Second Quarter / First Half 2023 financial results

Helleniq Energy Holdings S.A.
31 August 2023
 

Maroussi, 31 August 2023

 

Second Quarter / First Half 2023 financial results

 

Good operating results, despite weak benchmark refining margins -

Acceleration of RES investments and faster implementation of the Group's transformation and energy transition plan

 

 

HELLENiQ ENERGY Holdings S.A. ("Company") announced its 2Q23 consolidated financial results, with Adjusted EBITDA at €164m and Adjusted Net Income at €26m. Accordingly, 1H23 Adjusted EBITDA came in at €568m and Adjusted Net Income at €277m, reporting yet another strong performance. It should be noted that operating results (EBITDA) do not include results of our associates, ELPEDISON and DEPA, which are consolidated under the equity method.

2Q23 results reflect a weaker benchmark margin environment, especially when compared to the historic-highs of 2Q22, limiting thus the benefits of improved operations and increased availability of all 3 refineries. Oil product sales reached c. 4m MT (+16% y-o-y), with exports up by 28%, corresponding to 54% of total sales volume. At the same time, increased installed capacity following the last 2 years of investments and higher electricity generation, resulted in improved contribution from RES.

Reported Net Income amounted to €7m in 2Q23 (2022: €524m) and €162m in 1H23 (2022: €869m), with the big difference reflecting the losses from inventory valuation on compulsory stocks held and financed by the Company. Specifically, the movement between the two periods exceeds €700m, with 1H23 incorporating a €197m loss, reversing part of the €513m gains reported in 1H22.

 

Strategy Implementation - Vision 2025

Following the completion of the first phase of the Vision 2025 strategic plan, the Group focuses on four pillars: a) operational excellence across all businesses b) acceleration of targeted portfolio development in RES and storage in Greece and internationally, along with the development of commercial capabilities, c) carbon footprint reduction in our core activities and d) further improvement in ESG.

Through HELLENiQ Renewables, the Group is accelerating its development in the RES sector, with the aim of reaching operating capacity of 1 GW by 2025. During 2Q23, agreements were concluded for the acquisition of PV parks portfolios with a total capacity of 211 MW in Romania and up to 180 MW in Kozani, which are expected to be operational in the next two years and within 2024 respectively, as well as 15 MW PV parks in operation in Cyprus. These agreements mark HELLENiQ ENERGY Group's entry into two new, rapidly developing markets, Cyprus and Romania, achieving geographical diversification of the RES portfolio and strengthening the Group's extroversion. At the same time, HELLENiQ Renewables signed a framework agreement for the development of an additional RES portfolio with a total capacity of 600 MW in Romania, while the Group's entry into another international market through another subsidiary is in progress.

HELLENiQ Renewables successfully participated in the Regulatory Authority for Waste, Energy and Water (RAWEW)'s recent tender and 3 energy storage projects in Greece with a total power of 100 MW and a guaranteed capacity of 200 MWh were selected as eligible to receive investment and operating aid. This marks the Group's entry into a new market which is essential for further scaling-up RES while facilitating appropriate management of our investments in the sector.

The Group's RES total operating capacity along with projects under construction has reached ~680 MW, with the portfolio pipeline at 3.8 GW.

In order to accelerate its RES portfolio development, HELLENiQ Renewables signed a financing framework agreement of up to €766m with 2 Greek banks for the implementation of multiple financing arrangements (project finance) in relation to existing and new projects for RES electricity generation in Greece. The agreement covers the RES projects' operational/commercial model, with pricing structures such as feed-in-tariffs, feed-in-premiums or even power purchase agreements (cPPAs). It is a particularly innovative transaction, pioneering for the Greek market, with material benefits, such as: a) sufficient financing capacity to support the Group's growth, b) flexibility and speed of projects implementation, c) improvement of the Group's capital structure, d) competitive financing terms and costs.

 

Further de-escalation of crude oil prices and weaker refining margins

International crude oil and product prices continued to fall during 2Q23, with Brent averaging $78/bbl due to developments in the broader macroeconomic environment and the expected impact on demand, despite OPEC+ announcements of production curtailments.

In 2Q23, refining margins declined significantly compared both to the 2Q22 historic-highs, following Russia's invasion of Ukraine, and to 1Q23. Refining margins weakened due to ample inventories, milder weather conditions and sufficient global supply of oil products after the redirection of Russian products exports to markets other than Europe, following the implementation of new sanctions by Europe and other Western countries on 5 February 2023. International benchmark FCC and Hydrocracking margins in 2Q23 averaged $4.4/bbl and $5.5/bbl respectively vs $21.4/bbl and $11.1/bbl in 2Q22.

 

Improved domestic market demand

Domestic market demand in 2Q23 reached 1.5m MT, higher by 5% y-o-y, mainly as a result of a growing economy and tourism, with auto fuels consumption increasing by 3%. Aviation fuels sales increased by 7% to 416k MT on higher air traffic, while bunkering fuels offtake rose by 3% to 723k MT.

 

Balance sheet and capital expenditure

Capex amounted to €101m in 2Q23, directed primarily to maintenance upgrade projects at the refineries as well as to the acquisition of the 2 PV parks in Cyprus.

Net Debt was shaped at €1.55bn, lower by €0.4bn since the beginning of the year, due to positive cash flow generation in 1H23, as the Temporary Solidarity Contribution is set to be paid in the following months. Gearing (Net Debt to Capital Employed) fell to 36%.

At the end of 2Q23, refinancing of a €400m revolving credit facility (RCF) for 5 years was completed. In addition, in 3Q23, the return on the Temporary Solidarity Contribution on excess profits for FY22, amounting to €267m, was filed to the tax authorities, with the repayment gradually taking place, starting from July 2023 and affecting the 2H23 cash flow.

 

Andreas Shiamishis, Group CEO, commented on the results:

"2Q23 results and developments across all Company's businesses were positive, especially considering the significant decline in international refining margins and prices vs last year. Amid a quarter with weaker refining benchmark margins, we improved our refineries' operational performance, further developed our fuels marketing business in Greece and internationally and increased contribution from RES. 1H23 Adjusted EBITDA came in at €568m, with a positive outlook in terms of full year financial results as well as increased contribution from new businesses.

During the last 3 years, the challenging landscape on account of the pandemic and the energy crisis led us to adjust our business, prioritizing safety, uninterrupted market supply while, at the same time, stepping up to support the society. While these attracted a significant part of our attention and efforts, we remained focused on the Company's future, with emphasis on accelerating the implementation of our holistic energy transition plan VISION 2025.

In addition to the improved operating performance, we continued to develop our RES business through a series of projects, including: a) expansion of RES asset base in operation or under construction capacity with projects over 400 MW, b) entry into new international markets with RES assets and set-up of green energy commercial business, c) participating in the newly-formed energy storage market following the successful bid in the recent tender for the development of energy storage projects (batteries) with a total capacity of 100 MW, and d) signing an innovative financing framework agreement of up to €766m for RES investments in Greece.

Our goal for 2023 is to deliver strong profitability and respective shareholders' cash returns through dividends, along with a further strategic strengthening of the Company through its targeted Green Energy transition."


Key highlights and contribution for each of the main business units in 2Q23 were:

 

Refining, Supply & Trading

-       Refining, Supply & Trading 2Q23 Adjusted EBITDA came in at €114m. Despite the significant decline in international refining margins compared to the 2Q22 historic highs, increased availability of the Group's all 3 refineries leading to higher exports as well as product mix improvement, resulted in substantial overperformance vs benchmark refining margins.

-       Production reached 3.6 mt, +13% y-o-y, as maintenance turnarounds had been implemented at the Aspropyrgos and Elefsina refineries in 2Q22.

 

Petrochemicals

-       2Q23 Adjusted EBITDA came in at €12m, lower y-o-y on weak PP margins.


Marketing

-       In 2Q23, Domestic Marketing recorded higher sales volume (+3% y-o-y), driven by 3% y-o-y increase in the automotive sales. Despite improved contribution from Aviation, profitability was impacted by regulatory gross margin caps and lower inventory valuation due to falling prices. Excluding the inventory impact, Comparable EBITDA came in at €14m vs with €9m in 2Q22. 

-       International Marketing recorded slightly lower profitability compared with 2Q22 despite inflationary pressures on costs.


Renewables

-       Higher RES operating capacity (356 ΜW) compared with 2Q22 (285 MW) led to increased power production (+39%), with Adjusted EBITDA coming in at €11m (+82%).

 

Associate companies

-       The contribution of associate companies was negative. Specifically, a) Elpedison's profitability was negatively affected by lower demand, due to weather conditions, as well as the scheduled maintenance at Thisvi and Thessaloniki power plants, b) DEPA's contribution was mainly affected by the valuation of safety stocks of natural gas, due to falling international prices, as well as increased costs for securing capacity in the gas network, for national security of supply purposes.

 


HELLENiQ ENERGY Holdings S.A.

 

Key consolidated financial indicators for 2Q / 1H 2023

(prepared in accordance with IFRS)

 

€ εκατ.

2Q22

2Q23

% Δ

1H22

1H23

% Δ

P&L figures







Refining Sales Volume ('000 ΜΤ)

3,418

3,951

16%

6,710

7,639

14%

Sales

3,974

2,978

-25%

6,777

6,091

-10%

EBITDA

738

121

-84%

1,239

400

-68%

Adjusted EBITDA 1

535

164

-69%

633

568

-10%

Adjusted Net Income 1

364

26

-93%

369

277

-25%

Operating Profit

668

43

-94%

1,088

244

-78%

Net Income

524

7

-99%

869

162

-81%

Balance Sheet Items

 

 

 

 

 

 

Capital Employed




4,835

4,283

-11%

Net Debt




1,967

1,553

-21%

Gearing (ND/ND+E)




41%

36%

-5 pps2 π.μ.pps2 2

 

Note 1: Adjusted for inventory effects and other non-operating/one-off items, as well as the IFRS accounting treatment of the EUAs deficit.

Note 2: pps stands for percentage points

 

Further information:

Investor Relations

8A Chimaras str., 151 25 Maroussi, Greece

Tel: 210-6302526, 210-6302305

Email: ir@helleniq.gr

 

 

Group Consolidated statement of financial position

 


 

As at

 

Note

30 June 2023

31 December 2022

Αssets

 



Non-current assets

 



Property, plant and equipment

10

3.642.566

3.639.004

Right-of-use assets

11

231.393

233.141

Intangible assets

12

283.866

518.073

Investments in associates and joint ventures

7

408.424

402.101

Deferred income tax assets

 

101.423

91.204

Investment in equity instruments

3

482

490

Derivative financial instruments

 

944

958

Loans, advances and long term assets

 

61.172

64.596


 

4.730.270

4.949.567

Current assets

 

 

 

Inventories

14

1.465.151

1.826.242

Trade and other receivables

15

861.342

866.109

Income tax receivable

 

12.538

14.792

Derivative financial instruments

 

-

5.114

Cash and cash equivalents

16

737.382

900.176

 

 

3.076.413

3.612.433

Total assets

 

7.806.683

8.562.000


 

 


Equity

 



Share capital and share premium

17

1.020.081

1.020.081

Reserves

18

295.348

297.713

Retained Earnings

 

1.350.377

1.341.908

Equity attributable to the owners of the parent

 

2.665.806

2.659.702


 



Non-controlling interests

 

64.742

67.699

 

 



Total equity

 

2.730.548

2.727.401


 



Liabilities

 



Non- current liabilities

 



Interest bearing loans and borrowings

19

1.516.711

1.433.029

Lease liabilities

 

178.516

177.745

Deferred income tax liabilities

 

189.273

202.523

Retirement benefit obligations

 

177.572

175.500

Derivative financial instruments

 

-

-

Provisions

 

35.544

36.117

Other non-current liabilities

 

25.737

22.662


 

2.123.353

2.047.576

Current liabilities

 

 

 

Trade and other payables

20

1.521.737

1.835.957

Derivative financial instruments

 

808

1.761

Income tax payable

8

472.738

432.385

Interest bearing loans and borrowings

19

773.820

1.409.324

Lease liabilities

 

30.573

30.372

Dividends payable

 

153.106

77.224


 

2.952.782

3.787.023

Total liabilities

 

5.076.135

5.834.599

Total equity and liabilities

 

7.806.683

8.562.000

 

 

 

 

 

Group Consolidated statement of comprehensive income




For the six-month period ended

For the three month period ended

 

Note

30 June 2023

30 June 2022

30 June 2023

30 June 2022

 






Revenue from contracts with customers

4

6.091.369

6.777.314

2.978.026

3.974.379

Cost of sales


-5.571.296

-5.426.818

-2.793.169

-3.167.066

Gross profit / (loss)

 

520.073

1.350.496

184.857

807.313







Selling and distribution expenses


-195.019

-169.684

-101.211

-87.296

Administrative expenses


-88.798

-85.592

-48.316

-48.942

Exploration and development expenses


-4.659

-7.332

-415

-957

Other operating income and other gains

5

17.576

14.332

10.174

9.141

Other operating expense and other losses

5

-4.918

-14.085

-2.367

-10.953







Operating profit / (loss)

 

244.255

1.088.135

42.722

668.306

 






Finance income


3.105

1.105

1.779

567

Finance expense


-64.377

-51.052

-32.253

-26.498

Lease finance cost


-4.643

-4.704

-2.318

-2.342

Currency exchange gains / (losses)

6

687

1.239

129

5.509

Share of profit / (loss) of investments in associates and joint ventures

7

7.168

68.161

-24.122

21.809







Profit / (loss) before income tax

 

186.195

1.102.884

-14.063

667.351

 






Income tax

8

-23.512

-230.571

20.979

-141.668







Profit / (loss) for the period

 

162.683

872.313

6.916

525.683

 






Profit / (loss) attributable to:

 





     Owners of the parent


162.008

869.117

6.732

523.912

     Non-controlling interests


675

3.196

184

1.771



162.683

872.313

6.916

525.683

 






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


-1.711

0

-1.711

0

Changes in the fair value of equity instruments


-8

-13

-8

3



-1.719

-13

-1.719

3

Other comprehensive income / (loss) that may be reclassified subsequently to profit or loss (net of tax):

 




Share of other comprehensive income / (loss) of associates


-1.019

-9.636

98

8.091

Fair value gains / (losses) on cash flow hedges


-1.422

5.844

-501

578

Recycling of (gains) / losses on hedges through comprehensive income


1.991

-4.941

1.991

-4.941

Currency translation differences and other movements


-299

66

483

233



-749

-8.667

2.071

3.961







Other comprehensive income / (loss) for the period, net of tax

 

-2.468

-8.680

352

3.964

 






Total comprehensive income / (loss) for the period

 

160.215

863.633

7.268

529.647

 






Total comprehensive income / (loss) attributable to:

 





     Owners of the parent


159.643

860.447

7.070

527.875

     Non-controlling interests


572

3.186

198

1.772



160.215

863.633

7.268

529.647

 






Εarnings / (losses) per share (expressed in Euro per share)

9

0,53

2,8

0,02

1,7



 Group Consolidated statement of cash flows

 

 

 

For the six-month period ended

 

Note

30 June 2023

30 June 2022

Cash flows from operating activities

 

 

 

Cash generated from operations

21

664.325

362.945

Income tax received / (paid)


(4.474)

(3.202)

Net cash generated from/ (used in) operating activities

 

659.851

359.743

 

 



Cash flows from investing activities

 



Purchase of property, plant and equipment & intangible assets

10, 12

(146.688)

(219.598)

Proceeds from disposal of property, plant and equipment & intangible assets


1.973

172

Acquisition of share of associates and joint ventures


(175)

-

Purchase of subsidiary, net of cash acquired


101

404

Grants received


2.996

-

Interest received


3.105

1.105

Prepayments for right-of-use assets


(117)

(468)

Dividends received

7

31.715

-

Net cash generated from/ (used in) investing activities

 

(107.090)

(218.385)

 

 


 

Cash flows from financing activities

 


 

Interest paid on borrowings


(61.571)

(45.278)

Dividends paid to shareholders of the Company

25

(76.348)

(91.951)

Dividends paid to non-controlling interests


-

(2.061)

Proceeds from borrowings

19

546.867

376.400

Repayments of borrowings

19

(1.102.296)

(13.991)

Payment of lease liabilities - principal


(17.906)

(19.055)

Payment of lease liabilities - interest


(4.643)

(4.704)

Net cash generated from/ (used in) financing activities

 

(715.897)

199.360

 

 


 

Net increase/ (decrease) in cash and cash equivalents

 

(163.137)

340.719

 

 


 

Cash and cash equivalents at the beginning of the year

16

900.176

1.052.618

Exchange (losses) / gains on cash and cash equivalents


343

1.494

Net increase / (decrease) in cash and cash equivalents


(163.137)

340.719

Cash and cash equivalents at end of the period

16

737.382

1.394.831

 

  

Parent Company Statement of Financial Position

 

 

 

As at

 

Note

 

30 June 2023

31 December 2022

Assets

 




Non-current assets

 

 

 

 

Property, plant and equipment



683

671

Right-of-use assets

11

 

9.674

10.817

Intangible assets



95

138

Investments in subsidiaries, associates and joint ventures

7


1.710.182

1.654.517

Deferred income tax assets



11.213

11.020

Investment in equity instruments



38

38

Loans, advances and long term assets

13


279.043

230.243



 

2.010.928

1.907.444

Current assets

 




Inventories



-

-

Trade and other receivables

15


38.046

86.159

Income tax receivables



-

-

Derivative financial instruments



-

-

Cash and cash equivalents



188.398

209.054



 

226.444

295.213

Total assets

 

 

2.237.372

2.202.657






Equity

 




Share capital and share premium

17


1.020.081

1.020.081

Reserves

18


280.069

281.104

Retained Earnings



743.164

765.156

Total equity

 

 

2.043.314

2.066.341






Liabilities

 




Non-current liabilities

 




Interest bearing loans & borrowings



-

-

Lease liabilities



7.425

9.611

Deferred income tax liabilities



-

-

Retirement benefit obligations



7.852

7.977

Provisions



-

-

Other non-current liabilities



174

174



 

15.451

17.762

Current liabilities

 




Trade and other payables



17.758

36.491

Derivative financial instruments



-

-

Income tax payable

8


5.500

3.582

Interest bearing loans & borrowings



-

-

Lease liabilities



2.243

1.257

Dividends payable

25


153.106

77.224



 

178.607

118.554

Total liabilities

 

 

194.058

136.316

Total equity and liabilities

 

 

2.237.372

2.202.657

 

Parent Company Statement of Comprehensive Income

 

 

 

For the six-month period ended

For the three month period ended

 

Note

 

30 June 2023

30 June 2022

30 June 2023

30 June 2022

 

 

 

 

 

 

 








Sale proceeds



0

1.919.699

0









Sales taxes, excise duties and similar levies



15.172

(735)

7.715





----

----

----

----

Revenue from contracts with customers

 

 

15.172

15.162

7.715

9.122

 

 

 

 

 

 

 

Cost of sales



(13.792)

(13.785)

(7.014)

(8.294)

Gross profit / (loss)

 

 

1.380

1.377

701

828








Administrative expenses



(4.572)

(3.407)

(1.297)

(1.992)

Other operating income and other gains

5


9.764

11.044

6.078

7.359

Other operating expense and other losses

5


(9.494)

(9.245)

(6.674)

(5.894)

Operating profit /(loss)

 

 

(2.922)

(231)

(1.192)

301








Finance income



9.865

2.738

5.281

1.323

Finance expense



(6)

(509)

(3)

(4)

Lease finance cost



(174)

(264)

(81)

(129)

Dividend income

25


126.081

-

-

-

Profit / (loss)  before income tax

 

 

132.844

1.734

4.005

1.491








Income tax credit / (expense)

8

 

(2.017)

(432)

(781)

(401)








Profit / (loss) for the period

 


130.827

1.302

3.224

1.090

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



(1.034)

-

(1.034)

-








Other comprehensive income / (loss) for the year, net of tax

 


(1.034)

-

(1.034)

-

 

 






Total comprehensive income / (loss) for the period

 


129.793

1.302

2.190

1.090

 

Parent Company Statement of Cash flows

 

 

For the six-month period ended

 

Note

30 June 2023

30 June 2022

 

 

 

 

Cash flows from operating activities

 



Cash generated from / (used in) operations

21 

(6.179)

44.890

Income tax received / (paid)

 

-

-

Net cash generated from / (used in) operating activities

 

(6.179)

44.890

 

 

 


Cash flows from investing activities

 

 


Purchase of property, plant and equipment & intangible assets

 

(18)

-

Participation in share capital increase of subsidiaries, associates and joint ventures


(54.665)

(16.609)

Loans and advances to Group Companies

13

(48.800)

(18.302)

Interest received

 

8.003

1.118

Dividends received

7, 25

158.532

-

Proceeds from disposal of assets held for sale

 

-

-

Net cash generated from / (used in) investing activities from discontinued operations


-

-

Net cash generated from / (used in) investing activities

 

63.052

(33.793)

 

 

 


Cash flows from financing activities

 

 


Interest paid

 

-

-

Dividends paid to shareholders of the Company

25 

(76.348)

(91.951)

Payment of lease liabilities - principal, net


(1.007)

(1.494)

Payment of lease liabilities - interest


(174)

(264)

Net cash generated from / (used in) financing activities from discontinued operations


-

-

Net cash generated from / (used in) financing activities

 

(77.529)

(93.709)

 

 

 


Net increase / (decrease) in cash and cash equivalents

 

(20.656)

(82.612)

 

 

 


Cash and cash equivalents at the beginning of the period

 

209.054

843.493

Exchange gain / (loss) on cash and cash equivalents

 

-

-

Net cash outflow due to demerger

 

-

(713.493)

Net increase / (decrease) in cash and cash equivalents

 

(20.656)

(82.612)

Cash and cash equivalents at end of the period

 

188.398

47.388

 

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