Credit Update
June 2014 Contents
• Introduction – Group Overview
• Strategy update
• Industry & market developments
• Credit update
• Strategic business units (SBUs)
• Appendix
1 Group’s Profile
• Largest SEE independent downstream Group, with investments in Power & Gas – €10b Turnover with 14 MT of product sales, with strong export orientation (50% exports) – Leading Greek market position covering c. 60- 65% of local wholesale market fuels demand – Regional footprint through subsidiaries; coastal refineries provide supply chain advantage
• Completed its strategic investment plan, with positive cash flow impact – A €2bn investment plan with €150-200m of incremental cash flow opportunity at mid-cycle margins; no material capex requirements – Asset portfolio allows upside on recovery of refining margins and Greek market
• Successfully implemented a transformation competitiveness improvement plan on Group structure and operational model – Transformation initiatives added c.€270m annual benefits with additional opportunities of €130m over the next 18-24 months
• Consistent delivery of strategic targets; improving balance sheet – Achievement of strategic targets, despite Greek crisis & industry “black swans” – Continuous support from local and international relationship banks throughout crisis – Completion of capex cycle allows deleveraging from higher than target gearing – Opportunities for value monetisation (DEPA/DESFA sale process)
2 Complex refining asset base and leading domestic market share; Group positioned to benefit from Greek market recovery and refining industry upturn
Group operational footprint • Complex refineries (Nelson index 9.6) ROMANIA BOSNIA SERBIA • Balanced sales channel mix with exports at
BULGARIA MONTENEGRO FYROM 50% of total sales
ALBANIA • Leading market position with c.60-65% of GREECE TURKEY Greek wholesale domestic market and
Refining c.30% of retail Marketing Power & Gas CYPRUS • Regional footprint with international subsidiaries
• 30% of capital employed in non-refining Nelson/Solomon complexity benchmark margins margin driven returns from Marketing, 4* 5* -3* Petchems, Power and NatGas 13.9 11.3 9.7 8.8 6.9 5.0
Aspropygros Elefsina Thessaloniki NCI Solomon *$/bbl, average 2010-13 3 Shareholding & Governance Controlling shareholders’ agreement supported successful transition from state to private sector Group, divestment of remaining 35% held by the Greek State as part of the privatisation
Corporate Governance Shareholding structure
Board of Directors: Retail Int’l institutionals • Consists of 13 members (3 executive and 6% 7% 10 non executive) appointed as per GR institutionals 9% Articles of Association 43% POIH • Board Committees (Finance / Audit / HR)
Executive Committee: 35% • Key management executives with Greek State responsibility for strategy and operations
Management structure:
• SBU structure ensures focus on key business issues
• Regional portfolio controlled centrally
4 Assets overview Core business around downstream assets with activities across the energy value chain
DESCRIPTION METRICS
Exploration & • Exploration assets in Egypt, Greece, Montenegro Production
• Recently upgraded refining asset base: • Capacity: 16MT – Aspropyrgos (FCC, 148kbpd) • NCI: 9.6 Refining, Supply – Elefsina (HDC, 100kbpd) – Thessaloniki (HS, 93kbpd) • Market share: 65% & Trading 3 • Pipeline fed refinery/terminal in FYROM • Tankage: 7m M
• c.1,800 petrol stations • Leading position in all market channels (Retail, Domestic • 30% market share Commercial, Aviation, Bunkering) Marketing • Sales volumes: 3MT
International • Strong positions in Cyprus, Montenegro, Serbia, • c.280 petrol stations Marketing Bulgaria • Sales volumes: 1MT • Advantage on supply chain/vertical integration
• Basel technology PP producer and seller on the Petrochemicals back of refineries integrated value chain • Capacity (PP): 220 kt • > 50% exports in Iberia, Italy & Turkey
• Second largest IPP in Greece (JV with • Capacity: 810 MW Edison/EdF) (CCGT) Power & Gas • 35% in Greece’s incumbent NatGas supply • Volumes (2013): company (under privatisation) 3.8bcm
5 Our Group in numbers – key financials (FY13)
€ million, IFRS 2009 2010 2011 2012 2013
Income Statement
Sales Volume (MT) - Refining 15,885 14,502 12,528 12,796 12,696
Net Sales 7,424 8,477 9,308 10,469 9,674
Segmental EBITDA
- Refining, Supply & Trading 269 338 259 345 57
- Marketing 92 114 66 53 68
- Petrochemicals 20 50 44 47 57
- Other -19 -28 -6 0 -5
Adjusted EBITDA * 362 474 363 444 178
Adjusted associates’ share of profit 18 30 67 69 57
Adjusted Net Income * 150 205 137 232 -117
Balance Sheet / Cash Flow
Capital Employed 3,927 4,191 4,217 4,350 3,905
Net Debt 1,419 1,659 1,687 1,855 1,689
Capital Expenditure Incl. Refinery upgrade program 614 709 675 521 112
Free Cash flow -561 17 165 25 404
(*) Calculated as Reported less the Inventory effects and other non-operating items 6 Key segmental financials Non-refining segments make a significant contribution to Group profitability; FCF at 12-15% of ACE over the last years (adj. for refinery upgrade).
HELLENIC PETROLEUM
Adjusted EBITDA: €178 m Capital Employed: €3,905 m Free Cash flow: €420 m
POWER & REFINING PETCHEMS RETAIL INTERNATIONAL GAS
€ million
Adjusted EBITDA 57 57 25 44 57*
Capital Employed 2,517 129 527 400 692**
Free Cash Flow 267 36 53 64 n/a
FCF % of CE 11% 28% 10% 16% n/a
* Income from associates (reported below EBITDA) ** investment in associates *** Segments include Intra-segment transactions 7 Contents
• Introduction – Group Overview
• Strategy update
• Industry & market developments
• Credit update
• Strategic business units (SBUs)
• Appendix
8 2007-12 Strategy review Delivery of strategic targets despite prolonged crisis; new refineries amongst most competitive in the Med
• Completed Elefsina and Thessaloniki upgrades Upgrade Refining Assets 1 successfully • €150-200m additional cashflow opportunity (benchmark margin driven)
2 Enhance vertical integration • Doubled domestic market share - BP network • Increased benefit of regional integration
Manage Portfolio for value • Refocus E&P 3 • Power generation portfolio JV
• Refining improvements (DIAS) 4 Improve competitiveness • Marketing competitiveness • Procurement (BEST 80) • Cost structure
5 Fit-for-purpose • Reduced headcount by 21% by 2012 • Established Group culture organisation • Shared services
9 2013-2017 Strategy Update Refocuses on operational excellence; maximise cash flows to deleverage
BUSINESS TARGETS FINANCIAL TARGETS
1 Realise full benefit of the new 1 Improve profitability investment
Consolidate market position 2 Deleverage Group leveraging on new asset base 2
Enhance competitiveness 3 Diversify funding mix improvement momentum 3
4 Leverage business portfolio 4 Reduce funding costs
5 Develop our people and continue to build culture of excellence
* Assuming mid cycle margins
10 Recent results reflect new refinery start-up process and record low margins. Company performance rebased post investments and competitiveness improvements; further upside driven by Greek economy and margin recovery.
Adjusted EBITDA projected evolution (€ mil)
400-700 40-60 20-30 70-100 2013 margin Medium term ($2.1/ bbl) 50-60 300-350 performance driven by 178 refining margins.
2013 Elefsina Performance Greek market 2014 runrate Performance Margins and Medium Term optimisation Improvement FX* Cash Flow profile pre and post-investment plan** (€ mil)
Investment phase Post-upgrade
400 (700) 400-700 (100)-(150) 250-550
EBITDA Capex Pre Tax Free Cash (300) Flow
EBITDA Capex Pre Tax Free Cash Flow
(*) $1/bbl sensitivity in margins results to €90m, assuming full utilisation of refineries and €/$ at 1.3 (**) assuming mid-cycle margins 11 Elefsina Refinery Upgrade Full residue conversion, with 75% middle distillates yield, positioning Elefsina as a top net cash margin refinery in the Med basin
New refinery schematic Product slate
17% 25% Other 11% 11% 24% Jet
64% Diesel/Gas oil 47%
Fuel oil Pre upgrade Current Solomon complexity index: 13.9
European Med refineries Net Cash margins* Refinery utilisation (%) 8 95 Elefsina 83 6 76 71 4
2
0
-2 *Wood Mackenzie 2018 Net cash margin projection, Med basin refineries -4 Q412 1H13 2H13 1Q14 12 Operational improvement projects reduced overhead gearing FY14 target for additional benefits exceeding €80m, with a further €50m earmarked for 2015; 1Q14 on track with plan, at €18m on incremental contribution
Middle distillates yield of Group Headcount (FTEs) Evolution of transformation initiatives (€m) Aspropyrgos Hydrocracker % 5.138 16 400 4% 3.680 12 -28%
2014 target: >€80m
2008 2013 290 2011 2013 18
45 227
Propylene production (MT’000) Procurement savings vs spent (%)
16 163 30% 7% 125 9
2009 2013 2011 2013 2008-12 2013 1Q14 YTD Medium Term Target
13 Contents
• Introduction – Group Overview
• Strategy update
• Industry & market developments
• Credit update
• Strategic business units (SBUs)
• Appendix
14 Recent Industry developments Challenging refining environment in the region driven by regional crude supply issues and weak growth • 2013 the worse refining macro backdrop in the Med region for at least a decade • Curtailed supply for crude due to developments in Iran (sanctions), Iraq, Libya (internal frictions), Russia (crude directed to the East and domestic refineries) • Weak demand in Europe, particularly in the South due to recession • Competitive advantage of US refineries on energy cost and crude spreads, due to shale oil and gas, led to reversal of product flows across the Atlantic
Med hydrocracking margins (2004- 2014) Med FCC margins (2004- 2014) 15.1
12.5 10.8 10.9
7.0 6.9 6.8 6.5 5.9 5.4 4.9 4.4 4.7 3.7 4.0 3.7 2.8 2.9 2.4 2.0
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014* 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014* SE sovereign crisis Shale oil
* year to 30 May 15 Regional market – Diesel shortage in the Med ELPE middle distillates yield suited to expected increasing shortage in the region
16 Greek market evolution Signs of stabilisation in domestic market demand, post significant contraction due to recession; mild weather conditions reflected in heating gasoil market in 1Q14, while transport fuels demand remained flat
Domestic Oil products demand 2008-2013 million tonnes / year
2009 vs 2013 -42% 11,413 10,832 10,125 9,239
4,408 -29% +4% y- o- y
3,283 3,117 3,422 -4% 1,679 1,616
2008 2009 2010 2011 1H12 2H12 1H13 2H13 1Q13 1Q14
Source: Ministry of Energy, Environment and Climate Change 17 Contents
• Introduction – Group Overview
• Strategy update
• Industry & market developments
• Credit update
• Strategic business units (SBUs)
• Appendix
18 Pro forma Cap structure Weak refining environment and Elefsina optimisation process led to increased leverage ratio vs historical trend
€ million Maturity 2013 pro-forma** HP & HPF €605m Syndicated Facilities 2016 586 EIB €200m Facility A* 2022 189 EIB €200m Facility B – Guaranteed by Commercial Bank* 2022 189 HP €400m syndicated Facility 2015 225 Eurobond 2017 490 USD Eurobond ($400m) 2016 292** Bond loan (€200m) 2015 200 Other bilateral lines n/a 771 Gross Debt 2,942
Cash and cash equivalents (1,052)**
Restricted Cash* (260)
Net Debt 1,690
Gearing ratio (Net Debt/Capital Employed under IFRS) 43%
Leverage ratio (Clean EBITDA + associates’ share of Net Income) 7.2 x
Pro forma Leverage ratio (excluding debt equal to investment in associates) 5.6 x
Pro forma Leverage on mid cycle historical EBITDA (2010-2012 avg) 2.3 x
(*) Contract review in progress; cash collateral in relation to EIB loan guarantee (**) based on FY13 financials, adjusted for ELPE GA 4.625% May 2016 19 Gearing Growth capex of >€2bn during 2008-12 led to Net Debt peak in FY12; Deleveraging is a priority with expected DESFA proceeds later in 2014, earmarked for debt reduction
Capex evolution 2008-2013 (€m) Net debt and gearing(1) levels (%) - €bn
Net Debt Gearing
2.5 50%
44% 709 43% 43% 45% 675 41% 41%
614 2.0 40% 36% 1.9 1.8 35% 521 1.7 1.7 1.5 1.6 30%
1.4 25%
333 1.0 20%
15%
0.5 10% 112 5%
0.0 0% FY09 FY10 FY11 FY12 1H13 FY13 FY08 FY09 FY10 FY11 FY12 FY13
NET DEBT DEBT/CAPITAL EMPLOYED
(1) calculated as Net Debt / Capital Employed 20 DEBT STRUCTURE AND FUNDING STRATEGY Aiming towards increasing markets participation in funding mix and reducing costs
Drawn Credit facilities by source • DCM provides capacity optionality, tenor 2012 1Q14 Target and competitive pricing 27% 100% 73%
Banks Markets
ELPE GA Bonds Mid YTM (%) Term lines maturity overview* (€m) New USD Bond* 800 12% • ELPEGA € 8% 2017: < 5% 11% • ELPEGA $ 4,625% 2016: < 4% 700 10% 600 9% 8% 500 7% 400 6% 300 5% 4% 200 3% 100 0 2014 2015 2016 2017 2022 ELPE 8% 2017 GGB 10YR ELPE 4.625% 2016 (*) Matched by equal cash balance increase
21 Contents
• Introduction - Group overview
• Strategy update
• Industry & market developments
• Credit update
• Strategic Business Units (SBUs)
• Appendix
22 Greek petroleum market overview and route to market Leading domestic market position through vertical integration and good logistics assets; well positioned to capture Greek recovery
Greek Refining capacity: 25MT 16MT
60-65% 25-30% 3rd party Imports ELPE exports: 6-8MT Domestic market: 11.5MT
3rd party exports: ELPE Group ELPE Group Independent Specialty markets MOH Group 0-10% 5MT subsidiaries: 2MT subsidiaries: 3MT marketing (PPC, public sector): subsidiaries: 2MT (30%) companies: 5MT 1.5MT (10%) (20%) (40%)
Greek market product breakdown
Other 22% Gasoline 23%
Bunkers 23% 23% Retail C&I (Construction, Aviation & Diesel wholesale) Bunkering 8% 8% Jet Gasoil 23 Greek Refining, Supply & Trading economics USD based value chain with trading premia adding to refining net backs; export sales exceeding 50%.
Refining Markets (Med benchmark returns (sales premia varying & operations performance) across channels)
Domestic market Elefsina NCI 11.3 $ / € 100kbpd HDC 5 MT Refined Products (14.0m MT) Aspropyrgos Aviation & Bunkering NCI 9.7 145kbpd (Med competitive pricing) FCC 3 MT Thessaloniki NCI 6.9 95kbpd Exports, Intra-Group Hydroskimming (Platts Med FOB based + premia)
Total ELPE capacity 16 MT 2 MT
Exports, 3rd parties (Platts Med FOB based) Imported Products (1-1.5m MT) 1-1.5 MT 5 MT
24 Marketing Leading position in the Greek market with both EKO and BP enhanced following BP brands; subsidiaries in neighboring markets increases downstream integration
Auto-fuels domestic market share International Marketing: Regional footprint evolution (%) 30
15
2008 (EKO only) 2012 (post BP acquisition) Domestic Retail network evolution (# PS) International Marketing: Sales volumes evolution (MT) 2,345 1,051 1,041 1,072 1,072 2,186 1,014 2,022 1,931 215 211 1,170 1,816 243 237 1,108 256 981 949 117 115 874 126 152 150
194 220 222 336 367 1,175 1,078 1,041 982 942
438 436 433 404 379
2009 2010 2011 2012 2013 EKO HF 2009 2010 2011 2012 2013 JPK SER BU CY 25 Petrochemicals Operations centred on vertical integration for higher value product; trading geared to exports markets
Position: Polypropylene value chain
• Competitive advantage in polypropylene - vertical Propane integration exceeding 85% of total production • Exports account for 50- 60% of total sales; strong export markets in Turkey, Italy and Iberia Propylene splitter • Domestic market share in petchems exceeds 50% in all products, produced or traded Propylene imports Propylene 90% 10% Thessaloniki PP plant (220 kt) Targets: • Increase propylene production capturing propane PP conversion value 10% • Exploit niche markets: 90% – Increase PP resin grade portfolio and BOPP film BOPP film plant (26kt) types with tangible cash benefits
– Add new commodity plastics Domestic and international • Leverage regional positioning and in-market market presence to increase trading
26 Power: second largest IPP in Greece; development of a renewable energy portfolio
Thisvi 420MW CCGT power plant • Elpedison BV, is a 50/50 JV between Hellenic Petroleum and Edison, Italy’s 2nd largest electricity producer and gas distributor (EdF Group) – Owns 75% of 810MW of installed CCGT capacity: a 390MW plant in Thessaloniki and a 420MW in Thisvi – Increasing power trading & marketing, within predefined credit metrics
• Energy market in Greece under restructuring; current model targets system stability during a transitional phase
• Renewables portfolio target > 100MW (wind, PV, biomass) subject to fiscal environment and market developments
Consolidated as Associate 27 Gas: 35% participation in DEPA, Greece’s incumbent gas company (in sale process) Natural gas transmission network DEPA – Long-term contracts on pipe gas (Russian & Azeri) and capacity rights on two in-bound interconnecting pipelines – Long-term contracts with power generators, eligible industrial customers and existing EPAs – Owns 51% of the local supply companies (EPAs), with rights until 2036 DESFA (RAB) – Greece’s gas grid and LNG import terminal owner and operator – International pipelines: Participation in Greece-Bulgaria Interconnector
• SPA for sale of 66% of DESFA to SOCAR for €400m signed DEPA Volumes 2007-13 (bcm) on 21 Dec 2013; regulatory approvals in process for 4.3 4.0 4.2 completion of transaction 3.8 3.6 3.8 3.3
DEPA snapshot financials (€m) 2008 2009 2010 2011 2012* 2013 EBITDA 240 166 211 288 287 209 Net Income 120 61 91 191 197 170 * Adjusted for settlement with PPC 2007 2008 2009 2010 2011 2012 2013
Consolidated as Associate 28 Contents
• Introduction - Group overview
• Strategy update
• Industry & market developments
• Credit update
• Strategic business units (SBUs)
• Appendix
29 Key Milestones Transforming stand-alone government controlled Greek companies to a leading private sector regional energy player
PETROLAPETROLA Elpedison: 50/50 JV Greek Government with Italy’s Edison, announces its (Elefsina( Elefsina Listing of in Power intention to divest RefineryRefinery)) new Group in Elpedison’s 2nd CCGT its shareholding in ASE/LSE Plant (420MW) in ELPE Agreement to Acceleration of POIH becomes commercial operation DEPDEP & & strategic investor DESFA sale for transformation with 25% stake €212m programs targeting DEPEKYDEPEKY c.80m of benefits (Greek(Greek E&P) E&P)
1960 – 1998 2003 2007 2008 2009 2010 2011 2012 2013 2014 1998
ELDAELDA Thessaloniki Refinery Issue of €500m Aspropyrgos( Aspropyrgos upgrade completed Eurobond RefineryRefinery)) Libyan upstream concessions sold to Sale of 70% stake in Elefsina Merger with GDF Suez for $170m W. Obayed upstream upgraded refinery ESSOESSO - Petrola concession in Egypt start up PAPPASPAPPAS Hellas Thessaloniki( Thessaloniki Acquisition of BP’s Refinery)Refinery) Ground Fuels business in Greece Float 21% POIH 43%
36% Greek State Shareholding events 30 Refineries complexity upgrade impact on the Group’s crude and product slate
Crude slate — Group-wide Product slate — Group-wide
10% 8% Other High sulphur 23% 25% Gasoline 75% 9% 10% 89%
Medium sulphur 32% Jet 45%
10% Diesel/Gas oil 0% 26% 15% 11% Low sulphur 12% Fuel oil Pre Upgrade Current Pre upgrade Current
Crude slate — Elefsina Product slate — Elefsina
17% 24% Other 11% High sulphur 59% 12% 24% Jet 100%
64% Diesel/Gas oil 47% 41% Medium sulphur
Fuel oil Pre upgrade Current Pre upgrade Current
31 Group Key financials: 2004 - 2013 Strong track record of consistent delivery and balance sheet resilience
€ million, IFRS (Published) 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Income Statement Figures
Sales Volume (MT)- Refining 15,807 16,525 16,952 17,130 16,997 15,885 14,557 12,528 12,796 12,696
Sales Volume (MT)- Marketing 4,793 4,727 4,790 5,236 4,910 4,787 5,735 5,126 4,434 4,043
Net Sales 4,907 6,653 8,122 8,538 10,131 6,757 8,477 9,308 10,469 9,674
EBITDA 372 671 502 617 249 390 501 335 298 29
Adjusted EBITDA* 400 466 526 458 513 362 474 363 444 178
Net Income 128 334 260 351 24 175 180 114 86 -269
Adjusted Net Income* 149 191 277 232 216 150 205 137 232 -117
Balance Sheet / cash Flow Items
Capital Employed 2,335 2,956 3,442 3,557 3,153 3,927 4,191 4,217 4,350 3,905
Net Debt 386 699 1,044 977 679 1,419 1,629 1,687 1,855 1,689
Capital Expenditure 295 185 145 195 338 614 709 675 521 112
Dividend (€/share) 0.26 0.43 0.43 0.50 0.45 0.45 0.45 0.45 0.15 n/a
Key drivers
Brent crude ($/bbl) 38.0 55.2 68.1 72.9 98.3 62.6 80.3 111.0 111.7 108.7
FCC cracking Med margins ($/bbl) 7.2 7.3 7.3 7.1 6.8 3.7 4.4 2.9 4.7 2.4
€/$ 1.24 1.24 1.26 1.37 1.47 1.39 1.33 1.39 1.29 1.33
(*) Calculated as Reported less the Inventory effects and other one-off non-operating items and special income taxes
32 1Q 2014 GROUP KEY FINANCIALS
Adj. EBITDA (€m) FY € million, IFRS 1Q +35% 51 2013 2013 2014 Δ% Income Statement 38 12,696 Sales Volume (MT) - Refining 2,872 2,790 -3% 4,043 Sales Volume (MT) - Marketing 862 807 -6% 9,674 Net Sales 2,241 2,077 -7%
1Q13 1Q14 Segmental EBITDA Reported EBITDA (€m) 57 - Refining, Supply & Trading 21 24 16% 25 68 - Marketing 4 11 - 57 - Petrochemicals 14 17 19% -5 - Other -1 -1 46% 178 Adjusted EBITDA * 38 51 35% 11 Adjusted EBIT * (including Associates) 10 17 78% -12 -209 Finance costs - net -47 -53 -12% Net Debt (€m) -117 Adjusted Net Income * -21 -19 9% +7% 2.333 29 IFRS Reported EBITDA -12 25 - 2.188 -269 IFRS Reported Net Income -78 -38 51% Balance Sheet / Cash Flow 3,905 Capital Employed 4,623 4,505 -3% 1,689 Net Debt 2,188 2,333 7%
1Q13 1Q14
(*) Calculated as Reported less the Inventory effects and other non-operating items 33 1Q14 HIGHLIGHTS Improved results across all our businesses, as Elefsina contribution and enhanced operational performance offset weak margins and USD
Industry and Market • Med benchmark refining margins significantly lower y-o-y (especially for FCC), with further negative impact due to weaker $; small improvement vs 4Q13 partly due to Brent-Urals spread widening to $0.5-1/bbl area • Uncertainty in Med crude market remains with due to Libya and Iraq exports • Positive signs for domestic fuels demand as auto-fuel remain stable for a 3rd consecutive quarter; 1Q14 GDP estimate at -1.1%, lowest decline in 4 years Financials • 1Q14 Adjusted EBITDA at €51m (+35%), reflecting improved operational performance in all business units, despite weak refining environment and Elefsina 4-week shut-down • Competitiveness projects deliver additional €18m contribution, in line with plan; opex 13% lower y- o-y • Associates contribution at €15m affected by lower gas demand due to mild weather conditions • Net Debt at €2.3bn, driven by operating conditions and seasonality
Business developments • DESFA transaction regulatory approval in process; closing expected in 2014 • New CLA with ELPE refining union agreed for 3 years; annual benefits of c.€10m • Lease agreement for West Patraikos concession signed on 14 May 2014; field studies to commence in 2H14
34 INDUSTRY ENVIRONMENT Challenging supply environment remains as Libya and Iraq flows remain uncertain
$/bbl ICE Brent ($/bbl) 160
140 31/03/14 • Uncertainty in crude markets 120 $107.8 continued, with supply availability and 100 31/12/1 80 3 Ukrainian crisis affecting Brent price $110.8 2013 2014 60 FY 108.7 107.9 1Q 112.6 107.9 40
20
Brent – Urals spread ($/bbl) • Improved sweet-sour spreads in 4.0 2013 2014 1Q14 q-o-q 3.0 FY 0.34 0.79 1Q 1.20 0.79 • Urals increased to c.55% of ELPE 2.0 crude slate in 1Q14 1.0
0.0
-1.0
-2.0
35 INDUSTRY ENVIRONMENT Weakness in product cracks affects FCC margins; Elefsina benchmark margin more resilient
ULSD cracks ($/bbl) Med FCC benchmark margins ($/bbl)
4.7 -59% 20.0 4.1
15.0 3.5
10.0 2.4 1.7 2013 2014 1.0 1.0
MOGAS cracks ($/bbl)
2012 1Q13 2Q13 3Q13 4Q13 2013 1Q14 14.0
9.0
4.0
-1.0 Med Hydrocracking benchmark margins ($/bbl)
5.4 -13% 2013 2014 4.7 4.7 HSFO cracks ($/bbl) 4.1 3.7 2.9 -6.0 2.4 -16.0
-26.0
-36.0
2012 1Q13 2Q13 3Q13 4Q13 2013 1Q14
2013 2014
36 DOMESTIC MARKET ENVIRONMENT Mild weather conditions account for lower heating gasoil demand; transport fuels flat with new car registrations +19% y-o-y
Domestic Market 1Q Aviation and Bunkering 1Q ΜΤ ’000* ΜΤ ’000*
-4% 1.646 1.588 150 168 -3%
HGO 426 361 -15% -2% 636 625
ADO 457 494 8%
Bunkers FO 480 474 -2%
612 MOGAS 565 -8% Bunkers Gasoil 86 80 -3%
Aviation 70 71 1%
1Q13 1Q14 1Q13 1Q14
(*) Does not include PPC and armed forces
37 CAUSAL TRACK & SEGMENTAL RESULTS OVERVIEW 1Q 2014 Improved operational performance offset weaker margins and USD with Adjusted EBITDA +35%
Adjusted EBITDA causal track 1Q13 – 1Q14 (€m)
51 2
19 38 17 Chems
14 Chems 18 11 MK 20 53 MK 4
FX 5
Refining, 24 Refining, S&T 21 S&T 16
Other -1 -1 Other (incl. E&P) (incl. E&P)
1Q13 Margins & FX Elefsina Refinery Operational Others 1Q14 (Jan- Feb) Improvements (Refining, Marketing, Petchems) 38
1Q 2014 FINANCIAL RESULTS GROUP PROFIT & LOSS ACCOUNT
FY IFRS FINANCIAL STATEMENTS 1Q 2013 € MILLION 2013 2014 Δ % 9,674 Sales 2,241 2,076 (7%) (9,369) Cost of sales (2,210) (1,997) 10% 305 Gross profit 32 79 -
(448) Selling, distribution and administrative expenses (108) (104) 4% (3) Exploration expenses (1) (0) 38% (50) Other operating (expenses) / income - net* 5 2 (45%) (195) Operating profit (loss) (72) (23) 69% (209) Finance costs - net (47) (53) (12%) 9 Currency exchange gains /(losses) (1) 1 - 57 Share of operating profit of associates** 32 14 (56%) (338) Profit before income tax (89) (60) 33%
66 Income tax expense / (credit) 6 19 - (272) Profit for the period (83) (41) 50% 3 Minority Interest 5 3 (44%) (269) Net Income (Loss) (78) (38) 51%
(0.88) Basic and diluted EPS (in €) (0.25) (0.12) 51%
29 Reported EBITDA (12) 25 - (*) Includes derecognition of Elefsina project hedges (non-recurring) (**) Includes 35% share of operating profit of DEPA Group 39 1Q 2014 FINANCIAL RESULTS GROUP BALANCE SHEET
IFRS FINANCIAL STATEMENTS FY 1Q € MILLION 2013 2014 Non-current assets Tangible and Intangible assets 3,607 3,582 Investments in affiliated companies* 692 708 Other non-current assets 172 187 4,470 4,477 Current assets Inventories 1,005 875 Trade and other receivables 737 869 Derivative financial instruments 5 2 Cash and cash equivalents 960 344 2,707 2,090 Total assets 7,177 6,567
Shareholders equity 2,099 2,059 Minority interest 116 113 Total equity 2,214 2,172
Non- current liabilities Borrowings 1,312 1,260 Other non-current liabilities 164 161 1,475 1,421 Current liabilities Trade and other payables 2,125 1,532 Borrowings 1,338 1,417 Other current liabilities 24 26 3,488 2,975 Total liabilities 4,963 4,396 Total equity and liabilities 7,177 6,567
(*) 35% share of DEPA Group book value (consolidated as an associate) 40 1Q 2014 FINANCIAL RESULTS GROUP CASH FLOW
FY IFRS FINANCIAL STATEMENTS 1Q 1Q 2013 € MILLION 2013 2014 Cash flows from operating activities 502 Cash generated from operations (276) (586) (9) Income and other taxes paid (1) (2) 493 Net cash (used in) / generated from operating activities (277) (588)
Cash flows from investing activities (105) Purchase of property, plant and equipment & intangible assets (10) (25) (7) Acquisition of subsidiary - - 4 Sale of property, plant and equipment & intangible assets 1 - 8 Interest received 2 2 (3) Investments in associates - - 13 Dividends received - - (90) Net cash used in investing activities (7) (23)
Cash flows from financing activities (184) Interest paid (45) (33) (46) Dividends paid (2) - 1,276 Proceeds from borrowings 776 81 (1,384) Repayment of borrowings (933) (53) (338) Net cash generated from / (used in ) financing activities (204) (5)
65 Net increase/(decrease) in cash & cash equivalents (488) (616)
901 Cash & cash equivalents at the beginning of the period 901 960 (6) Exchange gains/(losses) on cash & cash equivalents (2) - 65 Net increase/(decrease) in cash & cash equivalents (488) (616) 960 Cash & cash equivalents at end of the period 411 344
41 1Q 2014 FINANCIAL RESULTS SEGMENTAL ANALYSIS
FY 1Q 2013 € million, IFRS 2013 2014 Δ%
Reported EBITDA -80 Refining, Supply & Trading -34 -1 98% 63 Marketing 9 10 10% 53 Petrochemicals 14 17 19% 36 Core Business -11 26 - -8 Other (incl. E&P) -1 -1 3% 29 Total -12 25 - 102 Associates (Power & Gas) share attributable to Group 31 27 -15%
Adjusted EBITDA (*) 57 Refining, Supply & Trading 21 24 16% 68 Marketing 4 11 - 57 Petrochemicals 14 17 19% 183 Core Business 39 52 32% -5 Other (incl. E&P) -1 -1 3% 178 Total 38 51 35% 102 Associates (Power & Gas) share attributable to Group 31 27 -15%
Adjusted EBIT (*) -97 Refining, Supply & Trading -22 -7 68% 13 Marketing -9 -2 79% 45 Petrochemicals 10 14 36% -39 Core Business -21 5 - -7 Other (incl. E&P) -1 -1 -10% -46 Total -22 3 - 57 Associates (Power & Gas) share attributable to Group 32 14 -56%
(*) Calculated as Reported less the Inventory effects and other non-operating items 42 1Q 2014 FINANCIAL RESULTS SEGMENTAL ANALYSIS – II FY 1Q 2013 € million, IFRS 2013 2014 Δ%
Volumes (M/T'000) 12,696 Refining, Supply & Trading 2,872 2,790 -3% 4,043 Marketing 862 807 -6% 295 Petrochemicals 68 60 -12% 17,035 Total - Core Business 3,802 3,657 -4%
Sales 9,078 Refining, Supply & Trading 2,097 1,929 -8% 3,345 Marketing 742 658 -11% 327 Petrochemicals 80 80 1% 12,750 Core Business 2,918 2,667 -9% -3,076 Intersegment & other -677 -591 13% 9,674 Total 2,241 2,077 -7%
Capital Employed 2,248 Refining, Supply & Trading 2,869 2,707 -6% 775 Marketing 900 886 -2% 129 Petrochemicals 139 138 -1% 3,152 Core Business 3,908 3,731 -5% 692 Associates (Power & Gas) 677 708 5% 62 Other (incl. E&P) 37 63 69% 3,905 Total 4,623 4,502 -3%
43 Glossary of Key Terms
Adjusted EBITDA Reported EBITDA adjusted by inventory effect (impact of the fluctuation of crude prices on BS inventories and on the value of products sold during the related period) and other one-off non recurring items CCGT Combined Cycle Gas Turbine FCC Fluid Catalytic Cracking HDC Hydrocracking HS Hydroskimming HSFO High Sulfur Fuel Oil IPP Independent Power Producer Leverage ratio Net Debt / Adjusted EBITDA (including associates share of net income) LNG Liquefied Natural Gas NatGas Natural Gas Nelson Complexity Index (NCI) An index assessing the refinery conversion capacity by relating each processing unit capacity against the crude distillation capacity and applying weighting factor.
Pro forma leverage ratio Net Debt (excluding debt equal to investment in associates ) / Adjusted EBITDA Pro forma leverage on mid cycle Net Debt (excluding investment in associates ) / Adjusted EBITDA(2010-2012 avg) historical EBITDA (2010-2012 avg)
POIH Paneuropean Oil and Industrial Holdings (POIH) PP Polypropylene Solomon Comlexity Index Compares the relative refining configuration apart from throughput capacity. It is the total of EDC (Equivalent Distillation Capacity) divided by the sum of the crude unit stream-day capacities. ULSD Ultra-low-sulphur diesel (ULSD)
44 Disclaimer
Forward looking statements Hellenic Petroleum do not in general publish forecasts regarding their future financial results. The financial forecasts contained in this document are based on a series of assumptions, which are subject to the occurrence of events that can neither be reasonably foreseen by Hellenic Petroleum, nor are within Hellenic Petroleum's control. The said forecasts represent management's estimates, and should be treated as mere estimates. There is no certainty that the actual financial results of Hellenic Petroleum will be in line with the forecasted ones.
In particular, the actual results may differ (even materially) from the forecasted ones due to, among other reasons, changes in the financial conditions within Greece, fluctuations in the prices of crude oil and oil products in general, as well as fluctuations in foreign currencies rates, international petrochemicals prices, changes in supply and demand and changes of weather conditions. Consequently, it should be stressed that Hellenic Petroleum do not, and could not reasonably be expected to, provide any representation or guarantee, with respect to the creditworthiness of the forecasts.
This presentation also contains certain financial information and key performance indicators which are primarily focused at providing a “business” perspective and as a consequence may not be presented in accordance with International Financial Reporting Standards (IFRS).
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