Hellenic Petroleum Holdings S.A.

Earnings Release • Feb 24, 2022

National Storage Mechanism | Additional information

RNS Number : 7707C

Hellenic Petroleum S.A.

24 February 2022

24 February 2022

Fourth Quarter / Full Year 2021 financial results
FY21 operating results improvement, implementation of the Group's key strategic initiative Vision 2025

HELLENIC PETROLEUM Holdings S.A. announced its 4Q/FY21 consolidated financial results, with Adjusted EBITDA coming in at €138m in 4Q, +80% vs last year, while FY21 Adjusted EBITDA amounted to €401m (+21%) and Adjusted Net Income to €144m.

The results improvement was achieved in a weak economic environment in terms of demand and benchmark refining margins in 1H21, as well as the global energy crisis in 2H and was driven mainly by increased production and exports of refined products and the overall positive performance of the international subsidiaries. Production and sales of oil products increased to 14.4m MT (+4%) and 15.2m MT (+6%) respectively, with exports at their second highest level in the Group's history. Petchems captured the improved international environment and recorded a historical high in terms of profitability at €131m, while Domestic and International Marketing considerably improved their contribution, as markets gradually recovered, despite higher operating costs.

The Reported Net Income in 2021 amounted to €341m, the second highest in the history of the Group, reversing last year's losses of €397m, as crude oil prices recovered significantly from the historical lows recorded in 2020.

The Board of Directors, considering the results and outlook, decided to proceed with the distribution of dividends of €0.40/share; €0.30/share will be distributed in April and €0.10/share after the AGM.

Strategy Implementation - Vision 2025

During the year, the Group proceeded with the update and implementation of its new strategy "Vision 2025", an ambitious plan targeting improved operations of the Group and the strategic shift towards green energy.

The corporate governance framework was significantly upgraded with the election of the majority of the Board of Directors members by the General Assembly and increase of independent members, the implementation of a fit & proper policy and a minimum gender quota in accordance with the Law 4706/2020 and by incorporating improved practices at European level.

Furthermore, in 3 January 2022 the corporate restructuring was successfully completed with the demerger by way of hive-down of the Group's refining, supply and trading of oil products and petrochemicals sector and the establishment of a new company, 100% subsidiary of HELLENIC PETROLEUM, which was renamed to "HELLENIC PETROLEUM Holdings S.A.".

In 2021, the implementation of Group's investment plan accelerated, with capital expenditure reaching €400m, mostly on green transition projects, which represent almost 60% of the total capex for the year. Specifically, the construction phase of 204MW photovoltaic park in Kozani was completed, with the connection and start of operations expected in 1Q22. In addition, in 4Q21, the Group proceeded with the acquisition of operating wind parks, with total installed capacity 38MW and particularly high load factors, while during 1Q22 completed the acquisition of 16MW operating PV parks. The above will enable the achievement of the target of 300MW installed capacity in operation in early 2022, earlier than the initial target.

The sale of DEPA Infrastructure (65% HRADF - 35% HELLENIC PETROLEUM Holdings) to Italgas for €733m, which corresponds to €256m for the participation of HELLENIC PETROLEUM Holdings, is expected to be completed in the near term, following relevant regulatory approvals. It should be noted that 50% of the proceeds will be allocated to an extraordinary dividend to the shareholders.

Recovery of crude oil prices to the highest levels since 2014, strengthening of international refining margins

International crude oil prices increased in 2021, following the multi-year lows of 2020, due to the recovery of economic activities, easing of mobility restrictions to mitigate COVID-19 and the normalization of travel activity. Increased demand, together with the proportionally lower supply growth from OPEC++, led to higher prices. As a result, Brent prices in 4Q21 reached $80/bbl, a seven-year high, compared to $44/bbl in 4Q20. Prices followed a similar trend throughout the year, with Brent price averaging at $71/bbl, 68% increase compared to 2020.

The dollar strengthened against the euro averaging 1.14 in 4Q21 while for FY 2021 the euro averaged 1.18 dollars (1.14 in 2020).

In 4Q21 diesel cracks recovered reaching two-year highs, leading to improved Hydrocracking benchmark margins q-o-q to $5/bbl, while FCC refining benchmark margins reached $5.2/bbl.

Increased demand in domestic fuel market

Total demand in the domestic market for ground fuels was 1.5% higher, reaching 6.4m MT, while the consumption of auto-fuels increased by 6.6% in 2021, as a result of the lifting of mobility restrictions, in contrast with heating gasoil which decreased 17% due to milder weather conditions. Aviation fuels increased significantly by 90% due to the increase of tourist traffic and bunkering fuels grew by 7.2% due to increased coastal shipping activity.

Finance Cost at historical lows

During 4Q21, the Group repaid the €201m Eurobond, with 4.875% interest rate, which had a substantial positive effect on the finance costs, which amounted to €23m, lower by 13%. For the year, the total finance costs amounted to €96m (-8%), recording a decrease of more than 50% over the last 5 years. Net debt reached €1.9bn, with gearing ratio at 48%.

Andreas Shiamishis, Group CEO, commented on the results: "2021 was a milestone year for HELPE, as we progressed significantly in areas that redefine our strategy and our transformation towards a greener energy group. Through a holistic plan, Vision 2025, the modernization of the corporate governance framework and the successful completion of the corporate restructuring and shift of strategic emphasis towards the development of green energy, with unanimous acceptance from the market, the shareholders, the bondholders, the creditors, as well as the support from management. Through this program, the Group will continue to play a leading role in the energy market, aiming at improving our environmental footprint by 50% by 2030, as well as the gradual transition towards greener energy sources and more environmentally-friendly fuels.

In this context, with total 2021 capital investments of €400m, out of which 60% relate to developing green energy, while an additional 10% directed to environmental upgrading and safety projects in our facilities, we are accelerating towards the implementation of this plan. Already, the fact that within the year we have upgraded our portfolio with 0.3 GW RES in operation, out of which 0.2 GW were recently completed and is the largest RES investment in our country, demonstrates that the Group has the ability to move swiftly and decisively in this sector.

In relation to financial results, the improvement of our operational performance and profitability, with increased production and exports in a challenging international environment, is the result of the continuous effort to enhance our competitiveness. Increased emphasis is given to digital transformation, for which a long term, aspiring plan is in progress, focusing on organizational flexibility and international trading growth. The above enable us to proceed to a dividend distribution of total amount of €0.40 / share and, as we committed, 50% of the expected proceeds from the sale of DEPA Infrastructure will be distributed as an extraordinary dividend during 2022.

Finally, besides from our strategy and our financial results, particular emphasis has been given to environmental and social contribution issues, through a series of targeted initiatives mainly around local communities but also through one of the largest private programs of environmental protection and restoration in areas affected by the recent wildfires of 2021.

All the above achievements were made possible with the significant effort of all Group employees, who successfully managed all the challenges and I would like to personally thank them for their substantial contribution."

Key highlights and contribution for each of the main business units in 4Q/FY21 were:

REFINING, SUPPLY & TRADING

-  Refining, Supply & Trading 4Q21 Adjusted EBITDA at €86m (+99%).

-  Net production amounted to 3.7m MT (+24%), with sales at 3.9m MT (+21%), with FY21 at 14.4m MT and 15.2m MT respectively.

-  Realised HELPE System margin came in at $11.8/bbl in 4Q21, with significant overperformance vs benchmarks.

PETROCHEMICALS

-  4Q21 Adjusted EBITDA came in at €28m, almost tripling vs 4Q20, as the strong polypropylene margins and the increased production of propylene in the Aspropyrgos refinery had a positive effect on the profitability, while FY21 recorded the highest historical performance in terms of operating results at €131m.

MARKETING

-  In Domestic Marketing, the gradual recovery of the market, together with the increase of market shares and the successful introduction of differentiated fuels in the retail network, led to significantly improved results for 2021, despite the increased supply chain costs, 4Q21 Adjusted EBITDA at €9m and FY21 at €58m (+52%).

-  In International Marketing, the recovery of demand in all countries resulted in increased sales volumes, which mitigated the higher operating expenses in most markets and led to improved profitability for 2021, with 4Q21 Adjusted EBITDA at €16m and for FY21 at €62m (+5%).

ASSOCIATE COMPANIES

-  DEPA companies' contribution to the consolidated net income for FY21 was €68m.

-  Elpedison EBITDA amounted to €94m in FY21 due to the increased demand for electricity and the increased production of Elpedison plants.

HELLENIC PETROOLEUM GROUP OF COMPANIES

Key consolidated financial indicators (prepared in accordance with IFRS)

for 4Q/FY21 are shown below:

€ million	4Q20	4Q21	% Δ		FY20	FY21	% Δ
P&L figures
Refining Sales Volumes ('000 MT)	3,224	3,891	21%		14,397	15,199	6%
Sales	1,322	2,823	-		5,782	9,222	60%
EBITDA	68	126	85%		-253	657	-
Adjusted EBITDA 1	77	138	80%		333	401	21%
Net Income	-17	83	-		-397	341	-
Adjusted Net Income 1	-8	93	-		5	144	-
Balance Sheet Items
Capital Employed					3,521	4,067	16%
Net Debt					1,672	1,938	16%
Debt Gearing					47%	48%	1%

Note 1: Calculated as Reported adjusted for inventory effects and other non-operating items.

Further information:

V. Tsaitas, Group CFO

Tel.:      210-6302399

Email:  vtsaitas@helpe.gr

Group Consolidated statement of financial position

		As at
	Note	31 December 2021	31 December 2020
ASSETS
Property, plant and equipment	6	3.484.805	3.379.813
Right-of-use assets	7	228.375	235.541
Intangible assets	8	175.907	105.841
Investments in associates and joint ventures	9	313.723	416.542
Deferred income tax assets	20	75.702	72.161
Investment in equity instruments	3	504	959
Loans, advances and long term assets	10	73.910	71.676
Non-current assets		4.352.926	4.282.533
Inventories	11	1.379.135	694.410
Trade and other receivables	12	694.606	544.795
Income tax receivable	30	16.479	37.699
Derivative financial instruments	24	92.143	9.945
Cash and cash equivalents	13	1.052.618	1.202.900
Current assets		3.234.981	2.489.749
Assets held for sale	14	191.577	2.466
Total assets		7.779.484	6.774.748
EQUITY
Share capital and share premium	15	1.020.081	1.020.081
Reserves	16	249.104	273.959
Retained Earnings		795.468	492.457
Equity attributable to the owners of the parent		2.064.653	1.786.497
Non-controlling interests		64.402	62.340
Total equity		2.129.055	1.848.837
LIABILITIES
Interest bearing loans and borrowings	18	1.516.531	2.131.371
Lease liabilities	18	172.296	170.896
Deferred income tax liabilities	20	89.478	32.572
Retirement benefit obligations	21	210.736	194.887
Derivative financial instruments	24	860	-
Provisions	22	26.959	26.368
Other non-current liabilities	23	27.801	27.957
Non- current liabilities		2.044.661	2.584.051
Trade and other payables	17	2.093.807	1.559.498
Derivative financial instruments	24	2.214	4.635
Income tax payable	30	4.488	1.673
Interest bearing loans and borrowings	18	1.474.493	744.561
Lease liabilities	18	29.499	30.240
Dividends payable		1.267	1.253
Current liabilities		3.605.768	2.341.860
Total liabilities		5.650.429	4.925.911
Total equity and liabilities		7.779.484	6.774.748

Group Consolidated statement of comprehensive income

		For the year ended
	Note	31 December 2021	31 December 2020
Revenue from contracts with customers	5	9.222.235	5.781.791
Cost of sales	25	(8.346.317)	(5.817.773)
Gross profit / (loss)		875.918	(35.982)
Selling and distribution expenses	25	(326.588)	(319.897)
Administrative expenses	25	(151.798)	(132.920)
Exploration and development expenses	26	(3.636)	(5.526)
Other operating income and other gains	27	36.365	53.387
Other operating expense and other losses	27	(29.971)	(60.466)
Operating profit / (loss)		400.290	(501.404)
Finance income	28	5.356	5.646
Finance expense	28	(101.387)	(109.820)
Lease finance cost	19,28	(10.092)	(10.914)
Currency exchange gains / (losses)	29	16.246	4.950
Share of profit / (loss) of investments in associates and joint ventures	9	96.660	29.826
Profit / (loss) before income tax		407.073	(581.716)
Income tax	30	(65.916)	185.101
Profit / (loss) for the year		341.157	(396.615)
Profit / (loss) attributable to:
Owners of the parent		337.444	(395.827)
Non-controlling interests		3.713	(788)
		341.157	(396.615)
Other comprehensive income / (loss):
Other comprehensive income / (loss) that will not be reclassified to profit or loss (net of tax):
Actuarial gains / (losses) on defined benefit pension plans	21	(15.254)	(7.381)
Changes in the fair value of equity instruments	16	(349)	(309)
Share of other comprehensive income / (loss) of associates	16	(3.930)	1.440
		(19.533)	(6.250)
Other comprehensive income / (loss) that may be reclassified subsequently to profit or loss (net of tax):
Fair value gains / (losses) on cash flow hedges	16	24.973	(22.008)
Recycling of (gains) / losses on hedges through comprehensive income	16	(31.794)	25.077
Currency translation differences and other movements		97	145
		(6.724)	3.214
Other comprehensive income / (loss) for the year, net of tax		(26.257)	(3.036)
Total comprehensive income / (loss) for the year		314.900	(399.651)
Total comprehensive income / (loss) attributable to:
Owners of the parent		311.165	(398.840)
Non-controlling interests		3.735	(811)
		314.900	(399.651)
Εarnings / (losses) per share  (expressed in Euro per share)	31	1,10	(1,30)

Group Consolidated statement of cash flows

		For the year ended
	Note	31 December 2021	31 December 2020
Cash flows from operating activities
Cash generated from operations	33	262.342	427.130
Income tax received / (paid)	30	8.032	23.133
Net cash generated from/ (used in) operating activities		270.373	450.263
Cash flows from investing activities
Purchase of property, plant and equipment & intangible assets	6,8	(400.441)	(295.261)
Proceeds from disposal of property, plant and equipment & intangible assets		6.370	2.803
Acquisition of share of associates and joint ventures	37	(2.400)	-
Purchase of subsidiary, net of cash acquired	37	6.296	-
Share capital issue expenses		(132)	(51)
Grants received		70	337
Interest received	28	5.356	5.646
Prepayments for right-of-use assets		(280)	(1.035)
Dividends received	9	6.525	9.465
Proceeds from disposal of assets held for sale		2.649	-
Net cash generated from/ (used in) investing activities		(375.986)	(278.096)
Cash flows from financing activities
Interest paid on borrowings		(94.420)	(100.003)
Dividends paid to shareholders of the Company	32	(30.320)	(152.647)
Dividends paid to non-controlling interests		(1.635)	(1.401)
Participation of minority shareholders in share capital increase of subsidiary		-	34
Proceeds from borrowings	18	586.620	1.419.247
Repayments of borrowings	18	(479.426)	(1.167.609)
Payment of lease liabilities - principal	19	(32.074)	(33.563)
Payment of lease liabilities - interest	19	(10.092)	(10.914)
Net cash generated from/ (used in) financing activities		(61.347)	(46.856)
Net increase/ (decrease) in cash and cash equivalents		(166.960)	125.311
Cash and cash equivalents at the beginning of the year	13	1.202.900	1.088.198
Exchange (losses) / gains on cash and cash equivalents		16.678	(10.608)
Net increase / (decrease) in cash and cash equivalents		(166.960)	125.311
Cash and cash equivalents at end of the year	13	1.052.618	1.202.900

Parent Company Statement of Financial Position

		As at
	Note	31 December 2021	31 December 2020
ASSETS
Property, plant and equipment	6	2.707.520	2.766.635
Right-of-use assets	7	26.547	32.157
Intangible assets	8	1.111	8.094
Investments in subsidiaries, associates and joint ventures	9	933.596	1.064.566
Investment in equity instruments	3	37	587
Loans, advances and long-term assets	10	143.172	42.956
Non-current assets		3.811.983	3.914.995
Inventories	11	1.240.774	599.613
Trade and other receivables	12	569.077	489.979
Income tax receivable	30	13.898	33.830
Derivative financial instruments	24	92.143	9.945
Cash and cash equivalents	13	843.493	992.748
Current assets		2.759.385	2.126.115
Assets held for sale	14	122.301	-
Total assets		6.693.669	6.041.110
EQUITY
Share capital and share premium	15	1.020.081	1.020.081
Reserves	16	260.642	279.576
Retained Earnings		714.744	520.475
Total equity		1.995.467	1.820.132
LIABILITIES
Interest bearing loans and borrowings	18	1.149.696	2.064.808
Lease liabilities	19	16.532	21.279
Deferred income tax liabilities	20	60.807	2.773
Retirement benefit obligations	21	174.211	159.782
Provisions	22	22.248	22.287
Other non-current liabilities	20	11.956	12.685
Non-current liabilities		1.435.450	2.283.614
Trade and other payables	17	1.901.339	1.427.067
Derivative financial instruments	24	2.214	4.635
Income tax payable	30	416	450
Interest bearing loans and borrowings	18	1.349.300	494.675
Lease liabilities	19	8.216	9.284
Dividends payable		1.267	1.253
Current liabilities		3.262.752	1.937.364
Total liabilities		4.698.202	4.220.978
Total equity and liabilities		6.693.669	6.041.110

Parent Company Statement of Comprehensive Income

		For the year ended
	Note	31 December 2021	31 December 2020
Revenue from contracts with customers	5	8.425.535	5.114.813
Cost of sales	25	(7.863.097)	(5.417.177)
Gross profit/(loss)		562.438	(302.364)
Selling and distribution expenses	25	(104.996)	(95.983)
Administrative expenses	25	(92.548)	(78.536)
Exploration and development expenses	26	(124)	(1.123)
Other operating income and other gains	27	25.723	38.444
Other operating expense and other losses	27	(50.126)	(37.715)
Operating profit/(loss)		340.367	(477.277)
Finance income	28	7.719	9.727
Finance expense	28	(92.775)	(102.724)
Lease finance cost	19,28	(1.110)	(1.388)
Dividend income	9	22.809	51.533
Currency exchange gains/(losses)	29	16.007	4.988
Profit/(Loss) before income tax		293.017	(515.141)
Income tax	30	(63.336)	176.377
Profit/(Loss) for the year		229.681	(338.764)
Other comprehensive income/(loss):
Other comprehensive income/(loss), that will not be reclassified to profit or loss (net of tax):
Actuarial losses on defined benefit pension plans	16	(12.940)	(6.311)
Changes in the fair value of equity instruments	16	(345)	(288)
		(13.285)	(6.599)
Other comprehensive income/(loss), that may be reclassified subsequently to profit or loss (net of tax):
Fair value gains/(losses) on cash flow hedges	16	25.472	(22.008)
Recycling of (gains)/losses on hedges through comprehensive income	16	(31.794)	25.077
Other Comprehensive income/(loss) for the year, net of tax		(19.607)	(3.530)
Total comprehensive income/(loss) for the year		210.074	(342.294)
Earnings/(Losses) per share (expressed in Euro per share)	31	0,75	(1,11)

Parent Company Statement of Cash flows

		For the year ended
	Note	31 December 2021	31 December 2020
Cash flows from operating activities
Cash generated from operations	33	98.032	312.109
Income tax received / (paid)		13.145	33.170
Net cash generated from operating activities		111.177	345.279
Cash flows from investing activities
Purchase of property, plant and equipment & intangible assets	6,8	(112.261)	(208.118)
Proceeds from disposal of property, plant and equipment & intangible assets		43	4.846
Loans to affiliated companies		(22.252)	-
Dividends received		54.809	161.533
Interest received	28	7.719	9.727
Participation in share capital increase of subsidiaries and joint ventures	9	(9.465)	(12.043)
Net cash used in investing activities		(81.408)	(44.055)
Cash flows from financing activities
Interest paid		(87.728)	(98.323)
Dividends paid	32	(30.320)	(152.647)
Proceeds from borrowings		470.647	1.412.971
Repayments of borrowings		(537.249)	(1.342.771)
Payment of lease liabilities - principal	19	(9.271)	(10.393)
Payment of lease liabilities - interest	19	(1.110)	(1.388)
Net cash used in financing activities		(195.031)	(192.551)
Net (decrease) / increase in cash and cash equivalents		(165.262)	108.673
Cash and cash equivalents at the beginning of the year	13	992.748	888.564
Exchange (losses)/gains on cash and cash equivalents		16.007	(4.489)
Net (decrease) / increase in cash and cash equivalents		(165.262)	108.673
Cash and cash equivalents at the end of the year	13	843.493	992.748

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