, amendments to standards and interpretations is set out below.
The following standards, amendments to standards and interpretations to existing standards may be applicable to the Group for periods on or after 1 January 2016.
Annual Improvements to IFRSs 2012:
The amendments set out below describe the key changes to certain IFRSs following the publication of the results of the IASB"s 2010-12 cycle of the annual improvements project. The adoption of these amendments does not have significant impact for the Group.
IFRS 2 "Share-based payment". The amendment clarifies the definition of a "vesting condition" and separately defines "performance condition" and "service condition".
The amendments set out below describe the key changes to four IFRSs. Their adoption does not have significant impact for the Group.
IAS 7 (Amendments) "Disclosure initiative" (effective for annual periods beginning on or after 1 January 2017). These amendments require entities to provide disclosures that enable users of financial statements to evaluate changes in liabilities arising from financing activities. 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:
Macroeconomic Environment: 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 remained in 2015, albeit with a less profound impact, as signs of improvement appeared in certain areas. The approval of the € 86 billion bailout programme in August 2015 and the successful recapitalisation of the 4 systemic banks during December 2015 were key steps towards the stabilisation of the macroeconomic and financial environment in Greece. Growth is projected to gain some momentum in the second half of 2016, notwithstanding the measures relating to direct and indirect taxation, as consumer confidence is expected to strengthen and as structural reforms take effect with the anticipation of boosting supporting exports and investment. Inflation is expected to remain low due to the very depressed state of the economy and unemployment is expected to gradually decline.
The bailout program was approved to be dispensed in allotments following the adoption of a series of agreed upon changes and austerity measures. Allotment of bailout funds commenced in tranches during 2015. The next tranche is expected upon completion of the first review of the program, following agreement between the Greek government and its lenders on specific measures to be implemented.
While the bailout program has reduced the risk of economic instability in Greece, concerns around its implementation remain as reflected in debt capital markets risk assessment and pricing. The implementation of the program and its effects on the economy are beyond the Group"s control. In this economic environment, management continually assesses the situation and its possible future impact to ensure that all necessary actions and measures are taken in order to minimize any impact on the Group"s Greek operations.
Group response in Capital controls: The Group responded to the imposition of capital controls, with all necessary measures and adjustments to its supply chain, enabling uninterrupted supply, refining and trading operations.
The measures imposed by the Greek government on 28 June 2015 restricted cross border payments of any kind without the prior written approval of a committee that has been set up for this purpose at the Ministry of Finance. Since initial imposition, capital controls are gradually being relaxed, with some responsibility for approvals being transferred to the banks for up to certain amounts, daily limits for the banking system increasing and other measures, thus facilitating international payments in the country. At present, there are no official restrictions on domestic transactions which are gradually being normalized.
The capital controls impact the ability of the Group to effect payments for imports of crude oil and products to its foreign suppliers if these are not approved by the committee. The risk is mitigated by the fact that imports of crude oil and fuel products are considered by the authorities as critical for the economy, taking priority over other payments. There has therefore been no adverse impact on the operations of the Group and this is expected to continue going forward. In addition, the Group maintains accounts with its foreign core relationship banks outside Greece which are funded by export receivables and can also be used to pay foreign suppliers. Therefore the risk of disruption to normal operations of the Group as a result of the imposition of capital controls is
considered low. The impact of capital controls on Group operations was limited as a result of appropriate planning and risk management.
Securing continuous crude oil supplies: Developments in the global and regional crude oil markets in the last 18 months have reduced the cost of raw material for the Group and increased optionality. Crude oil prices dropped by more than 70% 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 and leading to higher refining margins, albeit with a significant one off inventory loss. The Group was able to take advantage of this development and diversify its crude basket compared to previous years.
Financing of operations: 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 64% of total net borrowings are financed by medium to long term committed credit lines while the rest is financed by short term working capital credit facilities. Further details of the relevant loans and refinancing are provided in note 18, "Borrowings".
Capital management: Overall the Group has around €4,3 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 58% of total capital employed while the rest is financed through shareholders equity. The Group has started reducing its net debt levels through utilization of the incremental operating cashflows, post completion and operation of the new Elefsina refinery, and plans to reduce these even further with the expected sale proceeds of its stake in DESFA, which is expected to lead to lower Debt to Equity ratio, better matched Asset and Liability maturity profiles as well as lower financing costs.
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 31 March 2016:
| Assets | Level 1 | Level 2 | Level 3 | Total balance |
|---|---|---|---|---|
| Derivatives held for trading | - | - | - | - |
| Derivatives used for hedging | - | - | - | - |
| Available for sale financial assets | 3.583 | - | - | 3.583 |
| 3.583 | - | - | 3.583 | |
| Liabilities | ||||
| Derivatives held for trading | - | - | - | - |
| Derivatives used for hedging | - | 39.259 | - | 39.259 |
| - | 39.259 | - | 39.259 |
The following table presents the Group"s assets and liabilities that are measured at fair value at 31 December 2015:
| Total | ||||
|---|---|---|---|---|
| Level 1 | Level 2 | Level 3 | balance | |
| Assets | ||||
| Derivatives held for trading | - | - | - | - |
| Derivatives used for hedging | - | - | - | - |
| Available for sale financial assets | 523 | - | - | 523 |
| 523 | - | - | 523 | |
| Liabilities | ||||
| Derivatives held for trading | - | - | - | - |
| Derivatives used for hedging | - | 34.814 | - | 34.814 |
| - | 34.814 | - | 34.814 |
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, and those prices represent actual and regularly occurring market transactions on an arm"s length basis. 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 periods. There were no transfers between levels during the period.
The fair value of Euro and US\$ denominated Eurobonds as at 31 March 2016 was €1.106 million (31 December 2015: €1.110 million), compared to its book value of €1.146 million (31 December 2015 €1.161 million). The fair value of the remaining borrowings approximates their carrying value, as the effect of discounting is insignificant. The fair values of borrowings are within level 2 of the fair value hierarchy.
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 to allocate resources. Management has determined the operating segments based on these reports. The committee evaluates the business performance using a number of parameters which may vary depending on its nature and maturity and by taking into account the prevailing business risks, cash flow needs as well as product and market considerations.
Information on the revenue and profit regarding the Group"s operating segments is presented below:
| For the period ended | ||||
|---|---|---|---|---|
| Note | 31 March 2016 | 31 March 2015 | ||
| Sales | ||||
| Refining | 1.050.191 | 1.737.312 | ||
| Marketing | 424.392 | 589.721 | ||
| Petro-chemicals | 65.177 | 70.679 | ||
| Gas & Power | 446 | 472 | ||
| Other | 3.153 | 2.845 | ||
| Inter-Segment | (296.358) | (521.531) | ||
| Total | 1.247.001 | 1.879.498 | ||
| Operating profit / (loss) | ||||
| Refining | 60.097 | 91.486 | ||
| Marketing | 114 | 1.738 | ||
| Exploration & Production | (2.960) | (657) | ||
| Petro-chemicals | 22.842 | 16.405 | ||
| Gas & Power | 210 | 340 | ||
| Other | (823) | (763) | ||
| Total | 79.480 | 108.548 | ||
| Currency exchange gains/ (losses) | 7 | 11.455 | (38.934) | |
| Share of profit of investments in associates and joint ventures | 8 | (718) | 8.101 | |
| Finance (expense)/income - net | 6 | (48.430) | (49.870) | |
| Profit / (loss) before income tax | 41.787 | 27.845 | ||
| Income tax (expense) / credit | (10.192) | (10.682) | ||
| Profit / (loss) for the period | 31.595 | 17.163 | ||
| (Income) / loss applicable to non-controlling interests | 811 | 1.126 | ||
| Profit / (loss) for the year attributable to the owners of the parent | 32.406 | 18.289 |
Inter-segment sales primarily relate to sales from the refining segment to other operating segments and are carried out at arm"s length.
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 financial statements published at 31 December 2015.
| For the three month period ended 31 March 2016 31 March 2015 |
|||
|---|---|---|---|
| Income from Grants | 353 | 521 | |
| Services to 3rd Parties | 765 | 671 | |
| Rental income | 3.317 | 2.905 | |
| Profit / (loss) from the sale of PPE - net | 49 | (36) | |
| Insurance compensation | 56 | - | |
| Voluntary retirement scheme cost | (122) | - | |
| Other operating income / (expenses) | (214) | (303) | |
| Total other operating income / (expenses) | 4.204 | 3.758 | |
| Other operating gains / (losses) | - | 558 | |
| Total other operating income / (expenses) - net | 4.204 | 4.316 |
Other operating income / (expenses) – net, include income or expenses which do not relate to the trading activities of the Group.
| For the three month period ended | ||
|---|---|---|
| 31 March 2016 | 31 March 2015 | |
| 1.988 | 2.435 | |
| (50.418) | (52.305) | |
| (48.430) | (49.870) | |
Foreign currency exchange gains of €11 million relate to marked-to-market gains on US\$ denominated liabilities, due to the US \$ weakening against the Euro as of 31 March 2016, compared to the beginning of the year. Operating foreign currency exchange gains and losses on transactions which do not relate to financing are reported under operating results.
The amounts represent the net result from associated companies accounted for on an equity basis.
| For the three month period ended | ||||
|---|---|---|---|---|
| 31 March 2016 | 31 March 2015 | |||
| Public Natural Gas Corporation of Greece (DEPA) | 4.468 | 9.800 | ||
| Other associates | (5.186) | (1.699) | ||
| Total | (718) | 8.101 |
The main financial information of DEPA Group based on unaudited interim consolidated accounts is presented below:
| For the three month period ended | |||
|---|---|---|---|
| 31 March 2016 | 31 March 2015 | ||
| EBITDA | 70.436 | 45.360 | |
| Income before Tax | 54.048 | 31.018 | |
| Income Tax | (11.227) | (3.019) | |
| Net income | 42.821 | 27.999 | |
| Income accounted in Helpe Group | 4.468 | 9.800 |
The Group"s share of profit / (loss) arising from its investment in the Depa Group is accounted for based on unaudited results. Differences arising between audited and unaudited results are incorporated in the following year"s results.
On the 16 February 2012, HELPE and the HRADF (jointly the "Sellers") agreed to launch a joint sale process of their shareholding in DEPA Group aiming to sell in total 100% of the supply and trading activities and the shareholding of regional supply companies (DEPA S.A. and EPAs) and 66% of the high pressure transmission network (DESFA). This agreement was approved by HELPE"s EGM, dated 30 January 2012, and the decision specifically requires that any such transaction will be subject to the approval of a new EGM.
The sales process resulted in three non-binding offers received on 5 November 2012 and at the final stage, one binding offer for the purchase of 66% of DESFA shares by SOCAR (Azerbaijan"s Oil and Gas National Company). SOCAR's final offer is for €400 million for 66% of DESFA; i.e. €212,1 million for HELPE"s 35% effective shareholding. Given that at present DESFA S.A. is a 100% subsidiary of DEPA, in order to complete the transaction, DESFA will be "unbundled" through a share distribution (treated as capital reduction of DEPA S.A.), to the two existing shareholders/sellers (i.e. HELPE 35% and HRADF 65%). Thus, once all approvals from the competent authorities are received, SOCAR will buy 35% directly from HELPE and 31% from HRADF.
On 2 August 2013 the Board of Directors of HELPE considered the offer for the sale of its 35% effective interest in DESFA as acceptable, and called for an Extraordinary General Meeting of the shareholders of the Company to approve the transaction. The EGM of the shareholders of the Company held on 2 September 2013 approved the transaction.
Prior to the Board of Director"s meeting, the previous day, on 1 August 2013 the board of directors of HRADF had unanimously accepted the final offer of SOCAR.
The Share Purchase Agreement (SPA) for the sale of 66% of DESFA"s share capital was signed by HRADF, HELPE and SOCAR (Parties to the SPA) on 21 December 2013. According to this SPA the rights and obligations of the parties are conditional upon the occurrence of certain events (Conditions) such as the merger clearance of the transaction by the EU or national competition authorities (as applicable) and the certification of DESFA by the
Regulatory Authority for Energy of the Hellenic Republic ("RAE") in accordance with article 65 of L. 4001/2011 ("Energy Law"). RAE issued its final certification decision on 29 September 2014. Notification of the transaction to DG for Competition of the European Commission took place on 1 October 2014. On 5 November 2014, the European Commission opened an in depth investigation. The extent of commitments which may be required to be undertaken by SOCAR and the exact time required for the European Commission to issue a clearance decision cannot be controlled by the parties. On 27 July 2015, the Parties to the SPA executed Addendum No 2, by virtue of which the long stop date of the SPA has been further extended to 21 December 2015; while on 16 December 2015 Addendum No 3 was executed providing for an additional long stop date extension to 30 September 2016. Further to such agreement, the validity of the SOCAR performance guarantee has been extended accordingly.
Although the parties undertake valid commitments upon signing of the SPA, the effectiveness of the totality of the provisions of the SPA (including the transfer of shares and the payment of the consideration) remains subject to conditions, some of which lie beyond the control or diligent behaviour of the parties and, consequently, the completion of the transaction remains suspended and depends on the satisfaction of such conditions.
The Group consolidates DEPA on an equity basis and the carrying value of the investment in the consolidated financial statements reflects HELPE"s 35% share of the net asset value of the DEPA group which as at 31 March 2016 is €600 million. The cost of investment of the DEPA group in the financial statements of HELPE S.A is €237 million. The impact of the above transaction on the Group financial statements will be determined on the basis of the structure of the transaction (at present a spin-off process is provided for in the SPA) and timing of implementation.
Given that the transaction can only be completed upon receiving the approval of the relevant competent authorities, and given the timing of such approvals and the unbundling process that is still to be concluded, DEPA Group, as it currently stands, continues to be accounted for and included in these consolidated financial statements as an associate.
The corporate income tax rate of legal entities in Greece for the period ending 31 March 2016 is 29% (31 December 2015: 29%).
Effective for fiscal years ending 31 December 2011 up to 31 December 2015, 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 Certificate which under certain conditions, substitutes the full tax audit by the tax authorities, which however retain the right of performing subsequent audit without finalizing its tax obligations for the respective fiscal year. All Group companies based in Greece have been audited by their respective statutory auditor and have received a clean Tax Compliance report including fiscal year ending 31 December 2014.
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.
| Company Name | Financial years |
|---|---|
| ended | |
| HELLENIC PETROLEUM S.A. | 2010 |
| ΕΚΟ S.A | 2008-2010 |
| HELLENIC FUELS S.A. | 2010 |
Issuance of Tax Certificates for the fiscal year ending 31 December 2015 is expected within the second quarter of 2016.
Management believes that no additional material liability will arise as a result of unaudited tax years over and above the tax liabilities and provisions recognised in the consolidated financial statements for the period ended 31 March 2016.
Provisional VAT audits have been completed for:
Relevant audits, for subsequent periods and for other Group companies are in progress.
Diluted earnings per ordinary share are not presented because they are not materially different from basic earnings per share. 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.
| For the three month period ended | |||
|---|---|---|---|
| 31 March 2016 | 31 March 2015 | ||
| Earnings/ (losses) per share attributable to the Company Shareholders (expressed in Euro per share): |
0,11 | 0,06 | |
| Net income/ (loss) attributable to ordinary shares | |||
| (Euro in thousands) | 32.406 | 18.289 | |
| Average number of ordinary shares | 305.635.185 | 305.635.185 |
| Furniture | Assets | ||||||
|---|---|---|---|---|---|---|---|
| Plant & | Motor | and | Under Con | ||||
| Land | Buildings | Machinery | vehicles | fixtures | struction | Total | |
| Cost | |||||||
| As at 1 January 2015 | 286.280 | 875.798 | 4.349.294 | 89.587 | 151.942 | 102.372 | 5.855.273 |
| Additions | 10 | 331 | 1.090 | 113 | 983 | 14.463 | 16.990 |
| Capitalised projects | - | 2.225 | 6.853 | 1 | 14 | (9.093) | - |
| Disposals | - | (1) | (290) | (86) | (32) | (70) | (479) |
| Currency translation effects | 120 | 101 | (122) | (5) | (30) | 2 | 66 |
| Transfers and other movements | - | - | 80 | - | - | (785) | (705) |
| As at 31 March 2015 | 286.410 | 878.454 | 4.356.905 | 89.610 | 152.877 | 106.889 | 5.871.145 |
| Accumulated Depreciation | |||||||
| As at 1 January 2015 | - | 379.129 | 1.892.498 | 53.692 | 131.784 | - | 2.457.103 |
| Charge for the period | - | 7.583 | 31.800 | 1.029 | 1.739 | - | 42.151 |
| Disposals | - | (19) | (278) | (86) | (16) | - | (399) |
| Currency translation effects | - | (27) | (97) | (4) | (28) | - | (156) |
| Transfers and other movements | - | - | (137) | - | - | - | (137) |
| As at 31 March 2015 | - | 386.666 | 1.923.786 | 54.631 | 133.479 | - | 2.498.562 |
| Net Book Value at 31 March 2015 | 286.410 | 491.788 | 2.433.119 | 34.979 | 19.398 | 106.889 | 3.372.583 |
| Cost | |||||||
| As at 1 Apr 2015 | 286.410 | 878.454 | 4.356.905 | 89.610 | 152.877 | 106.889 | 5.871.145 |
| Additions | 6 | 2.836 | 9.720 | 1.664 | 6.943 | 125.435 | 146.604 |
| Capitalised projects | - | 9.167 | 152.715 | 63 | 711 | (162.656) | - |
| Disposals | (1) | (926) | (3.039) | (620) | (416) | - | (5.002) |
| Currency translation effects | (234) | (308) | (18) | 3 | 48 | (7) | (516) |
| Transfers and other movements | 386 | 3 | 10.454 | - | (1) | (5.923) | 4.919 |
| As at 31 December 2015 | 286.567 | 889.226 | 4.526.737 | 90.720 | 160.162 | 63.738 | 6.017.150 |
| Accumulated Depreciation | |||||||
| As at 1 Apr 2015 | - | 386.666 | 1.923.786 | 54.631 | 133.479 | - | 2.498.562 |
| Charge for the period | - | 22.798 | 106.374 | 3.029 | 5.517 | - | 137.718 |
| Disposals | - | (480) | (2.232) | (620) | (375) | - | (3.707) |
| Currency translation effects | - | (52) | 18 | 2 | 23 | - | (9) |
| Transfers and other movements | - | (17) | (564) | - | (103) | - | (684) |
| As at 31 December 2015 | - | 408.915 | 2.027.382 | 57.042 | 138.541 | - | 2.631.880 |
| Net Book Value at 31 December 2015 | 286.567 | 480.311 | 2.499.355 | 33.678 | 21.621 | 63.738 | 3.385.270 |
| Cost | |||||||
| As at 1 January 2016 | 286.567 | 889.226 | 4.526.737 | 90.720 | 160.162 | 63.738 | 6.017.150 |
| Additions | 17 | 116 | 776 | 880 | 1.058 | 22.610 | 25.457 |
| Capitalised projects | - | 763 | 11.926 | - | 71 | (12.760) | - |
| Disposals | - | - | (108) | (4) | (124) | (87) | (323) |
| Currency translation effects | (226) | (452) | (303) | (2) | 8 | (51) | (1.026) |
| Transfers and other movements | - | 433 | 233 | - | (20) | (938) | (292) |
| As at 31 March 2016 | 286.358 | 890.086 | 4.539.261 | 91.594 | 161.155 | 72.512 | 6.040.966 |
| Accumulated Depreciation | |||||||
| As at 1 January 2016 | - | 408.915 | 2.027.382 | 57.042 | 138.541 | - | 2.631.880 |
| Charge for the period | - | 7.466 | 36.146 | 1.087 | 1.565 | - | 46.264 |
| Disposals | - | - | (102) | (4) | (124) | - | (230) |
| Currency translation effects | - | (225) | (227) | (2) | (10) | - | (464) |
| Transfers and other movements | - | - | - | - | (4) | - | (4) |
| As at 31 March 2016 | - | 416.156 | 2.063.199 | 58.123 | 139.968 | - | 2.677.446 |
| Net Book Value at 31 March 2016 | 286.358 | 473.930 | 2.476.062 | 33.471 | 21.187 | 72.512 | 3.363.520 |
"Transfers and other movements" in assets under construction include the transfer of computer software development costs to intangible assets.
| Retail Service | ||||||
|---|---|---|---|---|---|---|
| Station Usage | Computer | Licences & | ||||
| Goodwill | Rights | software | Rights | Other | Total | |
| Cost | ||||||
| As at 1 January 2015 | 133.914 | 51.365 | 96.582 | 38.769 | 74.260 | 394.890 |
| Additions | - | - | 220 | - | 29 | 249 |
| Currency translation effects and other movements | - | - | 273 | - | 79 | 352 |
| As at 31 March 2015 | 133.914 | 51.365 | 97.075 | 38.769 | 74.368 | 395.491 |
| Accumulated Amortisation | ||||||
| As at 1 January 2015 | 71.829 | 26.138 | 85.717 | 27.260 | 51.968 | 262.912 |
| Charge for the period | - | 940 | 978 | 485 | 1.946 | 4.349 |
| Currency translation effects and other movements | - | - | (96) | - | 98 | 2 |
| As at 31 March 2015 | 71.829 | 27.078 | 86.599 | 27.745 | 54.012 | 267.263 |
| Net Book Value at 31 March 2015 | 62.085 | 24.287 | 10.476 | 11.024 | 20.356 | 128.228 |
| Cost | ||||||
| As at 1 Apr 2015 | 133.914 | 51.365 | 97.075 | 38.769 | 74.368 | 395.491 |
| Additions | - | 421 | 869 | 16 | 104 | 1.410 |
| Disposals | - | (128) | - | (1) | - | (129) |
| Currency translation effects and other movements | - | (1.382) | 2.761 | 1.232 | (660) | 1.951 |
| As at 31 December 2015 | 133.914 | 50.276 | 100.705 | 40.016 | 73.812 | 398.723 |
| Accumulated Amortisation | ||||||
| As at 1 Apr 2015 | 71.829 | 27.078 | 86.599 | 27.745 | 54.012 | 267.263 |
| Charge for the period | - | 2.782 | 4.508 | 1.536 | 5.856 | 14.682 |
| Disposals | - | (62) | - | - | - | (62) |
| Currency translation effects and other movements | - | (779) | (4) | 779 | (218) | (222) |
| As at 31 December 2015 | 71.829 | 29.019 | 91.103 | 30.060 | 59.650 | 281.661 |
| Net Book Value at 31 December 2015 | 62.085 | 21.257 | 9.602 | 9.956 | 14.162 | 117.062 |
| Cost | ||||||
| As at 1 January 2016 | 133.914 | 50.276 | 100.705 | 40.016 | 73.812 | 398.723 |
| Additions | - | - | 90 | 167 | 4 | 261 |
| Currency translation effects and other movements | - | (156) | 157 | 349 | (45) | 305 |
| As at 31 March 2016 | 133.914 | 50.120 | 100.952 | 40.532 | 73.771 | 399.289 |
| Accumulated Amortisation | ||||||
| As at 1 January 2016 | 71.829 | 29.019 | 91.103 | 30.060 | 59.650 | 281.661 |
| Charge for the period | - | 830 | 976 | 524 | 1.186 | 3.516 |
| Currency translation effects and other movements | - | - | (51) | 52 | - | 1 |
| As at 31 March 2016 | 71.829 | 29.849 | 92.028 | 30.636 | 60.836 | 285.178 |
| Net Book Value at 31 March 2016 | 62.085 | 20.271 | 8.924 | 9.896 | 12.935 | 114.111 |
"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 | |||
|---|---|---|---|
| 31 March 2016 | 31 December 2015 | ||
| Crude oil | 205.755 | 180.149 | |
| Refined products and semi-finished products | 378.068 | 400.301 | |
| Petrochemicals | 17.708 | 22.286 | |
| Consumable materials and other spare parts | 80.279 | 83.705 | |
| - Less: Provision for consumables and spare parts | (25.237) | (24.416) | |
| Total | 656.573 | 662.025 |
The cost of inventories included in "Cost of sales" amounts to €0,9 billion (31 March 2015: €1,5 billion).
Hellenic Petroleum SA is obliged to keep crude oil and refined products stocks in order to fulfil the EU requirement for compulsory Stock obligations (90 days stock directive), as legislated by Greek Law 3054/2002. Part of this obligation is delegated to OTSM S.A, a subsidiary of an associate company, DMEP Holdco Ltd.
| As at | |||
|---|---|---|---|
| 31 March 2016 | 31 December 2015 | ||
| Trade receivables | 584.534 | 504.984 | |
| - Less: Provision for impairment of receivables | (216.528) | (211.349) | |
| Trade receivables net | 368.006 | 293.635 | |
| Other receivables | 468.794 | 471.003 | |
| - Less: Provision for impairment of receivables | (38.469) | (34.005) | |
| Other receivables net | 430.325 | 436.998 | |
| Deferred charges and prepayments | 25.113 | 21.509 | |
| Total | 823.444 | 752.142 |
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.
Other receivables include balances in respect of VAT, income tax prepayment, advances to suppliers and advances to personnel. This balance as at 31 March 2016 includes an amount of €54m (31 December 2015: €54m) 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 claims 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.
| As at | |||
|---|---|---|---|
| 31 March 2016 | 31 December 2015 | ||
| Cash at Bank and in Hand | 564.268 | 1.952.808 | |
| Cash and Cash Equivalents | 564.268 | 1.952.808 | |
| Restricted Cash | 155.556 | 155.556 | |
| Total Cash, Cash Equivalents and Restricted Cash | 719.824 | 2.108.364 |
Restricted cash relates to the proceeds of a loan concluded between Hellenic Petroleum S.A and Piraeus Bank, which have been provided as a guarantee to the European Investment Bank in relation to the Company"s €200 million Facility Agreement B with the latter.
The outstanding balance under the EIB Facility Agreement B as at 31 March 2016 was €144 million, in accordance with the amortization schedule, whilst the outstanding balance of the Piraeus loan as at 31 March 2016 was €156 million. This is expected to be reduced to €144 million in the following months. The guarantee matured on 15 June 2015 and was renewed for an additional year.
The effect of the loan and the deposit 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 31 March 2016 was \$ 283.283 (euro equivalent €248.830). The respective amount for the period ended 31 December 2015 was \$ 920.895 (euro equivalent €845.866).
| Number of Shares (authorised and issued) |
Share Capital |
Share premium |
Total | |
|---|---|---|---|---|
| As at 1 January & 31 December 2015 | 305.635.185 | 666.285 | 353.796 | 1.020.081 |
| As at 31 March 2016 | 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 2015: €2,18).
During the Annual General Meeting (AGM) of Hellenic Petroleum S.A. held on 25 May 2005, a share option scheme was approved, with the intention to link the number of share options granted to management with the results and performance of the Company. Subsequent AGMs have approved and granted the share options. The vesting period is 1 November to 5 December of the years 2014 – 2018.
Since the vesting period is 1 November to 5 December of each respective year, no share options were exercised during the three month period ended 31 March 2016, or the comparative period of the previous year. Share based compensation expense was nil for the three month period ended on 31 March 2016.
| Statutory | Special | Hedging | Share-based payment |
Tax-free | Other | ||
|---|---|---|---|---|---|---|---|
| reserve | reserves | reserve | reserve | reserves | Reserves | Total | |
| Balance at 1 January 2015 | 118.668 | 98.420 | (41.982) | 3.640 | 271.845 | (15.578) | 435.013 |
| Cash flow hedges | |||||||
| - Fair value gains / (losses) on cash flow hedges | - | - | 4.124 | - | - | - | 4.124 |
| Fair value gains / (losses) on available-for-sale financial | |||||||
| assets | - | - | - | - | - | (7) | (7) |
| Currency translation differences and other movements | - | - | - | - | - | 142 | 142 |
| Balance at 31 March 2015 | 118.668 | 98.420 | (37.858) | 3.640 | 271.845 | (15.443) | 439.272 |
| Cash flow hedges | |||||||
| - Fair value gains / (losses) on cash flow hedges - Derecognition of gains/(losses) on hedges through |
- | - | (8.926) | - | - | - | (8.926) |
| comprehensive income | - | - | 24.548 | - | - | - | 24.548 |
| Share-based payments | - | - | - | (2.893) | - | - | (2.893) |
| Transfers from Reserves to Retained Earnings | - | - | - | (8.798) | (148) | (8.946) | |
| Fair value gains / (losses) on available-for-sale financial | |||||||
| assets | - | - | - | - | - | (165) | (165) |
| Fair value gains / (losses) on available-for-sale financial | |||||||
| assets reclassified to Profit or Loss | - | - | - | - | - | (6) | (6) |
| Actuarial gains/(losses) on defined benefit pension plans | - | - | - | - | - | 1.619 | 1.619 |
| Currency translation differences and other movements | - | - | - | - | - | (774) | (774) |
| Balance at 31 December 2015 and 1 January 2016 | 118.668 | 98.420 | (22.236) | 747 | 263.047 | (14.917) | 443.729 |
| Fair value gains / (losses) on cash flow hedges Fair value gains / (losses) on available-for-sale financial |
- | - | (3.156) | - | - | - | (3.156) |
| assets | - | - | - | - | - | (4.927) | (4.927) |
| Currency translation differences and other movements | - | - | - | - | - | (626) | (626) |
| As at 31 March 2016 | 118.668 | 98.420 | (25.392) | 747 | 263.047 | (20.470) | 435.020 |
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. Where considered appropriate deferred tax provisions are booked in respect of these reserves.
Tax-free reserves include:
| As at | ||
|---|---|---|
| 31 March 2016 | 31 December 2015 | |
| Non-current borrowings | ||
| Bank borrowings | 795.625 | 794.634 |
| Eurobonds | 800.176 | 799.014 |
| Finance leases | 3.820 | 4.306 |
| Total non-current borrowings | 1.599.621 | 1.597.954 |
| Current borrowings | ||
| Short term bank borrowings | 1.236.737 | 1.226.063 |
| Eurobonds | 346.087 | 361.641 |
| Current portion of long-term bank borrowings | 44.802 | 44.796 |
| Finance leases - current portion | 529 | 533 |
| Total current borrowings | 1.628.155 | 1.633.033 |
| Total borrowings | 3.227.776 | 3.230.987 |
Gross borrowings of the Group by maturity as at 31 March 2016 and 31 December 2015 are summarised on the table below (amounts in € million):
| Balance as at | Balance as at | |||
|---|---|---|---|---|
| Company | Maturity | 31 March 2016 | 31 December 2015 | |
| 1a. Syndicated credit facility €40 million | HPF plc | Jul 2016 | 40 | 40 |
| 1b. Syndicated credit facility €10 million | HPF plc | Jul 2018 | 10 | 10 |
| 1c. Syndicated bond loan €350 million | HP SA | Jul 2018 | 342 | 341 |
| 2. Bond loan €400 million | HP SA | Jun 2016 | 225 | 225 |
| 3. Bond loan €200 million | HP SA | Jan 2018 | 199 | 199 |
| 4. European Investment Bank ("EIB")Term loan | HP SA | Jun 2022 | 289 | 289 |
| 5. Eurobond €500m | HPF plc | May 2017 | 486 | 485 |
| 6. Eurobond \$400m | HPF plc | May 2016 | 346 | 362 |
| 7. Eurobond €325m | HPF plc | Jul 2019 | 315 | 314 |
| 8. Bilateral lines | Various | Various | 972 | 961 |
| 9. Finance leases | Various | Various | 4 | 5 |
| Total | 3.228 | 3.231 |
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.
In January 2013, the Group concluded two three-year credit facilities with identical terms and conditions with a syndicate of Greek and international banks for a total amount of €605 million and a gradual amortization schedule. In July 2014, the Group proceeded with a voluntary early repayment and partial refinancing of the facilities. As a result, the Group voluntarily repaid a notional loan amount of €152 million and concluded two new credit facilities with similar terms and conditions as follows:
(1a-1b) HPF concluded a €50 million syndicated credit facility guaranteed by Hellenic Petroleum S.A. The facility has a €40 million tranche maturing in July 2016 and a €10 million tranche maturing in July 2018.
(1c) Hellenic Petroleum S.A. concluded a €350 million syndicated bond loan credit facility guaranteed by HPF maturing in July 2018.
In June 2014, Hellenic Petroleum S.A. extended the maturity date of a €400 million syndicated bond loan agreement from December 2014 to 30 December 2015 with a six month extension option, achieving at the same time improvements in cost and general terms and conditions. In September 2015 Hellenic Petroleum S.A. extended the maturity date to June 2016.
In line with the Group"s risk management strategy to increase the percentage of committed term credit facilities, Hellenic Petroleum S.A. concluded a €200 million committed credit facility in January 2015, with a tenor of 3 years, with National Bank of Greece.
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 have 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 31 March 2016 amounted to € 111 million.
In May 2013, the Group issued a €500 million four-year Eurobond, with an 8% annual coupon, maturing in May 2017. The Notes, which were issued by Hellenic Petroleum Finance Plc and are guaranteed by Hellenic Petroleum S.A., are redeemable at maturity and are listed on the Luxembourg Stock Exchange.
In May 2014 the Group issued a \$400 million two-year Eurobond, with a 4,625% annual coupon, maturing in May 2016. The Notes, which were issued by Hellenic Petroleum Finance Plc and are guaranteed by Hellenic Petroleum S.A., are redeemable at maturity and are listed on the Luxembourg Stock Exchange.
In July 2014 the Group issued a €325 million five-year Eurobond, with a 5,25% annual coupon, maturing in July 2019. The Notes, which were issued by Hellenic Petroleum Finance Plc and 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.
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 in place and renewed as necessary.
| As at | |||
|---|---|---|---|
| 31 March 2016 | 31 December 2015 | ||
| Trade payables | 910.145 | 2.626.459 | |
| Accrued Expenses & Deferred Income | 100.486 | 73.535 | |
| Other payables | 52.038 | 95.384 | |
| Total | 1.062.669 | 2.795.378 |
Trade payables comprise amounts payable or accrued in respect of supplies of crude oil, products, commodity derivative contracts and services. Since the imposition of capital controls on 28 June 2015 in Greece, open credit from suppliers has reduced materially.
Trade payables, as at 31 March 2016 and 31 December 2015, include overdue 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 due to 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, which is due to the EU sanctions posing legal constraints outside its control.
On 18 October 2015, by Decision (CFSP) 2015/1863, the Council of the European Union (EU) decided to terminate implementation of all Union economic and financial sanctions 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 a Heads of agreement on 22 January 2016 for the recommencement of their commercial relationship for the supply of crude and for the settlement of the overdue amounts. Implementation of the agreement, which commenced during April 2016, is in full compliance with the prevailing EU and international framework as well as surviving sanctions. In accordance with the Heads of agreement, the relevant amount has been transferred from trade payables to other long-term liabilities as at 31 March 2016.
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.
Other payables include amounts in respect of payroll and other staff related costs, social security obligations and sundry taxes.
| For the three month period ended | ||||
|---|---|---|---|---|
| Note | 31 March 2016 | 31 March 2015 | ||
| Profit / (loss) before tax | 41.787 | 27.845 | ||
| Adjustments for: | ||||
| Depreciation and amortisation of property, plant and equipment and | ||||
| intangible assets | 11, 12 | 49.780 | 46.500 | |
| Amortisation of grants | 5 | (353) | (521) | |
| Finance costs - net | 6 | 48.430 | 49.870 | |
| Share of operating profit of associates | 8 | 718 | (8.101) | |
| Provisions for expenses and valuation charges | 6.384 | 36.314 | ||
| Foreign exchange (gains) / losses | 7 | (11.455) | 38.934 | |
| (Gain) / Loss on sales of P.P.E. | 5 | (49) | 36 | |
| 135.242 | 190.877 | |||
| Changes in working capital | ||||
| (Increase)/Decrease in inventories | 13.310 | (275.093) | ||
| (Increase)/Decrease in trade and other receivables | (86.320) | (73.609) | ||
| (Decrease)/Increase in payables | (1.386.940) | (607.002) | ||
| (1.459.950) | (955.704) | |||
| Net cash generated from operating activities | (1.324.708) | (764.827) |
Included in the condensed interim consolidated statement of comprehensive income are proceeds, costs and expenses, which arise from transactions between the Group and related parties. Such transactions mainly comprise sales and purchases of goods and services in the ordinary course of business and are conducted under normal trading and commercial terms on an arm"s length basis.
Transactions have been carried out with the following related parties:
| For the three month period ended | ||||
|---|---|---|---|---|
| 31 March 2016 | 31 March 2015 | |||
| Sales of goods and services to related parties | ||||
| Associates | 99.165 | 149.567 | ||
| Joint ventures | 38 | 109 | ||
| Total | 99.203 | 149.676 |
Purchases of goods and services from related parties Associates 94.289 160.550 Joint ventures 565 548 Total 94.854 161.098
| As at | |||
|---|---|---|---|
| 31 March 2016 | 31 December 2015 | ||
| Balances due to related parties | |||
| (Trade and other creditors) | |||
| Associates | 40.919 | 73.348 | |
| Joint ventures | 355 | 294 | |
| Total | 41.274 | 73.642 | |
| Balances due from related parties | |||
| (Trade and other debtors) | |||
| Associates | 25.173 | 42.062 | |
| Joint ventures | 9 | 101 | |
| Total | 25.182 | 42.163 |
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 31 March 2016 was equivalent to €99 million (31 December 2015: €105 million).
During the three months period ended 31 March 2016, sales of goods and services by the Group to government related entities amounted to €39 million (31 March 2015: €48 million) whilst purchases of goods and services by the Group from government related entities amounted to €12 million (31 March 2015: €7 million). As at 31 March 2016, the Group had a total receivable amount of €30 million (31 December 2015: €31 million) from government related entities and a total payable amount of €3 million (31 December 2015: €10 million) to government related entities.
Total receivables (trade and other) due from the Greek state and its related entities amount to € 270 million (31 December 2015: € 281 million).
c) Key management includes directors (Executive and Non-Executive Members of the board of Hellenic Petroleum S.A.) and General Managers. The compensation paid or payable to the aforementioned key management amounted as follows:
| For the three month period ended 31 March 2016 |
For the three month period ended 31 March 2015 |
|||||
|---|---|---|---|---|---|---|
| Short term employee benefits |
Termination benefits |
Number of Members/ Managers |
Short term employee benefits |
Termination benefits |
Number of Members/ Managers |
|
| BOD Executive Members | 255 | - | 4 | 235 | - | 4 |
| BOD Non Executive Members | 103 | - | 9 | 72 | - | 9 |
| General Managers | 423 | 471 | 8 | 382 | - | 8 |
| Total | 781 | 471 | 689 | - |
The above table includes benefits paid or payable to Members/Managers for the period that they held the specific position. In instances where a Member/Manager is concurrently a BOD Member as well as a General Manager, the respective benefits are included in the former category. The Number of Members/Managers refers to Members/Managers who were included in one of the above categories even for part of the period.
Capital expenditure contracted for as of 31 March 2016 amounts to €30 million (31 December 2015: €35 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 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 31 March 2016 was the equivalent of €1.404 million (31 December 2015: €1.427 million). Out of these, €1.305 million (31 December 2015: €1.322 million) are included in consolidated borrowings of the Group and are presented as such in these financial statements.
Τhe Group"s international operations face a number of legal issues related to changes in local permits and tax regulations, however it is considered that they do not present any material impact on the consolidated financial statements. Such cases include a dispute in connection with the local tank depots of Jugopetrol AD in Montenegro, as well as the re-opening of the Commission for the Protection of Competition in Cyprus" investigation against the Petroleum companies operating there (wholesale), for the period from 1 October 2004 to 22 December 2006, 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 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 an ongoing audit is in place for financial years up to and including the year ended 31 December 2010. Furthermore, for these legal entities, provisional tax audits mainly relating to VAT refunds have been concluded up to more recent dates for the same entities. Management believes that no additional material liability will arise as a result of open tax years over and above the tax liabilities and provisions recognised in the consolidated 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. All the relevant Group companies were audited for the financial years ended 31 December 2011- 2014 obtaining unqualified tax audit certificates.
(ii) 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. 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 done against the law.
The Company considers that it will be able to recover the above amounts.
The BOD will propose no dividend out of 2015 results to the upcoming AGM. The Board did not approve a change in dividend policy overall and will re-evaluate dividend payment during 2016.
| EFFECTIVE | |||||
|---|---|---|---|---|---|
| COUNTRY OF | PARTICIPATION | METHOD OF | |||
| COMPANY NAME | ACTIVITY | REGISTRATION | PERCENTAGE | CONSOLIDATION | |
| ΕΚΟ S.A | Marketing | GREECE | 100,00% | FULL | |
| HELLENIC FUELS S.A. | Marketing | GREECE | 100,00% | FULL | |
| ΕΚΟΤΑ KO S.A. | Marketing | GREECE | 49,00% | FULL | |
| ΕΚΟ KALYPSO M.E.P.E. | Marketing | GREECE | 100,00% | FULL | |
| EKO ATHINA MARITIME COMPANY | Vessel owning | GREECE | 100,00% | FULL | |
| EKO ARTEMIS MARITIME COMPANY | Vessel owning | GREECE | 100,00% | FULL | |
| EKO DIMITRA MARITIME COMPANY | Vessel owning | GREECE | 100,00% | FULL | |
| EKO IRA MARITIME COMPANY | Vessel owning | GREECE | 100,00% | FULL | |
| EKO AFRODITI MARITIME COMPANY | Vessel owning | 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 BULGARIA PROPERTIES LTD Marketing | BULGARIA | 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 | GREECE | 100,00% | FULL | |
| APOLLON MARITIME COMPANY | Vessel owning | 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 | |
| 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 | |
| BIODIESEL S.A. | Energy | GREECE | 25,00% | EQUITY | |
| SUPERLUBE LTD | Lubricants | CYPRUS | 65,00% | EQUITY | |
| DMEP HOLDCO LTD | Trade of crude/products | U.K | 48,00% | EQUITY |
No material events took place after the end of the reporting period and up to the date of publication of the financial statements.
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