Consolidated Financial Results of the LOTOS Group Q (IFRS)

Transcription

1 Consolidated Financial Results of the LOTOS Group Q (IFRS) Management Board of Grupa LOTOS 11th May 2011

2 Summary and key achievements Main investments update Market Conditions Upstream Downstream Overall financial results Management Board 2/30

3 KEY Q ACHIEVEMENTS First results of 10+ Programme significantly influenced downstream segment result Record high EBIT at PLN 413m (+213% yoy) Strong net profit at PLN 636m Gaining full control over AB Geonafta Management Board 3/30

4 Q1 11 OVERALL FIGURES Crude oil production amounted to 4,325 bbl/d (50.3k tonnes) Crude oil throughput amounted to 2,223k tonnes Consolidated sales at the level of 2,485k tonnes EBITDA at PLN 533.8m due to growing depreciation and amortization and high EBIT Average benchmark refining margin decreased by 36.4% yoy from 2.61 to 1.66 USD/bbl Average Brent dtd price amounted to USD/bbl (+38.1% yoy) Brent/Ural differential increased from 1.05 USD/bbl to 2.88 USD/bbl (+174.3% yoy) Management Board 4/30

5 1 Summary and key achievements 2 Main investments update Market Conditions Upstream Downstream Overall financial results Management Board 5/30

6 MAIN INVESTMENTS UPDATE FINALISATION OF GEONAFTA ACQUSITION On February 3rd LOTOS has gained full control of AB Geonafta acquiring the remaining stake in the company (previously an equity shareholding of 40.59%) The price of acqusition (as already mentioned) of UAB Meditus, which owns 59.41% stake of AB Geonafta consists of: (i) EUR 56.8m, (ii) adjustment on net debt, (iii) part of potential former shareholder s obligations Settlement of the deal triggered revaluation of the previously held 40.59% stake in Geonafta. Additonal goodwill value of PLN 123.9m has been included in the financial revenues Fixed assets increase of PLN 317.4m, representing the exploration licenses granted to AB Geonafta and it s subsidiaries UAB Genciu Nafta, UAB Minijos Nafta oraz UAB Manifoldas. The licences shall be amortised naturally Crude oil sales for the first quarter of 2011 amounted to 133 ths bbl (17.4 ths tonnes) Management Board 6/30

7 MAIN INVESTMENTS UPDATE 10+ PROGRAMME At the end of Q first products from ROSE instalation were obtained Ongoing process of analysing, integrating and optimisation of the logistical assets in order to achieve top quality of the processes maintained within the refinery after 10+ Programme Management Board 7/30

8 Summary and key achievements Main investments update Market Conditions Upstream Downstream Overall financial results Management Board 8/30

9 MARKET CONDITIONS KEY FACTORS Refining margin Crude oil prices Positive impact of increase in Brent/Ural differential in comparison with Q4 10 and Q1 10 Negative impact of decrease in refining margin qoq and yoy Increase in crude oil prices qoq and yoy Management Board 9/30

10 MARKET CONDITIONS KEY FACTORS FX rate LIBOR 3M USD The EUR/USD FX rate slightly increased qoq, while the USD/PLN rate decreased Downward trend of 3M USD LIBOR rate from beginning of October 2008 Management Board 10/30

11 Summary and key achievements Main investments update Market conditions Upstream Downstream Overall financial results Management Board 11/30

12 UPSTREAM GEOGRAPHICAL COVERAGE OF LOTOS UPSTREAM OPERATIONS Helsinki Oslo Stockholm Vilnius Warsaw Management Board 12/29

13 UPSTREAM FINANCIAL RESULTS QUARTERLY VIEW Net sales (PLN m) -23% EBITDA (PLN m) -15% EBIT (PLN m) -40% Net sales yoy lower due to decreased volume of Rozewie crude; qoq net sales higher due to AB Geonafta sales EBIT decreased yoy mainly due to lower sales volume EBIT increase qoq mainly due to higher crude oil prices and impairments in Q4 of 2010 Management Board 13/30

14 Summary and key achievements Main investments update Market conditions Upstream Downstream Overall financial results Management Board 14/30

15 DOWNSTREAM CRUDE OIL THROUGHPUT +38% Q09* 2Q09* 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 * Lower throughput in Q1 and Q2 09 due to maintenance shutdown Significant increase in crude oil throughput yoy due to operating new units Stable crude oil throughput qoq Management Board 15/30

16 DOWNSTREAM PRODUCTION AND SALES OF PRODUCTS AND GOODS PRODUCTION Q ( 000 t) SALES Q ( 000 t) In Q total production reached 2,481 thousand tonnes (+28% yoy) In Q sales volumes were significantly higher (+30% yoy), due to refinery production growth Management Board 16/30

17 DOWNSTREAM MARKET SHARE AND RETAIL NETWORK Total market share Retail Network Total Polish fuel market share higher by 2.5 pp. vs. end of 2010, significant growth in middle distillates market share The number of CODO and DOFO stations increased by 2 and 3 respectively, whereas 13 DODO cooperation contracts has expired as a consequence of LOTOS retail network restructuring activities 116 franchise agreements signed as of March 31th 2011 Management Board 17/30

18 DOWNSTREAM RETAIL AREA Retail Sales (PLN m) Retail EBIT (PLN m) +27% n.a. Retail sales higher by 27% yoy 12.8m PLN retail operating loss due to unfavourable market conditions and pressure on margins Management Board 18/30

19 DOWNSTREAM FINANCIAL RESULTS QUARTERLY VIEW Net sales (PLN m) EBITDA (PLN m) EBIT (PLN m) +66% +202% +295% 391 Financial results of the downstream segment are positively impacted by sales volume boost due to enhanced throughput capacity of Gdańsk refinery EBIT increase follows growing crude oil prices in Q1 11 (LIFO effect), growing sales volumes and high Brent Ural differential Management Board 19/30

20 DOWNSTREAM DOWNSTREAM OPERATING PROFIT ACCORDING TO LIFO INVENTORY VALUATION QUARTERLY VIEW LIFO effect = -278 LIFO effect = -69 As a result of growing crude oil prices the LIFO effect was negative and amounted to -278 m PLN Management Board 20/30

21 Summary and key achievements Main investments update Market conditions Upstream Downstream 6 Downstream Overall financial results Management Board 21/30

22 ONE-OFFS AND CHANGES IN REPORTING AND PRESENTATION METHODOLOGY Fixed assets increase of PLN 317.4m, representing the exploration licenses granted to AB Geonafta and it s subsidiaries UAB Genciu Nafta, UAB Minijos Nafta oraz UAB Manifoldas. The licences shall be amortised naturally PLN 123.9m positive impact on financial revenues goodwill one-off related to AB Geonafta acquisition Hedge accounting has been introduced starting from January 1st 2011 with respect to cash flow hedges, applicable for the 10+ programme investment loan facility Operational result has been restated by using average FX rates for booking of oil purchases (previously the result could have been different due to e.g. bank FX spread)* * Effective for q and q For following quarters similar excercise shall be done, which will lead to restatement of 2010 results. Management Board 22/30

23 OVERALL FINANCIAL RESULTS Q1 11 FINANCIAL RESULTS 1Q11 1Q10 Management Board 23/30

24 OVERALL FINANCIAL RESULTS OPERATING PROFIT ACCORDING TO LIFO INVENTORY VALUATION QUARTERLY VIEW LIFO effect = -278 LIFO effect = -69 As a result of growing crude oil prices the LIFO effect was negative and amounted to -278 m PLN Q EBIT for total company reached 413m PLN and was higher by 281m PLN compared to Q Management Board 24/30

25 OVERALL FINANCIAL RESULTS Q1 11 RESULT ON HEDGING Positive impact of hedging transactions on the results at the level of over PLN 93m Management Board 25/30

26 OVERALL FINANCIAL RESULTS Q1 11 RATIOS EBITDA margin EBIT margin Net margin Management Board 26/30

27 OVERALL FINANCIAL RESULTS BALANCE SHEET EVOLUTION OF LIABILITIES STRUCTURE +428m Increase of short term liabilities by +428m PLN resulting from purchase of higher volume of crude oil at an increased price Higher equity by +794m due to retained earnings (by +638m) +794m Management Board 27/30

28 OVERALL FINANCIAL RESULTS BALANCE SHEET EVOLUTION OF ASSETS STRUCTURE +500m +235m Increase of short term receivables by 26% (+500 m PLN) following higher product prices in the market Higher mandatory reserves volume triggering increase in the level of inventories (+235m PLN) Management Board 28/30

29 OVERALL FINANCIAL RESULTS FINANCIAL DEBT Financial Debt Net debt Gearing ratio -2% -5% -10.9pp Strong cash flow in Q and favorable development of USD/PLN FX rate improving the level of indebtness of the company Management Board 29/30

30 APPENDIX INTRODUCTION OF HEDGE ACCOUNTING Hedge accounting has been introduced starting from January 1st 2011 with respect to cash flow hedges, applicable for the investment loan facility For 80% of the investment loan an effective hedging transaction can be established (remaining 20% stand for the balloon rate) 80% out of 10+ investment loan (~ USD 1 120m) i.e. +10 gr FX rate change FX loans ~ USD 1 400m + ~USD 600m 20% out of 10+ investment loan (~ USD 280m) i.e. +10 gr Fx rate change Other FX loans ~USD 600m Hence, FX USD/PLN changes on 80% of the loan shall be recognized in other comprehensive income (separate component of EQUITY) Settlement of FX changes recognized in EQUITY shall be effected by applying the hedged FX rate to company s FX revenues corresponding with loan repayment for the respective periods BS impact 10gr * = PLN 112 P&L impact 10gr * ( ) = PLN 88 Example of settlement of a respective hedging transaction: 1) FX rate hedged: ) Sample FX rate for the sale hedged with a respective hedging transaction : ) Loan repayment for the quarter = FX sale: USD 20m Revenues from sales at a sample FX rate : PLN 56m Revenues booked including Hedging transaction: PLN 60m Capital change from revaluation: PLN (4)m Management Board 30/30